Whether you’re just starting up a new business or you’re just starting to make bigger business moves, your business needs a legit plan.
So, with help from small business mentor Len Briskman, we’ve broken the whole process down into seven simple components every business plan needs, plus a step-by-step guide to make sure it’s written perfectly. You’ll have a legit business plan ready to go in no time. Go you.
What Is a Business Plan?
Basically, a business plan is a document that formally lays out your goals and serves as a roadmap that shows how you plan to achieve them. It includes your business model, budget, marketing plan and more.
No matter what stage of life your business is in, whether infancy or those awkward teen years, a clear business plan is absolutely vital.
Why Do I Need a Business Plan?
Business plans serve two purposes: as a way for you to strengthen your business, and as a way to show lenders what you’ll do with their money (and why you’re a good investment). They’re just as useful after you open your business as a way to keep you on track mission-wise and financially.
Putting together a business plan is a chance for you to catch flaws in your business idea before you spend a dime. Discovering an intimidating competitor, high start-up cost or potential employee shortage can all happen while you write a business plan. You can also find exciting new opportunities for profit.
Banks aren’t looking for fancy formatting or flashy buzzwords in your business plan: They’re looking for evidence that you have a clear idea of what you’re doing, how much money you’ll need, and a realistic idea of how much you can earn.
Banks treat business plans like hiring managers treat a resume: They’re looking for evidence that your business is a good candidate for a return on their investment.
The 7 Ingredients of a Killer Business Plan
Every business plan looks different and they don’t need shiny graphic design, but there are a few components that successful plans share:
- An executive summary: A one-paragraph summary of the entire business plan, right at the beginning.
- A description of your business model: Describes what you’re selling (e.g., products or services) and how you’re selling it.
- A description of your ideal customers: Describes the slice of the population you’re targeting (and no, you can’t just say “everyone”).
- An analysis of your competitors: Lists who’s already in your niche and how you’ll stand out from them.
- A marketing plan: Outlines how you plan to advertise your business and attract new customers.
- A budget: Usually broken down monthly for the first year and annually after that. Lists your expected expenses and income.
- A copy of your resume: Draws a direct connection between your experience and your business, showing the unique ways you’re equipped to succeed. If you have business partners, include theirs, too.
When it comes to the overall length of your business plan, you may come across a fair amount of disagreement in your research. Some may say 10-12 pages is enough, and others may say you’re shooting more for around 30. What you really need to aim for is to be thorough. You need to prove that you’ve thought of everything, you understand the market and know your strengths. And at the same time, don’t just drone on and on, just state your case, show examples and get out.
There are lots of other sections that can be added to a business plan, but the seven we just ran through are the most vital. Small business experts, mentors or local resource centers can help you figure out what else to include that may be important to what you’re trying to accomplish.
How to Write a Business Plan, Step by Step
Plagued by the blank page? Here’s how to turn that big idea into a gorgeous, fully fleshed-out business plan:
- Step 1—Brainstorm: Take time to write or record your ideas beforehand to get the juices flowing.
- Step 2—Outline: List all your sections in a document. (Use the 7 listed above as a guide if you’re stuck.) Use bullet points or another note-taking technique to sketch out what you want to include in each.
- Step 3—Research: Use your outline to determine if there are any gaps in your knowledge. Do you know your competitors? Customers? Realistic rents or salaries in your area? Conversations, the Internet, and even an old-fashioned trip to the library all count as research.
- Step 4—Start filling in the blanks: Write a few solid paragraphs in each section, starting to use complete sentences. Don’t worry about grammar or spelling just yet. Just get it all on the page.
- Step 5—Research again: What gaps can you see now? Are you seeing holes in your plan or opportunities for bigger profits? Hit the books again to tweak your plan.
- Step 6—Edit once for content: Fix any research errors you made the first time and expand or shrink your sections based on any new ideas or pitfalls you’ve discovered. It’s especially helpful to ask friends, family and mentors for help with this.
- Step 7—Edit twice for grammar: Now fix the small stuff. Double-check your spelling, grammar and math. Make sure your paragraphs are the correct length (no more than half a page) and that your font is easy to read.
- Step 8—Read it out loud: Now that you should feel confident about the content, give your business plan a read-through out loud. Just hearing it all read will usually uncover any remaining errors or sentences that just don’t seem to work.
- Step 9—Keep editing! (But save a copy of the original): Business plans are living documents that are meant to grow with your business. Revisiting your business plan every month or so will keep you focused and help you stay on budget. It’s fun to track how far you’ve come by comparing the first draft of your business plan and the newest one.
There you have it, a complete business plan, ready for whatever your next step may be. Hopefully we were able to help guide you through all the important stuff to touch on. Just remember, your business plan is like a resume to help you get what you want, so state your case, be honest, and everything will go great.