Organizations at every stage will need a business plan. From obtaining a loan to attracting top talent or partnerships, people will want to see the roadmap guiding your business.
Should you write a business plan prior to launching your startup?
According to a Quickbooks Survey published in 2020, over 65% of current business owners recommend “writing a business plan before you start a business.”
When you begin to create a business plan, you may want to consider your initial goals, the audience that will be reviewing your business plan and the format that you will use.
The traditional business plan format is comprehensive. It includes financial data, market research, and a management summary. A “lean plan” shares only the most essential information about the business. It typically is only two to three pages long. While the lean plan is shorter than the traditional business plan, they have some elements in common.
Prior to selecting a format for your business plan, consider what goals are most important to your business. You may need to do one of the following:
- Grow your business from a startup
- Obtain a business loan, investments or grants
- Attract a partner or hire new employees
- Rebound from an economic downturn
No matter where you are in starting your business, a business plan will help you along your entrepreneurial journey.
Statistics now show the many benefits of having a business plan during the pre-launch phase.
The University of Oregon and Bplan compiled data on the benefits of business plans that showed:
- Small business owners with a plan are twice as likely to “grow, get investments or secure loans” than those without one.
- People with a plan have a 129% increased likelihood of growing beyond the startup phase.
- Entrepreneurs have a 260% increased likelihood of growing from “idea” to “new business.”
You should view your business plan as a living document that will be updated many times over the life of your business. As mentioned earlier, a business plan comes in different forms.
If you’re showing your business plan to your local bank or financial institution, you may want a traditional format. Or it may be used for someone interested in becoming a partner, supplier or large customer.
Need a template to get started writing your business plan? Get one here.
All business plans share some elements.
- Executive Summary
The most common element of all business plans is the executive summary. It is the introduction of your business to the reader. It is recommended that you write this section last. You should provide a concise yet meaningful description of your company. This part of your business plan should deliver just the highlights of your business and should only be two pages or less in length.
Tip: Let your brand personality shine in the executive summary to inspire people to continue reading. In some industries, investors or pitch content organizers may only request the executive summary prior to requesting more information.
- Company Overview
This part of your business plan provides an overview of your company and should include any necessary background information relevant to your business and industry. If your company has a mission statement or a bio for the officers of the organization, you can include it in this section as well.
- Describe Your Product and/or Service
In this section, you’ll provide details on your product and service offerings. This is the opportunity to share your unique value proposition to customers. You can also answer questions such as:
- How do you produce the product or service you offer?
- Do you have a copyright or patent?
- Any market advantage?
- Marketing Plan
In the marketing plan, you want to communicate a clear understanding of your target market, competitors and strategic plan on how to attract and retain customers which will be fundamental to the growth of your business. You can also include information on pricing, advertising strategies and brand awareness campaigns that you have planned for the future.
While the level of financial data that needs to be included may vary depending on the audience reviewing your business plan, you will want to ensure that you have a financial forecast, cash flow statement, balance sheet, income statement and any planned capital expenditures.
- Organizational Team and Management
The goal is to identify your key team members and founders. This section should highlight the strengths and skills of each team member and how they are working together to lead the company into the future. If you still need to hire an accountant, attorney or marketing officer, you can include the plans and budget to do that in both this section and the financial section of the business plan.
To show a comprehensive picture of your business, you may need to include additional documentation. The appendix is where you can attach any permits, licenses, product specs, organizational charts or detailed financial statements.
Whether you just have an idea or are currently in business, a business plan can be invaluable on your entrepreneurial journey. A business plan can help you clarify your goals, provide a timeline for when you can leave your full-time job or see potential pitfalls that can derail your business during the startup phase.
You can get expert assistance with developing your first business plan from the Wake Tech Startup Center. Visit our website to schedule an appointment with a business counselor. We also have a step by step guide and template that will help you create a business plan.