15 things you need to do when writing a business plan
Starting a business? Find out why you need to write a business plan, and the 15 things you need to do to impress an investor or potential business partner.
Benjamin Franklin once allegedly said, “If you fail to plan, you plan to fail”. And never has this been more true than when starting a business.
While there are exceptional cases of businesses being started accidentally, or run chaotically but profitably, the truth for the majority of us is that, if we want to succeed in business, we need to plan carefully.
We need to know what we’re doing, when, why, how and for whom. And we need to have contingencies and strategies to help us achieve the results we want. (We also need to know what results we’re working for.)
So you need a business plan.
15 things you need to do when writing a business plan
A business plan is also something an investor or potential business partner will expect to see, and will use to base any decision to lend to, invest in or work with you on.
So it’s important you know how to write a proper business plan. And to help you do so, here are 15 things you need to do.
1) Answer the five Ws and one H
When you’re writing your business plan, keep in mind that you need to answer the five Ws and one H:
- What – what’s the reason you’re starting this business, and what will you do and sell?
- When – when will you open your business, and when will you make a profit?
- Where – where will customers find and buy from you?
- Why – why are you qualified to run this business, and why will people buy from YOU?
- Who – who is my business for, and whose help do I need making it successful?
- How – how will you make and deliver your offering, and how will you promote it?
And these aren’t just overall questions you need to consider. When writing each section of your business plan, ask yourself these six questions:
- What am I doing?
- When will I do it/will it happen?
- Where will I do it/will it happen?
- Why am I doing it/will anyone care?
- Who is this for and whose help do I need?
- How will I do it/will it happen?
If you do this, you should answer any questions a potential investor or partner may have, and ensure your business plan looks robust and considered.
2) Explain your vision
If you want anyone to care about or believe in your business, you need them to buy into your vision. So make sure this is clearly stated on your business plan.
Outline why you want to start or did start this business, and your vision for its future. Where do you see your business in six months? One year? Five years?
Potential investors or partners will need reassurance that their money or time will be invested in a venture they believe in, and that is headed in a direction that fits their own goals or vision. (You can find out how to craft a professional business mission and vision statement here.)
3) Explain in detail the reasoning behind your budget
If you’re asking for financial investment for your business you’ll need to clearly explain why you need that specific amount, where it will be spent, and what you anticipate happening once the money is invested.
This will include financial forecasting, outlining how long it will take for you business to turn the investment into profit.
4) Keep it under 40 pages
No one wants to wade through a business plan that rivals War and Peace for length. All a potential investor or business partner needs to read is the information that will help them make the right decision. So be concise when writing your business plan.
If you know you struggle to write, or can’t get your plan under 40 pages, it may be worth investing in a professional content writer. They’ll ensure that your plan doesn’t just have the right information (and no more), they’ll also make sure you don’t blind or bore with too much jargon, and they’ll be able to ‘sell’ your business more effectively.
5) Define potential challenges
No new business is without risk. And a potential investor or business partner will expect you to be aware of your business’ own risks, and have a plan for dealing with each of them.
Don’t assume that ignoring any challenges will mean an investor or possible partner won’t know they’re there; instead you’ll either look like you’re being dishonest in avoiding them (and if you’re hiding one thing, what else have you omitted?), or ignorant to their existence.
And neither bodes well for your business.
So consider and define any potential challenges you are going to face in your business plan. Demonstrate you have a clear vision of the problems your business may encounter, and are prepared to meet and deal with them.
6) Get an expert to review your business plan
Business plans are difficult for anyone to write, especially when you’re as close to your business as you are. So once you’ve written your rough draft, ask an expert to review it.
This could be a business mentor or an experienced business owner you trust. Ask them to give honest feedback, and make sure you listen to it. Don’t get precious about elements of your business plan if they say they don’t work.
