Drafting your first business plan is exciting, and a huge first step towards making your business dreams a reality. Whether you’re practicing your business skills by fleshing out a proof of concept or your business is up and running and you need to put your actions into words, creating a business plan is what brings it to life.
As exciting as it is though, a business plan can make or break your business (and it means nothing if you don’t follow through with it). So, here are the elements you need to construct a winning business plan on your first go.
The most important pieces of information in your plan are the mission and financial projections. What is the purpose of your business? And what revenues do you expect to earn? Basically, the problem you’re solving and how your solution will make money! Simple enough, right?
While the mission and financials are the most important factors for potential investors, they need to know some other information, as well.
Here are the six components of the business plan and what to include within them:
- Executive summary
Now, let’s go into a little more detail so you know what to include in each section.
1. Executive summary
The executive summary is basically an overview of your business (including the mission statement) and your plans will follow. Don’t go into too much detail here, but explain what your plan will cover and how your business will help solve the problems that you’ve outlined (touching on the market opportunity).
This section is usually only 1-2 pages and it’s convenient to write this section at the end, once you’ve put together the rest of the plan. Writing a summary is often easiest when you have all the other information available to summarize.
The opportunity or market opportunity section is where you will explain what exactly the problem is and how your business will solve it. Basically, why does your target audience need your business? Is there an alternative solution or competitor already in the market? If so, how is your business different?
Take some time to define your target audience by going into the demographic breakdown and maybe even some user personas of your ideal customers.
In this section, you will want to answer exactly how you’re going to turn this opportunity into a profitable business. This section will be longer as you should include marketing plans, sales plans, operations, and a timeline of milestones and key performance indicators. Basically, how will you know whether you’re succeeding?
You can feel free to link to your other plans (if they are already created) and provide a high-level summary of each. If you haven’t taken the time to create your marketing/sales/operations plans, now is a perfect opportunity to explore them!
Company/management is pretty self-explanatory… this one explores exactly who will be working at the company, your current team, and what roles you will still need to hire.
Explore why these roles are a priority as opposed to others. Showing some reasoning behind your managerial decisions is always intelligent here.
This section will also describe your company’s legal and ownership structure, location (physical or otherwise), and detailed history (if you have already been operating).
The financials are arguably one of the most important sections of your business plan. Don’t worry though, you don’t need to be a financial genius to figure this one out. Simply working with an accountant on some forecasting will be enough.
However, this section is important because it requires a lot of research into the potential market size and accurate estimates on how much of the market share you will be able to capture given your current infrastructure.
Documents to include in this section are a sales forecast, cash flow statement, income statement (profit and loss), and a balance sheet. Most cloud-based accounting software will generate these for you automatically upon request, but if you need help it’s best to contact an accountant.
Last, but certainly not least, is the appendix. Instead of bogging down your plan with in-line charts and pictures, the appendix is where these should go. If you need space for product images or even research information, use the appendix for these details.
You can refer to these appendices throughout your business plan, so make sure to label them all correctly and triple-check the order of things (it should follow the same flow as your business plan sections).
Writing a business plan is exciting but it is also a lot of work. There are a few ways you can make it easy on yourself, though.
Try to keep your business plan short. You want people to read it, after all! Ten pages is definitely palatable (before appendices) but anything beyond 10-15 is really pushing it. Financial documents go in the appendix, by the way, so they’re not taking up space in that section. You simply want to describe your positioning there and include all relevant documents at the end.
Your business plan will be constantly evolving. Make sure to keep previous versions and adapt as the years go on. This year has changed a lot of business plans for a lot of people, so just know that nothing is set in stone. Keeping it short and sweet will make it easier on your future self who has to revise this plan so just keep that in mind.
You’ll also want to consider your brand language in your business plan. If your business is fun and edgy, let that come through a little bit. Don’t be overly professional and “stuffy” if your brand is not. Keep in mind that investors do know the business, so you can use appropriate terminology, but avoid minutia that only your employees will care about. Basically, you want to show them the money.
Finally, have fun with it! Many business owners did not go to school for business… or go to school at all. All the information you need is accessible and at your fingertips. Just enjoy the process, do the research, and make the business plan.
Keep working hard and the results will follow.
If you have questions, comments, or insights, we would love to hear from you. Don’t hesitate to send us a message here or on social media to tell us about your business plan.