When speaking to small business owners, entrepreneurs or managers of community organizations, the same question always comes up: Do you really need a business plan? Without a doubt, the answer is yes – even if you’re not starting from scratch.
Discover how to write a business plan in 8 easy steps:
There are many reasons why you should take the business plan writing process seriously. For one, it helps to focus your overall business strategy, manage your organization’s milestones incrementally and use available data and metrics to construct long-term guidelines that will help your business prosper year after year.
More than that, you also need a business plan if you’re an existing entity in the community and are planning on expanding, opening a new location or a creating a new program, be it recreational or competitive. Is your organization a not-for-profit? The same rules still apply; detailed business plans can help you set proper goals, iron out strategies to increase your revenue and determine how you’ll allocate those newfound resources after the fact.
Most importantly, if your business is still in the early stages of growth, getting a concrete plan down on paper is crucial if you want to enjoy sustained success in your community. That said, the process of writing a business plan can still be a difficult one if you don’t have the proper knowledge or tools going in.
Here’s our step-by-step guide to creating a business plan document:
Steps 1 to 3: Pre-Writing Checklist
Before you start putting either pen to paper or hands on your keyboard, you have to wrap your head around the formatting of your business plan. Make sure you have the following points firmly in mind ahead of starting the first draft of this very important document:
- Keep it short! Let's be honest - no one's ever going to read that 100-page business plan you wrote. Heck, even a 40-page document will be tough to slog through again and again, especially if key stakeholders and investors need to refer to it on a regular basis. You and your team will also need to refine and improve your plan over time, so avoid making it overly long. Between 15 and 20 pages is the optimal length for a business plan.
- Do your research first. At the end of the day, what good is a business plan if you don’t know your audience? You must make sure you’re building a document that plays to stakeholders, both internal and external, and potential investors in your industry. Keep acronyms and overly technical language out of the text and focus on clear, concise descriptions of goals and products or service offerings. Some people are simply going to skim the different sections of your business plan, so make sure your message is understood at all times.
- Don’t worry about being an expert. The most important rule of writing your business plan is this: there are no rules (sort of). There are certain structural and visual standards to adhere to and sections you should include (all of which we go over in a few seconds), but in terms of what your organization should be striving for, that’s up to you. Not an “expert” when it comes to business strategy? No problem! Not the most knowledgeable entrepreneur in your industry? That can be a good thing. A business plan should be something you make your own, regardless of what competitors may be doing or saying about similar topics.
Now that you've got the pre-writing basics locked in, it's time to begin putting those ideas together, one sentence at a time. If you're not sure where to start or finish, what to leave in and what to take out, check out our complete section-by-section breakdown of your business plan below:
Steps 4 to 8: The Sections of Your Business Plan
- Executive Summary: This is exactly what it sounds like – an overview of your business, its goals and plans for future scaling and/or growth. Ideally, this should be one to two pages long and not more. Pro tip: most professionals will flesh out the rest of their business plan first and leave this section until the end of the process so that ideas can be communicated with the utmost clarity.
- Opportunity: The core points here will have mentioned in the Executive Summary, but the long-form answers to the biggest questions surrounding your business should be presented in this section. They include:
- What is your service and how does it fill a specific need within your community? In other words, what is the problem and how does your business provide a solution?
- What is your target market?
- Who are your competitors? How is your solution different?
- Execution: This is the “how” that follows up on the “who,” “what” and “where” in the previous section. Essentially, it describes your plan of attack when it comes to providing that solution to the community at large. Make sure you include:
- Marketing and Sales strategies
- How you’ll structure your day-to-day operations
- What milestones you hope to accomplish, along with the dates you want to reach those markers, as well as the metrics with which you’ll measure those successes.
- Company: go into detail about your organization – mission, values, vision, team members, culture and more.
- Financials: arguably the section that gives most small business owners print’s version of stage fright, it’s still extremely important to write out accurately, especially if you’re courting investors. Be sure to go over:
- Forecast where you think your revenue streams will be monthly and what kind of expenses you’ll be incurring in the same time frame
- Outline how you’ll spend funds, where that money will be coming from
- Project profit/loss margins going forward
Looking for a business plan template? Check out the embedded example below, courtesy of Palo Alto Software:
Want more free business tips that will help your organization grow long-term? Check out our blog post about the 5 business strategies you should be using on a regular basis. Read more by clicking below!