Should your business plan be a lean, mean startup machine or should you use a more traditional format? Depends on who you need to impress. Find out how to write the right plan for your business.
How To Write A Business Plan
Yes, you do need a business plan. Getting it all down on paper in a structured way helps you figure out your strategy, determine the steps you need to take to achieve your vision, attract investors, get grants and funding.
There’s no absolute template to follow, but in general you can choose from a traditional business plan format, or a more modern streamlined “startup” format.
In general, you’d choose a traditional format if you want a detailed, comprehensive plan, or plan to request financing from traditional sources like banks.
You can use the startup format if you’re working in a field that is open to new ways of communicating – such as technology or a creative business – or you expect to refine your business plan as you go, and just want to detail your company’s value proposition to potential new hires, or quickly communicate with potential investors who just want an overview prior to seeing a full business plan. If you happen to be an acknowledged expert in your field, the startup format plan may be all you need to convince investors.
Traditional Business Plan
There’s no standard format that you absolutely need to use, but typically you’ll want your plan to include much of what is outlined below, as and if it makes sense for your business:
Executive summary: a short but very compelling overview of your business. You’ll probably want to write this section last, so you can include the best points from the rest of your plan.
Description of your company: explain what you do, why you do it, and why your business is different from your competition.
Market analysis: detail the financial prospects of your industry (especially its growth potential), the overall market and your competitors. Remember, if you have no competitors, it may mean that you’ve come up with an amazing breakthrough – but it also may mean there is no niche for your product/service. You want to explain why and how you fill an unanswered need in an industry that is growing.
Management: Your background and experience, and – if you have a leadership team – their qualifications. Focus on the achievements needed to build your company’s success, addressing the risks that investors might see – e.g.: “I wonder how all these engineers will promote this product? Oh, ok, I see they have a digital marketing expert on their team.”
Service or product: details about what you offer.
Marketing and sales: explain how you will promote your product/service, and how you handle sales.
Financial projections: available working capital, balance sheets, your projected profit and loss statement, etc.
Funding request: if you are looking for investors or a loan, detail how much money you’ll need over the next 3 to 5 years, how you’ll use the funds and what profits you can reasonably anticipate gaining from these actions. Your anticipated profits should be higher than the amount you wish to access/borrow.
Appendix: here you can include résumés, business permits, supplier contracts, licensing agreements and other substantiating documents.
Startup/Lean business plan
With this type of business plan, you focus on describing your company’s value proposition, and provide an overview and facts about your company’s, customers, and finances. Many people use the Business Model Canvas, developed by Alex Osterwalder, as their model for this sort of plan.
Information you’ll want to include:
Value proposition: what unique value does your company offer? What are you doing that no one else is doing? And why does it matter – what proven need does it address?
Competitive advantage/key activities: This is where you can get specific about the things you mentioned as key advantages. Do you have an amazing, unique algorithm that will revolutionize your industry? A proven process to deliver goods by drones? A better way to share? Detail it here.
Customers: who are your customers, and how do they engage with your business? Detail your target markets and channels - how your business will interact with your customers.
Cost structure: does your service or product maximize value or reduce costs for your customers? Define your strategy, and its associated costs.
Revenue streams: how exactly will your company make money? Detail it.
Key partnerships: what strategic partners will you rely on? Do you have agreements in place, or are you pursuing them?
Key resources: your staff, your intellectual property, your licensing agreements and partnerships – etc. Anything that you have that adds value for your customers and gives you a significant advantage over your competition.
Make it personal
Tailor your plan to your needs, and how you intend to use it. Your plan will be different if your business is self-funding or you obtain funding from non-traditional sources. In these cases, you can focus on planning your success and not so much on having to convince other people that you can turn a profit/pay back a loan. If you want to attract investors or apply for a bank loan, you need to focus on financials and making the case for the profit potential and trustworthiness of your business.
Be aware though that no matter how wonderful your business plan is, you’ll probably still struggle to access working capital from banks. The application process is complex and demanding, requirements are strict, and banks aren’t thrilled about extending loans to small businesses. You may not have the time, know-how, patience or credit history to qualify for the same financing options that were designed to meet the needs of big businesses.
One Park Financial works to help owners of small and mid-sized businesses access the working capital that they need. Our process is simple and straightforward, and we’ve helped many small businesses who have been turned down by banks to access funding. Visit oneparkfinancial.com or call 855.218.8819 to discover the options that make sense for you and your business.