How to conquer your fear of writing a business plan
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“An entrepreneur tends to bite off a little more than he can chew, hoping he’ll quickly learn how to chew it,” says Roy Ash, co-founder of Litton Industries.
There is much truth in Ash’s statement. Most entrepreneurs are full of excitement about their new venture and are eager to charge out of the gate. They are confident they can figure things out along the way without taking time to develop a business plan.
When you take the “fly by the seat of your pants” approach to your business, you may get lucky for awhile, but I guarantee you it will limit your growth and potentially cost you money down the road. Before you get into the thick of running your business, you need to think about where you want your business to be in 5 years. What will look it like in 10 years? What is your exit strategy? And what will it take for you to achieve your goals? In other words, you need a big picture vision for your new venture.
So why don’t small-business owners bite the bullet and develop a plan? Primarily because it intimidates them. They feel as though they don’t have the knowledge to do it and it seems like an insurmountable task. Many start-ups ask me if they need to have a business degree to develop a plan. The answer is “no.”
The truth is, a business plan is a process. Very few people can sit down and write a business plan in a matter of hours or days. It’s a learning process and it should be constantly changing. And don’t get hung up on the format. In fact, unless you are going after financing for your company, then format doesn’t matter. What matters is the substance of your plan.
Too many small-business owners shove their initial business plan into the top drawer of their desks and promptly forget about it.
What to include
In addition to being an entrepreneur, I’m also a journalist, so I think of a business plan as something that answers the questions every cub reporter learns to ask: Who? What? When? Where? Why? and How? For example:
- Who are your customers?
- What is your business?
- Where will you sell your product?
- How, where, and why will they buy from you?
- How much start-up capital will you need?
- What is the market for your product?
- What is the need for your product?
- How will you price your product?
- Why are you the best solution for this market need?
- Who is the competition and how will you differentiate your product?
In essence, a business plan covers everything from explaining the nature of your business to outlining its financial projections. The key elements include:
- Executive summary: A brief overview of the plan and a description of your company.
- Market analysis: Illustrate your knowledge of the industry and include any market research you’ve completed as evidence of the market opportunity.
- Company description: A general overview of your business including how you can drive its success.
- Organization and management: Include the structure of your company along with the qualifications of your team.
- Marketing and sales strategies: Define the marketing strategy that will help you build your brand and your customer base.
- Service or product: This section describes your service or product. Be sure to emphasize your unique value proposition.
- Funding needs: Estimate your start-up and ongoing capital requirements. Failing to appropriately define your funding needs is a costly mistake many small-business owners make.
- Financials: Include projections of your company’s future financial performance.
A completed plan isn’t the end of the story. It’s only the beginning. Constantly revisit and review your plan to see what is working and what isn’t. Don’t be afraid to adjust your plan as your business evolves. As I said earlier, your plan should be a process, not a one-time project.
A completed plan isn’t the end of the story. It’s only the beginning.
In my experience, too many small-business owners shove their initial business plan into the top drawer of their desks and promptly forget about it. Frankly, this is a lot like going to AAA, having the travel expert there plan your itinerary, but then leave the map in the glove compartment when you set out on your adventure.
You need to translate all the lofty goals of your business plan into what are essentially milestones with supporting to-do lists. Your detailed to-do lists need to define the responsible people as well as the dates by which each item should be completed. Getting your business off the ground will require certain tasks to be completed before others can be accomplished. Major milestones must be broken down into smaller items on these to-do lists. Remember, ideas without action mean nothing.
Get the help you need
The good news about developing your business plan is that you don’t have to go it alone. There are myriad resources available to help you along the way. Here are some of my favorites.
The Small Business Administration (SBA) offers templates and tutorials to help you write a plan that will work for your small business.
SCORE offers both online and offline resources to help you understand the business planning process and assist you in writing it as well.
BPlans offers the largest online collection of free sample business plans as well as practical advice and resources.
You’ve heard the old adage: Failing to plan is planning to fail. Give your small business the greatest chance for success by creating a business plan that works for you.