Did you develop your business plan before you actually launched your startup?
Did you develop your business plan after you developed your startup?
Do you even have a business plan at all?
These may sound like silly questions at first, but I guarantee that all of you fall into one of these three categories. I totally understand this because everyone has a different process and the outcome and results are what we measure ourselves by.
When I first started dabbling in business, I never thought of a business plan. It is something that never crossed my mind initially, but I would always arrive at different key elements that posed questions that I did not have answers for.[Tweet “I think Ben Franklin said it best when he said “If you fail to plan, you are planning to fail!” “]
From my own experience, I can confidently say that it is wise to get a business plan together prior to launching your startup. Be proactive rather than reactive, trust me on this one. You will only save yourself time, money and resources in the long run.
Who doesn’t want that?
Depending on where you get your information from, a thorough business plan may have between 7 and 10 elements. For the educational purposes of this blog post, I will share 7 elements with you at a high level and if you desire more you can add additional elements. If you don’t have a business plan right now, you will have the outline for one by the time you finish reading this blog post.
1. Executive summary
This is your high-level overview of why your business exists. If someone asks you, “What you do?”, your response should be pulled from this area of your business plan. This can be a bit trickier than you may initially assume. My natural tendency is to tell someone everything that I do or can do, but this has the opposite effect of what I intend. People walk away confused and overwhelmed with the information. Remember to keep it short and simple, while still conveying the highlights that are significant.
This is the more in-depth description of what your business does. This area of the business plan should share your story. Include when you officially began, your vision, values, and overall mission too. A good check for this section is to see if the description captures the elements of your “why” statement. You may choose to detail your physical location, the type of legal entity that you have formed (LLC, S-Corp, etc.) and the guiding principles that are crucial to the identity of the organization. Finally, it is a good idea to explain how the business fits into markets and niches. This will show the potential for growth and profit.
3. Market review
Who are your competitors and what will you do better or differently than the rest of them? How do you propose that you will fit into what already exists or do you plan on disrupting everything as we know it in your target niche? This is where you should describe your ideal customer in great detail. If you don’t know who you are creating products or services for, you are simply wasting your time. How old is your dream customer? How much money do they make? What do they value? What do you propose to do to solve one or more of their pain points? Another way to think about this is figuring out how you are going to make their lives better.
4. Organizational structure
This is where you get to show off your plan as it pertains to your human assets. In my opinion, this is among the most important areas in the entire plan. I am not talking about the titles and the reporting structure at all. I have always been and always will be a supporter of the idea that an organization’s people will make or break its success. Hire slow and fire fast are great words to live by. The people on your team should have the experience and the competence to do what you need them to do. Did you notice that I did not say education? I personally have two degrees and I value education, however I refuse to exclude the phenomenal talent and experience that exists outside of these parameters. I work hard to hire the best people period, and so should you. Organizational fit is just as important as qualifications so it can be a delicate balancing act to get all of this right, but it’s certainly not impossible.
5. Sales plan & forecast
How are you going to make sales and generate the revenue that is vital to your business? This details the products and services that you will sell and your branding strategy so that consumers are able to identify you in the marketplace. You will also want to explain your approach to your pricing strategy. What is your plan for advertising, social media, and your sales funnels? This area of your business plan should demonstrate a great deal of detail and careful thought because this could make or break an investor’s decision to give you money or not. Technology is your friend and it offers you options for automation and extreme efficiency, so be sure to include these strategies in your plan.
6. Startup capital
Do you need money to get your business up and running? If so, this is your opportunity to make that wish a reality. How much will you need and what is your plan for the money? It is a great idea to list a range, from low to high, of what you expect costs to be based on your research. Do not simply make numbers up here and put the time in so that you can speak intelligently to the questions that are sure to ensue. For the use of the money, you should have a detailed plan that includes a timeline so that potential investors have a clear understanding as to what they are getting involved with.
The need to show when and where your income will come from is very important. To add to this, the amount of money you expect to make is another desirable detail. Which projects and services do you anticipate selling the most of? You will have to conduct market research to identify current trends to help with you projections. This is especially critical if you haven’t made any sales yet. This will give your potential financial backers an idea of when they can expect to see returns on their investment. If you do have a record of sales, this historical data should help to shape your projections for the future.
If you didn’t have a plan, do you now?
Believe me, there are a million things that I would rather do with my time besides writing a business plan, but it is time well spent. Spend the time doing it right now or fix your oversights later. If you are seeking outside investments of any kind, a business plan is a prerequisite and not optional. This has been my experience and I have been denied funding for not having one in the past.
Learn from my mistake and do it right the first time. It is more fun to spend your time on selling and growing the business, and with this info in mind you should be able to do that. If you have made it this far in the post and you valued it, perhaps you will value this too. I just published an informative ebook for entrepreneurs that I wrote from my own experience called, 15 Lessons for Surviving Your Startup. Check it out if you are a new startup or if you are thinking about making the jump.