Looking to start a new business? If you want to succeed you need to have a solid plan. While writing a business plan can be a daunting task, you don’t need a fancy business degree in order to craft a good one. But you do need to have vision, passion, organization, and be willing to put in a lot of hard work.
Whether you want to write a business plan for yourself, the bank, or to show potential investors, you’ve come to the right place! Here you’ll learn how to create a strong business plan as well as learn from common mistakes that can hurt your chances of success.
Below are 25 tips to writing a business plan from the pros:
What You Should Do:
Liat Tzoubari, Founder & CEO, Sevensmith
You should be writing your business plan with a clear idea of who you are targeting (bank or potential investors) so that you can tailor your business plan accordingly, similar to how you would tailor a resume to a specific job application. Research the bank or potential investors and understand how they work, what they’ve invested in previously and most recently, and clearly outline the synergy with your business.
Steven Benson, CEO, Badger Maps
A great new business plan outlines how a business plans to solve a problem, how much it will charge for that and how much it will cost to solve that problem. It also includes why the business has the right group of people and assets to best solve the problem, how it will let people know that they are solving this problem, and finally how the business will get people to pay to have that problem solved.
When marketing yourself properly becomes the foundation of your business plan, you will expand your reach and ultimately make your business profitable.
Marc Prosser, Co-founder, Fit Small Business
When a new or young company presents financial projections, lenders and investors will want to have data which supports the company’s financial assumptions. Where did the company get its numbers for gross profit and amount of inventory it will need to purchase? If the company is using industry benchmarks, it will gain more credibility in the eyes of investors than saying the company made reasonable estimates. How can you get this data in your business plan? LivePlan offers this functionality as part of its online business plan software or you can comb through U.S. Census Bureau data for free.
Diane Elizabeth, Founder, Skincare Ox
Having a unique idea with billion dollar potential is great—but if you want an investment you’re going to have to clearly demonstrate just how you are going to achieve that potential. Ideas are truly a dime a dozen. Your job is to convince the investor that you have identified the plans, strategies, and resources to bring that idea into the market–and win.
Think critically about your marketing and distribution strategies (resist the urge to be vague and try to get specific) and their feasibility. How much money will you need to compete in your chosen market? What kinds of people and skills are needed? How long will it take to execute on your plan? If you can confidently, comfortably, and convincingly answer these questions realistically, then you’ve got yourself a great business plan!
Victor Clarke, The Marketing Quarterback, Be Better Do More
You won’t know if you are still on the right track unless you are clear about where you are going. Identify sales goals that are attainable. Global domination may be desirable but it’s not a realistic or a specific goal. As a manager or a business owner, you should create attainable financial sales goals for a defined period so your team is able to break the goals down into individual objectives.
Thom Fox, Business Advisor & Host, The Engine Radio Blog
Tell a story with your business plan. After countless interviews with commercial lenders and venture capitalist, I heard one thing loud and clear – they want to know the business owner’s story. What drove them to start their venture. Why are they launching now? How does this fit in with their beliefs. They want to know information like this because when things go wrong (and they will) the business owner is the right person to weather the storm. Understanding someone’s passion and thought process can belay fears from financiers and others looking to back your business.
Too often, entrepreneurs underestimate the true cost of starting their business and over estimate how much their business is likely to earn in the first year. Skewing these numbers accordingly can give you a better idea of what to really expect and if you beat your projections, that’s more cash to grow the business.
Garrett Ball, President, 65Medicare.org
Make your business plan fun to read. You can stay professional and still make your business sound exciting. Our business is what many would consider boring, but because it is my passion, I always try to make it exciting when explaining it to someone or writing about it.
One good way to do this is to use visual elements. A large percentage of people are visual learners, so don’t use only text to lay out your plan. Instead, intersperse visual elements – charts, graphs, pictures, infographics – that help tell, and sell, your story and your business.
Leo Ashkan, Marketing, Prisync
If you have chosen to be in the highly competitive e-commerce industry, you need to be aware of prices. What I would like to recommend is, know the price trends via price tracking software to increase your knowledge and to have a fine-tuned pricing strategy.
Tali Raphaely, www.taliraphaely.com
Show how your investors will make money! Many business plans lay out their ideas and business model nicely but forget to clarify the single most important thing – show your investors exactly how you’ll get them their money back plus the return on their investment.
Patrick Moss, EquityNet
It’s very important for entrepreneurs to identify their target market. Often, entrepreneurs will claim their product or service applies to a much larger market than it actually does, which is a common red flag for investors. Investors want to invest in companies that have clearly identified their markets and have a realistic view of their market share. For example, if you own a coffee shop in your town, your target market isn’t going to be everyone in your town that drinks coffee. It’s likely that not everyone in your town visits the area your coffee shop is located, and there are several other coffee shops that have established a share of the market.
