You can improve your financial situation by shopping smart, controlling your expenses, managing your credit and investing wisely—but there’s another way to find true financial independence and security most people only dream about.
Starting your own business, either as a part-time venture or full-blown effort, can be easier than you think if you’re willing to do some pre-launch legwork. For many people, writing a business plan is the easiest way to increase the chance of a successful startup. For many others, it’s an intimidating hurdle that scares would-be entrepreneurs away from pursuing their dreams.
Understanding what goes into writing a business and learning how to create one over a period of weeks, months or even years, can make this process less intimidating and easier for creating a document to guide you through your preparation, launch and growth.
How Do You Eat an Elephant?
One bite at a time.
There’s no need to tackle writing a business plan in one sitting or even over the course of a single week. You can work on it section by section, whenever you have the time or interest. What if you had started working on your business plan last year, putting in a few hours each month? You’d have a complete business plan right now ready to show potential partners, investors or lenders.
To get started on your business plan, you might spend 30 minutes one morning working on the initial outline. You can work on explaining your product or service one day, then come back weeks later and work on outlining your marketing plan. You can skip the section that analyzes your marketplace (customers and competitors) for a while in favor of working on your financial projections.
Setting a realistic timetable for writing your business plan and working on it when you’re motivated will make the process much less intimidating. And remember, just because you’ve finished your business plan doesn’t mean you have to launch your new endeavor right away. Don’t worry about immediately having to find financing, get permits, sign contracts and start advertising just because you’ve got a finished business plan. When a situation presents itself in the future to start your business, Even if you’re not ready to start your business yet, having a written plan will help you take advantage when future opportunities present themselves.
Writing an outline
Writing an outline for your business plan is the easiest step to getting started and, once completed, makes the prospect of putting together the complete plan much less intimidating. You can write an outline in a matter of minutes, or spend about 10 to 15 minutes filling in a sub-headings with a few details.
Your outline should include the following:
- Cover page
- Contents page
- Executive summary
- Product/service overview
- Marketplace overview
- Marketing plan
- Investment opportunity
This should include a title, date and your contact information.
This should help readers see what’s coming and make it easy for them to find information they want. The contents page can include the document sections that follow, with a page number after each heading and sub-heading. One of your headings will be Marketing. Your subheadings for this section might include Product Development, Pricing Strategy, Distribution, Advertising, Public Relations, Promotions, Direct Mail, and Social Media. Under the Advertising sub-heading, you might have further sub-headings, such as Print, Radio, TV and Outdoor.
An executive summary is a brief description of what’s in the document. The summary should be about a half a page long and not provide much detail. You should describe the product or service, share why there’s a need for it, tell why you’re qualified to run the business, give the projected sales and profits and lay out the necessary investment. Resist the temptation to sell or justify in your executive summary—you want to tease the reader into wanting to know more.
Here, you’ll explain your product or service concept in more detail than you did in your executive summary. In your executive summary, you explained what your product is and briefly mentioned why it would work. Now’s the time to show how it will work, what benefit it will offer, what proof (similar products) you have that it will work and what research you’ve done. Take care to show your concept’s unique selling differential. This is the need, benefit or solution you will offer consumers that they want, but can’t get elsewhere. It might be a lower price, better customer service and support, or quicker delivery.
This is where you discuss your competition, reveal who your target customer is and give any history about similar products, services or companies that have succeeded or failed in your marketplace in the past.
Marketing refers to the Four P’s: product, price, place and promotion. Since you’ve already explained your product in your product overview section, focus on how you will price your product based on your competition, target customer and what type of brand you want to create. Tell where you will sell your product or service (e.g., retail stores, websites, catalogs, etc.) and how much it will cost to use these channels. Provide a section that explains your marketing communications, which includes advertising, public relations, promotions, social media and direct mail.
Create two sections in your financial discussion that detail what it will cost to make or create your product or service and what it will cost to run your company. Add a section that lists your pre-launch expenses to start the business, such as a website, local business license, office space and insurance. Create a one-year budget that lists all of your expenses, including your startup costs, overhead expenses (costs to run your business) and production costs.
Give conservative and optimistic sales projections so you can project your revenues and profits and estimate how long it will take you to pay back your initial investment. Discuss how you will finance the business, which can include using credit cards, dipping into savings, borrowing from friends and family or taking out a small-business loan.
If you are looking for a partner or investor, explain what you need from the investor and what you are willing to offer him in return. You can offer part ownership of the company, a percentage of the profits or an opportunity to license or franchise your product or service. Re-state your financial projections to show a potential investor when they would get their initial investment back and when they would start making a return on their investment.
Summarize your business plan, similar to how you introduced it in your executive summary. You can add a bit more detail, including financial projections, in the final summary.
This is where you put support documents such as a budget spreadsheet, pictures, photos or drawings of the product, sample marketing materials and biographies of key employees. You might wait until you’ve written your business plan to write your executive summary because you will have all of the detail available and better know what to highlight.
Sam Ashe-Edmunds has been a small-business consultant and owner for more than 25 years. He has written for a wide variety of magazines, newspapers and websites, including Entrepreneur, The Chicago Tribune, Chron Small Business, AZ Central Your Business, TheNest, Zacks, Motley Fool, Sysmallnonym Money, GlobalPost and Opposing Views.