A business plan is one of the most important documents a business owner can have. Convincing yourself to sit down and actually write out your business plan may not be easy; my mentor really had to push me before I finally got around to doing one myself! On top of that, when I was in NYU earning my master’s degree in real estate development, I had to write my thesis which was essentially a 40-page business plan. It wasn’t easy either time, but after going through the experience I was able to clearly see how important it is to have a fully developed business plan. Now I write a business plan for anything I set out to do professionally, whether it’s organizing a charity event, helping someone else start their own business, or for any business venture I undertake on my own behalf. I recommend that you do so for the following reasons:
- A business plan acts as a road map for your company, and in the event that you’re trying to raise money from investors, it demonstrates your understanding of the market, your competition, your product, and more. Subsequently this shows that you have a firm grasp on exactly how much investment you’ll require for marketing, production, etc. This makes it a much easier decision for any potential investor to work with you.
- For your own benefit, writing a business plan forces you to thoroughly consider every aspect of your business. It’s very possible that in the process of writing your business plan that you’ll realize the venture isn’t viable and you’ll scrap it before you make a more serious investment in time and money. You may realize that the market is saturated, or that the amount of capital you require to get started is far greater than you expected. Writing a business plan makes you scrutinize all the details, which will make you much more prepared, and far more likely to succeed.
A common misconception about writing business plans is that you need to have all the answers set in stone before you even start. But in reality, you should consider your business plan to be a living document that evolves alongside your business. It pays to go back on a regular basis and revise your business plan (at least every 6-12 months) and take the opportunity to evaluate what is working for your business and what isn’t.
Your business plan can be as detailed or brief as you desire, but there are things that need to be in it:
- The Executive Summary: This is a one-page overview of the entire business plan. This should be the first page of your business plan, but you want to write it last so that you don’t inadvertently leave anything out that comes up in the process of writing the rest of the document.
- Introduce yourself: Who are you, what have you accomplished, what are your credentials? Introduce your team: In business, nobody can be expected to know how to do everything, so you want to know (for yourself and for the benefit of potential investors) who you’ll turn to when challenges arise to make sure that you can meet your goals.
- Outline your product/service or your investment strategy.
- Perform a S.W.O.T. analysis (Strengths, Weaknesses, Opportunities, Threats).
- Summarize the state of the market. Why is there a demand for your product or service? Describe your competition: Who are you competing against, what are they good at, and why are you better?
- Marketing. How are you getting the word out about your products or services?