5 Steps to Start Writing Your First Business Plan
Sacha Miodownik
Content Writer - Storyteller - Student in Journalism | Passion for writing and communicating real authentic stories.
Before I start sharing my vision on this topic I would suggest you read my other article “5 Steps to Validate Your Business Idea” which is the step everyone should take before starting a business plan. That step is part of the process but is required if you want to work efficiently towards your goals. Writing a complete business plan before knowing if your concept is worth the work is a big loss of time and resources.?
You Have Come So Far
Not every person who defines a great idea and puts the necessary time into validating it comes so far. But you did - so well done! Now comes the next chapter in your journey: creating your business plan.
There are many ways to create a business plan and different formats and strategies to implement it. By no means you should believe this is the perfect one for your business. Take what you deem necessary from this article.?
At this moment in time, you probably have hundreds of ideas and to-dos in your mind and don’t know how to start. When I had my first business project I didn’t even know I had to write a business plan. I thought my business would be what I decide to do every day and perhaps have some documents on the side that would help me with certain aspects.
Why Even Bother?
I know you have come to this article to understand how to start and write a business plan but I believe it’s very important you understand why you should write it.
Most people believe you create a plan for banks and investors. It’s a way to showcase your work and plans, get funding and continue your journey to grow. As much as this is valid, the main reason why you would write a plan is that your company needs it. It’s an internal tool that you will continue to work on even after you get funding. Your business is a dynamic entity that needs constant reflection and keeps growing - you need to give it attention and preparation.
If you look at why most businesses fail and you track back the origin of these causes - most of them could’ve been avoided by having worked on a solid plan. Here are a few examples:
Some of these examples are practical situations, the ones that come in real life and not in a plan. Having a plan doesn’t mean you have a guarantee to avoid them. It means you augment your chances significantly to prevent them.
The Business is Different - The Process the Same
You might think that your business or concept is very unique and different from others. And as much as this can be true, most if not all businesses need to go through the same process to create a business plan. There might be more or less emphasis on certain chapters and domains. But the basic structure and the process you use to fill it in are the same.
So what is this process I am talking about??
It’s a 5-step process to start putting all your todos and ideas into place. The word “start” is very important here as you could be working weeks or months on one plan. My work mainly consists of creating business plans and analyses for young startups and I’ve had different projects that varied from 2 weeks to 6 months of working on a single plan.?
Step 1 - Define a Structure
As mentioned above, a Business Plan has different chapters and domains to cover. It’s important you establish these chapters in advance and know who is going to work on them and what you want to achieve. If you don’t have time to read through all of it, feel free to hover over the chapter names only and come back to them later if you want more information.?
Definition of your Vision, Mission & Values. Where did your idea come from and which solution do you offer? This includes the company and founders' background and the road you and your team took to get to this point in time. Explaining your concept is key to selling your idea to new potential partners and investors and a way to intrigue them about the continuation of your plan.?
Current & Future Market analysis. This includes:
Geographical Analysis: Where will your product or service fit geographically and how many potential customers are currently in that market?
Competition Analysis: Who are your competitors? What do they offer and how do you see yourself as different from them?
Technical Comparisons: If you offer a complex product or service that has technical characteristics it is crucial to understand what your customers expect and how you want to educate them.
Financial Comparisons: Understanding aspects such as revenue, expenses and other metrics that define your market on a macro and local level.
Your product or service is the core of your business and your key focus in the early stages. In order to offer it to your customer often requires a set of skills to create which sometimes you don’t have and need to find the right person for it. Defining your product image, offer variety and qualitative aspects is part of this process and relies on your values. The next step is creating a development plan with different stages to decide how you want to set up and improve in time. Some aspects are a must and others are nice to have.
Having a great product or service is great but getting it into the right hands for the right price is a craft of its own. Defining a Sales approach and strategy to sell your product or service requires different steps. Have you thought about who’s going to sell your product, through which channels, and how you will handle interested customers??
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Everyone has heard of different Marketing techniques. Defining which one is best applied for your service is not only a question of the result but also cost and effort. Sometimes it’s not worth spending countless budgets on advertisement campaigns or using 20 different channels to reach your audience. All it might take is one smart strategic plan to let people know you and your product or services are out there.?
You have a product ready and a plan to launch it. Now comes the part where you have to handle the daily operations to make sure everything runs smoothly. This starts from the little things such as using the right software to save time and money but also concerns larger structures and logistics depending on your service. Every Business has its own personal way of working and it’s important to create a structure that is suitable.
It’s sometimes hard for you to decide what you want to prioritize in the short term and what should be your long-term goal. It’s vital for your business to choose this wisely as this can impact your whole success. Setting up a roadmap is a process based on milestones that are necessary to grow while taking into account risk versus reward. Flexibility is also key for a young project or company as you might need to have the clarity to pivot and choose a new direction if the situation dictates you to do so.
You might start alone with an idea but in time you will set up an Organization and define:?
This is a process that is done in time in a logical step-by-step plan. Depending on the stage in which your Project lies you might have different priorities.?
You might have the greatest product and team but if you are not generating money your company will fail. Revenue Forecasts, Expenses Analysis, Margins, Cashflow, Sales Simulations, Profit & Loss is all part of your preparation to create a solid financial backbone for your company.?
If all of the above sounds overwhelming - it’s normal. Business plan writing is a craft of its own and takes time. This doesn’t mean you can’t do it. It’s a process and you have to take small steps.
Step 2 - Focus On What Matters
Depending on your business, operations might be more important than marketing. Let me give you an example: A chocolate brand wants to expand its business by building a factory to mass-produce chocolates. They already have a great brand that thousands of customers recognize. Marketing is therefore less important - but not negligible. By realizing that their biggest challenge will come from building and managing the factory they will focus first on the Operational and Logistics side of the business such as:
What matters is not always that easy to recognize but is a huge value.
Step 3 - Set Deadlines
When you are going to write your first business plan you will stumble upon many challenges and todos will be added every now and then. What you want to avoid is getting into a never-ending cycle and working years on your plan. Set for yourself deadlines and objectives on when you want to be done with it. You can be flexible with your milestones and even decide to create a Version 1 Plan and put some heavier tasks as part of Version 2.?
If you are wondering where to put all this information and how to manage your deadlines, you can use a Project Management Software. Depending on the size of your work and team there are plenty of choices which I will not cover now. Personally, I’ve had a lot of experience with Asana and it’s one I recommend to all entrepreneurs who are new to this and don’t want more time in managing their deadlines but rather work on them.
Step 4 - Don’t Work Alone
Depending on your background and experience you might have some qualifications that can come in handy for your plan. Recognizing these qualities is as important as knowing where you lack understanding and could get help. Reach out to a potential co-founder or freelancer that has expertise in areas you don’t.?
Step 5 - Content Before Layout
Don’t focus on how your text looks and what images or font you want to use. The core of your plan is the content and information you display. In order to help you focus on content only, use this method:
Final Thoughts
It’s definitely not easy to write your first business plan. As a matter of fact, I’ve written plenty of them and I still find it challenging every time. I embrace the challenge by trusting the process and not thinking about “how do I get from a pitch to a 100-page document?”.
If you need help with writing a business plan or if you only need feedback on one of your chapters feel free to reach out to me. My daily routine revolves around helping entrepreneurs like you and guiding them in such plans.