Why Do You Need a Business Plan?
A business plan will help you build a business that will support you financially, have an impact on those around you, and leave a lasting legacy you can be proud of.
A business plan helps you to peer into the future and predict different outcomes. Though it’s certainly not perfect, it enables you to map out where you currently are and where you’re headed. Specifically, a business plan helps you:
- Estimate total startup costs
- Project revenues and profits
- Convince investors
- Compete from the start
- Anticipate challenges
A business plan helps keep you on track. It ensures that you focus your attention on the right things and enables you to avoid mistakes that could sink you. We’re going to walk you step-by-step through the process of creating a solid business plan.
Before You Start
Unfortunately, many business plans are wildly unrealistic. The initial excitement of starting the business often causes entrepreneurs to massively overestimate how successful they’ll be and underestimate the challenges they’ll encounter.
To be effective, a business plan needs to be realistic. Before you launch, you want to be relatively confident that you have a good chance of succeeding.
In many ways, a business plan should help you decide whether your idea will pan out. You may put together your business plan and then realize that the potential outcome isn’t as bright as you initially thought. That’s okay. It forces you to go back to the drawing board.
Take the necessary time to do the market research, analyze your financial needs, and map out your strategy for the future. Don’t look at it as the thing that’s preventing you from getting started. View it as building a foundation for a successful, lasting business.
The first section of any business plan will be the executive summary. It gives people a general sense of what your business is all about, what products or services you provide, where you’ve been, and where you’re headed.
The Small Business Administration recommends that your plan contain at least the following six things:
- Mission statement
- General information such as founding date, names and roles of founders, and other essential details.
- Company highlights, including financial successes and other vital successes
- Products or services that you sell
- Financial information, including funding goals and current sources of funding
- Plans for the business
Think of the executive summary as a detailed elevator pitch. It highlights the most critical points of your business plan without going into all the details.
You may want to consider writing your executive summary after you’ve written the rest of your business plan. That way, you’re more familiar with all the relevant information.
This section provides more detail regarding exactly what your business does and how it’s structured. You can start by explaining:
- The industry you’re in
- Your primary customer base
- The big problem that you solve for customers
- How you solve that big problem
Essentially, you’re explaining the reason for your business’s existence. You’re identifying a specific customer need within a particular market and then clarifying exactly how you’ll meet that need.
The overview section functions as your Unique Value Proposition. It clearly and concisely explains the unique value that your business offers. If you’re struggling with this section, try to answer the following questions:
- Who do you serve?
- How do you serve them?