A well-written business plan is an essential part of your new business strategy
Thoughtful planning is a huge part of any successful endeavor, and when it comes to starting a new business, a well-written business plan is the place to start. Your business plan will serve as a guiding document that helps you structure, operate, and grow your business. It’s especially important to create a professional business plan if you are planning to seek funding from investors, banks, or other financial institutions. Showing investors and lenders that you’ve thought through every aspect of your business and have planned for growth will help convince them that working with you is a smart and safe choice.
A traditional business plan will give you the most flexibility
A typical business plan uses a standard structure and is quite detailed. Because they can take a significant time investment to prepare, some small business owners create a lean business plan—a one page summary that hits the highlights but doesn’t delve into details. Although lean business plans can be helpful in some instances, a traditional business plan will typically serve you better, as most lenders and investors will require this type of plan.
Writing a traditional business plan
A traditional business plan is detailed and comprehensive, and typically includes some combination of nine standard sections:
The executive summary tells your reader—in a brief summary fashion—what your company is all about and why it will be successful. You will include your mission statement, a description of your product or service, and basic information about your company. You can include details about your leadership team, location, and employees, as well as high level financial information and growth strategy.
The company description section is where you can provide more detailed information about your company. Here, you can talk in detail about the specific problems your business solves, and describe the customers or market you intend to serve. This is a great place to outline the competitive advantages that will make your company successful, including the specific expertise of your team, strategic location advantages, etc.
In the market analysis section, you’ll demonstrate that you understand your industry and your target market. This is where you can highlight research into your competitors, showing strengths and weaknesses of other companies operating in your space. Identifying trends and themes can make this section very successful—what’s been working in this market? What’s missing? How can you fill a gap or do something better?
Organization and Management
In the organization and management section, you’ll tell the readers how your company will be structured and who will run it.
First, you’ll want to describe the legal structure of your business.Will you be a corporation, an LLC, or a partnership*? If you will be the only one working on your business, you may set it up as a sole proprietorship.
*Choosing a business entity is an important step, and advising on entity setup is one of Prime’s specialties—set a free consultation to discuss your business structure if you’d like help with this step!
Another common element in the organization and management section of the business plan is an organizational chart—often simply called the “org chart.” Here, you can outline roles and responsibilities, and show how each person’s unique experience will contribute to the success of your business. In this section you can also include resumes and CVs of key team members.
Service or Product Description
The service/product section of your business line describes, in more detail, what you sell or offer. Here, you’ll want to outline how your service or product benefits customers and offer details about the product life cycle if relevant. If there are intellectual property assets like patents or copyrights or trademarks, include them here. Research and development activities should also be described in this section.
Marketing and Sales
In the marketing and sales section of your business plan, you will describe your plan to attract and retain customers. You may discuss your plans for traditional and digital marketing, hiring a sales staff, and more.
If you need funding for your new business, the funding request section is where you’ll outline your capital needs and plans. This section should look at a five year horizon and explain how much funding you’ll need, how you plan to use the money, and whether you’re looking for depth or equity. You can also get into specific details such as terms and timing for payback if you’re seeking a loan.
The financial projections section can supplement the funding request with projected financial information that helps convince lenders and investors that your business is stable and will be a financial success. The projections should include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. You should project these items for about five years out, and for the first year, you should be as detailed as possible, offering monthly projections rather than quarterly or annual numbers. Using visual tools such as graphs and charts works well in this section.
The appendix is the place to provide any extra information or materials you think are relevant but not already included in your business plan. This could include things like licenses and permits, reference letters, product pictures, and other documents and contracts.
Need help writing your business plan?
Writing a solid business plan can put you on the road to success by providing a roadmap for your company’s future, preparing you for challenges, and setting you up for success with investors and lenders. It can highlight areas of strength and weakness, and can help you identify areas where you might want to seek professional advice. At Prime, our experts are always here to help in the process, whether you need help setting up your legal entity, building business credit, devising a solid tax strategy that allows you to keep more of what you earn, or looking at long term estate planning. Set up a call today for expert help launching your new business!