When starting and growing a business, one is faced with a multitude of decisions which will shape the company for years to come. It is important that you invest time and effort into making decisions in the best interest of your business and its longevity.
When you take the time to craft a business plan, you are defining the purpose of your business, your target customer, key strategies, revenue model, and cost structure.
Planning is key for success. Test your assumptions. Identify weaknesses early on so that you have time to remedy the weakness before it threatens your business. Your business plan is your very first step towards strategic planning.
What is a Business Plan?
According to Entrepreneur, a business plan is “a written document describing the nature of the business, the sales and marketing strategy, the financial background, and containing a projected profit and loss statement” (Entrepreneur). You can think of a business plan as a road map for your business.
A traditional business plan includes the following key sections:
The Company
Detail the purpose of your business – your goals, mission, vision, or values. Specify your business sector (wholesale, retail, etc.), business formation (sole proprietorship, partnership, LLC, etc.), as well as the team and their qualifications.
Products & Services
Describe your product and/or service, how it is used, and how it is different from other products and/or services in the market. Most importantly, define the value proposition that sets you apart from the rest. You may also consider detailing after-sale service and support as well as your product packaging and/or labeling.
Marketing Plan
Start with market research. Describe the market in terms of size, demographics, trends, growth, and sales potential. Then, use your market analysis to estimate a market share.
For your industry analysis, define and describe the industry – key performance indicators, the stage of the industry life cycle, barriers to entry, and other forces shaping the industry.
For the competitive analysis, identify your direct and indirect competitors. Then categorize the competition and start analyzing their strengths and weaknesses so that you can identify your competitive advantage.
Lastly, conclude by defining your own marketing strategy. Define your target audience, how you will differentiate your product or service from the competition (i.e. positioning strategy), how you will reach your customers (i.e. promotional strategy), how you will deliver your products or services (i.e distribution strategy), and how your products and/or services will be priced (pricing strategy).
Operations & Management
Describe how your business will operate – production plans, location, logistics, legal environment, inventory, key activities, key partners, and capital requirements.
Describe your management and organizational structure – Detail employees, their roles and responsibilities, key stakeholders, the board of advisers or board of directors, and any other business support (i.e. business coach, mentors, etc.).
Financials
Detail your three key financial statements – the income statement, the balance sheet, and the cash flow statement. If you do not have a statement for the prior year, create pro forma statements instead.
At a minimum, you need to define your revenue model, cost structure, and break-even point.
Appendices
Following these key sections, you can include supporting documents such as market reports, customer surveys, team member resumes, contracts with customers or suppliers, tax returns, and anything else relevant to your business plan.
Business Plan Tools
Sounds like a lot of work, right? Don’t stress, there are plenty of tools to help you! Live Plan is a great resource for crafting a traditional, written business plan. However, if a written plan is not your style or if you feel overwhelmed, the Business Model Canvas is a fantastic visual planner. Strategyzer and Canvaizer offer Business Model Canvas tools. If planning is not for you, consider GrowthWheel action planning for entrepreneurs!
Live Plan
As the world’s leading business plan software, over 750,000 small businesses have used LivePlan for business planning, forecasting, and financial management. The Live Plan Software will walk you through all the key elements of your business strategy – the opportunity, execution, company, and financial plan. To get started, Live Plan offers a 60 day free trail.
Strategyzer
With over 5 million users, Strategyzer is a web application that allows you to rapidly sketch out your business ideas with the Business Model & Value Proposition Canvas. The Business Model Canvas allows you to map out your customer segments, value proposition, channels, customer relationships, revenue streams, key resources, key activities, key partners, and cost structure.
The Business Model Canvas helps you answer the following questions:
Customer Segments: Who do you create value for? Who are your customers? Which customer segments are most important?
Value Proposition: What value do you deliver to your customer? What problems are you solving or what need are you fulfilling?
Channels: How do you interact with your audience? What channels will you use? Which ones are most cost-efficient?
Customer Relationships: What type of relationship does your customer segment expect? How to you establish and maintain that relationship?
Revenue Streams: How are you capturing value? What is your pricing?
Key Resources: What infrastructure do you need to create and deliver value? What resources are required for your value proposition, distribution channels, and customer relationships?
Key Activities: What do you have to perform well? What activities are required for your value proposition, distribution channels, and customer relationships?
Key Partners: Who will help you leverage your business model? Who are your key partners? Who are your key suppliers?
Cost Structure: What are your costs?
Strategyzer was created by the makers of Business Model Generation – A Handbook for Visionaries, Game Changers, and Challengers.
To get started, Strategyzer offers a 30-day free trial.
Canvanizer
As a visual tool, similar to Strategyzer, Canvanizer is a visual tool you can use to develop your idea and define your strategy. Canvanizer offers a variety of business canvas templates including Business Model Canvas, Lean Canvas, SWOT analysis, Pitch Planner, etc. Canvanizer also offers templates for service design and project management. The Classic version of Canvanizer is free. For a more modern interface, you can choose to upgrade to Canvanizer 2.0
GrowthWheel Action Planning
If planning seems like a waste of time, then Action Planning for Entrepreneurs with Growthwheel may be a better fit for you. The GrowthWheel model provides a map of the key focus areas: the business concept, organization, customer relations, and operations. Within each focus area, GrowthWheel provides actionable alternatives. Instead of abstractly outlining your market segments, you could create a list of the clients you want to approach and classify these ideal clients into different categories.
Conclusion
It doesn’t matter how you go about crafting a business plan as long as you have a roadmap for your business! You can write a traditional business plan or mock up a Business Model Canvas. If you are unsure what is right for you, contact us for coaching.