Your plan will help you turn your idea into reality.
If you’re someone who hated writing papers in school, it’s easy to understand why the prospect of creating a business plan puts your inner sophomore on edge.
But that’s the wrong way to look at business plans. Your plan is a blueprint for taking your idea—the one that you can’t stop thinking about—and turning it into a real, functioning company.
By writing a business plan, you’ll be forcing yourself to do the hard work of research and answer important questions that you might otherwise put off. This process will help you crystallize exactly how you want your company to run.
What Does a Business Plan Cover?
Good news: There’s no one perfect way to write a business plan. As you look at business plans that others have prepared—which is a really good idea, by the way—you’ll notice that all of them have their own ideas as far as structure and content go.
However, most successful plans do share the following sections:
Executive Summary // This is a quick summary of your company, what it does, who it serves and why it’s going to succeed. This usually runs about a page—it’s sort of a teaser for the rest of the plan. In fact, many folks like to assemble the rest of their plan first, then double back and write the summary. If you’re seeking a bank loan or an investment, you should quickly state how much you need and how you’ll use it.
Market Analysis // Who’s your target customer? How many of them are out there? Is there a particular geographic or demographic niche you’re trying to hit? Who is your competition?
It pays to be specific when you’re defining your market. “Everybody” is not a realistic target audience. By narrowing your focus, you can direct your marketing and advertising muscle to where it’ll do the most good.
Kansas City is lucky: Our local libraries have excellent business research departments stocked with powerful databases. You can get detailed numbers on how many of your ideal customers are out there.
Products and Services // What are you selling? Could be a physical product, could be a service. Some companies do very well by offering a mix of products and services, like the gardening store that hosts classes or takes on landscaping jobs.
Why will customers want your particular lineup? How is it better than your competitors’?
Sales and Marketing // It’s not enough to have the world’s greatest product if nobody knows you’re alive. You have to put together a sales and marketing plan.
How much will you charge, and how does that compare to competitors? You might consider a good-better-best approach. That is, offering different levels of service for different prices. That way, you capture buyers in a range of income levels.
How will you get the word out? You’ve got several options, including but not limited to paid advertising, paid search, social media, email marketing and more.
And if you’re selling products, where will customers be able to buy them? Brick-and-mortar shop? Trade shows? Online? Through a wholesale partner?
Management and Business Structure // This is where you introduce the team that’ll be running your business and detail their expertise. That includes owners and key managers.
How is your company going to be structured? As an LLC, an S-Corp, a C-Corp, a partnership or a sole proprietorship? If you have partners, who owns what percentage of the business?
Financial Projections // If you’re seeking funding, this section is what your lender or investor will read most intently.
You should include, at bare minimum, a profit-and-loss projection and a cash-flow projection for the next 12 months—or longer, should your readership demand it. You might need to work up a balance sheet and a break-even analysis, as well.
Your lender may ask for financial statements and personal tax returns for you and the other owners. If you’re seeking funding, state how much you’ll need and exactly how it’ll be put to work in the company.
The U.S. Small Business Administration offers a free online tool for creating business plans at www.sba.gov/tools/business-plan. SCORE provides templates for writing business plans and basic financial reports (www.score.org/resource/business-planning-financial-statements-template-gallery).
And Bplans.com has a library of more than 500 sample plans for a wide range of businesses, including restaurants, retailers, service providers and more.