For a lot of smaller businesses, the business plan can be a source of angst and frustration. Most of it stems from business plan templates that seem to correlate length of plan with potential for success. While I haven’t done the math, I am pretty sure this is not the case.
This doesn’t mean that businesses can be successful without planning, but that the planning process can often be scaled down at the initial stages, especially for individuals looking to go into business for themselves (those looking to raise money, will probably need more detailed analyses, but more pages will not make up for a lack of good answers to the most critical questions).
The key in the end is to look at the business plan as a way to experiment with ideas in a tangible way before committing any serious financial resources. And since most businesses rarely do exactly what they set out to, it makes sense to spend the least amount of money doing what in the end won't be fruitful. Here’s how I like to break the starting plan down:
1. CONCEPT
- What is the problem and market opportunity?
- What is the idea (benefits vs. features)? Can people make do without your idea?
- What is the revenue model?
2. TEAM
- Why are you the right person to do this (industry expertise, story, etc.)?
- What team have you put together? Will partners be required?
- Where does the team need to seek outside expertise and how will you get it?
3. INDUSTRY ANALYSIS
- What are the industry characteristics (size, growth, legal, etc.) and what are the key success factors?
- Who would be your main competitors and how do you compare?
- What competitive edge do you have that will help protect you?
4. MARKET ANALYSIS
- What is the condition of the general economy and why is this the right time?
- What are the major risks by doing it now?
- How do you intend to address them?
5. MARKETING PLAN
- Who are your potential customers and how will you get them to buy from you?
- How will you get your product to your customers (internet, delivery, etc.)?
- What's your go-to-market strategy? (ie: What is the exact process by which you’ll start getting your product/service to customers tomorrow?)
6. ACCOMPLISHMENTS
- What have you accomplished so far on your own and related to the business (legal, managerial, etc.)?
- How much have you raised or personally invested so far?
- What are your upcoming milestones and are you on target?
7. FINANCES
- How much money will you need to start? If raising money, what are you asking for?
- How will it be used?
- What is the overall financial risk (your personal risk profile), the expected return and exit (ongoing business, sell to larger company, etc.)?
APPENDICES
- Team member resumes (Can skip this in the initial stages, especially if working on your own.)
- Product images and examples (Great to include images of your product or service even if they are just temporary images pulled from the web. Again, it helps make things concrete.)
- Financial summaries (A: Per unit/service breakdown of revenue and associated costs. You want to quickly see what the profit structure looks like. B: Five year income statement to see what growth potential exists and whether it’s realistic based on your marketing plan and the amount of money your investing in it.)
The answers should ideally be one or two sentences and clearly speak to the question. The goal with the first version is to do it as quickly as possible based on what you know and to begin the transition from idea to tangible plan. As a good friend of mine says, you need to make the "0 to 1" transition. And then the fun really starts. Some other good resources for entrepreneurs:
eCorner: Stanford's Entrepreneurship Corner
Entrepreneurship.gov
Entrepreneurship.org
