Preparing To Write Your Business Plan
1. Determine the type of business plan you will use.
While all business plans share the common objective of describing a businesses purpose and structure, analyzing the marketplace, and creating cash flow projections, the types of plans differ. There are three major kinds.
- The mini plan. This is a shorter plan (likely 10 pages or less), and is useful for determining potential interest in your business, further exploring a concept, or starting point to a full plan. This is a great starting point.
- The working plan. This can be considered the full version of the miniplan, and its main purpose is to outline, without emphasis on appearance, precisely how to build and operate the business. This is the plan that the business owner would refer to regularly as the business moves towards its objectives.
- The presentation plan. The presentation plan is meant for individuals other than those owning and operating the business. This could include potential investors or bankers. It is essentially the working plan, but with an emphasis on sleek, marketable presentation, and proper business language and terminology. Whereas the working plan is made for reference by the owner, the presentation needs to be written with investors, bankers, and the public in mind.
2. Understand the basic structure of the business plan.
Whether you opt for a miniplan, or a comprehensive working plan to start, it is essential to understand the basic elements of a business plan.
- The business concept is the first broad element of a business plan. The focus here is on the description of your business, its market, its products, and its organizational structure and management.
- The market analysis is the second major element of a business plan. Your business will operate within a particular marketplace, and it is important to understand customer demographics, preferences, needs, buying behavior, as well as the competition.
- The financial analysis is the third component of the business plan. If your business is new, this will include projected cash flows, capital expenditures, and the balance sheet. It will also include forecasts as to when the business will break-even.
3. Obtain appropriate help.
If you lack business or financial education, it is never a bad idea to enlist the help of an accountant to assist with the financial analysis portion of the plan.
- The above sections are the broad components of the business plan. These sections in turn break down into the following seven sections, which we will, in order, focus on writing next: Company description, market analysis, organization structure and management, products and services, marketing and sales, and request for funding.
Writing Your Business Plan
1. Format your document correctly.
Format section titles in Roman numeral order. For example, I, II, III, and so forth.
- While the first section is technically known as the “Executive Summary” (which gives an official overview of your business), it is typically written last since all the information from the business plan is required to create it.
2. Write your company description as the first section.
To do this, describe your business and identify the marketplace needs for your product or service. Briefly describe your key customers and how you intend to succeed.
- For example, if your business is a small coffee shop, your description may read something like, “Joe’s coffee shop is a small, downtown-based establishment focused on serving premium brewed coffee and fresh baking in a relaxed, contemporary environment. Joe’s coffee is located one block from the local University, and aims to provide a comfortable environment for students, professors, and downtown employees to study, socialize, or simply relax between classes or meetings. By focusing on excellent ambiance, close location, premium products, and superb customer service, Joe’s coffee will differentiate itself from its peers.”
