Startups should take the time to write a business plan. If you have a great idea or product and are thinking of creating a startup, a strong business plan should reflect your understanding of why and how your business will be successful. Learning how to write a business plan will also help you to realistically evaluate your company’s mission, financial needs, industry statistics, and marketing strategies to help set your business up for success.
Know Your Audience
Before you start figuring out how to write a business plan, understand your audience. Who is going to read your business plan? Are you going to present your business plan to investors, or are you making a general plan for your employees to refer to, or maybe both? Knowing who is going to read your business plan can help you focus on what you are going to include content and presentation-wise.
Keep It Brief
While there are no requirements for how many pages your business plan must be, it’s best to keep it direct and concise. Avoid expressing data in a confusing way. Be optimistic but honest in your profit projections. According to the U.S. Small Business Administration, your business plan can be anywhere from 30 to 100 pages but should take as many pages as needed to show that you understand your industry and market, and present an execution strategy for both short and long-term objectives that will excite your readers.
The Basic Components of a Business Plan
Before you start putting together your business plan, you should also make yourself aware of local resources that have the tools and knowledge to help you throughout the process. For all of our Detroit founders, Bamboo Detroit's partner, BUILD institute, helps through classes, networking events, mentorship, or connections to resources, and The Mobile Business School, who hosts regular events at Bamboo Detroit on business plan classes.
The executive summary is the most important section of your business plan. This is the first page your reader sees, but will probably be the last section you write after you’ve worked through the details of all the other sections. There may be information you wish you had, especially if your startup is truly brand new, but take the information you do have and present it in a way that will be enticing and informative to your audience. The executive summary may include:
Mission statement and company description
When your company was founded
Brief founder bios and a description of their roles
Business information, including locations and number of employees
Your products or services
Current financial information
Summary of company growth and achievements
Summary of future plans
Operations and Management
Think of the operations and management section as an encompassing resume of your whole management team. This section presents how your business functions on a daily basis, the roles and responsibilities of each team member, and how tasks are assigned to each division within a company.
Names of owners and percentages of ownership
Description of roles and company involvement
Forms of ownership
Resumes and qualifications of the management team
Your market analysis should prove to your reader that you have a strong understanding of your industry and that you’ve done your research on your target market. This includes:
Industry description and outlook
Description of the target market
Pricing and gross margin targets
Regulatory restrictions, licensing, or special permitting
Projected revenue levels based on market data
Marketing Strategies and Competitive Analysis
While the market analysis section shows your understanding of your industry, this section should illustrate your knowledge of your target market and a plan of action on how to reach them. This section may include:
Overall sales strategy
Strengths and weaknesses of competitors
Barriers that may be developed to prevent other competitors
Products and Services
In this part of your business plan, describe your startup’s service or products and the benefits and solutions they offer to your target customers.
Descriptions of products or services
Benefits of product or service
Design and development timelines for products
Legal information, such as copyrights and patents
Research and development information
Financial Plan and Financial Information
It’s important to understand your startup’s goals and to properly allocate your resources. To do so, you must understand where your company stands financially. It’s advisable to work through the financial section of your business plan with an accountant. Financial information to include within this section includes:
Personal financial statements of owners
Startup expenses and capital
List of debts owed
Projected cash flow
12-month profit/loss statement
If you are presenting your business plan to investors, you should also include a funding request within your business plan. This section should tie in closely with your financial plan; make sure you can back up any funding or financial scenarios with corresponding financial statements and projections. Avoid making estimates, use exact amounts for any funding requests, and back up any projections with statistics from credible sources.
What has already been invested in the company
How much you plan to invest
Exact amounts of funding you need for your business
Strategic information that may affect your business’ finances, including going public, being acquired, whether or not you plan on selling in the future, etc.
After you’ve finished writing and editing the components of your business plan, put it in a quality binder with an attractive cover page and a table of contents so that it is ready to be presented. Include page numbers and dividers for easy navigation.
The information you present in your business plan should be timeless and serve as a reference point so that you can revisit your plan throughout your company’s timeline. Many successful companies will take time to compare their business plans to what is actually going on in their business. Your plan can help you stay on track with your long-term goals, help revise your current work processes, and, ultimately, continue to help your business grow and succeed.