Writing a Business Plan – What To Do First
As a professional business plan writer, you can find me writing a business plan or two at any given time. This is definitely something that brings unique challenges and takes a ton of time, effort, and focus.
However, all of the effort in the world means nothing if a few – well, to be specific, 3 – steps aren’t taken before the business plan is started.
And, these 3 steps are totally different if you are a startup seeking an investor.
These steps are different if you are an existing business seeking an SBA loan.
And, of course, 3 different steps apply if you are building a business plan for strategy as a startup versus for strategy as a growing business.
So, the first step is to finish your 3pre-steps.
The second thing to do is avoid the #1 biggest issue I see, which is not writing with purpose.
The third thing to do is to know when your business plan is really, truly finished.
So, assuming you already downloaded your pre-steps checklist above, let’s move along to the next action.
The Biggest Misstep When Writing a Business Plan
The #1 thing people get wrong when writing a business plan is they forget their purpose or goal while writing. This applies to anyone in any situation. You must understand clearly why you are creating the business plan and write for that goal.
If you are an existing business that is creating a business plan for strategy, then why in the world would you waste any paper space on listing your Mission Statement? ….unless you are designing a new Mission Statement as part of a refreshed business focus (in which case, read this post about the Myth and Truth About Mission Statements).
Rule of Thumb:
If you are adding things to your business plan because it’s simply a blank on a business plan template, then think through whether this will get skipped over later while reading. If that section is something that doesn’t help you meet your goal, or isn’t something that you would ever use, read, or leverage later, then don’t add it when writing your business plan.
One example of this is that silly “aging accounts payable/receivable” section in the typical business plan template.
It drives me crazy.
The vast majority of businesses are not going to have a clue about their future receivables. Bigger yet, most businesses will not even operate in a way where receivables is an issue (thanks to online payment and auto scheduling).
And still, I see entrepreneurs get stuck on this, Googling how to fill in the details asked in their template, and feeling lost and a little helpless. And very overwhelmed.
Remember, if it doesn’t seem to make sense, doesn’t help your goal of securing funding or getting an investor or clarifying strategy, then don’t be afraid to skip that section altogether when writing your business plan.
And, if you aren’t sure if a section is important, consider calling a professional business plan writer for some quick advice.
“When IS My Business Plan Finished?”
When to stop writing is a huge question for business owners and startups. There are a few rules of thumb to follow, like the magic word count for a business plan and such. Use these as guidelines to avoid working waaay too hard on your plan.
In theory, you can write for hundreds of pages and still not have a “finished” business plan. It is really about it being complete in nature and typically less is more. Most people don’t realize that usually, shorter is better. Touch on the fact, point, or number and move on. Try to avoid excessive explanation just to fill more pages.
Ok…So When Am I Done Writing a Business Plan That Is “Complete”?
Writing a business plan that is complete, useful, and actionable is something that you may think is a bit unique for each business.
In most ways, yes, every business plan is unique.
However, as far as creating a “complete” business plan for your business, it should include:
- Your goal & purpose for the plan (written in your Executive Summary)
- Who the business owners are. Include why they are qualified (some people realize at this point that they have a partner who has zero value to offer the business…try to be objective here)
- The macro industry overview (big trends that are happening in your space)
- The micro industry overview (the localized research and customer demands that you supply with your product or service)
- The competitive landscape (focus on 3-5 competitors here, and really deep dive what they do well and terrible)
- Your niche market entry or market expansion strategy (what you offer and why it rocks)
- Your operations plan for the next phase of business (includes the team, marketing goals, and some day to day activities)
- A timeline to meet goals set out in the plan
- Financial projections on how your plan will result in profits (cash flows, income statement, balance sheet, break even analysis, etc.)
Now…with allllll of these elements in the plan, there is no need to add fluff.
No need for a “technical specifications” section or aging accounts receivable projections if they don’t make sense. Everything inside of your business plan should somehow help your goals, otherwise it does not belong.
So as you review more basics in writing a business plan, consider templates that come in kit form and that are stripped of all the extra stuff (but that still include helpful details and shortcuts).
Read up on areas where you feel weak, like perhaps in how to start your business plan financials.
But most importantly…
Start strong with the 3 pre-steps you need to take before writing your business plan. And make sure they are the RIGHT steps for your situation. This will make sure you start off on the right track.