I have directly started my previous business without any business plan.
Even though there are so many free business plan examples but I have not searched about how to write a business plan step by step.
And I was constantly nagging I am not getting success in the business?
While starting your own business you must know the business plan definition, business plan format, a clear picture, goals, and purpose which are challenging parts of any business.
The best way to deal with this challenge is to create the business plan; a well written, informative, organized layout for how you want, grow, perform, and excel the business.
Before directly jump into business plan format let’s understand everything about this broad topic “Business Plan”
I recall a famous quote here,
“If you failed to plan, you definitely planned to fail”.
What are the five components of a business plan
Here are the 5W’s of Your Business Plan i.e (What, Why, Who, When, Where)
1. What is a Business Plan
A business plan is an important document that outlines your business.
It defines what is your business, how it will be structured, who are your competitors, what are your services, who are your executives, sponsors, investors, etc. what is your marketing plan, how are planning to sell your services & product, what are your future plans and projection in terms of finance, etc.
There are so many business plan examples available to understand but you must always modify as per your need.
2. Why must you write Business Plan at the early stage
Business is an evolving, dynamic, adaptive process and as a business owner, there are many different reasons like below which state that why you may need a plan.
- For Applying Business Loan.
- Searching for Investors.
- Making Improvements in your existing business.
- To map the Business future
- Create a new business.
- Develop new business alliances.
- Share and explain business objectives with your management team, employees and new hires.
- Set specific objectives.
- To identify the Market and Competition.
3) Who cares about your Business Plan
YouYes, first who cares about your business plan is You. As a business owner, a business plan helps you to encourage and keep motivated during business setup. The care which you are taking while creating a business plan which actually helps you to reduce the problems incurred during the business. You may identify potential problem areas that you had not seen before.
Your Business PartnersYour potential partner is another backbone of your business as they share some responsibility for the business. They are an investor in your business in terms of efforts, time, and money. Partners success and failure depend on your business hence they want to review your plan carefully.
SponsorsSponsors are the banks, people who are willing to lend you money to get your business started. As sponsors have invested money on the line, they will want to see how you plan to use it and, most importantly, how you plan to pay it back. They have a great experience to judge the business and see how realistic your plan is.
Your Investors Investors are similar to sponsors in that their money is on the line, but investors don’t expect you to pay them back.Sometimes Your Suppliers
They help you to create the finished product. How do you finished end product depends on your suppliers so they are in line actor of your business. So they want to know that your company is financially strong and will pay them for their work. Suppliers will ask to see the business plan for a new company before committing to manufacturing the goods.
4) When Business Plan needed?
Today business plan not only limited at the early stage of the business but also as needed at later stages of the business.
A good entrepreneur is one who regularly reviews the plan as it shows whether a business is on track or not
In some cases its static document and in other its dynamic document.
So you have to write a plan at the initial level of the business (before starting the business) and continuously review it.
5) Where to write a plan?
This is one of the weird questions I have seen while doing research…
There is no specific answer to this question as there are so many free sample business plans available with a good business plan format.
A business plan can be written anywhere.. there is no specified place.
It can be written even on plain paper, online, Wordpad, smartphones, etc..
Note: There are many best online business plan platforms where you can automate business planning like LivePlan which is a leading player in the market.
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I will capture details about LivePlan and other software in my other blog post.
Now let’s look at some paint point and solution of business planning
Pain Behind Business Planning
There are few reasons like below why entrepreneurs not preparing a business plan-
- For many entrepreneurs, it seems boring.
- Don’t know where to start.
- Seems Lengthy process.
- Confusion due to different business plan templates.
3 Rules to Avoid pain behind writing Business Plan
- Know your Audience.
- Keep it short, simple, and clean.
- Don’t discourage – Business planning seems an overwhelming, time-consuming process, like a difficult hurdle. In order to be successful, you should see this as an opportunity.
The vast majority of entrepreneurs aren’t business experts. Just like you, they’re learning as they go.
If you know the business and are passionate about it, writing a plan is easy.
How to Write a Business Plan Step by Step
You may find many simple business plan examples but below are the main backbone of the business plan format.
You must always look at some free sample business plan before writing your own business plan
It’s 4 step process
- Prepare Checklist.
- Choose the right business plan template.
- Define each element of the chosen business plan template.
Let’s see each in detail.
Step 1. Prepare Checklist for business plan format
The checklist is the best way to plan, complete anything and it works for the business as well.
Well, a prepared checklist will save your time and effort when you have lots of stuff on your plate.
So first prepare the checklist.
I have made a simple checklist that will help you to prepare a business plan. These are a few questions you need to ask before planning a business.
1. Executive Summary
- Who are the key executive in the business.?
- Why will the business succeed?
- Is there any need for funding.
- How much money is required?
- What is the return on the investment?
2. Business Description
- What is a Business Idea?
