The awful truth is that very few people look forward to writing business plans, even if they are beneficial: not only will a business plan help keep your business on track, but the process of putting your vision down on paper can provide additional clarity, without which can break your business. Moreover, a formal business plan is also a necessary evil if you are seeking funding.
But writing a business plan doesn't have to be so daunting. Not all business plans are the same, and they don't all have to be boring, either. With the help of a panel of experts, we help you navigate the business plan waters and provide some free business templates that can make writing a business plan easier than ever.
First things first
Crafting a business plan doesn't just help you create a blueprint of your business goals and expectations, it's also an opportunity to reflect on how you're going to meet those objectives. Before you jump into writing your business plan, there are several things you can do to better create a business plan that best sets your company up for success. Patrick Hull, CEO of investment firm Phull Holdings, shared the following tips in a contributed Forbes article:
1. Be honest with yourself
According to Hull, entrepreneurs need be realistic when it comes to planning their businesses. This means addressing both opportunities and challenges your business might face, for instance, by identifying the best and worst case scenarios. "If you’ve got a strong idea, let it stand on its merit," he wrote.
2. Be concise
A business plan should get straight to the point. You should avoid any fillers and get rid of any fluff. "Even if it sounds nice, fluff gets you nowhere and wastes space. Plus, no investors want to read a long business plan," Hull wrote.
3. Be creative
Just because a business plan shows you're serious about your business doesn't mean it can't be fun. One way to make your business plan more entertaining — and thus grab more attention and be easier to follow — is to add a creative element.
"Whenever possible, and without overdoing it, use visuals in your business plan. Graphs, charts, and images can help bring your concept to life. Plus, it breaks up the text and helps a plan flow better," Hull wrote. Although business plan templates are available, Hull said adding something unique will make the plan truly yours.
Simple business plan template
Generally, there are two types of business plans: one-page business plans and comprehensive business plans. If you have a more complex business that needs to hash out market analysis, financials and other strategic details, read ahead for expert advice on how to create a comprehensive business plan.
For other businesses, however, particularly those that just have an idea they want to try out or are not quite ready to delve into the details, a one-page business plan will do the job.
A one-page business plan has everything you need to concisely capture your business and what it will take to run it, all in a single page. The idea is to create a business plan as quickly as possible, so you can spend the rest of your time actually launching your company.
"The $100 Startup," a New York Times and Wall Street Journal best-seller, provides a downloadable one-page business plan template PDF at its website 100startup.com. This single-page form asks several business planning questions, all of which you can answer in one or two sentences.
Comprehensive business plan templates
Comprehensive business plans get down to the nitty- gritty of what your business is about and where it is headed. They are typically broken down into several sections: Executive Summary, Company Description, Products and Services, Marketing and Financials.
The following slides offer expert advice on how to best craft each section of a more detailed business plan, along with some useful resources on finding free comprehensive business plan templates.
Section 1: Business/Executive Summary
The executive summary needs to succinctly answer a number of key questions for prospective stake-holders, including investors, employees, vendors and customers. Often, an entrepreneur must summarize his/her new venture in a 250- to 500-word written summary or a three- to five-minute verbal description, said Jon Burgstone, founding faculty chair and adjunct professor at the Center for Entrepreneurship & Technology at the University of California, Berkeley. He is also the co-author of "Breakthrough Entrepreneurship" (Farallon Publishing, March 2012).
"The executive summary should be able to describe how the business will solve a customer pain [problem] in one or two sentences," he said.
The business summary should also provide information on the management team, including experience, industry credibility, history working together and commitment to the venture.
"Include a specific plan to fill any gaps in your management team," Burgstone said.
It is also necessary to include the business's immediate objectives and resources required—including necessary capital milestones expected to be reached, and other information needed to understand the business and technical risk of the venture.
"In addition to the executive team, a board of advisors is often very important to new companies,” he said. "Members can serve as executive mentors, providing advice on topics including leadership, management, functional skills and industry expertise."
Section 2: General Company Description
Raj Tumber, SCORE business counselor in the area of public relations, said this portion of the business plan should tell the story of your business, how it came to be, where it is today and where do you see it heading.
The company description should cover how you plan to grow and succeed and give investors and other interested parties a sense of your vision, knowledge and experience. Company history, current business position, objectives and ownership should also be included, he said.
Tumber suggests anyone writing a business plan consult SCORE's online business-plan templates.
Section 3: Products and Services
This section is designed to simply explain to the potential party of interest about your products and services, said SCORE's Tumber.
"[This section] explain[s] where you will source your supplies and inventory, specifies product comparison with those that are out in the market and explains your research and development plans," he said.
In the introduction portion of this section, outline the most exciting characteristic or benefit of your product line or service, he said. "How can it attract the target market? Summarize the value and offerings your product delivers," he said.
Other important things to touch upon are features, benefits and pricing of your products or services. These are key areas where many entrepreneurs skimp on the details, but they are arguably among the most important element of the business plan.
"This is where you have to really spell out how you are going to make money," said Mike Mirau, owner of a Growth Coach franchise in Dallas. The franchise provides business and sales coaching. "You need to establish your margins, how you will set your pricing and what you offer relative to the competition," he said.
Tumbler said you should outline how your products and services stack up against your competition, where their products are sold, and how yours compare to them.
Suppliers and inventory, along with research and development, should also be addressed in this section of the business plan.
Enloop, a company that offers free, customizable business-plan templates, has many examples of ways to present the products and services section.
Section 4: Marketing
A marketing section should be broken into internal and external communication, including a subsection that touches on traditional (print and TV ads) as well as new tactics (social media, blogging, photo and video sharing, etc.)
"A media relations section would delve further into positioning staff and company executives as experts in particular fields, pitching story opportunities, setting up interviews, product reviews, use of bloggers, etc.," said Jeremiah P. Sullivan, co-owner /integrated communication specialist for Framework Media Strategies, a marketing and public relations firm.
Potential investors also want to hear about how you plan to use mobile marketing to get the word out about your business.
"The number of mobile devices connected to the Internet is very quickly going to exceed PCs," said Simon Buckingham, CEO of Appitalism. "Mobile devices carry a much more personal brand and attachment to a consumer than a PC."
The Small Business Administration (SBA) website offers a number of business plan templates to help get you started.
Section 5: Financials
"When you get to the financial part of the business plan, that is what many people fear the most," said Tim Perry, founder and chairman of Palo Alto Software, a provider of small-business software.
Cash flow is the most important aspect to focus on, he said. "The balance sheet is the holy grail. Businesses run on cash. No business plan is complete without a cash flow plan." Aside from cash and income, there is the balance of assets, liabilities and capital.
The plan should also cover profit and loss, incorporating sales, cost of sales, operating expenses and profits. In most cases it should show sales, less cost of sales, as gross margin, and gross margin less operating expenses as profit before interest and taxes. Normally there is also a projection of interest, taxes, and net profits, he said. There should be a monthly sales forecast for the first 12 months and annual sales projections for the first three years of operation.
He also suggested including a market forecast, addressing questions such as: "How many potential customers are there for the business?" and "How will market growth impact this business?" The website Bplans.com also offers a variety of free business-plan templates.
Ready to start your business?
Think you're ready to start a business? Try our business quiz and find out. Are You Ready to Start a Business? 20 Questions to Ask Yourself. For more information on the best tools for running a business, visit our Small Business Resource Center.