Guide: Writing an Excellent Business Plan
By Sarah Davis
The business plan is a document that outlines what your business is about and what it intends to achieve. However, few business owners understand how to really write a good business plan. They only think about writing a business plan when the time has come to acquire funding for their business.
And next, they write the business plans with the sole aim of getting money from banks or potential investors. This is the wrong way to go about things. Even without having funding in mind, it’s best to have a cohesive business plan written down, for your own benefit.
Below, we’ll show you how to write an accurate, detailed, concise, and comprehensive business plan that will give you the best chance of funding and assist you in understanding your own business.
Why Write a Business Plan?
The most commonly cited reason to write a business plan is to acquire funding. Whether you want to get an SBA(7)(a) or look towards venture capitalists, you’ll need a solid business plan.
The business plan is an outline of what your business is about, what your value proposition is, how you intend to market your business, the target demographic, and how you intend to spend the acquired funds.
In short, the business plan is a detailed representation of what your business is about, containing all the possible details that a potential investor would like to hear.
However, there is another reason why you’ll want to write a business plan. A business plan is essentially a crystallization of your business on paper. It will help you to understand your business. And it’s always useful to clearly define your goals and expectations.
The business plan helps you to do this, in the most efficient possible way. You are really hitting two birds with one stone. The business plan will help you to run your business, and could also help you to acquire funding. It could be said that there are four major reasons why you should write a business plan:
Stages of the Business Plan
There are many business plan variants that depend on your industry, business, size, preferences, and numerous other factors. However, the Business Plan is often described as going through 3 primary stages. These stages are:
Even before engaging in a full-blown business plan, it’s best to have a mini-plan to refer to. This can be used when hiring employees or working with partners/contractors, to give them an idea where the business is headed.
The 6 Components of a Business Plan Outline
While there is a lot of room for customization (and a lot of opinion on the matter), the business plan can be loosely broken down into 6 components:
These components are outlined in more detail below. Some steps have multiple subcategories (for example, you can break up step 5 into your current financial situation, projected financial situation in the future, and include a funding request).
Component #1 – Executive SummaryThe executive summary is covered in more detail below in the 12 step outline. It’s the most important part of the business plan. It will contain:
The Executive Summary is actually the easiest part of the entire process. It’s only 1- 2 pages long and should be a neat outline of what you intend to achieve. But it’s very important to get this part correct. It will set the tone for the rest of the plan. So it has to read well and smoothly.
When writing the Executive Summary, take note that all businesses exist to solve customer problems. What is the problem, how are you solving it, and why are you better than competitors? If you answer these questions succinctly, then you are highly likely to acquire funding. Don’t hype your position – just state it clearly.
A great way to think about an Executive Summary is that it is a written elevator pitch. The Executive Summary is the perfect tool for you to refine your business concept. It allows you to write down a precise and exact concept about what your business stands for. If you have zero intention of acquiring funding from clients, it’s still a great idea to write out an Executive Summary.
Additional benefits of a concise Executive Summary are that it will help you to determine your priorities and will help the rest of the business plan run smoothly. It is often the case that if you start strongly, you will finish strongly.
Component #2 – OpportunityThe Opportunity section details where the customer base is under-served. This is a perfect place to include statistics indicating your target market and how it is expanding. Know your target market inside and out. What their spending habits are, what they are looking for, what methods of payment they prefer, how you can enhance their lifestyles, etc.
The more intimately you understand your target market, the better you can give them what they want. The more sophisticated investors will need to know that you have done extensive research on your target market.
Before you embark on any campaign you must do research to see what is viable and what isn’t. The best way to start is with a question and answer session. Here are some typical questions you could ask before starting out:
Asking these questions is critical to keep you on point. You can always refine your products and services later on, but you will still need to remain in the ballpark in terms of what the customers are looking for.
A key point here is that you need to distinguish yourself from competitors. Even in tough markets, you can do well if you offer a particular niche that is distinct from others. You will be the same, but different, though that is something of a contradiction in terms.
Investors will want to see that you are justified in asking for money and that you have given the issue a great deal of thought. Don’t get discouraged if you are in a tough and declining market. As long as you have a practical way of attracting a target market and the idea makes sense, then your business plan is solid.
