In our experience, the process of creating and writing a business plan is as valuable as the end product itself - a document that will provide
the priorities, context and sanity you’ll need as you start up your business.
Just remember that the most important audience for a business plan is
you! You’ll be forced to be accountable to all of the statements, claims, stats
and facts inside of it. You may also use your business plan as a tool to
generate interest from financiers, prospective
employees and strategic
partners.
We focus on 3
aspects of business planning to consider as you write a business plan:
1.
The "Defining Dozen" questions you must answer
2.
Key components of a business plan
3.
Writing a business plan
Sample Business Plans
Use these sample
business plans for reference.
- Hospitality
(restaurant)
- Manufacturing
(apparel)
- Service(public
relations)
- Technology
(software)
- Technology
(hardware)
1. The
"Defining Dozen" questions
To write a good business plan, you have to know the answers to the
“Defining Dozen” questions, which we describe in detail in “StartupNation:
Open for Business,” our book. Jot down the answers to each of
these questions and hang on to them. You might not use every answer in writing
your business plan, but they could be helpful when you update your plan as your
new business grows.
1.
What’s your business idea?
2.
How does your idea address a need?
3.
What model suits you best?
4.
What’s so different about what you offer?
5.
How big is the
market and how big will
you grow?
6.
What’s your role going to be?
7.
Who's on your team?
8.
How will customers buy from you, and how much will they pay?
9.
How much money do you
need, and how much will you make?
10.
Where's the startup money coming
from?
11.
How will you measure success?
12.
What are your key milestones?
Once you’ve answered these questions, you should be prepared to write
the actual business plan document.
2. Key components
of a business plan:
Executive
Summary:
Summarizes the most important information within the pages of
your business plan - the people, the idea, the market, the competition, the strategy - typically no more than two pages
long, the executive summary is usually written last. It takes discipline to
keep the summary short, but it's a must.
Business
Description:
Details the mission, goals, value proposition, business
model, and key assets. After someone reads this section of the plan, they
should be able to "get" what you're offering with total clarity!
Market Analysis:
Dives into the needs and wants of potential customers in
the market, as well as your competition and the percentage of the market you
expect to reach. Be sure to include any pertinent market research and
competitive analysis you've done - and cite your sources.
Personnel:
Describes the management team (existing
or future) and any other key personnel that will be instrumental to the
business’ success. Includes each team member's role and responsibilities, as
well as any background information that illustrates why they are highly
qualified for their role.
Exit Strategy:
Puts into words what
you see as the ultimate destiny of the company, especially as it may affect
those who finance your new business, as well as other equity holders in the
startup.
Financials:
Distills your
strategies and assumptions into how much they’ll cost and
how much money they’ll make you in the course of your new business.
The Financials section should
map out your first few years of business and contain:
· Written narrative of key business assumptions
· Income statement
· Balance sheet
· Statement of cash flow
· Cash management report
We’ve developed an
important tool to help you forecast and manage the financial side of your
startup business - a cash management report. It looks at how cash moves in and out of your business on a monthly basis. By
preparing a cash management report before the launch of your business, you’ll
be able to determine if you’ll need to raise outside capital, when you’ll need
it, and how much will be required.
3. Writing your Business Plan
Your business plan should be concise and neatly formatted. We suggest a Microsoft Word document
for the bulk of the business plan, with financial documents as attached or
embedded spreadsheets created in Microsoft Excel. Avoid fancy
graphics, flowery language or photos. The easier you make it to read for a
potential investor or partner, the better.
If you are the type of person who works better with templates
and wizards, there are many business planning software packages available that
cost around $100, as well as a few free online business plan templates.
The advantage to using business planning software is that it
offers a step-by-step approach to the process (similar to a “wizard”), and can
include sample business plans for
specific types of businesses (e.g. restaurants, manufacturing, service) to help
you outline some of the unique requirements or expenses associated with that
particular business. It also formats your business plan for you.
A drawback to using business planning software is that it
might not provide you the flexibility to convey some of the uniqueness and
creativity of your new business, since it's written through the software
system.
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