Many people struggle with writing a business plan. But it isn’t a difficult thing to write. While business plans can get very complex, if you are just starting your company, yours can be quite simple because there just isn’t much going on in your business. In this article, we’ll explain how to write a business plan and make it feel simple. Many people think that using complex language will make their business plan sound more sophisticated. The opposite is false. You should use clear and simple language, and aim to be concise. Above all else, aim for clarity, simplicity and brevity. If the reader gets confused, they will stop reading and think that you can’t express business concepts clearly.
The executive summary of a long-form business plan is just a paragraph or two meant to get the reader excited about reading further, and should give the reader a sense of what your business is all about. Your executive summary should contain your company’s mission statement and long-term vision. Some people get confused with the term executive summary because it can mean two things. Executive summary can mean just the introduction to your document, but very brief business plans are sometimes simply called executive summaries.
Your Product Or Service
In this section you should explain your company’s product or service. If it isn’t immediately obvious, you should also explain how the product or service helps people, and mention for whom it is intended. You will have more room to elaborate on your target market when you get to that section. In the product or service section, you must make it clear to the reader what it is that your company will be selling.
Current Business Stage & Traction
Mention where you currently are in the process of starting and growing your business. Are you just planning your company, or have you started? If you already started, what kind of progress have you achieved so far? Do you have clients? How many? Do you have revenue or profit? How much revenue or profit do you have? Traction, revenue and profits will excite almost any reader.
You should be able to intelligently discuss your target market. Don’t say that your target market is everyone. That is a classic mistake new business owners make. You should explain the approximate profile (sometimes referred to as the avatar) of a person in your target market, and note their demographics and psychographics.
Demographics are things like age, sex, marital status, income and education levels, etc. Psychographics are things like interests, likes, motivations, emotional needs, things that drive a person, and hobbies. Here is an article with more on how to identify your target market.
After you demonstrate a deep understanding of your target customer, you should also demonstrate a solid understanding of your target market size. There are a couple of target markets and corresponding sizes.
The market size is very important in evaluating whether the current incarnation of your business idea will be able to help you meet your financial goals for your business. If a target market is small, it may be difficult to generate sales and strong revenue. If the target market is very large at billions of dollars per year, it may be too competitive with very strong incumbents, and you may also find it difficult get customers because those bigger incumbents will outcompete you.
The marketing plan is an extremely important part of your business plan. This is one of the first sections people often search for, no matter what its order is in your business plan. This section is one of the best ways to determine whether the entrepreneur is savvy or a beginner.
Most beginners and first-time entrepreneurs have a marketing plan that goes something like “we will promote our company on Facebook, Twitter, by handing out business cards and flyers.” If that sounds close to what you have in mind for your marketing plan, you may want to take a deeper look at your marketing plan because if your marketing plan is not up to par, it won’t be effective to get clients, and your business will have a very difficult time growing or sustaining itself.
In this section of the business plan you must show a deep understanding of your competitive landscape. You should list two to four of your main competitors and explain how your product and overall strategy is different from them. The key word here is different. Many entrepreneurs want to say that they are better than their competitors, but when you start your business, you are not better than anyone since all the competitors are already established. It is more correct to note how you are different, so don’t make the mistake of saying that you are better.
This is probably the most complicated section of the business plan, and one that so many entrepreneurs dread. The financials should have your pro forma financial projections (future financial projections), your unit economics, and your cash flow statement.
You should note any previous funding that your business has. If you are looking for investors (as many small business owners are) check out this article on attracting an investor with your business plan.
The team section of your business plan should note the top level management team and any advisors your business has. Each individual noted in this section should also have a bio and their brief work history that is relevant for their position in this particular business.
What You Are Looking For
If you are handing your business plan to someone, there must be a reason for it. If you are raising money, looking for partners, or anything else, note it towards the end of the document. You can add or remove this section depending on whom you are planning to give your business proposal.
How Long The Business Plan Should Be
There is a big debate of how long a business plan should be. If you are a new start-up company, there is likely not very much you need to say. Additionally, if you give this document to savvy business people or investors, they can probably fill in the banks on their own. So you may want to opt for brevity. Only write a very long business plan if someone or some organization specifically asked for that.
Additionally, if you are wondering when you should write a business plan, I recommend writing one in two instances. Write such a document when someone specifically asks you to give it to them, or when you just want to organize the ideas in your mind to help you plan your business better.
Business Plan Examples
This blog has a few examples of how to write business plans for different kinds of businesses. Here are examples for how to write a business plan for a gym, restaurant, trucking company, lawn care business, and a clothing line.
Extra Business Plan Resources And Tools
If you need extra resources or tools to help you, you have some to the right place. We have mobile apps, books, and online courses to help you. First, check out our entrepreneur apps for iOS and Android. Additionally, here is the business book which helps you go from business ideas to starting a business. Here is the business idea book on Amazon.
Lastly, here is a tutorial for how to write your own plan from SBA.gov.