Most veteran business owners agree that the best approach to write your business plan is to start with a business plan outline that you can expand as you gather information.
Here's how to create and complete one for your business.
Start with standard business plan elements
Most business plans include the following elements. Use each as an outline section.
- Executive summary
- Company description with mission statement
- Products and services
- Target audience
- Market analysis
- Competitive analysis
- Operations and management
- Sales and marketing strategy
- Financial plan
How each of these applies to your business, and how in-depth you'll be in your outline and plan, depends on your answers to the following questions.
Who will read and use your plan?
Your business plan will look different depending on whether you write it to secure investors, form a business alliance, or hire contractors, says Nishank Khanna, chief financial officer of Clarify Capital.
If you'll be approaching banks and investors, your outline and resulting plan will be more detailed than one you'll only use internally with your team.
"Investors will value your business based on the details and data, so it's important to be comprehensive and thorough. Your investors will be looking for holes in your assessment and plan to determine whether or not your business is viable and to what extent it's profitable," Khanna says.
How new is your business?
Business plan outlines aren't just for startups. Small businesses with months or years of experience also use them when they change direction or need to secure funding.
Startups can begin the outlining process with fewer details because they don't have the in-house data needed to document presumptions or projections. But a business relying on its track record to seek outside funding or a partner needs to go deeper to make the case for success.
"As the business matures, the outline can change. A highly detailed outline in the very early stage would most probably go to waste as the business might look nothing like what's in the outline after a few months," says Gian Moore, a partner at MellowPine, a home DIY blog.
Are you a solo entrepreneur?
If so, you still need an outline and a plan, but you can skip the management team, funding requirements, and exit strategy components, says Daniel Seeff, CEO of sock retailer Foot Cardigan.
"My advice to small business owners is always to include an executive summary, industry analysis, customer and competitive analyses, marketing, and operation plans in the outline. Outlining your revenues, expenses, and forecast of net income for the next three to five years is crucial for understanding where your business is going," Seeff says.
Brian Cairns, CEO of ProStrategix Consulting, agrees that the financial component is important, even for sole proprietors. "Without that piece, if you hire because you expect an increase in demand, for example, you might not realize that you pay for the labor before you get the payment from the client, which could cause an unexpected cash flow crunch," he says. If you've included financial statements in the outline, you'll expect and plan for this.
Fill in the blanks
With the outline in place, expand each section by adding bullet points documenting what you know now and what you need to research. Think of it as a living document that grows as you add new information, one step at a time.
Some sections will have more bullet points than others, depending on your situation.
When your research is complete, and each section has the facts needed, you're ready to write a business plan that will be your small business success blueprint.
Find out more about Starting a Business