How to Write a Business Plan
This post is the second in an eight part series on how to prepare your business for success in 2014. Follow the links to learn how to prepare your business for success, make your customers happier, make your business legal, market your business, improve your personal and business credit, boost your website’s visibility and finance your business.
A plan in your head is good. A plan on paper is even better. Writing a business plan doesn't have to be intimidating or complicated.
Every business venture can benefit from a well written business plan and can be used to:
- Help you think through the business concept and ensure you have considered all your options and anticipate any potential difficulties.
- Structure startup activities.
- Serve as an operating guide.
- Convince lenders and investors that you are in control of the project/business and that you will be able to return their investment to them.
Begin in the middle when writing a business plan. Start by discussing the company – what business are you in and what is special about your business. Talk about the status of your business – are you a startup or expanding business operations and/or concepts. Next, the business plan should detail the location of the business – include leasing vs. purchasing and expansion possibilities. Also include specific licensing, permits and registrations your business has or will be required to obtain.
Also include management and operations. What qualifies you to own and operate this business – who will be making decisions and why. Describe a typical day for your business – who is doing what and when. Be sure to include the desired legal structure and potential risks with that structure and methods to reduce risk.
Generally describe who needs your product or service and how you plan to reach your customers. Include details about present market size and potential growth, describe your target market with sales and marketing strategies. Be as specific as you can be about the size of the market and the type of customer who will buy your product or service.
Briefly describe competition and similarities and differences between their operations and yours. Perform a SWOT analysis of your business as well as competitors.
If your business is established, include current balance sheets and income statements as well as tax returns for the past three years. If your business is a startup, include projected income statements, cash flow projections and balance sheets: detail by month for the first year and by quarter second and third years – make notes for explanations and assumptions.
Also include details of sources and application of funds, capital equipment and break-even analysis.
Once you have the bulk of the business plan complete, write an executive summary to give an overview of the business components. Include the mission and vision of the business and highlight objectives and goals. Also include any documentation of product acceptance and potential/current customers and contracts. Include resumes for the management team and any industry and/or private research clips. Complete your business plan by adding a cover, title page and table of contents.
Ask for Help
Kansas City offers lots of resources to help with your business plan. The SBA provides a good outline for building your business plan. And they have a business plan template for building your plan. SCORE provides free, confidential guidance and counseling to entrepreneurs in the Greater Kansas City metropolitan area. The Small Business and Technology Development Center – UMKC (Missouri) and Small Business Development Center – JCCC (Kansas) provide business assistance to aspiring and existing business owners. There are also many classes, seminars and workshops available throughout the metro that focus on business planning.