How to Write a Business Plan (Free Template)
If you’re like me, the best place to start writing your business plan is at home on your couch with a cup of coffee in your favorite mug.
Writing a business plan might sound scary or even daunting, but in reality, IT’S NOT. I will give you a step by step guide on how to write a business plan.
Before we start, I want to tell you this is not the 30-page business plan you might be thinking of in the back of your mind. This is the short and sweet business plan that will allow you to plan just enough so you can actually start building (and iterating/learning). Writing a business plan no matter how short is important for three reasons:
It helps you clearly define your goals
Nothing is worse than starting a business with without a clear direction. When building a business, you’re going to run into lots of different ideas or thoughts that sound exciting. So you might drop what you’re doing and starting working on that. Then something shiny comes up, and you’re after that. In the early days in building a business, there are so many distractions that will derail you from why you initially started out building a business. Having clearly defined goals will help you stay focused and remind you why you are building your business.
It helps you market your business better
Chances are you’ve talked with friends or family about a past idea, most of the time which don’t take it too seriously. And why should they? They can tell you haven’t put a lot of thought or time into it yet. There is a saying; ideas are a dime a dozen. It is the execution of that idea that really counts. Putting together a business plan will enable you to sound smarter at your next cocktail party on a side project you’re working on and in turn, possibly land you your first subscriber/customer/advocate.
Understand your competitors
If you’ve ever played sports or participated in a competition that was nearing your limits, you’ll know winning is not easy. Think of business as a massive competition. It’s an extremely competitive environment and not for the feint of heart. If you hate losing, love to learn from your mistakes, and have the heart to stick it out, you’re in the right place. You need to be a competitor and know the alternatives to your business. Understanding this will help you think about how you can carve out a niche where you can win and ultimately grow your business.
Let’s dive into the key areas of the business plan:
Company purpose
This is where you define your company in one sentence (which will be hard to do). Do not use bullet form. Literally define your company in one sentence. Think about the why and your mission.
Problem
Describe the pain your target customer is experiencing (which you may or may not know). How is this problem being addressed today? What are the gaps in the current solution?
Solution
Explain how your solution is different than all the others out there. What is the ah-ha moment? How does your solution work in 5, 10, 15 years?
Timing
Why is your business critical now? What is going on in today’s world that is enabling your business to thrive? Why hasn’t your solution been built before now?
Market Potential
Think about your potential customer base and boil that down to a niche (if possible). Be as specific as possible. This will be a dollar figure (e.g. the international smartphone market being $715 billion).
Competition / Alternatives
Who are your direct and indirect competitors? Can you show a clear path to win against them? For instance, Offerup is a competitor to Craigslist. So are classified ads on newspapers and your neighborhood Goodwill.
Business Model
How will the business make money? Share the numbers (e.g. My product cost $X, it sells for $Y).
Team
Write out how your story (and/or your team’s story) is unique for this business. Dig deep and show why you’re doing this and everything you’ve done has culminated to this moment.
Financials
Include if you have any.
Vision
What are you dreaming this business will become in five years?
Once again, don’t obsess over your business plan. Building a business plan is a necessary internal exercise that will help you identify opportunities and challenges later down the road. At the end of the day, it’s more important to get something out there and start building so that you can learn what’s working and not working, and do more of what’s working.
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