A potential area of contention is that of creating a new market versus attracting an existing market. It’s entirely possible to create a market with new products. For example, nobody calls for new smartphones until they are released with new applications and features. When they find out about these new features, they ‘have’ to have them.
But as a general rule of thumb, you do need to give customers what they are already looking for. Creating a new market demand is for more ambitious types, and investors are typically very skeptical of these endeavors. Even the very best products may not sell if there is no market for them. It’s best to dig, do some research, and be very exact in terms of your target market and how you are resolving their problem.
The opportunity section will also include what your competitors are doing and how you can do it better. Differentiate yourself from your competitors as much as possible.
Component #3 – ExecutionExecution is the sales and marketing side of a business plan. You can invent the world’s best application, and nobody will download it if you don’t place it in front of them.
This is where many businesses can fall short. You have to sell your products and services hard and aggressively. ’Build it and they will come’ does not work anymore. ‘Build it, market it aggressively, and they will come’ is much more accurate.
Marketing is tricky. The purpose of marketing is to generate a return, yet it can be hard to quantify what kinds of marketing cause the actual results. If you have a sign outside your shop, how do you track and record who came in because of the sign, and was going to come in anyway?
This issue is not only prevalent in the brick and mortar markets. If anything, it’s even more difficult online, despite all of the metrics and analytics. The online industry is rife with digital advertising fraud and fake bots.
Marketing has to be targeted and focused. It needs to have a strong emphasis on bringing in a return in the most direct manner possible. It’s easy to blow an entire sales and marketing budget while building ‘brand awareness’. But new business owners really need to focus on making as many solid sales as they can. Brand awareness can be built from having an excellent customer service policy and through other methods later on.
Do some research on the very best marketing plan you can find. What marketing strategy will bring you the best return on investment? This is where your research into your target market will be invaluable. What age are they? What kind of devices do they use? What are their favorite social media platforms? What are they looking for? Do they prefer text or video content?
Your marketing strategy must stem from your research into your ideal customer segment. For this, you should have an ‘ideal customer’. More detail on this is given below, but by using the proxy of the ideal customer, you can demonstrate what they are looking for and how your marketing model will attract them into your business. Here are some questions to ask when determining your sales and marketing model:
You also need to give consideration to the pricing of your products and services. For this, you need to clarify your brand. Typically, this is either a low-cost provider or a higher quality (and higher-priced) service.
Depending on your target market, your execution is going to be vastly different. You might be targeting white, rich males in New York aged between 55 – 70, selling luxury cars. This demographic might only respond well to letters and phone calls from skilled salespeople. On the other hand, you might be selling digital products to millennials. You can do this with an online advertising campaign with funnels and landing pages.
For a local coffee shop, you would need to post signs and pamphlets around the area. You also need to establish social proofs on sites such as Yelp and Tripadvisor. All of these Execution models will require completely different budgets and use unique strategies to attract customers. Do your research and find out the best marketing strategy possible.
This section is often the hardest but most financially rewarding part of starting a new business. If you get it right, you will be a success. And if you don’t your business will crash, despite doing everything else correctly.
Component #4 – Management InfrastructurePotential investors and partners are going to want to know who they are dealing with. The more experience you can demonstrate, the better. For this section, the most ideal way to present the information is through an organizational flow chart. You might have a person responsible for sales, another for customer relations, another branding, and marketing, etc.
The flow chart makes it easier to outline who is in charge of what. Many business owners will be starting off on their own or with one or two other people. In this instance, you will need to tell your story and how you got your idea. You need to convince the audience that you know what you are talking about and that you have the requisite knowledge.
Never forget that smart investors invest more in people than they do in the business itself. They want to know that you have what it takes to make it work, even if something goes wrong (which it most often does). Flexibility and adaptability are among the most important traits when it comes to business management.
But they also want to know that you are passionate about your business, which implies more than just generating revenue. Somebody who is passionate about their business will spend more time on it and have increased success. Nobody can succeed at a job they hate. With this in mind, a personal backstory about why you are passionate about the industry will work wonders.
