Plenty of people dream of starting their own business. Far fewer actually take the steps to make it happen. One of the first steps you will take when starting a business is writing a business plan. This document, revised and rewritten many times along the road, will be your guide through the entire process. It will also help you gain allies on the way.
But when you first hear the words “create a business plan,” this may seem overwhelming. You just want to sell crafts or open a café! Why do you need a whole plan for that? How do you start? Don’t let uncertainty prevent you from getting your dreams down on paper.
Why You Need a Business Plan
The main person who will reference your business plan is yourself. This document will translate a vague dream (“I want to be my own boss”) into concrete steps. There are so many details in running a new business that you can easily get bogged down and lose sight of your goals. A business plan will spell out your goals for 3-5 years into the future, so that you know when you’re on track and when you aren’t. Even if no one else ever looks at it, it will help you keep your eyes on the prize.
The second important reason to write a business plan is to get funding. Whether you’re seeking a loan or individual investors, they will need to see you have an actual plan. That shows them you have done the work of finding out the market, costs, profits, location and more that will help your business succeed. Nobody wants to lend money to a dreamer who doesn’t do the legwork or have a serious idea how they will succeed.
Third, your business plan can help you get partners on your team. When you hire on the ground floor of a new business, you may not be able to pay as well as an established business. So how can you assure your first employees that this job will last and grow? Your business plan shows them you’ve thought it through. It will give them an idea where they might be in the next five years, if they stay with your company.
How to Write a Business Plan
A business plan can be long or short, but a detailed plan will likely be the most useful for you. You can create a shorter version to show people later. Your plan will likely consist of several sections.
In this section, you will present a brief vision for your business. Think of it as an elevator pitch—the answer you give when someone asks, “So what does your business do?” If you don’t already have a concise answer to this question, work on one. Not only can it go in your plan, the more you practice it, the better you’ll be at answering this question in person when people ask you.
The further you are in the process, the more details you can put here. You’ll want to mention your business’s registered name, address, and business structure (sole proprietorship, partnership, or corporation). You can include information about the industry, the products you will sell, and the key people at your business. If your business has specific advantages—a new innovation or a great location—mention that here!
How do you see your business in one, three, and five years? What will be the benchmarks for success? Are you hoping to grow to multiple branches, or is there a steady state you want to reach? The more specific numbers you can use here, the better.
Potential partners will want to know that you have researched the market you’re trying to break into. Who will be your main competitors? What distinguishes you from them? You should also describe how you will get the word out about your business. Will it have a prime shopping-district location? Will you run advertising? Any research you’ve done about the effectiveness of these methods can go here.
Everyone with an interest in your business will want to know how it’s doing financially. Again, the further along your business is, the more detail you can put here. When you begin planning, you can list where you hope to acquire startup funds. Later on, you can fully break down your profit-and-loss and cashflow numbers. Projections are also important. How do you plan to pay off any loans? What are your projected profits each quarter?
These sections are only suggestions. There is no one way to organize your business plan. The Small Business Administration offers templates for you to use, or you can create your own categories.
An Important Step
Don’t forget the vital step of discussing your business plan with a financial expert. Business financial advisors specialize in helping business owners—or hopeful business owners—meet their goals. To find someone with the expertise you need in the financial side of your business, contact us today.