At its core, a business plan is a written version of how you'll make money. You've likely heard the benefits of a written business plan espoused many times before (if not, check out our prior post on it here). But why do you need a business plan? What goes into a business plan? And who actually uses a business plan?
A few key things, a business plan is a living written document. Its living in the sense that you will review it and reference it regularly, rather than a one time exercise. The actual implementation of the plan is the hard part, as the saying goes "plan the work, then work the plan". But many people and organizations find actually writing the plan to be difficult too. For some, they are used to having it all in their head - perhaps on a few sticky notes or maybe in a draft email to themselves. But once you start to grow, have to pitch your company to banks, investors or even potential co-founders or employees, you'll need more than some inspiring bullet points.
And it is a written plan in the sense that it a physical document that is produced. Much of it could be in spreadsheets (like forecasted cash flows and balance sheet) or images (sales process diagrams, organization charts) or converted into a slidedeck (short form for presentations). The key is its something that can be shared and read independently without you, the founder, having to explain it each time. For many founders, they are also surprised that it bring to light gaps in their plan and encourages them to plan for different scenarios (growing too fast can bring on just as many problems as growing too slow!).
The topics and depth that each are covered in the business plan will vary to some degree. In our experience, a short 3 page overview plus 1-2 years of financial forecasts is all that is required for a common type of business that has already been running but has new owners or looking to expand in a specific similar/small market or product. For example, a pub, bookstore or online clothing retailer. On the other end of the spectrum is a brand new company, a unique type of product or service, or a major change like beginning exports or a new division or product line. These could be anywhere from 10-35+ pages plus the financials.
The content will typically cover:
- Business model - what the problem is that you are solving, who the main type of customer will be and what is your revenue model
- Marketing - what will your message, channels and methods be; including topics like your CRM
- Sales - how will you serve these customers and maintain a relationship once they've been acquired
- Operations - depending on your type of business this will include human resources, location, supply chain, manufacturing methods, and/or document storage/sharing
- Finance - how will you receive money (payment terms/methods, bookkeeping) and what money will you spend (finance sources, working capital, burn rate)
Within these, how much depth you cover will depend both on industry norms and a lot on complexity and risk. If your operations will consist of a drop ship service using a standard ecommerce platform then it will be much shorter than your marketing and finance sections. In those you'll need to explain in depth how you'll funnel paying customers to your site and fund the working capital to get the product to your drop ship provider before receiving payments. For an app developer, marketing to clients and the actual operations of organizing the development team and various supports like visual and UX designers is key. While finance is important, it isn't as complex or risky if receiving deposits, milestone payments and have quick test cycles.
Remember when writing your business plan:
- Who will your audience be
- What message do you want to convey
- How much complexity and risk is there
- And that this is a plan for your business so put the research, thought and time required into it.
Looking for a trusted advisor to help research, write and support the implementation of your business plan? Contact BrightGo Solutions today. We love helping entrepreneurs get the excellent ideas in their heads out into the world in an actionable plan they can be proud of.