Component #5 – Financial StatusTypically, many investors will want to see that you have made progress in the past two years. This shows a trend of improvement. It is not absolutely necessary to make a profit. If you made a loss of $30,000 in year one, broke even in year two, and made a $15,000 profit in year three, then it shows that you can easily make more profit as the business grows. The first years in business are the most difficult, with the highest failure rates, and investors will account for this.
If you are just starting out on your business, then you will need the following items:
The last two items (balance sheet and cash flow statement) are less important for new businesses starting out, but are very important for established businesses with 2 or more years of experience.
It’s easy to find templates for the above financial documents such as balance sheets, cash flow statements, and income statements. There is little need to hire an accountant. These are statements that you need to understand.
Like all other aspects of the business plan, the more detail you can go into, the better. It shows you understand the business in its entirety. Don’t go into any kind of presentation unless you know the key numbers off by heart. You must know:
If your business is less than 4 years old, then you should really know these numbers. Nothing will turn off an investor more than a business owner who does not know profit/loss and target market metrics.
Along with the existing figures, you need to outline the funding requirements and exactly how the funds are to be dispensed, as well as what the profit would be from the sales. This is mostly just educated guesswork, but make it as realistic as you can.
Component #6 – AppendixThe appendix will contain all of the ‘back-up’ information to assist what you have already demonstrated in the main sections of the business plan document. The appendix could contain:
The Appendix could also contain references to the material contained in the core business plan. The business plan is supposed to be easy to read without overloading the audience. The appendix is where you include everything that is supplementary to what you have already said. It’s where most of the ‘boring’ stuff is found.
But you definitely need to have one for the people that really do wish to dig deeper into legal and business documents. These could easily be the investors that are willing to part with the cash.
Writing the Business Plan
We have broken down the business plan into 12 simple steps to make it as easy as possible to understand and execute.
Keep in mind that there is no ‘one size fits all’ approach to writing a business plan. There are many different ways you can present and format your business plan. Generally, all business plans will be broken down into executive summary, opportunity, execution, management, financial status, and appendix.
Every business plan must have these components. For instance, you can’t apply for funding without supplying financial documents or defining your market. But there are many ways that these could be included in chapters and variations in terms of how the concepts are presented. The following are 12 steps that you need to consider when writing the plan.
Step #1 – Executive SummaryThe Executive Summary is arguably the most important part of the business plan. It’s only a 1-2 page overview, but you must ensure that you have accurately captured what your business intends to do. Nothing will irritate investors more than not being clear about what it is that you actually do.
There is a significant amount of scientific research to back up the fact that first impressions count. You really want to put the best foot forward. A good executive summary will always include (i) the current problem and (ii) how you intend to resolve that problem.
The difficulty with writing the executive summary is that you need to cover a lot of essential points, in a neat way, within 2 pages. These key points will include:
Don’t hype this section, and don’t overthink it. Just state as candidly as you can who you are, what you intend to do, and where you stand in relation to your competitors. More detail will follow in later sections, and there is no need to justify anything at this early stage.
Step #2 – Description of BusinessThis is what your business actually does. Many business plans will integrate Steps Two and Three (below). An example of a business description might be:
John runs a small coffee shop in Downtown Crossing, Boston, Massachusetts. The coffeeshop is located near metro transport and frequently attracts customers who are just off the train. It’s also located near a university and is a place where students often meet up to chat and discuss projects. The coffeeshop focuses on providing fresh bread and niche coffee. The alternative design of the shop and novel means of payment attracts people in the 18 – 25 age bracket predominantly.
Step #3 – Statement of ObjectiveThe statement of objective is what the business intends to do in the future. Following on from the example given above, you might intend to expand your business into a new area or provide more seating:
Johns CoffeeShop is nearly always busy, particularly in the hours between 7 AM – 11 AM. Business is being lost because most people want to stay for a minimum of 20 – 30 minutes, but seating is not available. The business model works, and is now seeking to a) expand the current shop with more seating b) open a new store using the same model that already attracts a host of customers.
Step #4 – Key Personnel & Management StructureInvestors and other people you work with are going to want to understand key personnel and who manages the business. There is an old (and highly accurate) saying that investors do not invest in ideas, they invest in people. You are selling them on your skills and the team as much as on the market potential of your products. They are investing in you first, the business second. Even the best of markets can turn sour if it is managed incorrectly by the wrong person.
