The very first thing an entrepreneur should do when they have a business idea is to write it down. The most common request I get from clients is to help them write a business plan, which is essentially the story of how their business will come into existence and succeed. While I believe a business plan is crucial in fleshing out a good idea, there is a lot of confusion over whom exactly you are writing a business plan for.
A business plan is for you, the founder, and nobody else. Business plans should be long, extremely detailed documents that help you explore and plan the execution of every element of your business. Investors and other third parties do not need to be privy to this thought process, they just need to see your conclusions, and a compelling argument for why they should be involved. You present your ideas to investors in the form of a pitch deck: a boiled down version of a business plan that explains how you will solve a problem, why you are the person to do it, and how that will make the investors money.
While the business plan may be only for you, it is a crucial tool for anticipating business needs, and helps position you for success. Even though investors usually don’t want to read your entire business plan, they will want to know that one exists. Read on to learn more about what exactly should be included in every founder’s business plan.
The executive summary is a brief synopsis of what is to come in the business plan.
Pain (A problem you are trying to solve)
- The most successful businesses are created to solve a problem that people face.
- What problem are you trying to solve?
- Why hasn’t this problem been solved before?
- What evidence do you have that this is a problem people would pay to have solved for them?
Solution (How do you plan on solving that problem?)
- What technique do you plan on using to solve this problem? Is it a new technology?
- Is it a network of people that customers previously had no access to?
- Are you creating something of better quality than what already exists?
- Who are your competitors? How are they trying to solve the problem?
- How is your solution different and better?
- What is your value proposition? Are you better quality? Lower price? A new innovation?
Market (What is the monetary size of this opportunity?)
- What is the size of your market in terms of revenue/year?
- You should segment your target amongst the different groups of consumers. Which will you go after first?
Product (What you offer)
- Describe the product. Are you a website? If so, use screenshots of the prototype or inspiration to lay out the user experience. Are you knitting sweaters? If so, describe the fabric, designs and manufacturing process that make you unique. Be as specific as possible in describing all features of your product.
- What is your brand identity?
Sales & Marketing
- Which channels of communication exist between you and your target market?
- Which channels are the best ones to communicate the existence of your product to your target market? Social Media? PR? Paid Advertising?
- How much time and money will you spend on each marketing channel?
- How many users do you expect to get from each channel?
- Who will be the one communicating with customer? Will you need a sales force, or will you do it yourself?
Financials (P&L;, etc.)
- How will this business make people money?
- What is the size of the investment return, if there is investment?
- Identify your main sources of revenue.
- Break down monthly costs.
- Based on revenues and costs, what does your cash flow look like?
- How much money do you need to invest before your revenues pay for the costs?
Operations (How you will do it all)
- Are you a manufacturing business? Will you be hiring a production company?
- Will there be office space? Any other monthly overhead to consider?
Management & Personnel (Who will do it all)
- Why are you the right person to be solving this problem?
- Staffing plan. How many employees will you have, how much will they be paid, and when will they start?
- How will you hire and recruit?
- Do you have specific company slogans or ethos?
Always try to include company values & culture somewhere in your business plan. Demonstrate the intention behind your business. Share your vision for what your company will become and achieve. This helps stakeholders understand what they are investing in and supporting.