Whether you are at the business idea stage or the launch stage, you need a business plan. The process of writing the business plan forces you to take a step back to ensure you are looking at the big picture. After zooming out, a business plan also helps you to then zoom in to formulate the details for your business launch. Going through the key questions of a business plan helps you to uncover all of the potential pitfalls and opportunities. It takes time to write a thorough business plan, but the benefits are invaluable. And it will save you time and money in the long run. Let’s go through what it means to write a business plan for your idea, why you need one, and what you can use it for.
What is a Business Plan?
A business plan is a formal document that sets forth the objectives for your business and how you will achieve them. It typically includes a section that describes WHAT you are offering and what makes it unique, WHO you will offer it to, WHY they will need it, and HOW you will get it to them. It will also include sections on the category and competition, your marketing strategy, the pricing and financial opportunity, and a timeline for launch and achieving objectives. There can be additional sections and specific formats, but we will talk more about that later.
When Should You Write a Business Plan?
Right away! The beauty of a business plan is that you can use it as a guide for researching your idea and thinking through all of the obstacles and opportunities. It provides you with an outline for asking critical questions to ensure there is an opportunity and if so, how you can best meet that opportunity.
There are many business owners that started their businesses without formal business plans. Consultants, freelancers, small stores or restaurants, these are some of the types of businesses that often get started without a formal plan. However, whether you are launching a product that you hope to sell globally needing investors or a small local service business, a business plan benefits every type of business.
A business plan can also help refocus and grow existing businesses.
Let’s look at an example of a Marketing Consultant that wants to start working for local businesses. Without a business plan, this Marketing Consultant could end up taking on 10 small business customers without any consistency in the type of deliverables, being completely overworked, and charging these clients much less than the potential. However, with a business plan, this Marketing Consultant could have identified the type of client, consistent deliverables that will be offered to all, and the price for those deliverables to make it worth the time. This could look like this: Marketing consulting for small food business customers that are looking for branding, customer targeting, and marketing strategy deliverables for xx hours of work at $xx.
Why do you Need One?
There are instances where you need a formal business plan, such as pitching to investors. However, the biggest benefits are for you as the business owner, to guide and focus your business. Here are some of the benefits you gain from taking the time to write a business plan.
- Requires you to perform a market analysis to better understand the industry/category, macro and micro trends, competitive environment, and gaps and opportunities for your business
- Helps to segment your potential customer base and narrow your customer target
- Prompts you to determine your business point of difference, i.e. what makes your offering different or better than the other options available
- Gives you the opportunity to formulate a launch plan
- Directs your focus in marketing activities
- If your business has already launched, it can also help redirect you post-launch
What Format is Best?
There are many different formats for a business plan. The key is to find the one feels like the best fit for your needs. You can always start off broad and get more detailed and narrow as needed. There are templates available through many different websites, for example the SBA.gov. Some templates are slides and some are in documents. Think about what is easier for you to both write in and use for your business once written. If you plan to present the document to different constituents, then a Powerpoint or Google Slides presentation may make most sense for you. If you are submitting a business plan proposal to potential investors, a Word document may be required.
In terms of the content, most templates will include some subset of following sections within the business plan.
- Executive Summary
- Business Overview and Description
- Market/Category/Industry Analysis
- Customer Target
- Brand positioning and point of difference
- Financial Projections
- Marketing Strategy
- Launch Plan
As you can see, no matter what format you use, if you cover each of these topics, you will have a very comprehensive overview of your business.
What Comes After You Write a Business Plan?
After you’ve written your business plan, it’s always a good idea to have someone review it and provide questions and feedback. This can help you to identify any gaps in the plan and then refine it as needed. Once you have a solid plan, start your business and follow the plan! You can always go back to refine and update it through the years. However, this is a guide, a roadmap for your business. It’s also a fantastic tool for sharing the vision with others within and outside of your team. Here are some of the next steps for your business.
- Start your business!
- Seek funding for your business. With a business plan in hand, you have the starting point for reaching out to potential investors. Read more about this
- Starting point for marketing strategy and plan
- Use to brief agencies for various marketing activities
- Execute a Customer Acquisition Strategy
- Build your Business Website
- Create your Online store
- Start to build your Team