[Full Guide] How To Write The Best Business Plan On Earth
You have a great idea to start your own business. You finally made a decision to follow your passion and become your own boss. You agreed with your family members and found the support from your friends. Now it is time to start, but… you have no idea where to start.
The only thing you know is that you should have a business plan, but you don’t really know how to make it. This is where our ultimate guide comes: to lead you through all the steps you should take to create a successful business plan in order to establish your own business or get the necessary investments.
With this guide, you will learn why you need to have a business plan, what components you should include in it, how to make it look professional, and why a business pitch shouldn’t be as detailed as your business plan. So, let’s start to put everything in place.
What is a business plan, and why do you need it?
What is a business plan?
What do you imagine when you think of a business plan? Most likely the first thing that pops into your head is an impressive pile of papers with lots of financial calculations wrapped in a black solid folder.
However, a business plan is much more than just papers with numbers. It is your business, just in written form. If you have ever seen a website written as code, it should give you an idea of a business plan: it is the code for your future business that you should write first before pressing “start.”
A business plan is a plan for making your business work and succeed. There are no exact requirements or fixed size of a business plan: everything depends on your individual case, and you decide what should be included in it. It can be a one-page business plan or a big folder with lots of pages describing every small detail of your future business: as long as it is deliberate, size and particularity don’t really matter.
Of course, there is a standard structure of a formal business plan, and we will have a look at it in detail below, but it isn’t obligatory to follow this structure if you think that your business plan doesn’t need some parts. However, this standard structure is recommended in order to create a full picture of your future business.
It is also important to highlight that a business plan is a dynamic document. It can be updated anytime as there are always new ideas and changes appearing that should be included in it.
If you are planning to present your business plan to potential investors, or to a bank to get a loan, you will present the snapshot of your business plan the way it is on the day of presenting it. But there is no final point for a business plan: even when you get the necessary investments and start your business, you should still have a business plan to be able to develop your business and make it successful.
Evaluating the benefits of having a business plan
Structuring your thoughts
Many beginning entrepreneurs don’t realize the benefits of having a business plan and prefer to keep everything in their heads. And this usually becomes the first mistake they make. Unfortunately, keeping everything in your head is great but impossible.
There are so many important details that should be taken into consideration that the chances to forget some of them are too high. Having a business plan means collecting all your thoughts and ideas together and structuring them, and it can be considered as the first benefit. Having a structured plan of your thoughts will free you from the fear of forgetting something important, so you will feel more safe and confident about it.
Accomplishing your goals
Apart from that, having your business plan in a written form gives you more chances to accomplish your goals according to your plan, which is the second benefit.
According to research by Dominican University in California, people who wrote down their goals accomplished significantly more than those who did not write down their goals. A business plan will help you to determine your business’s future vision, and it will be easier to set up your goals and reach them.
Clarifying the direction of your business development will also help you to understand what exactly needs to be done in order to reach your goals.
Having a business plan is having more chances to attract financing for your business project
Another valuable benefit of having a business plan is having more chances to attract financing for your business project. Potential investors will definitely ask you to provide a financial forecast of your future business to evaluate the potential and decide whether to invest money or not. A well-prepared business plan can quickly become a financing proposal and attract investments.
Attracting team members and partners
A business plan will also help you to attract team members and partners. When you see clearly how you will turn your idea into a successful business, you will sound convincing and inspiring to those whom you would like see as a part of your team. Would you follow a person who only has a great idea, or a person who has a great idea and a step-by-step plan to make it work? The choice is evident, unless you are a very risky person.
Managing your project
A business plan is also a great management tool when it comes to the organizational structure of your business, including the team structure and the duties of every team member. It will also help you as a reference to ensure that your business is on the set course to the goals and milestones towards the success.
Tim Berry, the well-known business plan expert and author of Lean Business Planning, distinguishes one more benefit of it: a business plan will help you to plan and manage cash flow and tie together educated guesses on sales, costs, assets, expenses, and debts.
To sum up, the benefits of having a business plan are quite convincing: being able to focus on your goals and have a clear strategy will definitely help you set up a successful business.
Choosing the right type of business plan for your business
Fortunately, a business plan is not a mandatory 20-page document that is created not for the actual planning of a business, but to impress investors. There are many different types of business plans that might be suitable for various individual business cases. Let’s have a look to see what type of a business plan you should go for.
According to Entrepreneur, there are four major types of business plans:
The size of such a type of business plan is usually from 1 to 10 pages. It consists of only the key issues such as the business concept, financing needs, marketing plan and financial statements (cash flow, income projection and balance sheet).
You don’t need to describe each of these components in details, but just highlight the main points. The miniplan suits small and simple businesses, but if you are looking for an investor, you should go for a full-length business plan.
