A business plan is the next step in growing your business, often because you are pursuing financial support. Essentially, your business plan is a map that defines the terrain (Industry), the road blocks along the way (business strategy), the other travelers on the road (Competition), advertisements along the way (Marketing and Sales), fellow travelers with you (Management Team), your consumption needs (financial projections) and your final destination (Exit Strategy). Your business plan will hopefully show Investors where you are going, how you’ll get there, and what your future looks like. If your business plan connects to Investors and their interests, you might just have your ticket to ride.
In a March 2010 Forbes article, Martin Zwilling noted the importance of business plans as follows,
A BUSINESS PLAN–THOUGHTFULLY ASSEMBLED AND DILIGENTLY UPDATED–IS THE VERY BLUEPRINT FOR ANY COMPANY. IT SETS DIRECTION, FACILITATES COMMUNICATION AND ESTABLISHES PERFORMANCE METRICS. BETTER YET, WELL-ARTICULATED BUSINESS PLANS FORCE BUSINESS OWNERS TO CONSTANTLY WEIGH THE STRENGTHS AND WEAKNESSES OF THEIR OPERATIONS.
A formal business plan includes an executive summary, the body of the plan (Narrative) of 15 to 25 pages and several financial worksheets. The Executive Summary is usually done last. After you’ve completed writing each of the sections for your first draft, you’ll want to put them all together in one document and edit the entire plan so that the story flows from one section to the next in a cohesive manner. Try to avoid repetition and redundancy, if possible.
The real value of a business plan is the process. In preparing your plan, you must document research on your market and industry and potential exit opportunities. You have to think through your sales and marketing strategy and timeline for growth and write it all down. Then you look at your ideas in a critical manner, do more research and make decisions based on your analysis. While this process can be time-consuming, it will save you from making costly mistakes later.
The purpose of a business plan is to clarify, as well as justify your move into the field of business you are pursuing. Your business plan is a formal persuasive document filled with cited facts and reliable sources to validate your business idea’s vision of the future. Leave the emotional jargon and the slang out because your business plan needs to be all about business. Language in a business plan is professional, polished, and offered in a visually-pleasing presentation style. Just like you wear a suit to a business meeting, your business plan should reflect your professional demeanor, like using similar or the same fonts throughout your plan, using contractions sparingly, and keeping your wording to the point and purposeful.
Your business plan might open doors for you, but a poorly prepared plan might just shut those same doors. Make sure that you are thorough with developing your business model including financials and a proper growth strategy with a timeline for meeting each of your key milestones. Once your business plan is out there, you can’t take it back and ask for a “Do-Over.” The only way to avoid making a terrible first impression is to put all of your resources, and then some you haven’t considered, into making your business plan an impressive document.
If you’re creating a plan for investors, then pay close attention to your writing style. You’ll want to remember that investors will judge the quality and presentation of your work just as heavily as your ideas.
Don’t underestimate the staying power of your business plan. Just because you’ve received funding after the exhaustive and intense process of developing and fine-tuning your business plan and making presentations to investors, don’t discard it. Keep it in a safe place, because you’ll need it in the future. An original business plan can be updated to expand your business in the future. It can be fun to re-write your business plan after you’ve been in business for a few years and notice how your business has progressed as compared to your initial expectations. It’s also healthy to modernize your business plan to stay up to date on your Competition, Marketing Landscape, and Industry Trends.