This isn’t supposed to be a beautifully written vanity piece, it’s a working document that needs to achieve a specific goal. So give it the best shot of doing so by seeking out and listening to the feedback of experts.
7) Showcase what makes your business unique
Before writing your business plan, you need to research your competitors. What are they doing? What audience are they aiming for? What are their strategies? What makes them unique? And what gaps are they missing?
To give your business (and your business plan) the best shot at success, you need to find a way to differentiate yourself from the marketplace. You need a clear and valuable USP.
There are dozens of different ways you can ensure your business stands out from the rest of the market. These can include:
- Your pricing.
- Your products or services.
- The way your products or services are used.
- Your audience.
- The specific problem you solve.
- Your product or service delivery.
- Your customer service.
- Your brand personality.
Even in an established, crowded marketplace there’s always space for a new player who offers something different or better.
On the other hand, a business that tries to break a market with nothing new to offer or say will struggle to make a mark. They’ll also find it difficult to convince an investor or partner to buy into them.
So make sure you have a clear USP, and this is evident in your business plan.
8) Explain how your business is going to make money
What separates a business from a hobby or a passion project? The answer is one word: money. A business exists (amongst other reasons) to make money. And anyone reading your business plan will expect to learn how yours will make a profit.
So tell them.
In the Executive Summary section of your business plan detail specifically how you are going to make money. And ensure this is backed up by the rest of your business plan, including financial forecasting.
9) Define your target audience
Who’s the target audience for your business? If your answer to this question is ‘everyone’ or ‘everyone who needs or buys this’ then you need to go back to the drawing board.
Why? Because it doesn’t matter how brilliant your products or services are, ‘everyone’ won’t buy them. And if you do try to market your business to everyone then you’ll end up with bland messaging that attempts to please everyone, but actually speaks to no one.
To illustrate this point, let’s say your new product is a health drink. Now you may argue that everyone needs to drink, and everyone wants to be healthy, so your target audience is ‘everyone’.
But will everyone actually want to spend money on a health drink? And even if they do, the reasons why they may buy a health drink will vary dramatically:
- A mother may buy healthy drinks for her children.
- A teenager may buy them to clean up their skin and be more attractive to the opposite sex.
- A fashion-conscious influencer may buy them to be on trend and look good.
- A gym-lover may buy them to build their strength.
- A dieter may buy them to lose weight quickly or healthily.
- A pregnant woman may buy them to grow a healthy baby.
- A middle aged person may buy them to stave off ageing.
- A pensioner may buy them to remain more mobile.
Just consider each of the groups above, and the kind of branding and marketing messages that will appeal to them – and how wildly different that will be.
For example, how can you brand a product that appeals to worrying mothers, fashion-conscious teens and pensioners at the same time? And how can you create one ad that will convince each of those markets to buy?
This is why it’s important to define your specific target audiences using something called personas or avatars. When you’re very clear about your customers, you can create highly targeted marketing campaigns that will appeal to them.
And this is exactly what an investor or partner will be looking for on your business plan. They’ll expect to see a defined target audience, with demographics and carefully researched facts and figures. They’ll also be looking for valid reasons why you’ve chosen this audience.
10) Include your resume in the appendix
An investor or potential partner isn’t just considering buying into your business when reviewing your business plan, they’re buying into you.
You’re the person who’s going to be doing the work and making the day-to-day decisions for your business, and its success rides, in a very large part, on you.
So make sure you include your resume or CV in the appendix of your business plan. And check it’s up to date and ‘sells’ you in relation to your business. (If you need help writing a resume that will impress an investor or partner, take a look at our online CV course.)
Your CV needs to demonstrate that you’re the perfect person to start and grow your business, and can be trusted to deliver on the promises your plan makes. So don’t simply attach an old resume without editing it.
11) Outline your expected costs
If you’re asking an investor or bank for money for your business, they’ll expect to see where it’s going to be spent. So list all your business costs, and make it clear how they’ll benefit your business.
