Hello there friends! Today we are going to be talking about Business Plans, what they are, how to make your own, and why they are important for your business.
What is a Business Plan
To start today's discussion I feel that it is important to discuss about what a business plan is. In essence, a business plan is a document that discusses what you will be doing as a business, what are your goals, and how you are going to achieve them. It is not often clear what this document should be like. Should it be a plain text document, a presentation, a spreadsheet? In reality, it doesn't matter at all. As long as you have the important stuff down and calculated it could even be a scribble on a piece of toilet paper, to be blunt!
So what should be on the business plan?
- - An executive summary
- - A company overview
- - Some information about your products and/or services
- - Your marketing plan
- - A list of major company milestones
- - Some information about each member of the management team and their role in the company
- - Details of your company’s financial plan
By writing all of this stuff down in as much detail as possible, you will be able to recognize how your business is going to be working, and find any problems with your idea, and how you can become better in the future.
How to write your Business Plan
Let's talk about those bullet points one by one, starting of course by the second bullet, because we are innovative and stuff
A company overview
This section of your business plan should be a small description of what your company is. What is it? A bike manufacturing company? A software house? A Gyros Melathron?
Regardless of what your business will be, try to describe your core business functions, as detailed as possible, and how you differentiate yourself from the (if any) competition.
Your marketing plan
"Build it and they'll come" is the most overused lie in all of business. I believe it might be the first filter to filter out bad and good business persons. Even if you build the product that will change humanity to its core and create a better (or worse if you are an evil scientist) world, if you don't market it well, then either no one will know of your product, or, in the slight chance that it gets some traction, a competitor will steal your idea and use it as their own. This is not kindergarten where you could complain to miss Elizabeth that mike stole your Lego pieces.
In order to future proof your business and make it profitable, you need to invest in good marketing. I will not go on to describe what kind of marketing you could do, but there is affluent resources on the Internet to help you get started! My favorite, of course, being the social media mogul Gary Vaynerchuck (respect to my eastern European hommie).
Information about each member of the management team and their role in the company
Something that is really important for every company is transparency. Corporate transparency, and what each manager is doing and their backgrounds, helps resolve conflicts of interest and responsibility boundaries, while also gives a clear idea on who is doing what and is responsible for what. This way, when presenting your business plan to a potential investor, they can instantly know whether your management committee is complete or lacks a skill or a person, and can help you resolve this.
Information about your products/services
This section of your business plan will describe in more detail what you will be making money from.
Whether that is a service or a product you built, or even scamming people, make sure to document it, so you can make clear how this company will be making money. Here you can find where you have not thought out your selling point well, if so.
A list of company milestones
Unlike my Brazilian co-worker, whom I love immensely, who just came in office one day and during our daily sync said "Well, yesterday I did everything", and we all said "Well OK, business over, we made our billions, let's go home", your company will probably not have someone who will make it go from 0 to "business complete" in one day. That said, you need some short term goals that need to be achieved and are aimed towards your general business goals. Some milestones could be, "First release of our product X" or "We onboarded 10 people (and can now grow 50% our customer base)". Regardless of how you define your milestones, you need to define what you are working towards, so everyone in the company knows what the vision, and the short term goal is!
Details of your company’s financial plan
This is probably the most important part of your business plan. The goal of every business, whether it's a short term or long term business, is to make money, and more importantly profits. You need to calculate down to decimal points what your costs are, what your market size is, how you are going to capture what portion of which market, and how much money you are going to make from that. While you cannot have hard facts on how much money you are going to make, you need to have hard facts that support your projections. In the end you need to calculate if you would be making money or losing, and how much.
The executive summary
After you have composed the business plan, and probably changed some stuff that did make sense when thinking about it, but not when you actually put it down in paper, you are now able to write a small summary of what this business plan describes.
Why is a business plan important
Business plans help you better visualize what you have in your mind, by providing a single source of information for anyone that may need to know more about your business. They are the single point of reference for potential investors to better understand what your company does, and why they should trust their money with you.
It also helps visualize how you will be making money (financial plan), and what the business is aimed towards (milestones).
An important thing about business plans is that they are not written in stone. You can and should revisit, revise and rework your business plan, but that is a discussion for another time.
Until next time