A Beginner’s Guide to Creating a Lasting Business Plan
Monday, January 16th, 2017
One of the biggest assets a small business has is its business plan, a 30-40 page blueprint for your company. Some online articles will lead you to believe that simply by having a business plan, your startup will be successful, but that’s not what these plans work to accomplish. Rather, a business plan allows you to align the team towards a common vision for the company, evaluate its feasibility as objectively and critically as possible, and attract investors. Written three to five years out, the business plan also serves as a glimpse into your startup’s future. You may not be able to guarantee immediate success just by creating one, but all of the details outlined will help to contribute to the overall success of the business in the long run.
If you’re a budding entrepreneur, make sure to include the following sections to create a business plan that lasts and takes the future of the business, along with everyone who views the document, seriously.
The executive summary is the synopsis of the business plan, meant to be no longer than two pages, and includes a basic description of your business that sums up the five Ws and one H.
- Who you and your business are.
- What your company does and the industry it’s in.
- When you’ll start conducting business.
- Where you will be located.
- Why consumers will want to pay for these particular goods or services.
- How the business will make money. (And if you need extra funding, indicate how much and where those funds will be allocated.)
Business Description, Concept, and Strategy
Here’s where you can flesh out your business in-depth. Thoroughly note where the idea behind your business came from, what your product or service is and what it does along with what makes it unique and distinctive, where you’re at in the development stages, and your overall strategy and goals. What are the goals for your business? What kinds of steps will you take to reach them? What does the timeline for that plan look like?
The industry analysis goes in-depth on analyzing your competition. Study what their offerings are, their company background, if there are any barriers to entry, and why consumers will choose your services over theirs.[i] Indirect competition, which may not present challenges to your startup now but may later, should also be included in this section.
For the market analysis, determine who your target audience is and what they need. Census data can provide insight into this kind of information. Who is in your target market? What do the demographics of your audience look like? Is your market growing? How will you attract, capture, and retain this audience? What do opportunities look like with your market?
Organization and Management
Who’s running the show at your business? From management to staff, each member of your team needs to have a biography included in your business plan along with information about their backgrounds and core responsibilities. Be mindful of the kind of business structure you have, as that will play into how you introduce your team members. A corporation, for instance, will need to include profiles on officers (CEO, COO, CFO) while a partnership will need more details about its partners.
What does the cash flow look like for your business? In this section, include tables that are related to your projected profit and loss along with a sales forecast, expenses budget, your cash flow and 12-month income statement, a projected balance sheet to deal with assets and liabilities, and a break-even analysis with the revenue needed for your initial investment.[ii]
No modesty necessary here—lay out the cards and outline the funding you’ll require from investors for your funding request. As advised by the U.S. Small Business Administration, include both your funding request and any future financing needed in the next five years.[iii] Be sure to note how that money will be spent and the manner in which it will be spent. And what happens if your startup becomes so popular it receives an offer to be acquired? The funding request section of your business plan should include strategic financial situational plans for the future that cover areas concerning anything from debt repayment to buyout.
This information can be stored at the beginning or end of your business plan, so long as it doesn’t get neglected! Your appendix should include resumes from your startup’s team (from the aforementioned Organization and Management section), industry studies, trademark registrations, letters of incorporation, and partnership agreements, to name just a few documents.
As time progresses, you’ll likely make some edits to your overall business plan but if you start out concise and critical, you’ll find that the changes will be fairly minimal and allow you to reflect on how far your business has come from its humble beginnings.
Deborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Deborah received her Juris Doctor and Masters in Business Administration degrees from Pepperdine University in 1999. Follow her on Google+ and on Twitter @deborahsweeney and @mycorporation.