Whether you’re launching your first startup or are running an established company, creating a business plan will set you apart from your competitors. In addition, knowing how to develop a business plan will accelerate your startup’s early stages to success.
When only twenty percent of business owners have a business plan, it is easy to think that your startup may not need one. Do not fall into this trap. These businesses either got lucky, or they worked very hard to become viable. Removing the guesswork and learning how to develop a business plan will lead your startup to success.
What’s a Business Plan and What’s Included?
It is essential to know why a business plan is necessary for your startup before getting into what a business plan is and how they’re created. Knowing their value can inspire you to take the care required when creating an effective plan.
Having a business plan will show others that you’re serious. This helps gain support from friends and family as well as partners and co-founders. In addition, your plan will help you establish milestones, check progress, understand competition, understand customers, assess startup feasibility, and forces you to research your market to know it better than anyone else. Most importantly, a good business plan will attract investors.
So, what exactly is a business plan? Simply put, it’s anything and everything you need to know about your business, from startup to success and everything in-between. It is a document describing your business’s abilities, objectives, and how it plans to accomplish these goals.
Now that you know what a business plan is and why you need to know how to develop one let’s dig into how. The first thing you need to know about a business plan is that it is involved and not a task you’ll complete in one sitting. The average length of a business plan is somewhere between 30-50 pages. Note: Don’t confuse this with a lender proposal. Those will be an abridged version of your business plan and are only about ten pages long.
There are two types of business plans to consider. One is the Traditional Business Plan that is more comprehensive and more appealing to lenders and investors. The other is the Lean Startup Plan that is more rapid and focused, only highlighting key elements. Unfortunately, lenders are less likely to respond to this one.
There are seven elements involved when it comes to developing your startup’s business plan. Each one plays a crucial role. Leaving one out can leave you blind and deter investors. Be thorough and concise.
Executive Summary: This segment of your business plan is a snapshot of your entire company. It’s what lenders, investors, clients, partners, and co-founders will read first. Putting together a comprehensive summary is vital to gain their support.
This segment of your business plan will include your business name and its location, as well as products or services you offer and your business’s mission and vision statements. This is mostly a summary of the remaining six elements. Although this appears first, you should put this off until you’ve completed your business plan so that it’s easier to break down.
Company Description: This lengthy section of your business plan will essentially be a more extended summary of the remaining sections. Here, you’ll explain who you are, how you plan to operate, and your startup’s goals. This will also include your company’s legal structure.
On top of that, you’ll include a brief history, the nature of your business, customer pain points, the demand, and what you plan to do for supply. Following that, you will briefly lay out your products and services, customers, and list of suppliers. This section of your business plan will also include financial and market highlights.
Finally, this section of your business plan will end with your short and long-term goals and how you plan to make a profit. Again, this seems pretty extensive, but it’ll help you get the results you desire for your startup.
Products and Services: Here is the part of the business plan you are likely most familiar with when it comes to your startup. This is where you clearly describe what you offer. Focus on the value it gives the customer. Give very detailed information about suppliers, costs, and expected net revenue. You’ll want to include pictures and charts to provide those reading your business plan with a good idea about what you’re offering.
This section will also include the product’s life cycle, why customers should choose your product over your competitors, an explanation of the market role, and relevant copyright, patent, and trade secret data. Finally, don’t forget to add plans that may lead to new products or services.
Market Analysis: Here, you’ll highlight your industry knowledge. This section of your business plan should clearly outline everything you’ve learned when doing your market research. Ensure that you include detailed findings of any studies in your appendix.
You must include the size and demographics of every segment of your targeted customers. Include historical, current, and projected marketing information for your product or service. Then, conclude this segment with a detailed evaluation of your competitors. Make sure to include their strengths and weaknesses to create a comprehensive business plan.
Strategy and Implementation: A good summary of your marketing strategy and your plan to implement it is crucial to your business plan. This’ll include how you plan to promote your startup to future customers and how you plan to enter the market. Next, you’ll include your costs, pricing, gimmicks, and logistics.
Include detailed explanations on how your startup will function. This will entail laying out your entire operations cycle, information on labor sources, number of employees, hours, and facilities. Be as detailed as possible. This part of the business plan will help your startup develop a cohesive way of operating.
Organization and Management: When you develop a business plan, you must also outline the organizational structure. Include charts give information on departments as well as key employees. In addition, include information about the owner and their percentage of ownership, involvement, skills, and background.
