In one of my previous articles, I talked about the reasons why every young entrepreneur should write a business plan before starting a business. I expressed that a business plan is essential, and that failing to write one could have dire consequences on your businesses performance. Even though many young entrepreneurs would rather operate without one, a business plan ensures that your company has a strategy to penetrate the market, acquire customers, and sustain profitability.
In the past, business plans were long, vague, and fluff-filled documents with perplexing financials that no one wanted to read. Now, the business plan template and formula has changed; VCs (Venture Capitalists), Angels (Angel Investors) and banking executives want to see slimmer, more concise and transparent business plans that not only show whether the company can actually sustain profitability, but tell a story; investors want to know the founders and management team behind the company; they want to know whether the product or service solves a problem; they want to invest in companies that have a passion for what they do, and they want the business plan to support that passion.
In this article, I’m going to explain how to write the new and improved business plan; the 2014 business plan; one that resembles an executive summary and is only 2-3 pages long, with an additional (supplemental) page used for the financials. The only section I won’t discuss is the financials, since I already explained how to prepare the financials in my article titled “How to prepare a financial business plan.”
How to write a Business Plan (The 2014 Edition)
Introduce your company to the world! State the name of your company, its location, and the purpose of its operations, i.e. what it does. Imagine your company has a website; what would the first section of the “About” page read? Use this as a reference for writing the company introduction.
Describe your company; what type of business are you running? What problems are your products/services solving? What differentiates your company from its competitors?
Explain the reason you’re doing business. What’s your company’s mission? What are your company’s goals (short-term and long-term)? Don’t establish vague goals; research the market thoroughly to create realistic and detailed goals that can actually be realized. Also, make sure you put time constraints around your goals. For example, if your goal is to acquire 30% of the market (customers), state a time period in which you would like to achieve that goal.
Products and Services
Describe your product or service, in detail. Highlight its strengths and the reasons consumers will use it. State whether you have a prototype or it’s still in the developmental stages. Explain why your product offering is better than your competitors’ offerings.
*Now it’s time to describe the market, which is comprised of buyers (consumers) and sellers (your business and its competitors)*
Describe the industry that your business will be operating in (characteristics, trends, historic growth rate, projected growth rate, etc.). Who are the main players? Who are the industry leaders and what percentage of the market do they possess? This information isn’t easy to find, so you’re really going to have to do some extensive research. Try the Small Business Administration (SBA) website and marketresearch.com for industry reports.
Target Market Analysis
Describe your customers. Create a profile for the average consumer that will be buying your product or service. Who are they? How many of them are there (what’s the size of the target market)? What are their characteristics? How much money do they make? How much money are they willing to spend? What are their needs? How does your product satisfy their needs?
Describe your plan to penetrate the market. What are your marketing goals and objectives? How do you plan to reach your target market? What will your message be once you capture their attention? What marketing channels will you use? Be detailed; there’s nothing worse than a vague marketing strategy. Also, be creative! Think of innovative, cost-efficient ways to promote your product or service.
Describe your sales team or the type of sales team you would like to build. How many sales reps will you hire? Will your sales team be in-house? Will you outsource your sales efforts? Will you purchase any sales software to enhance your sales activities? What sales plan will the reps follow? How will the sales reps reach the target market? What’s your sales team’s selling style? What’s the pay structure for your sales team? How many sales interactions will it take to make a sale? The step requires some research, projections, and calculations, but don’t become intimidated, you’ve very capable of completing this section.
Describe your management team. Who are the founders? What are their backgrounds? What schools did they graduate from? What companies did they previously work for? Why did the start the company? Who’s the CEO? List all executives. Don’t be boring! Tell a story. Every business has a story as to why it was started. Explain where the idea came from and how the founders developed the idea into a business. This is the section where you can convey how passionate you are about your company.
So, what’s next?
That’s it! Congratulations! You now know how to write a business plan that’s fit for 2014. You can show this to your employees, co-workers, or prospective investors. Whenever your company has an identity crisis, just refer to your business plan; it’ll remind you of your company’s original plan for success.
-Mike, creator of EntrepreLoser