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A business plan is your big idea put down on paper. It’s the roadmap for how to start and run your business, and it’s the document you’ll share with potential investors or funders. Presenting a clear, well-thought out, comprehensive business plan is an excellent first step for any new business owner. Another bonus of writing one? As you complete each of the nine sections of the plan, inevitably you’ll further clarify your vision for your business and hone in even more on your ideas and strategies.
So, where do you start? Open a blank document and paste in the nine section categories below. Next, ask yourself a series of key questions to help you explain and describe your endeavor in detail. Last? Share your awesome business plan around and get yourself some investors!
(If you want to take a stab at writing your first business plan but prefer a faster approach for now, Julie Gordon White’s 10-Minute Business Planner is a great way to start.)
The nine sections of a (typical) business plan:
1. Executive summary
2. Company description
3. Market analysis
4. Organization and management
5. Service or product line
6. Marketing and sales
7. Funding request
8. Financial projections
9. Appendix
1. EXECUTIVE SUMMARY
This is the basic -- but super important -- info about your business. Succinctly describe your business and say why it will be a success. Describe your product/service, state your location and provide basic info about your leadership team. If you are planning to ask for funding, also include brief financial information here (you’ll get into more detail in sections 7 and 8).
Answer these questions:
1. What is your business name, what do you sell and where?
2. Who is your target market?
3. Who is the team (it might be just you!) behind this venture?
4. How much money are you seeking?
2. COMPANY DESCRIPTION
In this section you’ll go into greater detail about your company and your leadership team. This is where you present all the positive and amazing things about your organization and explain what makes you strong, competitive and sure to succeed. In this section, you’ll also share your mission statement.
Answer these questions:
1. What is your mission statement?
2. Who is behind the company? (Provide names and brief title or description.)
3. What’s great about your business and why are you confident you’ll succeed?
3. MARKET ANALYSIS
In order to complete this section, you’ll need to have studied businesses that are similar to yours. The goal is to identify their strengths and weaknesses so you can enter the market as a strong, strategic competitor. Outline what makes you different or better. Remember, you don’t want to denigrate the competition, but you do need to differentiate yourself. Also keep in mind that saying your competition isn’t doing well could reflect badly on the industry you hope to enter, and that could make potential investors wary. Instead, focus on the niche or gap in the market you will be addressing with your awesome business.
Answer these questions:
1. What industry are you entering and who is your target market?
2. Is this a thriving or growing industry?
3. Why is this opportunity interesting?
4. What is your total addressable market (TAM)?
5. Who is your competition?
6. Why are you better and/or different than your competitors?
4. ORGANIZATION & MANAGEMENT
Describe who is involved in your operation and don’t be afraid to sell yourself! Often times investors are investing in people, so be inspiring and tell them why you are worth the funding. Describe the founders/owners and the daily operations team (again, this might just be you!). You may attach resumes or CVs to the business plan appendix and mention that here. Explain how you will structure your company. Will you operate as a corporation (C or S Corp)? Form a general or limited partnership? Or will your company be a sole proprietorship or an LLC? Also address any special permits or regulations that your business will need in order to operate.
Answer these questions:
1. Who is behind this company?
2. Why are they uniquely suited to operate this business?
3. How will you legally structure your business?
4. Will you operate within or meet specific regulations?
5. Do you need or have a special license, permit, patent or trademark?
5. SERVICE OR PRODUCT LINE
This is where you explain in detail the service(s) you offer and/or the product(s) you sell. You decided to offer these products/services because you fell in love with a problem that they will help to solve. Explain the problem that you’ve fallen in love with solving (the whole reason behind your business!) -- who experiences this problem? When? Why and how? Explain your solution to the problem and how you will help your customers fix the problem.
List each product or service and the price you will charge. Describe why and how your customer benefits from using your product/service. If you are selling a product, you’ll want to include a timeline that explains its life cycle from idea to research to development to marketing to sales to peak sales to decline. Address how you will reposition your product if decline occurs or the market becomes saturated. If you are still developing or researching your product, describe this process in detail including a timeline.
Answer these questions:
1. What problem have you fallen in love with solving?
2. Who experiences this problem, and how, why and when?
3. What products and services will you offer to help fix this problem and how will they fix it?
4. What will you charge for each product or service? (Include a bulleted list)
5. How will your customer benefit from buying your product/service?
6. What is the product life cycle?
7. Will you or have you already filed for a copyright or a patent?
6. MARKETING & SALES
What is your strategy for actually make a sale? How will you market your product/service? In this section you want to carefully consider this question: How will you get customers and keep them coming back for more? Your answer will guide your marketing and sales strategy. Expect this section to evolve over time as you learn what marketing strategies are (and are not) working.
Answer these questions:
1. How (or via what channel) will you sell your product to your customer? (In a brick-and-mortar store? Online? At markets? With a POS system?)
2. How will you attract and retain customers?
3. What marketing strategy will you implement to reach your target market?
7. FUNDING REQUEST
Asking for money is never easy. In your business plan, your challenge is to present a clear, professional and specific financial request to your potential funders. This section and the next will show prospective investors you have carefully thought through the financial expectations and obligations of opening your business.
Here you will outline your financial needs for the next three to five years, and you will describe your plan for using the requested funds. Clearly state your terms and explain your plan for repaying your debts.
Answer these questions:
1. How much funding are you seeking?
2. Are you after debt or equity? What are your terms?
3. What will the funds be used for?
4. What length of time will the funding be necessary?
5. When do you project your revenue will start covering your expenses?
6. How will you repay your debts?
7. What is your exit strategy for selling/leaving the business?
8. FINANCIAL PROJECTIONS
Let your potential investor or funder know what kind of financial future you have planned for your business by showing them your three key financial sheets: balance sheet, income statement (or profit & loss statement) and a cash flow statement.
Be positive and convincing about your financial prospects. If you are requesting additional funding to grow an existing business, provide your balance sheets, cash flow statements and income statements for as many years as you have been operational. This is the section to outline any collateral you are putting up against a loan. Outline your financial projections for the next three to five years, and be as specific as possible (for the first year, include financial projections for each quarter). Your projections should be aligned with your funding requests. Use charts and graphs to visually show your business’s financial future.
Answer these questions:
1. What are you financial projections for the first four quarters of your first year in business? (Calculate what you think your weekly/monthly sales will be, subtract overhead and expenses and go from there.)
2. Use these free templates to determine the three key financials for this section: Balance sheet, income statement, cash flow statement
3. What does the 3-5 year financial future of your business look like?
4. Are you putting up any of your own collateral against a loan?
9. APPENDIX
Use this final section of your business plan to include any additional documents or materials that support the presentation of your successful business venture. For instance, here you can attach your leadership’s resumes or CVs, photos of your product/store space or any legal paperwork you’ve assembled such as permits, patents, licenses or contracts. If you’ve cited any market studies, include them here, as well as any articles from a reputable source about how your industry is thriving.
Ready to learn more about starting and running your business? Check out our comprehensive guide: How to Start a Business: Resources for Everything You Need to Know
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