How to Write a Business Plan
Welcome to the 40billion.com startup
guide to writing a business plan. This simple guide is for new entrepreneurs and individuals who believe that they have a great business idea and are considering going into business for themselves. This startup guide provides helpful tips for how to write the perfect business plan. Learn why having a business plan is so important to the success of your company, and find out what are the 13 main components of a business plan. This includes a template you can download to create your own business plan presentation.
The first thing you need to know is that you are not alone. The shift from large companies
to smaller companies is a trend that has been underway for many years, and the shift is due to many factors, including large company layoffs, veterans returning to the work force, people looking for a second income, and those just excited to provide a product or service that fills a need in the market. Being your own boss can be a rewarding experience.
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So, let's get started. What is a business plan? Do I need one? How do I write one? The answers are not as complicated as you might think.
A business plan is basically a document that describes your business idea and the plans you have for building your business. You might have a dream or a vision, but how will you turn that into reality? You might currently have an idea in your head, but others can't see what's in your head, and we all forget things, so be sure to write everything down. Now, you might have it written on the back of a napkin, or on a Post-It, but that's not a real business plan. A real business plan will be about 15-20 pages, but don't believe that quantity equals quality. A bigger business plan is not necessarily better. Start with the napkin or the Post-It, and you can expand it into a concise business plan with a little time and effort. In fact, we even have a template that can help you get started.
Do you need a business plan? The simple answer is a resounding YES. Everyone starting a business
should write a business plan because it will increase your chances for success. It'll force you to think about your goals for the business and how you're going to achieve them in order to be successful. Also, if you need to raise funding to start your business, then potential investors and lenders are going to want to see your business plan, whether they're friends and family, bank loan officers, or venture capitalists. They're going to want to know that you're serious and professional enough to complete all the sections of a business plan and that your plan makes sense.
In a poll of over 150 people on 40billion.com, we found that a good business plan is the #1 most important factor in deciding whether to fund a friend's or relative's business. That means even at the early stage, when you're just starting out and raising a friends-and-family round of funding, the best thing you can do to increase your chance of success is to turn your idea into a good business plan.
How do you write a business plan? It's not as difficult or as time-consuming as you might think, and you don't need an MBA or PhD to write one. There are typically 13 sections of a business plan. They are:
1. EXECUTIVE SUMMARY - This is a 2-4 page overview of the other key parts of your business plan.
2. BUSINESS DESCRIPTION - Describe your business concept. What is the need that you are filling and how do you fill it?
3. MARKET OPPORTUNITY - Include any market research. How many potential customers exist? How much money do they spend and is it increasing?
4. PRODUCT OFFERING - Describe your product or service and why people need it.
5. BUSINESS MODEL - Who pays whom for what? And how much?
6. COMPETITION - Who else has a similar product or an alternative to your product today? Why is your product and business better? Is your product cheaper, faster, higher quality? Do you have a patent or a secret ingredient that nobody else has?
7. MARKETING / DISTRIBUTION PLAN - Who are your target customers, and how will you reach them? Will you have to advertise your product? Can customers buy your product on the Internet or in retail stores?
8. PRODUCT DEVELOPMENT PLAN - How will you build your product? How long will it take, and when will it be ready for customers to buy?
9. MANUFACTURING & OPERATIONS - Will you have facilities or offices where your product is made or services are provided? Any regulatory issues or licenses needed?
10. TEAM - Who will run the business? Include the full management team, their backgrounds and qualifications. How many employees still need to be hired?
11. FINANCIAL PROJECTIONS - Include an income statement and/or cash flow statement. Assume that unpredictable events will occur, and establish both best case and worst case scenarios. What happens in the extreme cases if you're wildly successful or what if you're not? How much revenue will the business earn in the next 3-5 years? What about expenses? When will it be profitable, and how much profit will there be?
12. KEY MILESTONES - What are the most important goals that you hope to achieve over the next 3-5 years, and when do you plan to reach each goal? Some key milestones might include raising funding, hiring members of the team, building the first prototype of the product, getting a license, opening for business, reaching profitability.
13. THE OFFERING - If you need to raise funding for your business, how much do you need so that you don't run out of cash and have to shut down? What will you use the money for? What will investors get in return?
So, hopefully we've helped you to better understand the main components of a business plan, and we've given you enough to get started.
For more information, check out:
• Sample business plan presentation template, which guides you to create your business plan presentation in just 13 simple PowerPoint slides:
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