No one will take your start-up idea seriously without a business plan. A business plan precisely defines your business, identifies your goals and serves as your firm’s resume. Its basic components include a current and pro forma balance sheet, an income statement and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make the right decisions. Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan package. Additionally, it can tell your sales personnel, suppliers and others about your operations and goals.
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Choose a Business Plan Format
When it comes to writing a business plan, there is no right or wrong way. The chosen business plan should meet your needs.
Business plans often fall in one of the two categories
- Lean start-up business plans
- Traditional business plans
Lean start-up business plans are less common than traditional business plans. This plan focuses on summarizing the key elements of your business plan. Lean start-up business plans can be completed in as little as one hour and are typically one page in length.
Traditional business plans are more common, use a standard structure and encourage the writer to go in detail. These plans require a lot of work, are comprehensive, and often run in dozen of pages. A traditional business plan is often requested by lenders and investors.
Traditional Business Plan Format
If you are extremely detail-oriented or want a comprehensive business plan, you will prefer a traditional business plan over its counterpart.
When writing a business plan, don’t get overwhelmed. Instead, take a deep breath and use the sections of the business plan template that make the most sense for your business and requirements.
Traditional business plans often use some combination of the following sections.
- Executive Summary
The executive summary consists of details about what your company is and why it will be successful. It includes your company’s mission statement, basic information about the team, details about product and services, employees’ details and location.
If you are planning to ask for financing, it’s better to include financial information and growth plans.
- Description of the Company
Use this section to provide detailed information about your company. Define the problems your business solves. You can list consumers, organizations or businesses your company plan to serve.
Explain what makes your company better than your competitors. Do you have expert professionals on board? Is your store located in a perfect location? The company description section gives you a chance to boast about your strengths.
- Market Strategies
Having a good understanding of the industry outlook and target market is vital. Market analysis helps you understand what other businesses are doing and what they excel in. While doing the research, look for trends and themes. What works for your competitors? What are they doing differently? Why did it work for them? Can you do it better? This is your chance to answer these questions.
- Operations and Management
Explain to your readers how you are going to structure your company and who will run it. In this section, you can describe the legal structure of the business. How are you planning to incorporate your business? Will it be a C or an S corporation? Are you the sole proprietor or LLC? Is it a limited partnership?
Using an organizational chart will make it easy to define who’s in charge of the company and how each person will contribute to the success of your business.
- Product Line
It is important to include your services and products you offer in the business plan. Explain what the products look like and how they are going to benefit your customers. Share your plans for patent filings or copyright. If your business deals with research and development of the products, make sure to explain in detail.
- Sales and Marketing
As a business owner, you need to have a marketing strategy that fits your unique needs. The goal here is to describe how you are going to attract and retain your customers. It is also important to describe how you are actually planning the sales.
This section is important when you make financial projections. So, ensure a thorough description of your complete sales and marketing strategy.
- Request Funding
As a startup, you need funding. This is the section where you are going to outline your funding requirements. You should explain in detail how much funding you will need over the next five years and how you aim to use it.
Give out details on whether you want equity or debt, the length of the loan you want to request and the terms you would like to apply. Specify whether you want to use the funds to buy material equipment, cover specific bills, pay salaries, or use it for any other purposes.
This section should also include a description of your future strategic financial plan.
- Financial Projections
Back up your funding request with financial projections. The aim here is to convince the reader that your business is stable and will be successful financially.
If you have a well-established business, make sure to include income statements, cash flow statements, and balance sheets for the past three or five years. If you have collateral that could be put up against the loan, make sure to list it down.
You can use diagrams and graphs to tell your business financial story.
The appendix can be used to provide supporting documents that are specially requested. This includes things like resumes, credit histories, letters of reference, product picture, patents, licenses, permits, legal documents, and other contracts.
Lean Startup Business Plan Format
If you are eager to start your business quickly, have a relatively simple business, or plan to refine your business plan regularly, you may prefer a lean startup business plan format.
Lean startup formats use only a handful of elements to describe your company’s infrastructure, value proposition, finances, and targeted audience. These formats are useful for visualizing tradeoffs and fundamental facts about your venture.
The nine components of the Business Model Canvas include:
- Key Partnerships
Are you planning to run your business with other businesses or services? If so, list them down. This will include manufacturers, suppliers, subcontractors, and other strategic partners.
- Key Activities
How will your business gain a competitive advantage over your competitors? Highlight things that make you stand out such as using the latest technology to tap into the sharing economy or selling directly to the customers.
- Key Resources
Under this section, list the resources you will leverage to create value for your targeted customers. This includes capital, staff, or intellectual property. Also remember to leverage business resources that might be available to Native Americans, Women, HUBZone businesses and veterans.
- Customer Relationships
Describe how your customers can interact with the business. Is it personal or automated? Will they interact online or in-person? It is vital to think through the customer experience from start to finish.
- Value Proposition
Make a clear, concise, and compelling statement about the unique value proposition that your company brings to the market.
- Customer Segments
Be as specific as possible when defining your target market. No business can cater to anybody and everybody. Thus, it is important to have a clear sense of your targeted audience.
It is important to list different ways through which you will interact with your customers. A majority of businesses use a mix of channels and optimize them over time.
- Revenue Streams
How is your company going to make money? Will you be selling advertising space? Are you going to make money through direct sales or are your customers required to pay a membership fee? If your business has multiple revenue streams, make sure to list them all.
- Cost Structure
Is your company going to focus on maximizing value or reducing costs? Define your business strategy and list the most significant costs you will face.