So you have a great idea for a business, you understand that getting a new company off the ground takes tons of grit, work, and luck, and you’re excited to get started. Great! Now it’s time to work on your business plan.
You might be more excited about ordering inventory, designing your website, or renting your storefront than sitting down to write an essay, but your business plan is an essential part of a successful launch. This document serves (at least) three major purposes: to help you get loans, investment, and other funding, to provide a framework for planning concrete steps in your launch, and to encourage you to focus, reconsider, and perfect elements of your business that may have been hazy before.
A business plan can definitively increase your chances of success–the Harvard Business Review recently reported that entrepreneurs who wrote out formal business plans were 16 percent more likely to achieve business viability than their non-planning peers, even when factors such as education level and enterprise type were similar. It’s an important document, but not an overly long or difficult one. Here are some basic steps for getting your business plan going:
Describe Your Industry and Your Target Market
The average bank loan manager doesn’t know a lot about, say, the cupcake baking industry. So you’re going to have to describe it so that the rest of your business plan makes sense. This is also a good place to demonstrate that you understand the major trends and factors influencing your industry’s evolution over time, its potential risks and opportunities, and how your business fills an available niche.
Many business plans identify their target market within an industry by using a three-part Total Available Market (TAM), Served Available Market (SAM), and Share of Market (SOM) breakdown, explained here by Cayenne Consulting.
Examine Your Competition
Here’s where you analyze other companies who occupy market space overlapping with your proposed business and explain how your concept would be different and/or more effective. Bplans warns specifically against arguing that you “have no competition.” Even if your business concept is revolutionary, it’s almost certain that many of the consumer needs it could fill are already being filled, albeit less satisfactorily, through other avenues.
Email, after all, is technically a rival to phone and postal mail for satisfying user communication needs. Use your competition section to emphasize how your business will be better than its rivals, rather than pretending it has none.
Operations, Marketing, Management, and Finances
These sections break down the nitty-gritty of how your business will work, demonstrating to your readers that you have more than just a great idea and an understanding of your market–you have a concrete vision. Here you’re going to explain how your company will source and deliver products and services, how your marketing will ensure you can actually bring in consumers, how your company’s management structure and practices will maintain its long-term durability, and how you anticipate and plan to manage expenses and revenue streams.
You should also present the core personnel of your enterprise (even if that’s just you), explaining both how your initial staff’s expertise will contribute to the business and how you plan to find additional talent as your company grows. While business plans shouldn’t be the length of a novel–the Small Business Administration says that most consultants advise thirty to fifty pages–this is still a good location to go into detail.
Write Your Executive Summary
This actually should be the first text to appear in your finished business plan, but the Balance recommends writing it last. You may find that the task of briefly summarizing your business has changed significantly between when you started and finished writing the bulk of your plan, as methodical assessment likely helped you re-assess your goals and think through hazier points. Your executive summary will be the go-to section for any outside readers, such as banks or investors, who are assessing your company, so it should quickly and clearly summarize the most significant components of your plan, including why you think the market is receptive to your company and how you’re going to execute your enterprise successfully.
If your executive summary is unclear or unimpressive, then there’s a high chance that your audience will stop reading even if your actual business concept is a strong one. This is why many people consider the executive summary the single most important part of business plan drafting.
Ultimately the length, format, and content of your business plan can vary depending on the kind of business you’re launching and the readership you’re tailoring the plan for. Luckily, many resources exist for learning about and developing the ideal business plan for your company. The Small Business Administration provides a comprehensive interactive tool and a thirty-minute course on creating a plan, both for free. Many other resources, such as Investopedia and Bplans, also provide detailed advice.
Launching a new business is challenging but exciting, and the necessary step of writing a business plan shouldn’t keep you from moving forward. When your plan discusses financing necessary equipment purchases, consider exploring Currency’s flexible and speedy financing platform. Because Currency searches hundreds of lending providers to find the best rates for your specific situation, it can be a handy and cost-effective tool for finding equipment solutions.
If you’d like any additional support, a dedicated Currency team member is on hand to answer your financial questions. Contact the team today. We’re always available for a call at 877-358-4595, and would love to answer your questions.