The Best Way to Write a Successful Business Plan
A properly thought out business plan is a masterplan for future success, so it’s really important that you create something that sells your ideas well. You'd be surprised at how many people I meet who have a great idea but never do anything with it because 'it's all too much'. The sad part is that if they just put the work into writing a simple business plan, they'd know how to proceed. In this business plan essay I will explain the best way to write a successful business plan.
Does your brain shut down to the idea when people tell you that you have to write a business plan if you want to be successful? Do you think to yourself, 'that's for traditional or big businesses, not for businesses like mine'? or 'you only need a business plan if you want funding from investors or banks, not for a simple idea like mine'?, or 'I don't need a business plan, it's all in my head and I would just be wasting time and energy writing it all down, business plans are for corporate types who like to justify their jobs with pointless paperwork and procedures' Well, you're wrong like Donkey Kong, trust me, I've made this mistake in the past. I've said all these things to myself and fallen flat on my face, before getting back up and making the same dumb mistake again.
The biggest mistake I made when I was just starting was to try to draw up a full corporate business plan for my first business. I spent hours going through this ridiculous corporate template and filling in the boxes with BS. I even copied and pasted things off the internet just to fill in some boxes. It just wasn't me, I was doing it because I had been told I should do it. The result was that I never looked at it again because it had nothing to do with me or my business. In subsequent businesses I simply refused to contemplate the idea of a business plan because it had been such a boring waste of time. How did I not realize that the whole point of a business plan is that it needs to be individual and uniquely you? How did I not think, 'what the hell am I doing'? Anyway, the moment I just simplified the whole process and tried to make it authentic and unique to my ideas, knowledge and objectives is the moment my whole perspective changed, and as a result my whole business changed.
What Does a Business Plan Really Do?
Your business plan will help you see how likely you are to secceed and if your idea is financially viable. You’ll also set logical goals and finish your concept. You'll probably get several new ideas you hadn't thought about while you're crafting your plan. This is good, just make a note and see if there's a sensible way of incorporating them.
The effort you invest into your plan will help you identify and avoid possible mistakes which could cost you a lot of time and money, thereby increasing your chances of being successful.
Just a final note to finish off this section, it’s always a good idea to clearly state your 'value proposition' and keep it central to your plan. You can even write it on the top corner of every page if the plan is just for you. You can think of it as your main reason for being. Your value proposition should answer the following questions; “what problems are you solving for customers or clients?”, “how are you better than your competitors?” and “why will you succeed when other similar businesses have failed?”
Avoid the Most Common Pitfalls
Before we get down to the nitty gritty of writing a business plan, it's useful to review possible fatal errors so you can avoid them. This is particularly important if you're looking for funding from investors or lenders.
Stick to the Facts
The first thing you need to remember is that sticking to the facts is what's going to give you credibility. Nobody, including yourself, deserves to have to sit through a pie in the sky business plan. Sticking to the facts is everything, particularly when analysing your competitors. You need to be precise and say, in simple English, exactly what you're going to do. Trying to confuse the reader is a fool's game, so respect your reader.
So, while it’s great to put your ambitions down on paper for yourself and for investors to see, your plan needs to focus on real tangible areas like finance, demographics, product(s), branding and distribution channels for example.
Identify Your Competitors
If you're interested in finding funding it's essential that you identify your competitors and show that you've done your due diligence in this area. Not doing this property will give the reader the impression that you've not done your job properly. If they think this, you will have lost their trust from the get go.
Eve if you're only writing this business plan for yourself it's incredibly important that you do things properly. Every business has competitors, even if those competitors are in other similar sectors and compete indirectly. Doing this part thoroughly can bring you new insights and clarify existing doubts or misconsptions.
How Will You Make Money?
When I started my first few 'businesses', it's a bit generous to call them that, I didn't realise it at the time, but I focused on what I wanted to start based on some superficial idea of what a 'real business' was like. I saw other businesses and thought to myself something along the lines of 'that looks nice, it must be making money because it's got a nice office and a nice website'. I then tried to replicate that concept in my own way. This was obviously not a good way to start a business, I know that now.
If you focus excessively on 'starting a business' to impress either yourself or your friends and family, your business plan is not likely to work. Remember that in any business profit is king.
If you have members of staff, whether they're real or remote, add a short profile of each member of the team. If you don't have anyone to add yet but you plan to take on help in the next few months, create an avatar of the person or people you need.