A lot of small business owners can make a key mistake in failing to have clearly defined roles. Some may also have issues when it comes to delegating tasks to other people. The best way to do this is through an organization chart with pictures and credentials of who runs what department, and how roles are delegated. This is the easiest way to show people the management infrastructure.
Ideally, the more credentials and experience that the management has, the better. Think PH.Ds and successful entrepreneurs with a lot of business experience. It looks better to have a business with at least two people running it, as it tends to decrease risk (with lower rates of return).
Needless to say, the people running the company should have experience in their area. You need to outline who is responsible for what roles, but you don’t have to go into too much detail. The main thing is to demonstrate that there are skilled people assigned to particular roles within the company.
This section may also include your business legal entity type – LLC, Sole Proprietorship, corporation, etc. This is hugely important for people who are considering an investment. The legal entity type determines a lot of critical items, such as how investors get paid in the event of bankruptcy or liquidation.
Investors love to witness a personal story. It adds to the emotional appeal and also provides valuable information about the type of person who is in charge. And it also shows that the person knows about the industry. For example:
John has been an entrepreneur for 15 years. Eventually, John grew frustrated at the low quality of coffee served in cafes and the distinct lack of ambiance involved. John did extensive research into what makes for the best cup of coffee, and only drinks his own personal brand sourced from specific locations and packaged in a special way. He also hired an interior design expert to provide the optimum atmosphere in response to a survey he carried out on the student population.
Step #5 – Products & ServicesWhen it comes to products and services, simplicity is key. The whole idea of the business plan is that it is easy to explain and has a strong value proposition. Technical jargon about how the coffee is brewed is unnecessary. But stating that you purchase special, high-quality, local coffee beans and hire specialized baristas is a perfect description.
Johns Coffee only hires certified baristas to brew its specialty beans. The coffee and food can be ordered online for pickup using Square Payments, which is a popular means of payment among students and makes it easier for payroll, order processing, and inventory. The bread is served fresh and bought locally, given to a homeless shelter at the end of the day if it does not sell.
In this section, you would do well to give detail, but not jargon. There is a huge difference. Take the time to describe the beans, the brewing process, how customer order, the favorite kinds of coffee and dessert, how the baristas are trained, the quality of the customer service, etc. The above is only a short excerpt.
Step #6 – Sales and Marketing ProjectionThis step will include who your market is, who your competitors are, what products are selling the most, how you intend to expand, etc. You need to show that there is a viable business and that it can be exploited.
In many ways, the sales and marketing section is a continuation of the products and services section. But you want to break it down further and make it more ‘commercialized’. You might indicate:
The more specific and targeted the market, the better. Don’t bother mentioning the global demand for coffee or bread, as it is broad and pointless. Demonstrate why your business is uniquely positioned to attract a key demographic in your particular area.
Always keep in mind that the more clearly you define your target market, the easier it will be to cater to them. This clarity will show in your business plan and investors will be impressed with your clear vision and focus.
Step #7 – Financial AnalysisFor this step, you will need all of your financial statements at hand. You need to demonstrate the profit/loss of the business year on year. You need to demonstrate how much you spend and how much you gained each year, as well as what the money was spent on – wages, taxes, inventory, insurance, consultants, utilities, etc.
Typically, all of the financial documents will be attached in the appendix section. High-level overviews always come first, and specific details second. You will need to show how the capital will be used. The most important financial documents will include:
Step #8 – Financial Projection/Sales ForecastThe financial projection is where you intend to be financially in the future. Financial analysis and financial projection are often the most intimidating parts of writing a business plan. But it’s actually a lot easier than you would imagine.
The financial projection (sometimes called the sales forecast) is basically just what you expect to sell in the next 3 – 5 years. You don’t have to go into too much detail – you could just break it down into breakfast, lunch, and dinner (for a food/coffee outlet). Next to the estimated sales would be a cell for COGS. COGS only covers the direct cost to make the product and does not include rent, utilities, insurance, etc.
