Starting a business? Then you’ll need to know how to write a business plan.
A business plan maps out your sales goals, operating methods and financial setup.
Having an effective plan is important for your business for three main reasons:
- At the time of startup, creating a plan will help you think through every step you’ll need to take to set your business up.
- It creates an accurate summary that investors or banks can use to make decisions on financing your company.
- Once your business is running, it can be used to guide how you react to changing market trends and opportunities as they arise.
In the past, traditional business plans ran anywhere from 40 to 100 pages and took many months to research and write. Completing these super-detailed reports often meant hiring a professional who might charge thousands of dollars per plan.
Today we have streamlined versions like the Lean Business Plan.
In many ways, the Lean Business Plan accomplishes the same thing as a traditional plan. It’s just an easier way into the process for those who are visually oriented.
The plan’s nine squares cover all the business bases:
- The problem the consumer is having.
- A solution that is not currently available (or at least not in the form you propose).
- What makes your product/service different.
- How it will be priced.
- Description of likely customers.
When writing your Lean Plan, Noah Parsons of bplans.com advises, “Keep it short … know your audience … (and) don’t be intimidated.”
This stripped-down version of traditional business plans uses plain, everyday language instead of business lingo. Often this type of plan can be completed in a matter of hours or days.
The 6 sections every business plan should have
Business plans are worth the time you spend on them for lots of reasons. Here’s what to include in yours.
- Executive summary.
Now let’s dig into what to describe in each section.
1. Executive summary
This section is where you sum up the essence of your company for investors and lenders.
“The executive summary should provide a quick overview of the problem your business solves, your solution to the problem, the business’s target market, key financial highlights, and a summary of who does what on the management team.” says Tim Berry, the author of Lean Business Planning.
Because the executive summary relies on what’s in the rest of the sections, many people create the other sections first and then write the executive summary.
Related: How to start a business in Canada
Creating a good business plan means doing research on your competitors and the marketplace you will be entering.
It’s not enough to say “there aren’t enough poutine trucks in this part of town.” You need to actually determine if this is true. Read this post to learn how to do market research.
Your goal it to find a problem that your company can solve with its products and/or services. Once you’ve found one you want to solve, state it clearly here.
- How many poutine trucks serve this part of town?
- How busy are they?
- Are customers satisfied with what they’re getting from the current trucks (price, service, quality, etc.)?
- Is there demand for a variation/other type of food that’s not on offer?
This section is where you get to spell out in detail the present and future conditions of the market for your business.
This section describes how you will turn your marketplace opportunity into a functioning business. Be sure to include:
- How you plan to get customers. Learn how to set sales and marketing goals using the SMART tool that Eric Goldschein outlines here.
- The general operating procedures of your company, including where you’ll get supplies, how you’ll store inventory and how you’ll distribute your products.
- Measurable milestones you expect to reach, such as number of units sold, manufacturing agreements made, etc.
It is also important to describe the metrics you will be watching to mark your company’s progress over time.
Great companies are run by great teams, and this is the place to list members of your team along with the skills and experience each brings to the table.
If additional team members will be needed, be sure to provide a brief summary of the positions and general responsibilities you will be hiring for in the future.
You should also include the legal structure of the company — sole proprietorship, partnership, etc. — as well as its location and history in this section.
In his article, What is a Business Plan, Tim Berry explains “…a solid financial plan helps you figure out how much capital your business needs to get started or to grow.” Typical financial plans include a:
- Sales forecast.
- Personnel plan.
- Profit and loss statement.
- Cash flow statement.
- Balance sheet.
It’s super important to understand how to figure your startup costs. Be sure to stay realistic in your financial projections and conservative in your estimates.
The Appendix provides space for detailed product depictions, photos and other additional information referred to in your business plan.
Having evidence to back up every claim you make about your company and documenting why your ideas will work shows investors that you have done your homework.
And that’s how to write a business plan
Business plans have been around for decades and they remain a valuable tool because they work as:
- An exercise in planning.
- A way to showcase a company’s potential for investment.
- A guide to help a business navigate an ever-changing economy.
By completing these six sections with the help of a Lean Business Plan, you can reasonably prepare your company for success in the marketplace.