How to make a business plan
Unless you make your living writing business plans, you're probably going to need some help.
Fortunately, online resources for writing a business plan are plentiful. There are many books, software programs, and websites that will walk you through each of the dozens of steps involved.
Even if you hire someone to prepare your business plan, you still have to get all the information together to have an effective plan. You have to be able to convey excitement with substance and with the uniqueness of your business opportunity, start up costs, and qualifications of your management team. Above all, be concise; do not exaggerate.
Of the many parts of a business plan, by far the most important is the executive summary. The executive summary, or business plan summary, is just what it sounds like: a compact version of the big plan. In straightforward prose you should answer the following questions:
- What sort of company is it?
- What's the product/service, and what's special about it?
- Who are the managers?
- You focus your time and energy on activities that are most likely to achieve your goals.
- You know how to allocate resources.
- You put a solid strategy in place to set your business apart from the competition.
- You can communicate your plan to employees, and hold them accountable for results.
- You can track the results of your efforts and make mid-course corrections to get back on track if you need to.
A sound strategic business plan must cover three areas. If you miss any of these areas, your plan will be incomplete and will not be nearly as powerful as it needs to be.
First, you have to lay a sound strategic foundation. Your strategic foundation:
- Sets out your vision and specific goals for your business
- Describes your target clients, their current and emerging needs, and your target project
- Defines what sets your business apart - or your edge - in your clients' eyes
- Crafts your positioning statement, or irresistible marketing message that will attract desirable new clients to you
- Lists current hurdles that are keeping your from achieving your goals and vision
Second, you need to identify a set of priorities that will help you to make your strategic foundation a reality. This includes:
- Campaigns to become visible within your target market
- Ways to strengthen your business relationship with high-potential current clients
- Priorities to improve your capabilities to better serve clients
- Strategies to build an organization that can operate without you
These three elements - strategic foundation, priorities, and action plan - make up a complete strategic business plan. Yet, many entrepreneurs skip one of these, and never learn how to make a business plan that works, which is why their business plans never get implemented. Similarly, many organizations create a set of priorities, but don't assign specific people to implement those priorities. They also fail to free up those people to focus on those priorities, as opposed to their previous job descriptions. Therefore, the plan remains theoretical - a nice thing to do, but impossible without specific roles, responsibilities, and time frames in place.
Confusing a Strategic Business Plan for Management with a Business Plan for Lenders/Investors
While there is significant overlap, a strategic business plan for you as the owner of your firm is very different than a business plan whose goal is to raise money from investors or lenders. To clarify, a good business plan for investors or lenders answers three questions:
- How big is the opportunity?
- What is management's ability to take advantage of the opportunity and execute effectively?
- What is the financial deal to investors to make the investment worth the perceived risk?
Your strategic foundation explains what kind of firm you want to create, and some key elements that you need in place to get there. Without these elements, you are like Alice at the fork in the road. With that in mind, this section of your plan should include the following areas:
1. What is your vision for your firm? Write a brief paragraph that describes what you want your company to look like in 3 to 5 years. What will your firm be famous for? What will be your major accomplishments? How many people will be working for you? What kinds of clients will you be serving? Will you have more than one office and, if so, where? What will be your role in the company, and how will you spend your time? These are the types of questions your vision statement should answer.
2. What are your specific financial goals over the next few years? Your answer to this question is one of the most important items when learning how to make a business plan. Everything you write after this point should directly tie back to helping you achieve your financial goals. Aspire to earn the income that you deserve. What do you want to earn over the next 12 months? Three years from now? Five years from now? Write it down; so that your plan will help you make it happen.
3. What is your target market? Your plan should define your target market, then answer three questions about the people/businesses in your market: First, is the target market large enough to allow you to achieve your financial goals?
Second, what are the current and emerging needs of your market? Take a few clients or industry leaders out for lunch and interview them to understand their needs.
Third, what att