You have this great idea for a business. It’s been brewing for a couple of years now, and you’re finally ready to act on it.
Fantastic! What’s your business strategy?
Many people preparing to start a business — and even some who have already started one — fail to research and write a business plan that tests the feasibility of their idea. Some may think it’s a “waste of time.” They would rather wing it, stick with a pitch deck, or hope for the best.
But hope, unfortunately, isn’t a strategy for success. Writing a solid plan and executing it kick-starts your road to success.
If you hadn’t considered writing a business plan until now, here are three key reasons why it’s a crucial tool when starting your business.
One of the easiest ways to gain clarity on your goals and brand message is to practice how you communicate them. Clearly describe what problem or need your business addresses and why it’s necessary for your target market. This strengthens your case when marketing and selling to your target audience. It's also useful when you need to apply for or raise funding for your small business. A clear picture of what your goals will help you chart a course to deliver it as promised.
A lot of ideas sound great on paper or in casual conversations. But when you dive into the financials, such as how you plan to make money and how much it will cost, those ideas can fall apart. Writing a business plan provides you with the space to create a financial model. It outlines the best- and worst-case scenarios that validate your idea’s worth.
Writing a business plan helps establish benchmark goals — those that are on your path to the main goal — and determine what you need for your success. Setting mini benchmark goals with deadlines for each month, quarter, and year provides you with short-term targets to focus on. Nearly every plan for your business changes as the company grows. These benchmark targets ensure that your company is always moving forward.
Creating a plan for your business can seem like an overwhelming project. Especially, it’s your first business or you lack a background in finance or operations. Luckily, there are a number of resources available online, including Trailhead’s “Make a Business Plan” lesson, which helps you write a detailed plan. Your options vary based on your specific industry or product offering. However, all plans share a similar outline that you can follow when writing your own.
Below, we’ve put together a resource template for creating a thorough business action plan. Following a template allows you the opportunity to organise your thoughts and clearly present the plan to prospective partners, investors, or vendors. It can be a lot of trouble to start from scratch. Instead, try using this outline to draft a plan for your business and turn your napkin scribbles into a solid, well-researched plan that’s ready for financial investment.
Sales and marketing plan
Every thorough plan for a business open with an executive summary that provides a brief description of the business, a mission statement, the products and services offered, and a summary of plans to succeed in the marketplace. If someone were to ask for a more involved version of your business elevator pitch, you’d recite your executive summary.
This is your napkin drawing on steroids. The company overview section is a snapshot of your business:
Your business’s history
A detailed list of products and services
The physical location (if there is one)
The problem/need your product or service addresses
Briefly touch on your target audience and how you plan to attract them (you’ll go into more detail later). This is only a snapshot summary for someone to grasp your idea and see the opportunity behind it. You also want to clearly define your company’s strategy for starting or growing in the marketplace.
Your plan needs to address the industry as a whole, including relevant statistics, current trends, consumer demographics, and any external influences affecting the industry. Use this section to address how your business will fit into a specific industry and what (if any) subsections of the industry you will target.
Who will you battle for customers? The market analysis section requires you to validate that there is enough demand in the market for your business to both enter and grow. Research competitors in the industry, their market share, and how you plan to compete against them.
This is also a great opportunity to describe any industry barriers upon entry. You can explain how your company will establish itself — including your unique selling proposition — and share how the barriers will help protect your business from other startups or companies that want to go after your market share.
How will you execute your strategies and reach your goals? Your sales and marketing plan should clearly describe how you will grab the attention of busy consumers and persuade them to buy from your company. Use this opportunity to showcase your strengths, account for how your brand will stand out in the marketplace, and detail how you plan to build long-term customer loyalty for repeat business. Don’t forget to describe your pricing strategy and how it compares to the rest of your market, as well as the advertising strategies you will use during your launch and first year.
Your business team section should focus on your business’ legal structure. Are you a sole proprietorship, partnership, corporation, or other type of business? Introduce your key team members such as managers, board members, and additional owners. Detail who owns what percentage of the company and each team member’s involvement in the business’ day-to-day operations.
Your operating plan gives insight into how your business will function on an ongoing basis and what daily operations will look like. The questions you’ll address in your operating plan may include:
Will you have a physical location?
What expenses are related to running the business?
This is the money-making section, which can be an exciting part to investigate and budget. The financials portion of your plan may be the most important because it shows how your business will make money and grow over time. This section is even more crucial if you’re seeking outside financing or investors to help fund your startup. Your financials should outline how your business will generate revenue and profit, and if necessary, how it will repay its loan or investors. Create monthly, annual, and three-to-five-year profit and loss projections and outline anticipated expenses.
Close your business plan with an appendix that provides supporting documentation such as bank statements, employee bios, licenses, agreements, and business credit history. Think of it as your supporting research and reference documents.
Once you’ve outlined a plan for your business and gathered all the necessary research and documentation, it’s time to write it. By following this template, you should have no problem taking your great idea from a general concept to real life. Your plan doesn’t have to be as long as War and Peace — it simply has to address each key point referenced above and show that your business addresses a need in the market. Then, after you finish writing your business plan, you can follow its guidance and get started on building your business.