What Is a Business Plan and How Do You Write One?
A business plan is essentially a road map used to help grow your business into a successful operation. Without a business plan, it can be difficult to decide what you are going to do to keep your business profitable for the coming year and into the future. You can also lose focus and not keep your eye on your target market.
Furthermore, business plans are used for new business startups to help attract potential investors and secure financing from lenders. The business plan is your way of informing people why investing in your business is a great idea.
Essential Components of a Business Plan
There are several key components that make up all business plans, whether you use a traditional business plan model or a lean startup business plan model. Each component of the business plan should contain the required information with supporting documentation when necessary.
We will not get into the specifics of what each component should contain, as that would be rather lengthy. For now, we will provide a summary of each essential component.
Traditional Business Plan Model Components
- Business Description
- Company Organization and Management Structure
- Products and/or Services
- Market Research Analysis
- Sales and Marketing Goals
- Financial Outlook
- Financing/Investing Requests
- Executive Summary
- Appendix
Lean Startup Business Plan Model Components
- Primary Resources
- Vital Partnerships
- Essential Business Activities
- Market Segments
- Customer Experience Process
- Customer Support Channels
- Cost Analysis and Strategy
- Revenue Sources
- Value Statement
What to Consider When Selecting a Business Plan Model
As you can see, there are key differences in the components included in a traditional business plan model and a lean startup business plan model. The primary difference when evaluating which one is best for your needs is to ask yourself if you need your plan to be rather detailed or whether a summary with a focus on key areas works for your needs.
If you need a detailed plan, then choose a traditional model. If you just need to focus on key details, then choose a lean startup plan instead.
How to Create Your Business Plan
Now that you know a little more about business plans, you will be ready to start creating your one for your business. Before you jump right into each particular component, take a moment to answer the following questions:
- Where do you see your business in a year, three years, five years, and ten years?
- What do you project will be your revenues for each of these time periods?
- How many different locations do you see yourself operating for each of these time periods?
- How many employees will you need to hire for each of these time periods?
- How many different products and/or services will you sell for each of these time periods?
Answering these five questions will help you answer specific questions related to each business plan component. In addition, answering these questions and questions related to each business plan component will help you create your executive summary or value statement, depending on which model you are using.
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