Rather than working on a business plan just because you think you need one, your planning process will be more efficient and effective if you understand what a business plan is for and how you will make use of it for your business.
Here are some tips and resources to help answer key questions about the what, why, and how of business plan writing.
As explained in our analytics course (TA-C506), knowing your business - being clear about your business objectives - is critical to understanding what to measure and how to utilize data for your business.
Know Your Business
Business plans may come in different forms, but to put it simply, "a business plan is a guide—a roadmap for your business that outlines goals and details how you plan to achieve those goals" (BPlans, "What Is a Business Plan?").
Rather than being a one-size-fits-all prescription, this simple answer to "what is a business plan?" distills the key purpose of a business plan, which is to serve your business purposes.
Depending on the specific needs of your business, the format, length, and the level of detail required for your business plan will differ. For instance, you may need to invest time in refining the design and language used in the document if you're using your business plan as a fundraising tool. On the other hand, if it will mainly serve as an internal management tool for strategic planning, you need to focus on the practical aspects of the plan.
Whether your aim is to produce a one-page consice summary or to create a detailed 30-page plan, here are some key components of a business plan which will be helpful for you to consider.
- Goals: What does your business aim to achieve?
- Benefits and Solutions: What problems are you proposing to address, and what solutions can you provide that benefit your customers in a tangible manner?
- Milestones: What steps do you intend to take in order to achieve your goals? What tasks are needed and who are responsible for them?
- Conditions: What are the strengths and advantages that your business has that make those goals attainable? What do you currently lack and how will you address the challenge in order to achieve your goals?
- Marketing Plan: How can you reach your target audience and attract new customers?
- Financial Plan: How do you plan to manage your business in a financially sound manner and achieve sustainable growth?
Benefits of Writing a Business Plan
There may be different opinions about the value of having a business plan, whether you should start with a plan when starting a business, and how long or formal a business plan should be.
It seems, however, that many business leaders and entrepreneurs agree that the process of writing a business plan has great value, as it forces you to think critically about your business idea, and to hold yourself accountable for the growth and success of the business.
This helps you think logically about your business idea and its feasibility. It also helps you think practically in terms of actions and outcomes; not just what success means to your business, but also specific goals and objectives that help you achieve the desired outcomes.
"What you need is a concise and focused plan to help you chart your course and hold yourself accountable" - Dave Skibinski (BloombergBusinessweek, "Do You Really Need a Business Plan?")
In addition to helping you better establish the direction of your business, a business plan can play an important role in getting everyone on board with the business' goals, sharing both your big-picture visions and specific program ideas with your partners, team members, and others involved (or you want to have involved) in the success of your busienss.
Business Plan Development as an Iterative Process
While it's important to recognize these benefits of writing a business plan, be sure not to focus too much on the "writing" part of business plan writing.
You may spend a lot of time perfecting the plan and fine-tuning the language, but a business plan is not a static thing that will stay in its original form once it's prepared.
Instead, focus on the process of developing, maintaining, testing, and continuously refining your plan as a living document in order for it to serve as a useful business tool.
Your business plan will be revised and updated as your business evolves. With this understanding, you can turn the business plan writing process into a practical and valuable business development experience by taking an iterative approach to gathering "evidence"; e.g. feedback from prospective customers, and assessment of your intended target market.
Test your business concepts and the assumptions you make about how you seek to achieve your goals, in order to prepare your business for the challenges and obstacles you will face in the "real world".
Resources and Tools to Help You Get Started
Lean Canvas: The lean canvas approach is often used as a one-page business model template that helps you articulate your goals, objectives, and methods in a consice manner. Building on the lean canvas concept, the business model offers detailed descriptions of common approaches to and interpretations of lean canvas, and the nine blocks of the canvas that a business model should include.
Business Plan Template: To get started on thinking about your business plan, it may be helpful to browse and learn from a template or a sample plan. Of course, you need to be aware that the process of thinking about the what, why, and how of your own business plan is just as important as the document itself, and that you cannot, therefore, rely on a template to do the work for you. Templates can be a helpful tool to kickstart your thinking process, and you can find some examples from: BPlans (free template download), Entrepreneur (forms and templates), SCORE (tools for small businesses and non-profits), and The $100 Startup (one-page business plan template).
Software Solutions: If you are in need of a robust and professional business plan (e.g. to be presented to potential investors), it may be worth looking into services such as LivePlan, which is likely one of the most frequently cited software solution related to business plan writing, particularly for startups and small businesses. Here are some additional information and comments on LivePlan by StartupSavant and by FitSmallBusiness.com.