There’s a lot that goes into starting a business. One of the first and most crucial steps is the business plan. It is the place where you finally document all those thoughts that have been swirling around in your head.
It is the roadmap for your company. It helps you focus your thoughts, guides you into the future and will get you back on track when you get lost. Without a well-crafted, documented business plan, banks and lenders aren’t likely to consider your loan. Investors probably won’t give you a chance.
When you finally write out the plan for your company, it has immense benefits for founders too. For instance, the business plan can highlight key holes or challenges in your concept. You’ll be better equipped to handle the bumps that you come across if you prepared in the beginning, anticipated them and formulated actions.
The beginning of your plan should answer perhaps the most obvious question: What is your company or idea? In your description, you need to identify your industry, your business model and how you will be profitable or successful.
Don’t get too hung up on the details in this section. Remember, that this is meant to be the introduction or a brief overview. The rest of your business plan should go into further detail on the points that you summarize in the beginning. The main purpose of this section is to help your reader understand your organization more clearly.
Who are your founders or founding team? What background or expertise do they have in the industry? The executive summary helps to organize your leadership structure, but also shows investors, lenders and other constituents that you have the experience and credibility to build your startup.
Mission and Objectives
One of the most important sections of any plan is your mission and your objectives. What are your short-term and long-term goals? Why are you starting this business? Why will it be valuable to employees, customers, the industry and other constituents? You should outline the problem that you are trying to solve, and more importantly, why you are the one to do it.
The why is thought to be even more important than the how or what. Researcher and leadership expert, Simon Sinek says, “People don’t buy what you do; people buy why you do it.”
People have a stronger commitment to brands and products that resonate with their own beliefs, so don’t skimp on your mission, values and objectives.
Identify Your Market
Identifying your target market can be a challenge, but it is critical to success. This is where you outline your target audiences, identify competition and determine how much need or opportunity there is in your area of expertise.
Planning this part will help you form a clearer picture of what your startup is or will be up against in order to be successful. Once you have identified the challenges and the opportunities, you can create more effective strategies to overcome and take advantage of those.
For instance, if you sell organic ingredients and recipes to make your own vegan baby food, then your target audience may be Millennial-aged, vegan parents that are expecting or have just had a child. The next question is: How are you going to connect with them? You’ll need to outline your marketing and sales strategy and tactics. The vegan baby food company may want to partner with health food stores, food and mom bloggers as part of their strategy.
Perhaps the least fun parts to create is the financial section. How will you finance your company? To start, you need some capital or funding source. Will you bootstrap, get loans or look to venture capital?
Plus, you must include an accurate estimate of the amount of capital you need. What are your expenses? For instance, if you are working from an office building, include the leasing expense. If you expect to hire developers, writers and other employees, allocate a budget.
As you invest time and money into building your company, there is usually the thought of: How am I going to make money or be profitable? Laying out all your expenses may give you a realistic “slap in the face”. You’ll decide how much revenue you’ll need to be considered financially successful and if you can realistically reach those revenue goals.
For most small business owners, a 15 to 20 page plan is sufficient. It is better to start with a lot of pages that you can edit down than fewer and risk omitting critical information. Once you have a full version, you may create abridged versions that highlight the main points when presenting it to others. But, have the complete version on hand to reference.
Remember, your business plan is a living document. As your startup grows and changes, you need to revisit it and change it so that it still reflects your company, mission and goals.
Business plans are the roadmap for your startup’s future, so you’re not going to complete it one day. It’s going to take time to develop, and you’ll want a trusted, second or even third or fourth pair of eyes to review it. Find more on planning, marketing and growing your business at StartUP Labs.