Create profiles of your entire management team. This’ll display their name, positions, experience, and responsibilities. Lastly, provide information of advisors, board members, accounting firms, and legal counsel.
Financial Plan and Protections: Please consult an accountant when developing this last segment of your business plan. This can only be completed after you’ve done a market analysis and laid out the goals you’ve set for your startup.
This section will include historical financial information, income statements, balance sheets, and cash flow statements going back five years. If you are launching a startup, you won’t need to include this when developing your business plan. Instead, be realistic about your projected financial information and forecasts for the next five years. End with a brief analysis of your financial details and give a trend analysis for all statements.
Business Planning Software
Congratulations, you have learned how to develop a business plan for your company or startup. But, unfortunately, if you are like most entrepreneurs, you likely don’t have time to put all of that together in a cohesive manner, regardless of the benefits it may bring to your company.
There is good news. Entrepreneurs foresaw your pain point and developed business planning software just for you. As a result, you no longer must go through the grueling task of putting together all this information into one document. Instead, these top three business planning software companies will do all the leg work for you.
LivePlan: This company is frequently labeled number one in the business plan industry. Its low price draws in business owners, and what they’re offering really cannot be beaten. In addition, their comprehensive approach to the development of a business plan leaves their customers very satisfied.
Generally, $20-$30 a month, LivePlan is currently offering their services for $15 for the first three months. For this price, you can use their business planning software anywhere. In addition, they provide unlimited business plans and forecasting capabilities, including graphs, charts, competitor information, and much more.
This company is labeled number one by multiple sources because of its top-to-bottom approach to servicing your startup or company. In addition, they promise to create a polished business plan that’ll impress future investors.
Planguru: Planguru is so confident in their program’s ability to create the best business plan for your startup or company that they’re offering a free trial for their normally $99 a month service.
Not only will Planguru help you put together the best business plan possible for your startup or company, but they also offer financial analytics, a rolling forecast, and strategic planning.
With over twenty features, Planguru guarantees you’ll have the best business plan possible. But, they also do not stop at the business plan. They offer business valuation tools, payroll utility, solved cash flow statements, and QuickBooks.
Bizplan: One of the most alluring parts of Bizplan is its pricing structure. They offer a $29 per month and a $249 per year option. This yearly rate is the decoy to create a greater value for their lifetime offer of only $349. That’ll give you access to your business plan features for the lifetime of your company or the lifetime of Bizplan.
Their affordable pricing is no indication of the value they offer you as an entrepreneur. Their cloud-based, fill-in-the-blank program is easy to use. They also provide services to distribute and publish your business plan online.
One of Bizplan’s greatest tools doesn’t even lie with its business plan development features. Their website offers business planning education and information on fundraising strategies that they boast have earned startups over $500 million. Those impressive numbers are alluring and make Bizplan a wise choice when searching for business planning software.
How Often Should You Update Your Business Plan?
When you develop a business plan for your startup or company, business plans are always wrong. That’s right. It is wrong after all the time and effort you put into developing the perfect 50-page business plan.
That doesn’t mean your business plan isn’t right either. It just means that today’s forecasts and strategic planning may or may not be true tomorrow. So, all the work you put in becomes obsolete relatively quickly. The good news is you don’t have to start over from scratch.
A good company with a good business plan will set aside time every month or quarter to go over their business plan. They will identify where things changed, note any shortcomings, recreate realistic goals, and revise the plan where necessary. Of course, this plan will also be wrong, and that’s ok. Your startup or company is constantly evolving, and so should the plan.
Don’t neglect the revision process. This will lead to headaches later when you need capital from lenders and investors. If you never touch your business plan and you let years go by, when the time comes to read it, it’ll feel like a foreign document. Nostalgia will set in, and you will reminisce about how hopeful you used to be. Then, you will have to sit down and start from scratch because the document is essentially useless.
This is another area where business planning software can assist you. If you chose this route when developing your startup or company’s business plan, you would have a built-in AI that regularly completes these tasks. With Bizplan, you’re covered for life, but the others will only require a small monthly or yearly fee to continue.
Don’t let your business plan collect dust. You put in a significant amount of time creating it, and as an entrepreneur, one of the things you value most is time. Don’t be the one that wasted your own time. Instead, think ahead and be proactive about the direction of your company. You’ll thank yourself for it later.
Whether you’re a startup or an established company, creating a business plan is necessary to take your business to the next level, leaving competitors behind.