The reason for adding profiles and /or avatars, is first of all to make potential investors comfortable with your business. If they're investing money into your business, then it will help if they can see who will be working on the project. The second reason is for you to be able to see clearly on paper who you'll be working with. When you put things on paper you see them in a more sober light. This might help you decide which skills you actually need and which you don't. It may also give you some perspective on that person you think is really cool and nice to work with but who actually brings very little to the table.
Work your numbers out before you seek investment or loans. Make sure you know your numbers inside out. This will give you confidence and also credibility in front of investors and lenders The money you're asking for needs to go with your needs. For example, if you ask for a $50,000 investment or loan, the person or business providing the money is going to want to know what you need it for, whether it's for marketing, production costs, inventory or wages. You need to be able to account for every penny or they'll lose trust in you, and if this happens they won’t invest.
Getting someone else to write your business plan is dangerous in my experience. Not only can it affect cohesiveness, but it will defeat one of the main purposes of the plan; knowing your business.
Strategies for Writing a Strong Business Plan
We've looked at common mistakes people make when they write a business plan, now we're going to look at strategies for writing a strong business plan.
Feasibility Study
The feasibility study analyses the main elements of your plan: your idea, the advantage you have over your competition, an avatar of your ideal customer and your daily activities. You should also have realistic numbers to predict your cash flows. By writing up and then reading through your feasibility plan you'll quickly see if your initial idea is sound enough to go forward with or not. After you've done your feasibility plan and are satisfied that everything makes sense, it's always a good idea to discuss your business with impartial experts you trust to get some feedback. If you have a business mentor, talk to him or her and get feedback. This part will help you identify and eliminate mistakes and any dangerous assumptions you're making.
The Executive Summary
The opening section of your business plan is one of the most important parts because it can win or lose your reader. People are busy and their time is very valuable, so you need to respect that. Your reader will get a impression of you and your business from the opening section and if the first impression is negative it's very difficult to reverse. This is a snapshot of your whole business and it needs to fit perfectly with the rest of the plan. Paragraph 1 should say the problem you will solve for your customers or clients and why you're different from your competitors. Paragraph 2 should say who your target customers are, who your competitors are and how much you expect to make. Then you need to write a short part about your staff or team. Who will you need to work with? Give some details about skills and experience. The final paragraph needs to focus on finances, with projected income for at least the first year, but preferably the first 2-3 years. You should also detail how much money you need to start up the business. How much will you contribute? How much will lenders or investors contribute? The maximum length for the executive summary should be 2 pages (at the very most), so remember to keep it concise and clear. It's also probably best to write this section last, as you'll have a better idea of what to say and how to say it once you've written the other sections.
Clarity is King
Can you think of anything more mindnumingly frustrating than struggling through a business plan, trying to make sense of the unnecessarily complicated and pretentious language which should be explaining crucial things you need to know? Don't waste people's valuable time, express your message clearly and concisely.
Clarity shows confidence and respect for your readers. If you're writing a business plan and pitching it to investors, you're probably dealing with smart people just like yourself. Smart people see straight through jargon and unnecessarily complex language in a heart beat. It annoys them most of the time because it's insulting. It's insulting to assume they'd fall for such an obvious trick. Don't insult your readers, remember that less is more in most cases. For example: “improving the efficacy of measurable learning outcomes” could be 'improving learning' or 'improving learning efficiency' if you want to complicate it a bit.
Product or Service Section
To begin with, talk about your product or service and how you're going to get it to your customers or clients. Describe your production techniques and your schedulen in detail. When you describe your production techniques take the opportunity to sell your company and your product again. Use attractive copy to immerse your readers in what you're all about. You also need to mention your location and any equipment you use.
Financial Projections
There are three basic kinds of financial statement that your business plan should include:
- Balance sheet
- Income statement
- Cash-flow statement
It's vital that the numbers you include in these statements are supported by solid proof. The proof can be from historical data, market research or any credible source as long as it’s logical. Some people even draft a 'worst case scenario' version and a conservatively optimistic version to see both ends of the spectrum. If you do this just change your assumptions about the key numbers so that the calculations are as accurate as possible.
Conclusion
Your business plan is your pocket guide to where you are going and should be ever changing and adapting to market changes. Don't just write it and stick to it religiously, make sure you change it to suit new conditions, new information and new trends you encounter. Writing your business plan should be as creative as it is scientific. Test, evaluate, adapt and create.
