If I Only Had A Business Plan
How Important is the Business Plan?
Needing a business plan and hot having one seems to be the bane of nearly every startup entrepreneur. If I only had a dollar for every time I’ve been told that “I want to start my business, but I don’t have a business plan, it would make a pretty sizable slush fund.
Why is a Business Plan so important and what makes it so challenging to write is the topic of this article.
The Business Plan is the primary document that articulates what your business does from the perspective of meeting market needs and identifying the specifics of how the business will generate revenue.
Having a well-written business plan allows potential funders to assess whether or not your business is a sound investment. Regardless of whether it is a family member, bank or other financial institution; in the end what they want to know is how you propose to pay back the money.
If you can demonstrate on paper that your chosen business venture will produce a profit and how that profit will be generated, then you have a business plan that is probably worth funding. Sounds easy right? In theory, it is.
A search on Google for the term ‘business plan’ yields over 526,000,000 results. It is a highly targeted term with loads of traffic. This broad search term covers everything from defining a business plan, sample business plans, business plan templates, business plan software and more.
According to the SBA (Small Business Administration), “a business plan is an essential roadmap for business success. This living document generally projects 3-5 years ahead and outlines the route a company intends to take to grow revenues.”
Entrepreneur.com puts it this way, “For any entrepreneur planning to start a business, writing a business plan is a helpful way to clarify what service or products the company provides, as well as your business goals and how to reach them. Business plans are considered a mandatory step for entrepreneurs seeking funding from venture capitalists or banks.”
Business plans vary in length — anywhere from 20 to 50 pages — but typically cover the same topics, such as Cover Page (essential contact information); Executive Summary (what your business does and what market need it solves); Company Overview (profile of company and successes); Industry Analysis (details about the market); Customer Analysis (who are the customers); Competitive Analysis (identify key competitors); Marketing Plan (your brand and how do you plan on getting it in front of customers); Operations Plan (daily and yearly operational processes for success); Management Team (identify key company personnel); and Financial Plans (revenue projections for three to five years).
Source: Business Plans
Despite the massive amount of information available about business plans, a huge percentage of entrepreneurs struggle when it comes to actually writing the business plan.
It can be a daunting task, especially when you think about writing 20-50 pages of narrative. This challenge is even greater if writing is not your thing.
Business Plan Templates
Some folks turn to Business Plan Templates. Unfortunately, this boiler-plate approach tends to result in a business plan that is a hodge-podge of copy and paste elements that lack the cohesiveness of a well thought out and well-written narrative.
Templates are designed more for structure than substance. As iterated above, the components of a business plan that make up its structure include:
- Executive Summary
- Company Overview
- Industry Analysis
- Customer Analysis
- Competitive Analysis
- Marketing Plan
- Operations Plan
- Management Team
- Financial Plans
Each element, while distinct in scope, must relate to each of the other elements to tell the complete story of your business.
A mistake that many people make is to copy and paste generic information based on their niche as opposed to performing their own research (primary or secondary). The end result is a document that has no actual bearing on the actual business.
This typically leads to problems in the long run especially if the entrepreneur must make a presentation based on their business plan. Often, they are unable to answer key questions related to the individual elements of the plan.
So how do you write a business plan?
Read, The Business Plan – Start By Asking The Right Questions to get started.