Don’t overthink this part. All investors understand that financial projections are simply…projections. Be realistic and base future earnings on your current earnings and expansion. Always use realistic estimates. Many aspiring entrepreneurs are too optimistic and set future earnings too high, which puts off potential investors.
Depending on your industry, you might need to have an exit strategy underneath this section. However, this is typically only for high growth startups that are looking to make a huge profit and then sell. This is a distinct niche that you will need to research, as there are many nuances to this kind of opportunity. And you really have to be on your game if you intend to play in the Venture Capital niche.
Step #9 – Funding RequestSteps 7, 8, and 9 are often interwoven within the business plan. You have demonstrated what you have earned previously and what your current financial situation is (Step 7). You have also demonstrated your financial projections for years to come (Step 8). And this is the perfect time to ask investors for cash.
You need to outline exactly where the funds will be allocated and how it will help the business grow and expand. If you have strong historical sales, good current financials, and a good (and realistic) sales forecast, then there is no reason you won’t get funding for your new business.
You will need to specify what the funds will be spent on over the next 5 years (hiring, marketing, sales, IT, etc). You will need to explain the terms and conditions of the investment, especially the estimated return, term length, and whether you are offering debt or equity. The investors will want to know what is in it for them and how they will be compensated for taking the risk. Be prepared for negotiation on these points from the more sophisticated investors.
Step #10 – AppendixThe Appendix should contain all additional information. It can include details of the company (where it is registered, licenses, who to contact, awards, certifications, etc). It should also contain financial statements for the investors that wish to investigate them in more detail.
The appendix can also include information with regard to the key players within the company, and some of their credentials. The appendix is basically all information that can help to bolster what you have already said. It’s the perfect place for references, statistics, and graphs.
You can also attach CVs and links to the people that work in your company to showcase their abilities.
Step #11 – Review, Edit & ProofreadA business plan is a big document. It needs to be read over a lot of times to omit any errors and to ensure it reads smoothly. It’s better to get a professional to look over this section. You can even get a couple of people to proofread it for a very low rate (hire a freelancer from a reputable platform).
The editing and reviewing part is a little more intricate. You might want to engage the services of a copywriter or business professional. This is especially true for the Executive Summary, which needs to be spot on.
Step #12 – Hire a High-Quality Graphic Illustrator (optional)A picture is worth a thousand words. And in recent years, we have been seeing more and more business plans incorporating infographics and illustrations. The business plan should not purely be made up of infographics and images. But it should have an exceptional cover page with the words ‘Business Plan’ alongside your business name. A few high-quality images within the plan can also add tremendous value to viewers.
Tips For Writing a Business Plan Outline
When you are actually writing the business plan, always keep the audience in mind. You might be a technical expert in a particular programming language. But your audience is not. You need to present the business to them in a language that they understand.
Many investors have no idea about programming languages and network infrastructures, or technical concepts in general. But they do understand financial figures and selling products to customers. You need to paint the picture for them, in a language that they understand.
With this in mind, it can be a good idea to get a professional business plan writer. If you articulate the concept to him/her, they will be able to put it across in the right way to appeal to investors.
Remember the essential purpose of the business plan while it is being written. It’s not to ‘fool’ anyone. It’s to be ruthlessly objective about where you are and what you intend to achieve. You need to convince yourself as much as investors. Make the business plan as good as it can be so you can get clear about your position.
Don’t write the plan just because it is ‘something to do’, so you can get funding. It should be an engaging process that you can learn from. It’s also worthwhile practicing public speaking and pitching your idea to family and friends. This will assist you in developing confidence and speaking about your business.
Key Points to Cover When Writing a Business Plan Outline
Remember, a business plan is just the best guess of a problem you intend to solve. All of the sophisticated investors and business people understand this. What they are really looking for is to know that you are reliable, organized, dependable and that you have given the plan serious consideration.
Nobody can tell the future, and many sales forecasts will fall flat on their faces. And most small businesses fail anyway, despite having very strong business plans and fundamentals. With this in mind, it’s important to make the business plan as realistic as you can. Avoid exaggerating in order to secure funds. The investors will know. They have seen it all before. It’s best to think of the business plan as something you do to learn about your personal thought processes.
