When you’re setting up a new business, it’s one thing to have a good elevator pitch or a convincing story to tell at a “speed-dating for business funders” event. Yet when people want to get serious about investing in your idea, they need something more concrete. Your business plan is what you prepare to explain what your business hopes to achieve and how you plan to accomplish your goals.
Business plans don’t need to be too long; back in the day, it was recommended to have a 20-40 page business plan, with lots of detail, but now, funders look for a more concise business plan – all mean, not fat. Here’s what your business plan should include.
What to Include in Your Business Plan
Executive Summary
You can even use a well-crafted Executive Summary as a stand-in for a full business plan when you meet with potential investors but don’t have time to discuss the full document.
Company Overview
corporation, a partnership, or an LLC?), when and where it was formed, and any history the company has already had.
The company overview section explains how you do business – online, brick and mortar, or both – and you can talk about key hires and agreements for supply and distribution that you have already made.
Your Products or Services
Your products or services section should answer these questions and help guide your business strategy.
Market Analysis
Within your market analysis, you should also give an overview of who your customer base is, target demographics, and how you plan to reach them.
Competitive Analysis
Your competitive analysis should answer these questions, which will help you position your company in the competitive marketplace.
Sales and Marketing Plan
Answering these questions will help you identify how your company will communicate with your target audience, and explain the benefits of your product or service.
Management Team
Also: highlight where you need to add to your team, which skills are you lacking, and who you need to hire to reach your business goals.
Financial Plan
You should also provide information about projected income: abbreviated income statements and balance sheets for the next few years of your business. And if your business has been running for a while, you must include full financials for the past few years.
As Feld and Mendelson point out in their book Venture Deals, “The only thing you know for sure about your financial projections at the early stages is that they are wrong,” but you still need to work out these numbers so you have a road map for where you are heading financially.
Next Steps
Your business plan isn’t just helpful when you’re seeking funding; it allows you to refine your ideas and discover any weak points in your strategy. And don’t forget that a business plan is a living document; as you progress in your project, you’ll be updating it as the market changes, and as you encounter success or setbacks.
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