Proper business planning is pivotal to your success as a business owner. According to the Small Business Administration (SBA), 20% of new businesses fail within the first year and half of all businesses fail within five years. There are many reasons why businesses fail, but two reasons, in particular, are often the culprit; lack of funding or working capital and ineffective business planning. And the truth is, these two reasons often depend on one another.
Business plans are comprehensive documents that outline the company, its goals, and its plans for revenue growth. While business plans help business owners summarize their mission and markets, business plans are primarily used to help secure funding from lending institutions (like banks) and investors. Without a proper, well-written business plan, securing much-needed funding to help a business grow is virtually impossible.
Yet many entrepreneurs skip or rush this step for a variety of reasons. Mainly, they don’t believe it’s necessary during the early stages and consider business plan development more of a formality than a necessity. However, many investors and banks are able to make first impressions based on business plans and use these documents to rationalize their decision to fund or not fund you.
Getting started with a business plan can be intimidating, but with the right steps, you can have your business plan ready in no time. Here’s how you can create a business plan for your startup:
Analyze Existing Business Plans
There are dozens of sample business plans available on the Web and you should analyze several of them before you take the next steps. Before you begin starting a plan of your own, take a notebook and jot down what you see. What do different business plan samples have in common? What stands out to you? How do a business plan samples in the same industry differentiate from one another and what makes one better than the other?
By assessing existing business plans with a critical mind, you’re giving yourself a crash course in business plan writing and creation. Armed with insight into what a real business plan looks like, you’ll feel more confident as you move towards writing a business plan of your own.
While studying different business plan examples, put yourself in the shoes of an investor. Would you invest in this company? Why or why not?
Download Business Plan Template(s)
Just like business plan examples, there are many business plan templates to choose from. Business plan templates offer a great starting point for entrepreneurs who lack experience in business plan development. Once you have a template, you’ve already gotten one of the most difficult elements out of the way and are equipped with proper building blocks.
Most business plan templates follow the format and structure that investors are accustomed to. A standard business plan includes the following sections:
- Executive summary
- Company analysis
- Industry or market analysis
- Analysis of customers
- Competitive analysis
- Marketing plan
- Operations strategy
- Management team
- Financial plan
Lastly, try to find business plan templates that cater to your industry. For example, if you’re opening a local coffee shop, you should conduct a Google search for coffee shop business plans. You can use the included text as inspiration and modify it to align with your company. This helps streamline the writing process; essentially, you’re simply swapping out text from Sample Coffee Shop with text about your own coffee shop.
For many people, writing is the most intimidating part of creating a business plan. However, you don’t have to be a writer to do well in this area. Investors aren’t looking for eloquently written copy; they want simple, concise, factual content. Unnecessary wording and overly descriptive verbiage are no good in a business plan.
When you first start writing, you may come across areas that you don’t feel confident filling out yet. Perhaps because you haven’t done enough market research and are still learning about your target market. Or perhaps you haven’t fleshed out your competitive advantages or collected data from your content strategy.
It’s okay to start writing before you have all your ducks in a row. Write what you can and highlight areas of the plan that require separate tasks to be completed before you can finish writing that particular section.
You can also outsource the writing portion of your business plan to a business plan writer. Keep in mind that if you go this route, there’s still plenty of work for you to do, as you’ll need to be hands-on with the project and work with your writer on a regular basis to communicate the goals of the business. You’ll also need to provide your writer with important company information, including any necessary documents and data to support the plan.
Use Project Management Software
Because writing a business plan is such an important project, consider using a project management platform to break your progress into bite-sized, manageable goals. For instance, in the below example, the task for “Write Market Analysis” would have several dependencies/subtasks.
Project management software is also a great way to collaborate with other team members (if applicable) who are collaborating with you on its development. For example, if you have a Chief Marketing Officer, you could assign them any marketing-related tasks and keep track of progress.
This is especially useful if you want to set deadlines and hold you and your team accountable for them, particularly if you need to show your business plan to an investor or bank by a certain date.
Write Your Executive Summary Last
Your executive summary is the first section of your business plan, but it should be written last because it summarizes everything you’ve put into the remaining sections. Furthermore, some investors consider this section to be the most important part of a business plan; as the first page, it sets the tone for what’s to come and encourages the recipient to continue reading. Your executive summary should:
- Have a captivating introduction paragraph
- Contain a short statement that addresses your proposal
- Provide a quick summary of the other sections in your business plan
- Outline your solution
Here’s a section of an executive summary for fictional kitchen tech company Culina. After Culina describes the company, they end the executive summary by stating the ask and providing a quick overview of the why.
Writing a business plan involves multiple steps and moving parts, but it’s a necessary part of growing your startup company. Much more than a means for funding, business plans can also help you as an entrepreneur by encouraging you to think critically about your business and its trajectory. After you’ve written your business plan, chances are you’ll reference it time and time again (and should update it annually). Ultimately, your business plan acts as the cornerstone of your company.