Remember, whether you’re asking for an investment or a loan, the investor or lender will need to be confident they’ll get their money back in some form later on. And they’ll expect to be reassured of this in your business plan.
12) Be realistic
Who doesn’t hope their business takes off immediately, and turns them into a wealthy overnight success? The reality for the vast majority of businesses, however, is quite different.
Adding up theoretical projected numbers on a spreadsheet can be fun, and it’s easy to get carried away by how much you can potentially make if 10% or 20% of customers convert. But there’s a big difference between projecting potential numbers and actually getting the sales.
So make sure your business plan is brutally realistic. You’re more likely to win over an investor or business partner with carefully calculated, cautious numbers that can be backed up with research, and show an achievable profit than you are with hopeful guesswork.
For most businesses, the early years are gruelling. You’ll put in a lot of hard work for little return, and will need to deal with disappointments and failures. To give you an example of how long success can take, James Dyson famously spent 15 years creating 5,126 vacuum cleaners before he made one that did.
If James Dyson had tried to convince investors he’d be a millionaire based on his first design everyone would have been disappointed. And even if you do have a working product or service, you’re still not going to convert every marketing lead.
So write a realistic business plan, and show investors and potential partners that you have an honest grasp of what starting a business means, and an achievable plan of building yours – and turning a profit.
13) Showcase your business and personality
Your business needs to have its own distinct, authentic brand. Just because another business has been successful with a particular brand or messaging doesn’t means yours will. Besides, how can you carve out your own place in the market if you’re a pale imitation of someone else?
Investors and business partners also aren’t looking to work with a copycat business. They want fresh ideas, or new ways of solving problems, and are looking for a business with a clear point of difference. (This is where your USP comes into play.)
You need to find your own unique business personality, and clearly convey this in your business plan. And that personality needs to be authentically you. (Follow this system to help you build your own unique brand.)
14) Prioritise substance over design
While your business plan certainly needs to look presentable and business like, a glossed up and polished plan full of fluff, without a reasonable strategy to make profits or actionable steps is completely useless.
A beautifully designed document also won’t distract an investor or potential business partner, or make up for any holes in your thinking. They care more about what’s in your plan than what it’s printed on, or the font you’ve used.
So make sure that your business plan sounds as good as it looks.
15) Update your business plan over time
Businesses are rarely static, and often evolve over time. Sometimes products you think are going to be an instant hit fall flat. Or a new revenue-generating opportunity may present itself, and you decide to change the direction of your business. Expenses can be higher (or lower) than you anticipated, and financial forecasts can change.
The point is that your business plan is likely to date quickly. So don’t see it as ‘finished’ once you’ve completed this version. Instead see it as working document that grows with your business, and set aside times to review and update your plan.
This way you can make sure you’re on target to realistic goals (and you can set yourself more ambitious goals if you wish), and that you’re still considering your business in a holistic, rounded way, as you steer it to the success you’d planned in the first place (even if the end result looks a little different)!
A successful business starts with a solid plan
We’ve focused on writing a business plan for investors or potential business partners in this article, because that’s the usual intended audience for them. But even if you’re not looking for investment or partners, we still highly recommend you write a plan.
Because the most important audience for your business plan is really you.
Writing a business plan is a powerful exercise. It forces you to consider your business critically from a financial point of view (and if your business is going to succeed it must make money).
And the things an investor or partner will look for in your business are all the signs of a business that is destined for success. So skipping over these or turning a blind eye to your shortcomings won’t do you any favours in the long term. You’ll just waste your own time and money trying to get a doomed business off the ground.
By following the process we outline in this article and honing a carefully considered business plan, you’ll make sure you’re planning a business that is more likely to succeed. One that will repay you – or an investor or business partner – handsomely.
Justin Mark has been running his own digital marketing agency for a few years now. He closely follows the latest digital marketing trends, particularly SEO.
Photo by Mason Wilkes