When starting a new business, developing a comprehensive business plan is crucial. Many small businesses fail due to insufficient preparation, preventing them from achieving their full potential. As December is National Write a Business Plan Month, we are going to provide helpful information for those looking to become entrepreneurs.
Business Plans Help You Run Your Business
A good business plan guides you through each stage of starting and managing your business. You’ll use your business plan as a roadmap for how to structure, run, and grow your new business. It’s a way to think through the key elements of your business.
Business plans can help you get funding or bring on new business partners. Investors want to feel confident they’ll see a return on their investment. Your business plan is the tool you’ll use to convince people that working with you — or investing in your company — is a smart choice.
Which Type of Business Plan Should You Choose?
While some business plans may be more effective than others, there’s technically no wrong way to write one. Every business is different, and the type of plan you choose should ultimately boil down to your unique needs and goals. The two most common types of business plans are traditional and lean startup.
A traditional business plan might be right for you if:
- You’re detail-oriented.
- You want a comprehensive plan.
- You plan to request financing from traditional sources.
A traditional business plan is a great way to show you’ve done your homework, which is why it’s the preferred method of many lenders and investors. While a traditional plan may take more time to write, the extra effort is worth it in the long run. The more thorough you are, the better you’ll be able to answer questions about what your company is, how it will stack up to competitors, and why it will be a financial success. You don’t have to stick to a set structure, but the following nine sections should be included in a traditional business plan: executive summary and company description; market analysis; organization and management structure; service or product line description; marketing and sales strategy; and funding requests and financial projections.
A lean startup plan might be right for you if:
- You want to explain or start your business quickly.
- Your business is relatively simple.
- You plan to regularly change and refine your business plan.
The lean startup format is ideal for entrepreneurs who want to keep things high-level and adaptable. At their core, lean startup plans focus on only the most important details — making them a viable streamlined alternative. Lean startup business plans can take as little as an hour to write and are typically only one page. By sticking to the following basics, expressed through visual tradeoffs and fundamental facts, you leave a lot of room to fill in the blanks later: partnerships, activities, and resources; value propositions; customer experience, target market, and channels; and cost structure and potential revenue streams.
What Are the Next Steps?
Once you’ve fully developed your business plan there are various routes you can take. Maybe your business requires investors. Or perhaps you have the capital and need to take the initial steps to get your business going. The next part of the process is up to you, but try to start as soon as possible to prevent yourself from losing momentum.
