I've already written about the merits of writing a business plan and the vague process surrounding it. So I'm going to assume that you're going to write one. This post will focus more on specific details. There are tons of business plans available for a free download and tons more that are available to view for a fee.
- Don't buy any of the following to help you write a business plan: software to help you write a business plan, business plan templates, business plan books, or anything else. It's not worth it. Unless you like throwing money away, then maybe it's worth it.
Why do I say this? Because every business plan is different. There's really no right way to do it - and seeing a bunch of different types of plans will just confuse you. There are plenty of free business plans available to view online, just do some research. Search on Google, whatever. That will give you enough of an idea of how to do it.
- It's going to take a while. You're not going to write your business plan in 1 sitting. When I first sat down to write my first business plan - which was years ago, I was overwhelmed. I even had a business plan book with templates. I tried to follow the templates. Bad idea. My business didn't even have half the things the template tried to have me do. And some of the sections were absolutely useless. I thought I'd whip that thing out in like a week. I quit that business plan before I even started.
- Ok, there are some things to do before you even begin writing that plan. Research! Google will be your best friend. You're going to be looking for a few things in doing this preliminary research. If you're expecting your business to be a disruptive technology or a new technology - know your competition or whether someone else is already doing what you want to do. It's not a bad thing to have competition, in fact, it confirms your market. But you should know what people are up to. You will also be able to tell what your market will look like, where the money is at (since that's important to investors and probably you), and generally learn a lot about what field you're researching.
The best way to research though isn't necessarily from Google. If you live near a University or business school - stop into their library and "use" them. They usually have access to Hoover's, Reuters, Edgar's Online, or a variety of other research publications that go far beyond anything you'll get through Google. They have fairly extensive research reports that are even more extensive if the company is a public company.
- Understand your audience. It's you, your early team, and investors. Your business plan is a great piece of material that helps you outline how you should be going about building your business. Make it sell too - that will help when trying to attract talent and, later on, attract investors. Many investors won't even read the whole plan, so make sure, first and foremost, it really is for you.
- Get some help from someone else. Whether it's a friend or parent, getting a different point of view and perspective can help you refine your plan. After writing my most recent business plan, I was so sick of reading the same sentences that I overlooked quite a few mistakes. Getting Rajiv in on the fun allowed it to really take shape.
- Ok, so what are the parts of the business plan that are must haves:
- Executive Summary
- Product Overview
- Market Analysis (competitive analysis, Porter's 5 forces, etc)
- Growth Strategy
- Financial Plan - I put this at the bottom on purpose. If you're a new company, with no sales or revenue, then this part is really just for fun. No VC is going to believe it and you probably shouldn't either. But it's fun to look at how much money you "could" make.
All of these components will vary in length depending on your business. There will also be additional components depending on your business. Again, there's no silver bullet. Just start writing and pretty soon things will start coming together.
- Executive Summary
I used to think writing a business plan was such a mysterious thing. After writing a few, I've realized they're not. Give it a try and shoot me questions if you have them.
Some decent links:
Entrepreneur.com - Details about different sections of the plan
BRS - Some great examples
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