Sharifah Hardie, Ask Sharifah
My #1 Tip for writing any business plan is, your money is in the Executive Summary. No matter how detailed a business plan is, a potential investor is not going to continue reading it if the Executive Summary doesn’t peak their attention. Provide the WIIFM (What’s In It For Me) immediately, so that the investors knows that this will potentially be a good investment and will continue to read on. Summarize all of your information so that reading the complete plan is really just a formality.
Michael D. Greaney, CPA, MBA, CESJ
Sometimes the best schooling in developing your business plan can be purchased at the bookstore. Both undergrad and graduate I’ve taken courses on how to prepare business plans, and have prepared a significant number. Perhaps ironically, I found all the material in the courses I took covered at least as well, and more entertainingly, in /Business Plans for Dummies/. Go figure. You don’t even have to pay retail if you go to abebooks.com.
CHAVAZ, Executive and Entrepreneurial Consultant, Author & CEO, AYF Consulting Corp.
Your business plan is still a sales pitch and you should have the same foundational principles but the wording should be adjusted to be appealing and engaging to the specific financing option(s) who may be laying eyes on your plan for the first time. I also encourage business owners to have a separate business plan that is private and written down like a map, as though they were writing driving directions. This plan can be a private plan that is not shared with anyone, but its aim is to keep your business on the road to success.
Making sure that you provide the answers to the questions above will ensure a stronger business plan.
Kenneth Burke, Marketing & Communications, Text Request
My one tip for creating a business plan is to have your plan reviewed by one or several others who have no prior knowledge of your business concept or planning attempts. Like writing anything, when you create a business plan, and put it through personal review after personal review, it’s very easy to both get lost in the minutiae and become numb to it. A fresh mind is always a good additive to business planning.
20. Along with professional advice, ask your friends and family to look over your business plan and offer their advice.
Elizabeth R. Elstien, Write.Research.Edit.Sell.Educate
While the big picture is definitely important to where you want your business to be in the future, don’t overlook the details. Financials going 3-5 years out are crucial to understanding what you need to do to achieve success and imperative if a loan is needed. Think through every income and expense, such as updating software, tax increases as your business grows and all income-generating venues.
Be creative, but realistic. Crunch those numbers and know what you have to make to stay afloat. I find that this really solidifies the business concept and inspires confidence that the business can be done. Research marketing first and do the financials next, so you have a solid idea of where you are headed before doing the rest of the plan.
What You Should NOT Do:
Evan Harris, Co-Founder & CEO, SD Equity Partners
A business plan is not set in stone. It should not be a static document that is simply used to persuade investors. Your business plan should be updated as your business grows and potentially goes in new directions. By reviewing and revising your business plan, you are also taking the time to review where your business is currently headed and where you would like it to end up. This deep dive into the current state of your company will help you determine future goals, and updating your business plan will help you determine how to get there.
Cate Costa, Small Business and Startup Consultant, www.CateCosta.com
Make sure that you are consistent across all sections of your plan and that everything is backed up with real data. Too many new entrepreneurs talk about all of the marketing activities they will do but then don’t account for them in the operating budget, for example. Or they list a number for monthly rent that isn’t realistic based on where they intend to open their store. Consistency and supporting data are both key; without them your business plan is a fantasy story, not a business plan.
David Kosmayer, CEO and Founder, Bookmark
Work on product development AND customer acquisition simultaneously. You don’t need an established product in most cases to be able to test it or even sell it. Find your core audience early on, get them involved in product development, build a community and sell your product while working on product development!
Stuart Snyder, Founder & President, Snyder Media Group
One of the biggest mistakes startups companies make is to not properly assess the financial needs to start and maintain their new business. Besides passion, startup entrepreneurs need a clear actionable business plan that also has taken into account the financial resources required for at least the first year of operation.
Heather Schooler, The Money Library
One of the things that we find most small businesses don’t often do is complete analysis of their strengths, weaknesses, opportunities, and threats (SWOT). We recommend that this be done quarterly. Strengths and weaknesses are what your business does well and not so well.
SWOT shows what makes you special and what your biggest challenges are. It’s important be retrospective to identify your top 5 strengths and weaknesses. A business owner needs to capitalize on their strengths and use them to build their company, while working to mitigate or delegate the company’s weaknesses.
Over to You
Thanks to all who participated! Now it’s your turn. What are your best business plan tips? Let us know in the comments section below.