Whether you’re in need of a business plan to present to potential investors, your board of directors, or just to keep you and your team focused, there is a lot to consider. Every business plan is going to be different based on the type of business, stage of the company, and strengths and/or weaknesses of the market, product, service, or executive team.
In this article, we are going to discuss the important features that every business plan should have, as well as a few others that may be beneficial depending on the situation or use of the business plan. If you’re ready to start your business plan but just need a little help then you may want to try LivePlan, who helps you through the whole process.
When You Need a Business Plan
The length and format of a business plan can vary from chicken scratch on the back of a napkin to a 35 slide presentation deck or a 75 page formally written document. What is important is that your business plan is tailored to your business as well as your audience to achieve your specific purpose.
A napkin might be just what is needed to initiate an idea or recruit a friend to join you on a new venture. When presenting to potential investors or a board of directors a presentation is an expected option. A longer more formal document might be ideal for a legal review or when seeking some investments, depending on the preferences of the investment firm you’re working with.
Most organizations will likely need multiple formats of their business plan for different situations. So a good business plan is going to be easily adjusted to the scenario in which it will be used.
What to Include in Every Business Plan
Having a general outline of your business plan is an easy way to take the content and transform it into a slide presentation, written document, or to study for an upcoming oral presentation. Keeping your outline in a secure place in the cloud allows you and your team to collaborate and have access anywhere.
Here are the must haves for any business plan once you’ve passed the point of just writing things down on a napkin:
- Executive Summary: This is a general statement about the company that should include your mission statement, general company information (number of employees, locations of offices, how the company was started, how the founders met, how the idea for the product or service came about, etc.), highlights (growth, awards, sales numbers – any “wow” stat or metric), a brief statement of your product or service, the purpose of this business plan (seeking financing, merger, etc.) and a summary of what the future of the company looks like.
- Management & Organization: Go in-depth on the executive team. What qualifications they have to hold their positions, and what makes them better than everyone else. Even if this is a startup formed in a college dormitory you should talk about why your team is qualified to make the company a success.
- Product or Service: Provide an in-depth look into the product or service. Identify your competitive advantage. Be specific in discussing features, the product roadmap, and what the minimum viable product is to be able to launch to your customers. Include specific timeframes with the assumption that you’re receiving the funds you’re looking for.
- Market & Customer Analysis: Detail the market size, trends, and history of your industry. Be honest and upfront about your competitors, their strengths and weaknesses, and what your competitive advantage is. Identify your target customer and their needs with the way that your product can meet those needs.
- Sales & Marketing: Provide current and previous years sales metrics, if you have any. Lay out a specific model for future sales and areas of expansion. Discuss where your customers are coming from and where there is potential for growth. Go into detail about the cost to acquire customers, and marketing efforts used to drive traffic. Make the assumption that you’re living in a perfect world and get the financial resources you need. Your model should include a return on investment for any potential investors.
- Operations: This part of the business plan is where you lay out how the plan is going to be implemented. What are the next steps that need to be accomplished to get the business to the next level. This section should also include any support that you will provide to your customers. This is also the place to discuss any HR concerns and hiring needs.
- Financial Projections: Dive into the numbers in this section. You’ve already laid out what needs to happen from a sales and operational standpoint. So now, dive into developmental costs, burn rate, forecasted revenue and customer attrition. You should have a good idea of which financial numbers are important for your specific industry.
Additional Sections You Might Want to Include in Your Business Plan
Depending on the situation and audience, here are some additional topics that might be needed, but aren’t necessary for every business plan:
- Funding Request: If your business plan is being presented in an effort to raise money, be specific in what you are looking for. This will also play into the financial projections section. It could save you a lot of time you would otherwise be spending on phone calls or in meetings if your funding needs are outside the parameters of specific investors.
- Appendix: Depending on the audience it might be wise to add an appendix with permits, leases, and even patents as evidence of your legitimacy. Also include in the appendix any detailed financial statements such as income statements, balance sheets and cash flow statements. The appendix is used to support and backup previous statements throughout your business plan.
- Contingency Plan: Discuss other options that the company could explore, other markets and customers to pursue, and ways the product can pivot. For example, if you don’t have 1,000 paying customers within 6 months (like you planned for in your financial projections), then you need to shift product focus. Make sure the contingency is specific. This is not something we recommend for very many business plans, but some industries that change quickly (such as some technology based ones) could benefit from this.
- Exit Strategy: Make a list of possible exit strategies, always listing the most profitable potential first. This list could include potential mergers and acquisitions or examples of recent IPOs in your space.
Moving Forward With Your Business Plan
A business plan is a way to sell the vision of your company to the employees, investors and potentially even customers. Your business plan should be laden with your competitive advantage. There are a few sections dedicated to identifying your competitive advantage, but do not limit yourself to using just those specific sections to explain why you’re going to succeed. The entire plan should point back to why your business and the product or service meets a specific need in the market place.
The process of writing a business plan is more important than the end product. The conversations that will stem from the writing will be valuable, and the decisions that come from those conversations will end up shaping the future of your company. Take the time necessary to fully develop all conversations, and don’t shy away from the hard questions. If you don’t tackle the decisionmaking now, then your business plan won’t stand up to the execution later.
For example, you may be in the midst of writing about your product offering and discover that you’ve never thought strategically about the viability of a feature, or what the pricing structure will look like. Take a pause from the writing, involve your executive team, and fully engage in the conversation before moving on. Not only will this help you have a better business plan, but more importantly you’ll be better prepared to execute.
Your business plan needs to be specific, so talk about your niche. Do not become a jack of all trades by discussing products, services, or operational processes that are outside your core business. These are all things that can be added once your core business is successful. There can be a contingency section to discuss potential pivots or changes to your plan or product offering.
Remember, there is no right or wrong way to create and present your business plan. But be sure to highlight your strengths and emphasize your core competencies. Don’t be afraid to wander off the beaten path while creating your business plan, but no matter your approach the basics need to be covered.
The Smart Hack
For small businesses looking for help to develop their business plan a great option is to rely on LivePlan – a software solution designed to help small businesses get their business plan off the ground. LivePlan allows you to easily document ideas in a beautiful visual format, collaborate across teams, develop forecasting and budgets, and track your progress. The team at LivePlan shares a time tested formula for delivering a solid business plan to impress bankers and investors.