📖Reading: Business Plan Outline.

📖Reading: Bringing Your Business Plan Alive.

📖Reading: Preface - Nuts and Bolts of Great Business Plans.

📖Reading: Nuts and Bolts of Great Business Plans (full article).

📖Reading: Business Plans - All You Need to Know.

📝Template: Business Plan

Where the business model (STEP 25) captures the essence of your proposed business, the business plan is the full blueprint. So, it gets into much more detail on how things will work. Plans are written for three reasons: 1) to demonstrate that the business is financially viable, or can make money: 2) to attract resources to the business; and 3) to serve as an operating guide as you implement the business. You often write it for outside parties such as a banker, but the best approach is to write it for yourself, and to write it not because someone said you had to, but because it will help you build a more successful business. It will make you think things through, and recognize all the issues surrounding your business and what is required to make it a success.

A business plan is not a checklist, where you address sections one by one by writing a few paragraphs on the section being addressed. It is a living, breathing document. You are telling a story, and bringing a venture to life. It is about a company, not a product or an idea. It is about how that company can become a viable ongoing entity. A viable company has many facets, and these are reflected in the various sections of the plan. Most critically, the sections are highly interdependent. They must be internally consistent and “hang together”. As you subsequently make changes to one section, you will find yourself having to go back and make adjustments to a number of other sections.

Your ideas have flaws. It is the discipline of the plan that will help you see critical flaws in your idea, in your target market, how you plan to price, your cost requirements, your operational approach, your marketing methods, and so forth. And no matter what you think, there are critical flaws. You will have to continually adapt as you learn more about this business and the industry within which it will operate. Using the plan as a framework, it will help you to ‘tweak’ or adjust aspects of what you propose to do in ways that make the venture more viable.

Here is a basic structure for your business plan:

I.  Executive Summary (limit to two pages and write after you have completed the rest of the plan)

II.  The Industry (e.g., if you are a toy store, discuss developments in the retail toy industry in the United States, including its size, growth rate and recent trends)

III.  The Company, Concept and Products/Services (briefly describe how your company came to be, the form of entity (e.g., LLC), when it was founded, and then present your core value proposition, and an explanation of the products and/or services you are selling)

IV.  The Market (this is the local market you will operate and get most of your sales—define the boundaries of your market, estimate its size and growth rate, provide customer descriptors and results from customer interviews, discuss buyer behavior and discuss market segmentation)

V.  The Economics of the Business (discuss your fixed and variable costs, your margins on each product or service, and your breakeven point)

VI.  Marketing (discuss your overall marketing approach, your pricing approach, and how you will approach advertising, selling and promotion)

VII.  Operations (this is where your operating model goes—discuss how your business will operate, how you will produce products or deliver services, inventory policies, anything that will be outsourced, and what facilities and equipment you will have)

VIII.  Management (describe who will be managing the business and a bit on their background and experience; if you have a board of advisors, mention them here)

IX.  Schedule (provide a schedule of key activities to be accomplished over the first 12 months of the business)

X.  Financial Projections (provide a projected income statement and balance sheet and summarize key financial indicators (e.g., sales, when breakeven is reached, when profit is reached, how profit grows) for the first three years of the business)

XI.  Financial Needs (calculate how much money you need to launch the business and operate until you have a positive cash flow)

A business plan is also an objective and fact-based document. Address the upside and the downside. Make clear you understand what can go wrong. Be conservative. And importantly, the plan is not written in first person, so be sure to eliminate all use of ‘I’, ‘We’, ‘Our’, and ‘Us’. Use your company name to refer to the business.

It is critical that you organize your efforts in writing the plan in a logical fashion. Complete the financials last, but finish the economics fairly early in the process. If done properly, the market section will be the hardest and take the longest. It demonstrates that you understand your potential customers. A logical approach is to break the overall plan down into three stages.

• First, attack four key sections: the Industry, the Company/Concept/Products, and the Market, (think of this as stage one); These sections will lay out the nature of the opportunity and how you are going to capitalize on it;

• Then, go after the Economics, Marketing, Operations, and Management Team sections (stage two); These sections really get at the nitty-gritty of how you will make things operational; and

• Finally, address the Schedule, Financial Projections and the Summary of Your Financial Needs (stage three). Here you focus on implementation, what can go wrong, how the business will perform, and how much money is needed.

Be sure when you finish the plan that you go back through and make sure that all the sections are consistent with one another.

Again, write the plan for yourself, not for a banker or investor or outside party. It will not be easy, as there are issues where you will not have much experience of familiarity. But this is the magic of putting a plan together. It forces you to think things through and to learn. It helps you be more realistic about the things it will take to build something that is successful.

The best plans are always ones where the entrepreneur gathers the best information, does the most library and secondary research, the most extensive field research, and digs deeply. Better information helps you justify positions, ensures you have anticipated the challenges (a reality check), and is a source of creative inspiration—when you uncover approaches being used by others. Many answers you seek are hard to find, don’t exist in one place, and must be pieced together. Research for a great plan is truly a “scavenger hunt”. Many data sources, but certainly not all, are available electronically. If you can work through a community or university library, they often have useful databases and websites with a lot of data that can be helpful in your plan, particularly in the Industry and Market sections, but also in understanding typical costs in your business. Some key databases are listed back in STEP 6 earlier in this book. Examples include Mintel Reports, IBISWorld and government publications such as County Business Patterns.

If you limit your search to looking on the web through Google or some other search engine, you will miss much of the best research that will support your venture. Enter key words that relate to your venture.

Librarians can be extremely helpful. You are especially encouraged to seek help from the business librarian. It is also vital that you get out in the field and talk to suppliers, trade associations, customers, competitors, and potential investors. They will open your eyes to things that you simply had not considered.