If you’ve ever dreamed of starting your own business, the first step is to create a detailed business plan. It doesn’t have to be complicated, but it should be well-thought-out. Not only will it provide a sense of direction for you, but it’s something you can bring to investors if you need funding.
A well-written business plan can help you monitor your finances, provide an opportunity for unique partnerships, make you appealing to industry leaders, give you a foundation for future business decisions, and will ultimately help you grow your business. Below we’ve detailed 17 tips to help you get started.
Keep it short
“While it can depend on your industry, in general your business plan should take about 15 minutes or less to skim. A reader should be able to get a good idea of your main content with a quick read,” says Patrick Samy, CEO of Span Health. “Use format, headings, illustrations, and white space to your advantage. The length can vary greatly, but about 20-40 pages is a good rule of thumb for standard start-ups.”
Know your audience
It may be a good idea to have several versions of your business plan tailored to different audiences. You can have one for bankers or venture capitalists, one for individual investors, and one for companies that may want to do a joint venture with you. By tailoring your plan to your target audience, you’re more likely to gain their interest and their funding.
Know your competition
“It’s important to know who your competitors are. You shouldn’t disparage them to anyone you speak with, but you should be able to articulate what makes you different from them and why you believe you’re superior to them,” says Mehdi Marrakchi, CEO of Mob Hookah. “Many industries are overcrowded as it is, so it’s important for you to be able to differentiate yourself in your business plan.”
Have proof (to back up your claims)
“Make sure your business plan isn’t filled with fluff or promises you can’t keep. Your claims and statements need to be backed up with facts and figures. If you’re confident in your business succeeding, we need to know why,” says Miles Beckett, CEO & Co-Founder of Flossy.
“Is your team composed of top talent? If so, what are their credentials? If you believe you’re going to be a leader in your industry within a year, why? For every claim you make in your plan, ensure that you have concrete reasoning behind it,” says Beckett.
Be conservative in your financial estimates/projections
It’s always wise to err on the side of caution when making financial estimates or projections. You want to make sure your business is going to grow and potential investors want to ensure they’re making a good investment. By being conservative in your projections, you’re accounting for factors that are either out of your control or are unexpected. Sometimes expenses are greater than originally predicted, so it’s always better to underpromise and overdeliver, then the other way around.
Be realistic with time and resources
“Being realistic can lend credibility to your business plan. Many entrepreneurs are overly optimistic when it comes to how long they think things will take. A good rule of thumb is to plan for things to take 15% longer than you anticipated,” says Jason Wong, CEO of Building Blocks. “When you’re the one ordering supplies, answering the phones, and paying the bills, time is easily spent. Know that it’s a marathon, not a sprint.”
Have a strong management team
“Surround yourself with top talent. It’s important to hire people who are different from you. You want your team to complement you, not imitate you,” says Lindsay McCormick, Founder and CEO of Bite.
“Ensure that they have experience in your industry. When you’re first starting out, you’re going to need advice. If you’re able to hire people with either lots of experience or quality credentials, do it. You need a solid team behind you if you want your business plan to succeed,” says McCormick.
Prove why your idea will work
“In your business plan, you need to make a case for your idea. Is it a solution to a common problem? If so, why do you think it will work?” says Juan Pablo Cappello, Co-Founder and CEO of Nue Life. “Your plan should include all the variables that will have an impact on the result of your idea. Explain how you would overcome them and why your idea will succeed when others haven’t.”
Discuss payout options for your investors
Every investor is different. Some want to be very hands-on, while others don’t want to be involved in day-to-day activities. The thing they have in common is that they want to know how and when they’re going to be paid. Make sure you include options for all serious investors so they know what they’re getting themselves into, and if it’s a worthwhile investment for them.
Test your business idea
“Before sitting down to write your business plan, test it out on people. Talk to industry experts, potential customers, and other entrepreneurs to gauge its viability. Ask for honest feedback,” sasys Chris Gadek, Head of Growth for AdQuick. “Before crafting your plan, it’s wise to know what you may be up against. Take their constructive criticism to heart and have it in the back of your mind while writing your plan.”
Establish goals and objectives
“When composing your plan, it’s important to list your goals and how you’re going to measure those goals. You can establish volume goals, revenue goals, company goals, and/or individual sales goals,” says Akhilesh Srivastava, Founder and CEO of Fenix Commerce.
“Once your goals and objectives are established, decide your timeline for achieving them. If you have an annual goal, break it into monthly goals so they’re more manageable for your team,” says Srivastava.
Don’t be intimidated
“Writing a business plan can be daunting, but it doesn’t have to be. Remember that you’re the expert when it comes to your business. You know your idea better than anyone else. Be confident when writing your plan. If you need to, start with a simple one-page document. From there, you can flesh out your points until it’s more comprehensive,” says Jake Langley, CEO of Luma Nutrition.
Many entrepreneurs aren’t business experts. They don’t necessarily have an MBA or an accounting degree. They’re skilled at acquiring knowledge on their own and learning as they go. Don’t let your lack of education or experience stop you from pursuing your dream.
Incorporate visuals to support written statements
“Graphs, charts, diagrams, tables, and images are your friends. Visuals can bring your written statements to life,” says Kashish Gupta, Founder and CEO of Hightouch. “It also breaks up your business plan and makes it more appealing to read. No one wants to read a 30+ page dense document. Make your plan more engaging with visuals that backup your claims.”
Be willing to adjust it as you go along
Once your business plan is written, it’s not set in stone. Be willing to make adjustments. As you grow and learn as an entrepreneur, so will your business plan. It’s important to update it at least once per year, but you should be reviewing it often.
Has your industry changed at all? Have you run into unforeseen obstacles? Are your finances inline with what you projected? The bottom line is, don’t be stubborn with your business plan. No one can predict the future, so make sure you’re adjusting your vision once you’re aware of the reality.
Use your own resources
“When in doubt, bootstrap. Using your own personal resources is the easiest way to start a business. You don’t have to convince investors about the merits of your idea. You just have to convince yourself,” says Ryan Holmes, Chairman and Co-Founder of Hootsuite.
Persevere no matter what
“Whenever I meet a successful CEO, I ask them how they did it. Mediocre CEOs point to their brilliant strategic moves or their intuitive business sense or a variety of other self-congratulatory explanations. The great CEOs tend to be remarkably consistent in their answers: They all say, ‘I didn’t quit,’” says Ben Horowitz, Co-Founder and General Partner at Andreessen Horowitz.
Write an executive summary
One of the most important parts of your business plan is your executive summary. Ideally, you would write this last. This piece summarizes all of the critical points of your plan into one page. If someone is crunched for time or wants a quick summary before diving in to your plan, this section comes in handy. It also forces you to develop your elevator pitch.
You should be able to summarize your plan to potential investors and know confidently what your concept is, your goals, what differentiates your product from your competitors, and who your target audience is. You should also be able to state your marketing strategy, your current and projected financial situation, how much money you’re asking for, and who is on your team.