The importance of a business plan cannot be overstated. A business plan is the blueprint of your entire business, both in the present and in the future. Many make the mistake of thinking that writing a business plan is something that they do once and then set aside, never to see the light of day again.
Like your company, the business plan will also have to change as it develops. It’s also important to keep in mind that companies may develop multiple business plans as their objectives change over time.
During the development stage of the organization, for instance, the business plan could help with forecasting or raising additional capital. On the other side, however, if you decide to sell the company, the business plan can include various strategies for the transfer of new ownership.
What Are the Benefits of a Business Plan When Starting a Business?
There are several reasons why you should write down a business plan the moment you decide to start a business.
One of the most important reasons to do so is to test the feasibility of your future startup without risking your precious time and resources. By putting all the variables on paper, you can determine whether your idea will or will not stand a chance in the market. It will present you inherent weaknesses which can guide you to reevaluate or move on to other plans.
A business plan will also make you pay attention and assess specific details that would have, otherwise, gone unnoticed. The most common of these are cash flow management, budgeting, or market planning, among others. By working through all of these, your startup will have a much higher chance of success.
Besides, a sound business plan will put you in a much better position to get financing from financial institutions, angel investors, or venture capitalists. You can rest assured that investors and financiers will immediately ask you for your business plan, will weigh in the risk of non-repayment, and can tell the difference between a good and a lousy business plan.
What Is the Business Plan Format That Works Best for You?
According to the US Small Business Administration (SBA), there are two main ways of writing a business plan – a traditional or a lean approach. A traditional business plan is more common and encourages you to go into more detail. A lean plan, on the other hand, is faster to write and will only summarize the key elements of your project.
The Traditional Business Plan Format – It is a more detailed and comprehensive plan. It should help you better assess your startup and will be the one requested by financiers and investors. The SBA recommends nine sections to this format, but you should use only the ones that make sense for your business. These sections are:
- Executive summary – a rundown of your business
- Company description – what you do
- Market analysis – industry, market, and competitors research
- Organization and management – your business and management structure
- Service or product – your products or services
- Marketing and sales – your marketing and sales strategy
- Funding request – funding needed for the next 3-to-5 years
- Financial projections – balance sheets and other supply information
- Appendix– resumes, and permits (optional)
The Lean Startup Format – Though less detailed, the lean plan is right for simple businesses that want to explain or start quickly. They’re also right when changing or refining a traditional business plan. It describes the company’s infrastructure, customers, finances, and value proposition. The common sections are:
- Key partnerships – strategic partners (suppliers, manufacturers, subcontractors, etc.)
- Key activities – how you will gain a competitive advantage
- Key Resources – resources that create value for your customer
- Value proposition – the value you bring to the market
- Customer relationships – how your customer relations are handled
- Customer segments – your target market
- Channels – where you will interact with customers
- Cost structure – reducing cost or maximizing the value
- Revenue streams –how you will make money
Each of these two formats has its uses, depending on what you hope to achieve. Now, when it comes to writing a business plan, it’s best to use some devices that will help. Below is a rundown of several such tools.
The Palo Alto Software LivePlan
The Palo Alto Software LivePlan is a cloud-based application that provides users with numerous customizable features, online help, and plenty of learning resources. It can help you create anything from a simple, startup-style business plan to a highly-complex and in-depth traditional business plan format, and everything else in between.
It offers a step-by-step process, providing you with assistance in creating the initial pitch, to gathering information, budgeting, forecasting, designing the document, and long-term performance tracking. It also boasts an impressive library of sample plans categorized by industry and specific type of business. The only downside of this software stems from many customizable features, meaning that there is a bit of a learning curve.
A month-to-month subscription is $19.95, while an annual one is $11.66 per month.
Other Business Plan Tools and Resources
Business Plan Templates – If you’re interested in templates and fill-in-the-blank formats, below are some links to get you started.
- The $100 Startup One-Page Business Plan– A one-page, downloadable business plan template
- SCORE Business Planning Templates– A collection of templates for both new and established businesses
- BPlans’ Business Plan Template– A downloadable traditional business plan template
Business Plan Tutorials – How-tos on how to get your business plan started.
- SBA’s Video Business Planning Tutorial– A series of video tutorials that outline the steps to a business plan
- How to Write a Simple Business Plan– A step-by-step traditional business plan tutorial
- Entrepreneur’s Elements of a Business Plan– A more comprehensive and in-depth review of a business plan. What you should and shouldn’t include, how to calculate and work the numbers, etc
Keep in mind that there is no one-way to writing a business plan. In the end, you should tailor it specifically to your business, and for the purpose, you are writing it, in the first place. For more information on how to manage a successful business, please feel free to visit our website.