The business plan is going to change with time. Needless to say, a lot can happen in the period between a 5-year forecast. It rarely, if ever, plays out as expected. So the business plan is typically good for about a year, and which time it needs to be revised. In sum, the business plan:
Who Are You Convincing?
When you are writing out the business plan, it’s important to understand who you are writing for. All good writing, whether it is grant writing, copywriting, or academic writing is completed with a very specific audience in mind. This is similar to how a business will sell products to a very specific audience. There are 5 primary audiences:
Traction, Metrics, and Milestones
Traction is the term used when you look back on the historical growth of your company. Practically all startups and new business models will make use of traction to outline who they are and where they came from.
Milestones are similar, but they are future-facing. A milestone is an intended goal to be reached at a future date. This really helps investors (and you) to see where the business is headed. For example, if you are making some kind of medical device, then you might have traction by creating the product and testing it. Future milestones would include getting government approval, creating them in bulk, and shipping them around the world.
In addition to metrics and milestones, a business plan will also incorporate key metrics. In fact, every solid business has to key an eye on core metrics. These help you to keep track of growth. It’s important to choose such metrics wisely, as many of them can be misleading.
For instance, an online site might focus on increasing traffic. While it might get more and more traffic, its conversion rate (often far more relevant) could go down, resulting in more traffic but not increased revenue. A coffee shop might pay attention to how many customers they have each day and what the average spend is per customer.
When metrics are focused on, they can be improved. Otherwise, they will stay the same or stagnate. Progress is not made until you turn your attention to something, and matrics are the perfect thing to focus on. Traction, metrics, and milestones are best displayed in a visual format. This is simple to do, with past traction on the left (along with date) and future milestones on the right (along with date).
Getting the Price Right
Getting the price right is as much of an art as it is a science. But keep in mind that the way you position your business will play a role in how your products are priced. Are you aiming for a niche and specialized solution, or to be lower priced than your competitors, providing value for money?
The price will also depend on how much you are paying your employees and how much you pay for inventory. There are some basic primary rules to follow when it comes to pricing, and 3 rules main formats of pricing strategy. Rules include:
Alongside pricing, you will want to consider areas including advertising, packaging, and promotions. A lot of this might be overkill for a standard business plan. But it’s always a good idea to think about these things and to have them at hand. Investors that are interested will tend to ask about them.
Cover them if you think they are relevant to your business plan. A lot depends on your unique industry and circumstances. For a manufacturing or logistics business, pricing is essential. But for a coffee business, there is little need to spend an exorbitant amount of time justifying the price of your coffee. There are bigger things to cover.
Business Plan Essential Rules
There are some definite rules that you need to follow when writing up a business plan or business plan outline. The first is no fluff. Investors will spot it instantly. If you exaggerate your market or its potential, you will get quizzed, and it will be very embarrassing if you are pitching to a live audience.
Business plans need to be concise and to the point. The people you are trying to convince view time as a precious commodity. They do not want to have to wade through a 40 – 100-page business plan to try and figure out what your enterprise is about. The business case has to be simple and to the point.
This is why the executive summary is so important, and why you may want to consider hiring a professional or giving it a serious level of thought. The executive summary is an overview that outlines your business proposition. The rest of the document goes into more detail and backs up the initial summary.
So the business plan has to flow neatly from one section to the other, steadily building a case for why you need the money and why it will be a success, based on your logical assumptions. A business plan longer than 30 pages is simply too unwieldy. It’s also a nightmare to manage. The business plan is something that should be revised every year and a core document that you will constantly rely on. So for your own sake, and for the sake of your investors, please keep it on-point, concise, and easy to understand.
Avoid technical jargon and know thy audience. Otherwise, the concepts won’t be conveyed effectively and you will lose them.
The Lean Business Plan
In recent years, a new concept has cropped up known as the ‘lean business plan’. This is used extensively by startups but is an important business plan outline for new owners who want to get familiar with the process. The Lean business plan has 9 components:
The lean business plan is primarily for technology orientated startups. But it could be a good idea to try it out so you can get a general idea. Remember, there is no set formula for a business plan. The main thing is that you convey the key elements to the investors, including what you do, the financial status, unique value proposition, and expected returns. How you do this is up to you.
