If you’ve ever had to create a business plan before, you likely know that it sounds much easier in theory than it does when you actually get down to doing it. Heck, all you have to do is figure out how much money you need in order to get started, how much the business’s operating costs will be for the next few years, and talk about the boat-loads of money you’re going to make both you, and your investors for the next twenty years, right?
Let us dispel any misconceptions you might have by answering that last question with a resounding NO!
If you don’t have a business plan, investors won’t waste their time listening to your pitch, banks won’t consider issuing you credit, and your business will be doomed from the start – along with the other 90+ percent of the businesses that start (and end) in the world every day.
The plain and simple reality is that your business plan will be one of the hardest tasks you’ll have to complete when starting a business. You need to clearly define your product, develop a mission statement, figure out (near) exact projections for a financial plan (including overhead costs), complete due-diligence on your industry and competition, develop a believable operation and marketing strategy – and that’s just a basic summary.
Business plans can take quite a while to complete, especially if you’re alone or only have one or two partners. Below you’ll find a fairly brief, yet clear-cut, section-by-section “plan” to develop a business plan for your company.
1. Executive Summary
The executive summary portion of a business plan is crucial. It should end up being a couple of pages long which detail: your business concept, ownership hierarchy, management team, product or service, target demographics, marketing plan, perceived competitive advantage, and financial projections (including startup, production, overhead, and profit). This is just a summary and should be completed after the other six steps of this business plan “plan”.
2. Overview of the Business
Detail the business’s history (if there is one), your vision for the future of the company, key goals you have, and who owns what and at what percentage.
3. Products/Services Offered
Prepare a section about the products/services offered by your company and the advantages you feel you have over the competition. If selling a production product, detail where and how it’s made.
4. Industry Summary
An industry summary tells a potential investor the key facts about the industry you’re working in: growth factors, demand, how the product finds its way to the customer, and any sub-niches you can target.
5. Marketing Plan
This is a huge factor to consider. You can have a great product, but if you don’t know how you’re going to attract initial customers and continually boost new sales, investors will laugh you out of their offices. Detail any conventional plans you’ll implement, along with any unorthodox tactics you will explore and utilize.
6. Operations Details
Discuss the day-to-day operations of the company: your team(s), various departments (if applicable), location(s), and any other details that relate to the product or service’s operational needs.
7. Projected Financials
This is going to be the most important section of your business plan – the “make or break” section that decides whether you get funding and/or partners or not. Include a minimum of 3 years of projected income statements, balance sheets, (monthly) cash-flow statements, (yearly) cash-flow statements – and make sure you can back up everything you project here, because you’ll be asked!
What’s More?
Here’s a good, descriptive primer on how to create a business plan: