Business plans work — one survey reported 30% faster growth for companies with plans in place — but how do you know what a great business plan should include? When effective, they map out each stage of your company’s growth, establish a structure for your organization and tell you where to expand in the future. A good business plan outlines the scope of your company, products, and resources in the clearest terms.
Coherent plans also make pitching your company to potential customers and recruits much more effective. No matter who you present your business to, being able to lay out exactly who you are and what you do will help them understand your business quickly.
But business plans can be hard to write without a proven format, especially for first-time entrepreneurs. There is no wrong way to write a business plan, but there are key concepts to consider when sitting down to write one. Here are twelve things you should keep in mind when drafting your plan:
When effective, business plans map out each stage of your company’s growth, establish a structure for your organization and tell you where to expand in the future.
• Identify the problem you will solve.
Your business exists to fill a need in the current market. Understanding the problems your customers face is the number one step to providing a necessary product or service. You should name this problem in the simplest terms so your business plan can have a solid foundation from which you can build.
• Explain your solution.
How does your product or service solve the problem you identified? Write this out in simple terms as well. You can also use this space to explain why you and your company care — explaining your passion for solving the problem and proving why your business is a public good will help you pitch to customers and recruits.
• Write out your value proposition.
A value proposition is a clear statement about the specific value you bring to your customers. Make it simple and compelling.
• List your key partnerships.
Which companies will be your partners? Knowing exactly which suppliers, subcontractors, carriers, and manufacturers you will be working with will keep you organized and outline your professional infrastructure.
• Know your key resources.
Your resources create value for your customer. Consider all of your assets when writing your plan, and take into account your technology, administrative team, support infrastructure, logistics, intellectual property, diversity, and marketing.
• Prove your competitive advantage.
What makes you unique in your industry? Look at your competitors closely and identify what they lack that you will make up for — these can be things like direct selling, customer service, better technology, or strength in marketing.
• Lay out your key metrics.
Key metrics tell you whether your customers are satisfied with your product or find value in your service. Be wary of vanity metrics such as follower counts, social media engagement, and website visits. These numbers have their value but can be misleading when they do not correlate to the actual value for customers.
• Look at your customer relationships.
How do people engage with your business? Is your form of communication automated or personal? Think about how a customer interacts with your company from their initial discovery to the purchase of your product or service.
• Isolate your customer segments.
What is your target market? Who is your ideal customer? Nobody’s business is for everyone on the planet, so focus in and be specific about who your company serves.
• Find your channels.
Identify how you can communicate with your customers. This is important for building your marketing plan: think about where you will introduce new products versus where you will engage existing customers or sustain your long-term contracts.
• Build your cost structure.
Knowing your financial specifics is crucial to running a successful business, but it can only come after identifying everything mentioned above. Now that you have a general structure for your business, how will you keep your overhead low? List your expenses and brainstorm the best ways to reduce them.
• Focus on your revenue streams.
Outline how your company makes money, whether through direct sales, advertisement clicks, membership fees, or a combination of revenue streams. Focus on refining your business model to its simplest form while keeping in mind your future scaling.
Outline how your company makes money, whether through direct sales, advertisement clicks, membership fees, or a combination of revenue streams.
A business plan based on evidence and feedback will always beat one based on educated guesses, so try to spend twice the time researching your market, customers, and industry as you do writing the actual plan. Your model should also change as your business grows and as the market shifts, so remember to revisit your business plan at least once or twice a year. Adjust your plan based on your key metrics and the changes to your industry. With some fine-tuning and consideration, baking these aspects into your plan will keep your business on track to success.
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