Drafting Your Business Plan
A business plan has several uses, including:
- Organizing and refining your business idea
- Providing structure and answering important questions
- Identifying metrics of success
- Understanding your audience, market, and product/service
- Creating a living document that is easy to share with investors or partners
While there are a lot of templates and conflicting opinions on the “perfect business plan,” the most effective one should contain the following elements.
Elements of a Good Business Plan
Drafting a business plan is a crucial step when you are just starting your business or thinking about taking your business to the next level. Your plan is an important tool to help structure your business and communicate your idea with potential funders. Spending the time to detail your business plan helps you build a business with a strong foundation and one that is focused on the future.
1. Executive summary
Include several key elements, such as the name and location of your business, a description of products and services offered, your mission and vision, and major milestones. Executive summaries are often written last after all resources and considerations have been pulled together.
2. Goals
Outline your short-term and long-term goals. Define the performance metrics you are going to use to measure success.
3. Audience
Describe the target audience of your product or service. Be sure to discuss the profile (demographics, likes, dislikes, etc.) of your target audience. This analysis also requires a definition of the customer, i.e., where they live, work, or shop.
4. Market
Define the market for the product or service, including size and growth potential. Identify competitors through competitive analysis and highlight ways their business stands out. A detailed history of the company and future projections for products and services will help investors have a clear picture of the business and its future.
5. Business Operations
This section should include a description of the management team and your operating model. In other words, identify key executives, board members (if applicable), and founders and their roles in leadership. The operating model takes into account all necessities needed for a smooth operation, such as location, equipment, and a description of how the product is made and the cost to produce it.
6. Changes in Industry
Describe the impact of short-term and long-term industry trends on your business. Factors such as technology advances, trade regulations, and tariffs could affect your supply chain and business operations.
7. Marketing & Promotion
Define your target customer and ways you plan on recruiting new customers. Describe the type of marketing tactics (print, digital, or social media) you will use.
8. Budget & Expenses
Provide operating budget, financial history, cash flow, profit-loss statements, and realistic financial projections for your business. Include income statements and cash flow statements going back 3-5 years and ensure all of the budget numbers add up.
9. Summary
Provide a brief summary of the key points outlined in the business plan in a way that attracts potential investors.
Tips on how to share your business plan
Once you have drafted and polished your business plan, you’re ready to share it with the world. When you share your business plan, we would recommend the following tips and tricks.
Review the plan with a mentor
Find a business mentor to review your final business plan before sharing it with external groups. Later in the guide, we talk about how to build a successful business team around you.
Draft the perfect outreach email
First impressions are everything and this includes any email outreach on behalf of your business. Work with your mentor or advisor to craft the perfect outreach email that can highlight important and interesting parts of your plan. You want to make sure that whoever you send it to is going to want to read it!
Keep a few printed copies on hand
Be sure to have a few printed copies on hand in case you have a funding opportunity that arises unexpectedly. Having a physical copy for you and the potential investor also makes referencing items in the plan much easier.
Block time to review and update your business plan
The life of a small business is constantly evolving. For example, the day after you have finished writing your plan, your business approach may have changed. That is okay. It is part of the process. Be sure to build in monthly or quarterly checkpoints to review and revise your business plan so it stays up to date as your business grows and adapts.
Be mindful when sharing your business plan with people
Business plans often contain sensitive financial information and market analysis and strategy. Be mindful of who you share this plan with, as you would not want it to be shared widely.
While your business plan will change as your business grows, it is a useful document to help you organize your thoughts and share your ideas with potential funders. For more information about how to fund your business, click below!
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