A business plan explains the details of how a business will operate and achieve its goals. You can create a business plan for your company for free and in a relatively short period of time.
When and Why You Need a Business Plan
A business plan is usually required when a small business is seeking out financing for growth, whether the funds are coming from a bank, an angel investor or a venture capitalist. People or institutions about to lend you money or invest in your company need to have solid plans, projections and data on paper for a thorough understanding of the key areas of your business. Investors and lenders need to understand what problem your business is solving and how large the market is. It also shows them exactly what your business intends to do and how it will do it.
Key Components of a Business Plan
Every business plan is different, but usually every business plan contains a few common sections:
Executive summary : A brief outline of the company’s purpose and goals.
Business description: A description of the problem your business will solve and how it will solve it.
Market analysis: A detailed analysis of the potential market for your solution.
Competitive analysis: Usually a SWOT analysis that details how competitive your company will be against other market players.
Sales and marketing plan: A comprehensive strategy for making the market aware of your product and how it will be sold.
Operations plan: All necessary details of how your business will run.
Financial projections: A few years’ worth of cash flow, balance sheet and income statement projections.
A Shorter Business Plan Perspective
In the past, business plans could have been up to 100 pages long. Nowadays, even a dozen pages might be considered too long. Many successful entrepreneurs and startup investors argue that a business plan should presented on a single page. This presents a challenge, but it can also be a great opportunity to clarify the exact details of your business.
The main arguments behind a one-page business plan are that:
Financial projections are too fickle. Efforts should first be focused on creating a minimum viable product and generating sales.
Market data changes so quickly and competitors arise and die out so often that a business plan is stale the moment it is finished.
The one-pager is a useful tool, but confirm the type of business plan a lender or investor actually needs.
Creating Your Plan
A business plan can be created completely for free. You can find templates for the structure of a plan online and locate data for any section in the plan with a small amount of research. Don’t be hasty – but a business plan should not take a significant amount of time to complete.