Professional Tips for Amazing Business Plans
If you want to make the best business plan you can, there are a number of tips you can get from the pros. At Finimpact, we have seen hundreds of business plans (and helped to build many of them). Below are a few advanced tips with regard to making the most of the business plan.
Pro Tip #1 – Speak it OutIt’s great to have your business plan in writing. The more you work on it, the better your focus. The more your focus, the better your results. The level of your focus and clarity will play a huge component in your financial success. By simply having your plan in writing, you will have completed an essential element.
But now it’s time to add to this element with the art of public speaking. You should be able to orate your business plan to others in the smoothest and most confident manner possible. And you should be passionate and enthusiastic about your business when talking to others.
Public speaking can be a daunting process. But as a business owner, it is a critically important skill you need to have. And it’s where you can really sell yourself and make more cash. Believe in yourself, and others will believe in you.
Practice speaking about your business to family and friends first. But it’s better to speak to experienced business owners and financial advisors. They will have ‘harder’ questions for you to field. Relish the tough questions, as it will force you to think more clearly about your organization. Local events such as Toastmasters can help you to speak in public.
There are many indirect benefits to the art of public speaking, and it will help you to speak more clearly and confidently around many topics, not just your business enterprise.
Pro Tip #2 – Advanced Customer TargetingIt’s a golden rule of marketing. The more targeted and precise you are in identifying your target market, the better you can sell them products that help them. There are some key terms you need to know within this category.
A market segment is merely a segment of the market that you are targeting. If you sell coffee, then a market segment could be local university students (18 – 25) looking for specialty coffee. Market segments are often broken down into 3 categories:
These definitions are not particularly relevant for the coffee shop theme running through this article. But they are very relevant to an online storefront with a global, 24/7 audience. Once the market is identified, it’s a great idea to define an ‘ideal customer’.
This ideal customer is somebody who is looking specifically for the product that you are selling. This person will be assigned a gender, age, ethnic group, income level, etc. This makes it easier to demonstrate how you would market to such a person. Don’t overlook this. Make sure to create a representation of an ideal customer.
B2B enterprises and larger companies will also need to identify key relationships they have with specific businesses. This is because such companies will have bigger (and sometimes fewer) contracts which are ultra important.
Pro Tip #3 – Competition & Market AnalysisCompetitor analysis can often be done at the same time as customer targeting. Narrow down the primary competitors and what they offer. Don’t try to do the same as they are doing, just a little better. This will just cannibalize the market in a race to the bottom. Aim to differentiate your products and services so that the market can expand.
Look at their strengths and weaknesses. You can take a lot of ideas from them when you are starting off, in order to jumpstart your business. Competition analysis is usually part of the larger area of market analysis, which will help you to price your products intelligently.
Investors will want to see that you have given thought to potential hurdles down the line, such as technological advances, competition in the market, or new regulations. Ideally, you would like to identify :
Pro Tip #4 – Business Plans Are TemporaryA business plan is really only relevant for a short period of time. Most investors know that the financial projections are really just made-up estimates of what people hope to achieve in the future. Business plan or not, 80% of small businesses fail in their first year, according to the most official data.
They are mostly relevant for a year or so. What happens if a supplier goes out of business? What happens if a natural calamity (such as the ongoing Corona Virus) means you have to close shop for a few months? What happens if you have a malicious partner who is not doing any of the work?
On a more positive note, there are unforeseen events that can have a beneficial effect (though they tend to be a little rarer). Perhaps you attract more people to the business or the industry might experience a surge, for whatever reason. Maybe you find a new source of income. Perhaps you find a spot in the market with a home delivery coffee opportunity instead of letting people come to your outlet.
There are many ways to grow and expand, and many ways to run foul of the economy. The main priority is to show that you are diligent and organized and that you have goals based on logical assumptions.
Pro Tip #5 – Back Up EverythingInvestors and lenders have heard it all before. They invest/lend for a living. So they are used to looking at hundreds (possibly even thousands) of business plans. They often only pick out the best value propositions out of these.
