“One step in the right direction is better than 7 in the wrong one”
Idea – Market – Money
Business plan schmizness plan. In 2006, a Babson College professor emeritus studied several years’ worth of Babson Graduates and found no difference in success between those who started with or without business plans.
But wait, before you scratch the idea entirely, please take this into account:
- If you want funding, you need a plan, “show me the money….you better show me the plan”
- If you haven’t thought of everything yet, a plan will help you. If you think a lot about your business, brainstorming on paper is sure to uncover some key insights.
Your plan can be one page – Really. The last business plan I did was one page. Would it have been longer, I may have never got around to it.
Here’s my basic three step business plan for everyone. Those looking for an easy way to make a traditional business plan, be absolutely sure you read the next section.
- Idea – Write a paragraph about your idea. Make sure you discuss the problem you are solving and how exactly you will solve it. For instance, I have an idea to start an affordable web design service for locals. I would identify what is preventing local businesses from having decent websites and solve that problem.
- Market – whose problem are you going to solve? Look at your competitors. What are they doing, and more importantly…what are they not doing? Getting back to the web design example, I would do come research to figure out why local folks aren’t online yet, why they have crappy websites or if they even care. I would also check competitor pricing and prominence. If there are not many web designers, there is likely not a market for web design.
- Money – How much does your product cost to make, and how much will you sell it for? Unless you want to run your business for solely for fun, then you’ll need to find out right now whether the model you have in your head will be profitable. Figure out sales volume to profitability. Say I started a web design business, how many $500 websites would I need to sell to pay my business and living expenses. How would I get customers, and how much will that cost?
If you like to save time and get to the point, check out Tim Berry’s 3 Weeks to Startup. You’ll learn how to use the internet to eliminate the exhausting legwork in traditional startup plans.
And, there’s nothing wrong with traditional business plans. They are important for funding and small organizations too. There’s benefit to putting in the work, but it can be a real grind. There’s software to make it easy, like LivePlan. When you get started with liveplan, you’ll secure funding with ease, and also be able to track your progress.
Checkout this screenshot:
Here’s an overview of what a Traditional Business Plan entails.
Executive Summary is a brief synopsis of the entire plan, highlighting on the main topics of the Business Plan: Mission Statement, Company Info, Growth Highlights, Financial Information and a Summary of Future Plans
Company Description is a short sales presentation of what your company is about. Discuss the needs you are meeting, who’s needs and how many people’s needs you are going to meet. Also, be sure to highlight your competitive advantage.
Market Analysis is a detailed look at your potential market. Size, purchasing behaviors, location etc. help to describe your market. You’ll also need industry trends and forecasts here. Additional details will include your target market share along with a competitive analysis of the market.
Organization and Management – is where you put the roles of people involved along with ownership rights, organizational charts, etc. Duties and of your team need to be specifically documented. Your board of directors is documented as well.
Service or Product Line – is where you describe your product/service, explain the life cycle, intellectual property and R&D necessary. Be sure to explain the benefits of your product/service from the customer’s perspective along with the competitive advantage.
Marketing & Sales – will explain how you plan to acquire your customers. Discuss what methods you will use to reach customers, costs, and a growth strategy which may include offering additional products on top of your core offering. Also, how you manage the sales process and customer support is important to document.
Funding Request is used to outline how you will get funding. Included will be your funding requirements, how you will allocate the funding and whether you will require additional funding in the future.
Financial Projections – contain forecasts of sales income, expenses, cash flow and budgets. Be sure to include graphs and charts.
Appendix – will include attachments to further previous statements or points. Resumes of key managers, product pictures, contracts and market study details go here.
You can get free business plan templates inside MS Word. If you don’t have Microsoft Suite, you can get it monthly for less than $7 here.
To access the free templates inside of word, Open MS Word, Start a new document, Search “Business Template” in the office.com templates