By John Hovey, North Metro SBDC Special Projects Coordinator
This post is for anyone who’s in the early stages of starting their business. If you’re already in business, then perhaps your business plan is just a fond memory, although it is probably a great idea to review and update your plan from time to time. But, to those who are just getting started, you’ve most likely heard somewhere along the way that you need a business plan. Well it’s true! If you want to start a business, then you absolutely 100% need a business plan, and this post will address a few of the most common questions to help you get going. Let’s get started.
QUESTION 1. What is a business plan and why should I have one?
This is actually two questions, but that is all right, we’ll allow it. The business plan is a document that you, the person starting the business, will write. Why do you need one? There are a few good reasons. The business plan, if written thoughtfully, will help you focus your ideas and goals. You probably have a great idea, which is why you are excited about it, but working through an entire business plan will fill out and shape your idea into an actionable series of steps needed to bring it to life. The business plan will also help you figure out whether your business idea will work, i.e., if it will generate revenue. It’s better to find out soon on paper, than later and with real money! Your business plan should create a roadmap for your early business development, and it should outline key milestones as your business takes off. Finally, a solid business plan can help you secure financial support.
QUESTION 2. Will I need a business plan to get a loan?
Yes. The business plan is not just for you, it is for anyone you hope will become a partner in making your business a reality. Lenders will not offer financing without a business plan. As mentioned above, one of the benefits of a detailed business plan, if it is thorough and accurate, is that it can save you from experiencing financial loss in an unprofitable business. Well, lenders don’t want to lose money any more than you do! In order to get a lender to help finance your business, you will need to convince them that your business will generate enough profit to repay the debt. Your smile and your passion aren’t enough, you will need a business plan to make your case.
QUESTION 3. Do I have to write the business plan myself, or can I hire someone to do it for me?
You have to write the business plan yourself, or at least the meat of it. At the SBDC, our feeling is that anyone starting a business is much more likely to succeed if they write their own business plan. Of course, it is possible to outsource anything these days, but why would you leave the details of something as important as your future business, your life and your dreams, to anyone besides yourself? Nobody will be as invested in the success of your idea as you are. By all means, reach out to an SBDC consultant for help with this project, and get as many people to assist you as you can, but remember that at the end of the day, this business plan is yours. You must write it, know it, and understand it.
QUESTION 4. What type of paper should I use, and what font?
It doesn’t matter! This question is a bit silly, but you might be surprised how many times an aspiring entrepreneur lets trivial details like these block meaningful progress on the business plan. Whether you get started on a napkin or in a sketchbook or on your computer, the most important thing is to get started. It can be very useful to treat each section of your business plan as a separate project, and to get some feedback from trusted friends and advisors on each piece as you complete it. Once your business plan has been through a few drafts, then it will be time to make it more polished and presentable. When that time comes, here are a few formatting tips to make your business plan look its best:
– The cover and title page should indicate that all information contained in your business plan is confidential.
– You should use a table of contents to guide a reader to each section quickly.
– Use normal sized 8.5″ x 11″ paper.
– Print the business plan in color and include any helpful charts or other visual aids to make your communication clear.
QUESTION 5. How long does my business plan have to be?
Like so many questions in life, the answer is, “It depends.” The length of your business plan will be based on many factors like the nature of the business you are proposing, the market you intend to serve, the size and complexity of your operations, and the amount of funding you hope to raise. Your business plan should be as comprehensive as possible, so long as the information it contains is useful, and when in doubt you should opt for more information over less.
QUESTION 6. What are the sections of a business plan?
There’s not really a strict format or a one-size-fits-all approach to business plans, because every business is unique. However, a typical business plan will include an Executive Summary, Business Description, Market Analysis, Competitive Analysis, Management and Organization Description, Marketing Plan, and Financial Projections.
QUESTION 7. That seems like a lot! I don’t know how to write all that. Do I have to know everything at once, before I get started? What should I do?
Relax. It may seem overwhelming, but the exercise of writing a business plan can be educational and reassuring if you take your time and use the resources available to you. In fact, especially if this is your first business, a great way to save yourself some pain and frustration is to engage with your nearest Small Business Development Center early in the process of writing your business plan. You can book a free appointment with an SBDC consultant right now! Your SBDC business consultant will help you understand and formulate each section of the plan, one at a time, and make the entire process much more educational and less frustrating than if you try to go it alone. They will also be able to help you identify areas in your plan that need more attention, for example if you need more market research on where to find customers for your product or service. Since SBDC consultants see new business plans frequently they will be able to give you valuable perspective on how yours stacks up.
I hope this post gives you some confidence and some clarity around how to write your first business plan. Best of luck, and please remember that North Metro SBDC is here to help!
About the Author:
John Hovey, North Metro SBDC Special Projects Coordinator
John Hovey is the North Metro SBDC Special Projects Coordinator. With 12 years’ experience as a leadership coach and educator, he specializes in building effective teams quickly and creating a winning leadership style based in authenticity, bold action, and healthy risk management. A veteran of the U.S. Marine Corps and the National Outdoor Leadership School, he has worked with clients including the U.S. National Park Service, U.S. Naval Academy, Wharton School of Business, and the Harvard-Affiliated Emergency Medicine Residency.