And they will not take undue risks – if they do, they won’t be in the business for long. The first rule of investment is safety so that funds are returned. This class is good at identifying any fluff or estimates that are not 100% accurate.
With this in mind, be prepared to back up everything with data. Make sure all of your claims are substantiated. If not, they will question you. If you don’t ack up even one claim, it can cast doubt on your entire campaign and your trustworthiness. So avoid saying that your managerial team is perfect in an area where they have less than 5 years’ experience.
The most common exaggeration is that you are going to make more profits/revenue than you could reasonably expect. You can expect to be grilled on this point – so make sure to base your projected sales on reasonable current estimates or market averages. In many cases, it can be a good idea to be conservative in your estimates.
Not only does this apply to financials. Time and other resources should not be exaggerated. Even the best business in the world takes time to get up and running. This is just the nature of things. The more realistic you are in your presentation, the more credibility you will get for it. Do not:
4 Best Free Business Plan Templates
If you want to learn more about business plans sooner rather than later, check out some of these free business plan templates. Keep in mind that most business plans are really low-quality (we know because we checked them out). So the best templates, as checked by the Finimpact squad, are as follows:
It’s best to avoid quick ‘one-minute’ business plan templates, and all organizations that offer such services. The business plan should be something you give a great deal of attention to. You need to consider what your business is about, where it will be in the future, and who the audience is. Note that while the Small Business Administration used to provide an excellent business plan template, this tool is no longer functioning as of September 17, 2019.
Creating a business plan is actually quite easy. But creating an excellent business plan takes time, experience, and lots of practice. If you include all the steps above and give the business plan your time and attention, then you will have an excellent business proposition to further your goals and aspirations. If you have further questions about starting a new business or acquiring funding, don’t hesitate to get in touch with The Finimpact advisory service (for free!).
How Do I Write a Business Plan?The best way to write a business plan is to get started! Make a business plan outline of what your company is about using a basic word document. Follow the instructions given above to make a business plan outline. Keep working on it – you could do it within a week or two. After this, its time to refine and ask other people for their (hopefully expert) opinion.
How Do I Write a One Page Plan For a Business?The best way to write the one-page business plan is to write the executive summary. The executive summary really is a business plan outline. It contains all the core details of the business including the customer base, opportunity to capitalize on market need, financial status, funding request, and business management details. All of this is done in 1 or 2 pages, forcing you to write succinctly.
What Are The Main Purposes Of A Business PlanThe main purposes of a business plan are to outline your business opportunity and market analysis, in the hope that it will result in increased funding. With the funding, you can then capitalize on the business opportunity, growing and expanding.
What are the 9 Components of a Business Plan?This relates to the lean startup model only, and not the typical business plan (which has 6 components). The 9 components of the lean startup model are Key Partnerships, Key Activities, Key Resources, Value Proposition, Customer Relationships, Customer Segments, Channels, Cost Structure, and Revenue Streams.
What is a Short Business Plan?A short business plan is typically less than 10 pages. It covers all of the essential details of the business. In many instances, 10 pages might actually be enough to demonstrate the value of your business. But most often, the business plan will be between 15 – 25 pages.
Why Do Business Plans Fail?Mainly because one or more of the above steps was not followed. It is often the most basic of mistakes that kill a business proposition. But the most common reason is that many business owners do not know the figures inside and out. Mistakes in financial projections and analysis will indicate to investors that the business plan is not viable.
Who Can Help Me Write a Business Plan?There are professional writers who specialize in business plans. While you can do it yourself, it’s always best to have at least one other person to bounce ideas off of. It will help to keep you on the straight and narrow, so get your business partner involved. If you are flying solo, then get a friend or associate to assist. You definitely need at least one other person to look over and review it.
How Do You Write a Simple Business Case?A simple business case involves (i) A problem (ii) Intelligent analysis of situation (iii) Solution (iv) Cost-benefit analysis. They are usually created in order to change the direction of a business.
Sarah Davis is a business executive specializing in mergers and acquisitions, corporate finance, and international law. She achieved her MBA from Cornell University after completing a legal undergraduate at UC Berkley. Sarah runs her own business consultancy firm in tandem with working alongside the FinImpact team.
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