If you have reviewed what a business plan is, and reasons why you need one to start and grow your company, then it’s time to actually dig into how to write a business plan.
Rules for writing a business plan:
1. Keep it short
Business plans should be short and concise.The reasoning for that is twofold:
First, you want your business plan to be read (and no one is going to read a 100-page or even 40-page business plan).
Second, your business plan should be a tool you use to run and grow your business, something you continue to use and refine over time. An excessively long business plan is a huge hassle to revise—you’re almost guaranteed that your plan will be relegated to a desk drawer, never to be seen again.
2. Know your audience
Write your plan using language that your audience will understand.
For example, if your company is developing a complex scientific process, but your prospective investors aren’t scientists, avoid jargon, or acronyms that won’t be familiar.
Instead of this:
“Our patent-pending technology is a one-connection add-on to existing bCPAP setups. When attached to a bCPAP setup, our product provides non-invasive dual pressure ventilation.”
“Our patent-pending product is a no power, easy-to-use device that replaces traditional ventilator machines used in hospitals at 1/100th the cost.”
Accommodate your investors, and keep explanations of your product simple and direct, using terms that everyone can understand. You can always use the appendix of your plan to provide the full specs if needed.
3. Don’t be intimidated
The vast majority of business owners and entrepreneurs aren’t business experts. Just like you, they’re learning as they go and don’t have degrees in business.
Writing a business plan may seem like a big hurdle, but it doesn’t have to be. You know your business—you’re the expert on it. For that reason alone, writing a business plan and then leveraging your plan for growth won’t be nearly as challenging as you think.
And you don’t have to start with the full, detailed business plan that I’m going to describe here. In fact, it can be much easier to start with a simple, one-page business plan—what we call a Lean Plan—and then come back and build a slightly longer, more detailed business plan later.
Elements to Include in a Business Plan
Now that we have the rules of writing a business plan out of the way, let’s dive into the elements that you’ll include in it.
Remember, your business plan is a tool to help you build a better business, not just a homework assignment. Here are the basic components of the business plan you’re going to write.
1. Executive summary
The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. Most people write it last, though.
The opportunity section answers these questions: What are you actually selling and how are you solving a problem (or “need”) for your market? Who is your target market and competition?
In the execution chapter of your business plan you’ll answer the question: how are you going to take your opportunity and turn it into a business? This section will cover your marketing and sales plan, operations, and your milestones and metrics for success.
4.Company and management summary
Investors look for great teams in addition to great ideas. Use the company and management chapter to describe your current team and who you need to hire. You will also provide a quick overview of your legal structure, location, and history if you’re already up and running.
5. Financial plan
Your business plan isn’t complete without a financial forecast. We’ll tell you what to include in your financial plan, but you’ll definitely want to start with a sales forecast, cash flow statement, income statement (also called profit and loss) and your balance sheet.
If you need more space for product images or additional information, use the appendix for those details.