- What is Unique in your idea?
- What is the growth potential?
- What is the type of business?
- What products or services will you sell?
- Why does it promise to succeed?
- What is your organization hierarchy and How will you structure your organization?
- What approvals, licenses, and permits will you need to run the business?
- Who will manage the business?
- Initially how many employees will you need?
- What are your plans for employee salaries, and benefits?
- What consultants and specialists will you need?
- What legal form of ownership will you choose? Why?
- Who are you, key competitors?
- What’s unique about your competitors?
- Who are your potential customers?
- How large is the market?
- What is your marketing approach: Inbound or Outbound?
- What advertising and promotional strategies will you use?
5. Research and Development
- What are the initial technical challenges in terms of the setup, machinery, etc?
- What technical assistance have you received?
- What research needs do you anticipate?
- The cost involved in manufacturing your product or service?
- What are your needs for production (e.g.raw material, facilities, equipment)?
- Who will be your suppliers?
- What potential problems could arise and how to mitigate them?
- What are your total financial needs and sources of finance?
- Do I need funding? How?
- What will it cost you to open the business?
- What will your personal monthly financial needs?
- What sales volume will you need in order to make a profit for the first three years?
- What will be your projected assets, liabilities, and net worth on the day before you expect to open?
- What is your business projection?i.e timing,goals.
- Have you set up the objective and your deadlines for each stage of your business?
Step 2. Analysis of Business
After preparing a checklist you must do the analysis. An analysis in terms of Industry, Company, and Competitors.
Company Analysis: what products, services do you offer now, and/or what will you develop and offer in the future?
Industry Analysis: how big is/are your market(s) and how are they changing? What are the current trends affecting them and do these trends bode well for your future success?
Competitive Analysis: who are your competitors and what are each of their key strengths and weaknesses? In what areas will you have to gain a competitive advantage? What is the marketing strategy you have opt-in?
Step 3. Choose correct business plan template
This is the next important step after analysis.
There are various business plan formats out there, but the key pain point is how to choose the correct business plan template?
You must ask questions while choosing and writing a business plan along with the below characteristics.
Questions to be asked while choosing a business plan
- Is it fit for the business need?
- Is it realistic and can it be implemented?
- Can I track results in the business plan?
- Does it define responsibilities for implementation?
- Is it communicable to the people who have to work and run the business?
- Does it keep people Motivated?
- Can it be dynamic and kept alive by the follow-up and planning process?
Characteristics of a good business plan template
- Great Summary.
- Proof of Vision.
- Good Formatting and Clear Writing.
- Easy to Understand and Read.
- Short and Simple
- Realistic Financial Projections.
- Detailed Market Research and Competitor Research.
Step 4. Define each element of the chosen business plan template
Now define each element of business into the chosen business plan format.
Here I found that why business owners feel the pain of planning business….because they don’t know the difference between Traditional and Lean Business Plan.
Yes, it’s confusing.
Let’s Look at Traditional Business Plan Vs Lean Business Plan.
Business Plan Format
There are typically two business plan format
- Traditional business plan
- Lean business plan
Both have a different purpose, business plan definition, and business plan examples, so let’s jump into deep.
Traditional Business Plan
Traditional plans are lengthy about 40-60 pages of the document like college projects and still many of the entrepreneurs only creating it.
Traditional Business Plan Format
- Title Page
- Table of Contents: mentioned your tables of contents.
- Executive Summary: a high-level view of the company and in which you summarize your vision for the company.
- General Company Description: here you mention an overview of your company and the services.
- Market Analysis: Identify what’s your target market, and why market customers interested in buying from you?
- Products and Services: in which you describe, in detail, your unique product or service.
- Management and Organization: in which you describe the structure of your organization and the philosophy that governs it.
- Marketing Plan: in which you describe how you’ll bring your product to its consumers.
- Operational Plan in which you describe how the business will be operated on a day-to-day basis.
- Financial Plan in which you illustrate your working model for finances and business needs from investors.
When to use a Traditional Business Plan?
I agree sometimes banks, venture capital firms may ask you details but it’s not the case every time.
Lean Business Plan
Meaning of the word Lean started with lean manufacturing, which is focused on a cycle of continuous improvement which is called as PDCA(Plan-Do-Check-Adjust)
It is lean business planning because it makes perfect sense to apply the same idea of starting with the minimum, reviewing regularly, and improving over time to business planning.
A lean plan is a collection of bullet points, lists, tables. It’s not an elaborative business plan or document.
A simple 1-2 page business plan can fulfill your requirements.
Here is , a well know for business planning expert and Founder of Palo Alto Software, bplans.com saying about lean planning –
A lean business plan includes no wasted resources writing summaries or describing the business for outsiders. It doesn’t have to prove a market. It includes four things:
- Bare-bones strategy, a few bullets, to serve as an ongoing reminder.
