Plan To Succeed: Start With This Business Plan Outline
Imagine you hire architects to construct a building and ask to see the blueprints. They reply, "Nah, we don't need them. We'll just start building and handle problems as they crop up." Absurd! Yet so many businesses adopt a similar attitude towards business plans. These documents are blueprints for the success of your organization; like the architectural version, they provide clarity, direction, and make course corrections easier. Bottom line: you need one. So how can you create a plan that works?
Your Business Plan Outline
Tim Berry, founder and chairman of Palo Alto Software, conducted a survey (validated by the University of Oregon Department of Economics) to determine the value of planning. He discovered that those who complete business plans were twice as likely to grow their business, secure investment capital, or secure a loan as those who did not.
To ensure that you meet those goals, and create a plan that will function as a vital tool, include the following:
1. The Basics
It sounds simple - and a bit too obvious - but make sure you have a title page, which contains your company name, the title "Business Plan," your logo, address, phone, email, and website URL. Often, these details are forgotten, but it can make a difference to lenders and/or potential investors.
Throw in a table of contents as well. Time-pressed readers want to access the information they find most valuable first. Pagination and a table of contents allow them to do this easily and conveniently - and it helps convey a polished, professional look... never a bad thing when appealing to lenders and investors.
2. The Executive Summary
While written last, the Executive Summary is the most critical component of your business plan. This is your chance to provide a high-level view of your organization. Like the hook of a news story, its goal is to draw readers into your business. Briefly summarize:
- Your concept. In other words, what do you do?
- Your goals and strategies you will use to achieve them.
- Your product/service and what differentiates it.
- Your target market.
- Your marketing plan.
- Your current and project finances.
- The "ask." How much funding do you need? How will it be applied?
- Your management team. Outline roles and experience of each individual.
- Success factors
"Summary" is the keyword here; keep it as brief as possible while including relevant information. One to three pages provide enough real estate to give readers an overview of your company. You can use subsequent sections to elaborate.
3. Product/Service Description.
What makes your product different? Better? Identify key attributes and describe how they benefit customers. Keep in mind this advice from Entrepreneur Media's book, Write Your Business Plan: A product description is more than a mere listing of product features... You have to highlight your product's most compelling characteristics...that will make it stand out in the marketplace and attract buyers willing to pay your price. Even the simplest product has a number of unique potential selling strengths.
Is yours price? Exclusivity? Features? Customer support? What will make your product or service the top choice of your target market?
4. Market Description.
Potential investors, lenders, and other stakeholders need reassurance that you understand your industry, and how your business fits in. Consider the following:
- Is the market for your product/service stable? Expanding? Declining?
- What external factors will be significant (e.g. technology, regulations, globalization, competition, etc.)?
- Who are the market leaders? What are their strengths? Can you exploit their weaknesses?
- What opportunities are out there for your company, and how will you seize them?
Either opt for paid industry research or DIY with information from government agencies, industry associations, the US Census Bureau, EconomicIndicators.gov, Fed.Stats.gov, and other reliable sources.
5. Marketing Plan
This section answers the question: How are you going to persuade customers to buy your products/services? Start by identifying your target market, and articulate how you will reach, and keep, them. Describe your:
- Unique selling proposition.
- Pricing strategy.
- Distribution plan.
- Collateral (e.g. websites, brochures, business cards, etc.).
- Conversion strategy.
- Retention strategies.
6. Organization and Management
You introduced your organizational structure and management team in the Executive Summary. Now, go into more detail. Identify the skills needed to grow your business, and demonstrate how each member of the team contributes.
Also include a list of people on your board of directors or board of advisors. Seeing that you have business and industry experts on your side can help investors part with their money more readily.
7. Financial Plan
Crunch some numbers and include:
- Monthly cash flow projections.
- Quarterly or annual order projections.
- Profit and loss projections.
- Capital expenditure projections.
8. Risk Analysis
What are the most significant risks to your business? What are the most likely? Investors and other stakeholders need to see that you are prepared, and that you have plans in place. Describe your contingency plans, as well as alternative strategies if anticipated risks do not occur.
Include supporting materials (e.g. market studies, resumes, tax documents, financial statements, copies of letters of intent from suppliers, product brochures.)
To fill in this business plan outline, you'll have to take a good look at your organization, what it hopes to accomplish, and how. This process, in itself, comprises much of the value of a plan; it forces you to see your business objectively, through the eyes of an investor, a lender, or a potential partner.