A business plan is a crucial step in building any small business. The plan lends credence to your ideas, gives you confidence in your direction, and can play a vital role in securing financing.
Many entrepreneurs are intimidated by the prospect of creating a business plan, but they don’t have to be. With a few tips, creating a business plan can be a fun and enlightening project. Here are some simple suggestions to help you on your way.
- Do your homework – A business plan should be a well-researched document. Remember that this is the foundation for your decisions and could be used to convince lenders about the viability of your business. Make sure your numbers are correct. Research competitors, patents, cost of goods, supply chains, market valuation, etc. Having a well-prepared plan will illustrate your commitment and show investors that you are worth backing
- Know your target – Who are you establishing the plan for? This comes down to understanding the purpose behind the plan. The plan can be used as a guide for your efforts, but it can also be used to attract outside investors. Plans should present the business’s viability, the competency of management, and tactics that need to be executed. Make sure that your document is polished and presentable. Also, don’t overuse industry specific jargon. The plan should be easy for anyone to understand. If technical information is necessary, create an appendix with in-depth descriptions and schematics.
- Take it piece by piece – Don’t be intimidated by the scope of the project. A business plan may sound like a large undertaking, but when you break it down into sections you will see that it’s not such an overwhelming task. Start by creating a table of contents and tackle each segment piece by piece. Before you know it, you’ll have a complete plan
- Save the Executive Summary for last – This is the most important section of the plan because it is the first piece someone will read. It will need to grab an individual’s attention and encourage them to read more. Make sure that your executive summary is an accurate and compelling overview of the business. It always helps to go through the discovery process of writing the rest of the plan first, so you really know where it is going before you write the summary.
- Keep it short – Once you add up all those sections, a business plan can end up being pretty lengthy. Don’t skimp on the content but do try to stay on target. Keep your language concise to make sure that your investors can easily get through the document. This will also help you maintain the document as your business grows. There is no perfect length since each plan is tailored to its business and its audience, but the U.S. Small Business Administration recommends 30-50 pages for a standard plan.
- Don’t overestimate – Be realistic in your projections. Interested parties will want to see that you understand the reality of the industry and being overly optimistic or unnecessarily confident can raise red flags. Let the work speak for itself and play it safe with the numbers. Conservative estimates in your plan help show them that you can be conservative and level-headed with their investments.
If you have been putting off creating your business plan, now is the time. Don’t be intimidated.