- Important tactics of the marketing plan, product plan, and financial plan but just as bullets, not wordy descriptions.
- Concrete specifics of key milestones, metrics, dates, responsibilities.
- Essential numbers: forecast sales, expenses, and cash flow.
Lean Business Plan Format
- Here is the lean business plan definition
Identify Need That Your Business Fulfills
- Need which your business satisfies.
Describe How to Fulfill Needs
- List the mission statement and actions of your business to address gaps in the market.
- How your business will do better than others who already there in the market.
State Uniqueness Of Your Business
- Outline your unique business model how its unique than others.
- Mentioned key strengths, weakness, competition in the market.
- State how will end user takes benefit of the uniqueness.
- Identify and state your keyboard members, management team, advisors.
- Mention what value they add to your business.
Know Size Of Your Market
- After identification of the niche, check the market conditions –
- How is the size of the market growing?
- What is the earning potentials & how big it is?
Design Ideal Promotional Strategies
- Identify how to reach and pitch in the market.
- Devise your promotional strategies plan(inbound, Outbound, and both).
- Identify and strategies which promotional medium is suitable for your business.
Segregate Your Revenue Stream
- It includes-Expenses(internal, external), Pricing model, Costs, Margins on which your business is running.
Identify Budget to Start With
- Funding which typically comes from external sources(Angel Investors, Loans, Venture capitalists, friends).
Formulate the Plan for Braking Points
- Make breaking point with +ve and -ve scenarios with contingencies and without contingencies e.g If you hit or slow down in the market and you don’t have a plan, your business could even fail.
When to use a lean business plan?
All businesses should use the lean plan methodology and a traditional plan.
The traditional plan becomes useful only in special case business events such as applying for a bank loan or seeking outside investment.
In those instances, entrepreneurs can use the lean plan as a first draft, and then add summaries, market analysis, more explanations, and a lot of background information to make it into a traditional plan.
Current thinking about lean plans?
Most of the Venture Capital firms, Angel Investors are likely to be happy with the Lean Business Plan combined with images, pitch presentations, summary memo, and executive summary.
Business Plan Examples
There are many free sample business plan format out there in the market.
The problem, many people\ organization do copy paste but latter they are facing so many challenges.
The reason, those free business plan samples doesn’t exactly suitable for every business.
The solution, you must get the premium best business plan software or best online business plan software.
Hence I,m not giving any business plan example here.
You may get the best online business plan from here LivePlan
LivePlan is a modern online business plan which is built, research by well know business plan coach Tim Berry.
You can grab the LivePlan from here:
=> Get LivePlan at 50% Off <=
Common Business Plan Mistakes
During my research, I have come across some Business Plan mistakes that most of the Entrepreneurs are doing.
- Not caring to write.
- Not doing enough market and competitors’ research.
- No clear purpose in your business plan.
- Not having a clear business model.
- Ignoring market realities.
- No awareness about financials and how to plan it.
- Setting your business plan aside after you’ve written it.
FAQs on Business Plan
What are the main purposes of a business plan?
The purpose of the business plan is 1. Secure business help from outside institutions. 2. Raise funding 3. Showcase business potential.
What are the elements of a business plan?
Executive Summary: Quick introduction about your business, executives, and message from executives.
Business Overview: You can include a small business overview, niche\industry your business serving.
Sales & Marketing Strategy: This part include the sales & marketing strategy of a business.
Operations & Management: You should include How to operate & manage the business in this section.
Financial Information: If you want to give a few key financial matrices that will and has been helping your business.
What is the basic structure of a business plan?
The basic structure of a business plan is 1. Business model, strategy, approach. 2. Business niche & intended marketplace. 3. Executive summary and key stakeholders. 4. How to manage a business. 5. Business Financial information.
Final Words about Business PlanBusiness Plan is winning WEAPON for Entrepreneurs.
So there has to be some baseline planning needed to run and grow business in the future. Anyone can start a business, but before starting any business you must follow step by step approach rather than directly jump into the business.
“The development of a comprehensive business plan shows whether or not a business has the potential to make a profit.”
The exercise of writing a business plan will help you better define your business opportunity, ideas & strategy. You will go through a process of streamlining your thoughts & organizing concepts into a well-defined message.
Wisely written Traditional and Lean Business Plan is the sure-shot way to run and grow your business.
There are multiple mediums to help you out there like consultants, seeking advice from the business gurus, software and each of these mediums have their own funda(ways).
For the reader like you, below I have attached sample business plan format template which is developed by LivePlan (Online Business Planning Software)
Also, you can buy LivePlan from here
That’s it for the day.
- What do you think of business planning?
- Do you refer to any free sample business plan examples?
- Did you get an understanding of how to write a business plan step by step with business plan examples?
- Have you tried any business plan format?
Let me know in the comments if you have any further questions.