Your business plan is your roadmap to future success. It often starts with an idea on the back of a napkin that grows to include detailed information about your industry, management team and financial plan.
Good Ideas are a Dime a Dozen
We all have good ideas, but how many of us translate our ideas into reality?
Those who do generally create a plan to put their ideas into action. While only a small subset of businesses needs a formal plan to secure a bank loan or investor financing, every business can benefit from the planning process.
The true value of a creating a plan is not the final document, but the process of researching your industry, looking at your ideas critically and thinking through your business in a systematic way.
Who Needs A Business Plan?
The short answer is almost everyone in business.
- If you’re freelancing to supplement your income, you don’t need a plan.
- If you’re embarking a new endeavor that’s likely to consume a significant amount of time and resources, you need a plan.
- If you’re already in business and facing new market conditions and opportunities, you need a plan.
For an existing business, a robust planning process can be a competitive advantage that drives greater innovation and growth. Businesses with plans grow 30% faster than those that take a “seat of the pants” approach.
What Kind of Business Plan is Right for My Business?
The answer depends on your audience and goals. Plans can differ greatly in length, detail and presentation.
♦ One-Page Plan
You may start with a one-page business plan, which is exactly what it sounds like: a quick single page summary of your business, business goals and your plan to achieve those goals.
This format is helpful to early-stage companies that want to sketch out their ideas in broad strokes. It can also be a good tool to quickly introduce your business to outsiders, such as potential investors, who usually don’t take the time to read detailed plans.
♦ Internal Business Plan
Management uses internal plans to guide business growth. These plans skip details about company history and management team and focus exclusively on business strategy, milestones, metrics, budgets and forecasts. They also include a schedule for monthly review and revision.
♦ External or Formal Business Plan
This is a polished document with a strong emphasis on your market, management team and financial plan, which provides information for outside purposes such as securing a bank loan or investor financing.
Formal plans normally include:
♦ Executive Summary
The executive summary is your opportunity to make a favorable first impression on lenders and investors, so it must be compelling, intriguing and short, usually no more than 3 pages. The summary provides a quick overview of the problem your business solves, your target market, your management team and key financial highlights.
♦ Company Overview
The company overview provides a brief summary of the the company’s legal structure, ownership, history and location. It can also include a mission statement.
♦ Products and Services
In this section, you describe the problem you’re solving, how you’re solving it, the competitive landscape and your competitive edge. Depending on the type of company you’re starting, you may also detail the technologies you’re using, intellectual property that you own and other key factors about current and future products.
♦ Target Market
As it’s critically important for your business to fulfill a real-world need, it’s equally important to know who you are selling to. How well you reach your market will determine how your business grows.
♦ Marketing and Sales Plan
The marketing and sales plan details the strategies you will use to reach your target market. It provides an overview of how you will position yourself in the marketplace, how you will price your products and services, and how you will promote your offerings.
♦ Milestones and Metrics
Plans are nothing without solid implementation. This section defines concrete tasks that you plan to accomplish, complete with due dates and responsible parties. It also details key metrics that you plan to use to track the growth of your business. These can include the number of new sales leads and the number of page views on your website.
♦ Management Team
The management team is crucial to your business and plan, because most investors invest first in people and then ideas. As we all know, good ideas are a dime a dozen; it take a talented entrepreneur to turn a good idea into a thriving business.
Business plans should not only identify the strength of the the management team, but areas that need improvement. Identifying gaps in the team shows knowledge and foresight, not a lack of ability to build the business.
♦ Financial Plan
If you are seeking funding, a sold financial plan helps you determine how much capital your business needs to get started or to grow. While all financial plans require some guesswork, the more homework you do, the better you’ll be able to project cash flow, break even and profits.
Using Your Business Plan to Get Ahead
Taking the time to plan your business will give you an edge over the competition. But just writing a plan does not guarantee success.
The best way to extract value from your plan is to use it as a management tool. To do this, you’ll schedule monthly meetings when the management team will overview your milestones and key numbers, quickly review your business strategy, and adjust and set new milestones to reflect current conditions.
It takes effort, but it can put you in the “30% growth club” faster than you think.
Whether you’re just starting or have been in business for a while, Content First can help focus your ideas and develop the right kind of plan to guide internal growth or attract outside financing.