2. Working plans
This type of business plan requires a detailed description of key components and can be used as a tool to operate your future business. The working plan is mainly created for internal use and doesn’t require some elements like product pictures, for example. It also doesn’t have to be visually presentable and impressive, as it will be used mainly as an operational tool for your business.
3. Presentation plans
Basically, the presentation plan might be an improved version of a working plan, with focus on its visual presentation. The presentation plan is used for presenting your business to potential investors or bankers.
That’s why you should make sure that it is written using professional business vocabulary. The readers of this business plan might not know some of the terms you use, so you should have explanations for them. If a working plan is printed on a paper with stains from your morning coffee, a presentation plan should be printed on high-quality paper, and optimally in color.
Every detail matters when it comes to presenting your idea when seeking investments. It should also include graphics and charts to visualize the complicated parts of your business projections.
4. Electronic plans
Nowadays, having a business plan in a digital format is not even necessary, but obligatory. It might be used for some group presentations using a projector, or for sending it to investors who would like to read it in detail. So it should be visually presentable and accurate with the language and numbers.
5. Lean business plan
Tim Berry offers a few more types of business plans. One of them is the lean business plan that he considers a faster, easier, and more efficient plan than the standard business plan. It doesn’t include descriptions, summaries, background details, but requires such components as deadlines and milestones, along with the budgets you have to achieve them. The main components of the lean business plan are:
- Your strategy to define your goals, offer, target audience and specific features of your future business.
- Your tactics: the promotion of your business, social media strategy, advertising, pricing, product or service planning, etc.
- Concrete details: milestones and deadlines, tasks, and numbers to track to measure if the process is going the way you expect it to be.
- Financial numbers: forecasts, cash flow, etc.
6. One-page business plan
Another type of business plan that Berry mentions is a one-page business plan, or a business pitch. It is similar to a miniplan. It consists of a one-page summary with the most important highlights so a reader can quickly understand your idea and steps to make it a successful business. The one-page business plan is more suitable when you need to present a summary of your business to potential investors, partners, banks, etc.
7. Feasibility plan
One more type of a business plan, according to Berry, is a feasibility plan. This type of business plan is normally used to describe the development of a product or technology you are planning to use. For example, if you created a pencil with an automatic sharpener, you will need to describe the steps of producing your product: from establishing a rough version to a first working product.
The feasibility plan is especially useful when you decide to go for crowdfunding: Kickstarter and other similar websites will require you to present your product.
Knowing about all these types of business plans, you should decide what type you should go for in your individual case. It will depend on the size of your business, the need of looking for investments or business partners, and the type of product or service you would like to work on.
Nonetheless, no matter what type of business plan you will choose, it is still important to know and understand the main components of a standard business plan. As any type of a business plan has some of these components, let’s have a look at all of them in detail.
The main components of a successful business plan
The clear understanding of the basic components of a standard business plan will help you to decide on what you should include in your own business plan. Of course, every component is very important to contribute to the full picture of your business. But if you think that you should skip some of them in your case, it is absolutely your choice.
There are 7 main components of a standard business plan:
- Executive summary
- Business description
- Industry & competition overview
- Operations & management plan
- Product/service description
- Marketing strategy
- Financial projections
Essential finishing touches
When you know what the content of your business plan should be and how to prepare it, it is time to cover the important questions that you definitely still have. One of them is the size of the business plan. Are there any perfect dimensions for it? And how can you find the right balance so you don’t overdo it?
Another question concerns the visual part of the business: how should it look? Is it possible to show your individuality? Or is it better to stay neutral and follow the general black and white format? Let’s look for the answers in this section.
Determining the perfect size of your business plan
It is very normal to be worried about the size of a business plan because no one wants to look unprepared or too prepared. This is especially true when you are seeking investments because you want to make the right impression. So, is there any perfect size for a business plan?
As business plan expert Tim Berry mentions, it is not good to measure length by page count. It should be measured by readability and summarization. 20 pages of plain text or 40 pages of text illustrated with charts and with bullet points to make it easier to read and understand can show that it all depends on the way you present your business plan.
Measure your business plan by readability and summarization, not by page count
Readability is extremely important, especially when it comes to complicated information like financial forecasts. Formatting your document can make a huge difference no matter what the size of your business plan is and leave a better impression about you and your idea.
Therefore, don’t think about the amount of pages when you create your business plan: write everything you think is important to mention, and then think how you could format your text to make it more readable. Numbers are always better for understanding when they are presented in the format of tables or charts. Some complicated explanations will be easier to follow in the form of infographics.
Summaries are also very helpful for understanding complicated texts. Write a few sentences at the end of each section to highlight the most important information. It will also help highlight the general idea in case a reader will look briefly through your business plan.
The size of your business plan will also depend on the size of the business you are planning to start or already have. For example, the standard size of a startup business plan is usually around 20–40 pages. Large companies or corporations can prepare internal business plans of up to 100 pages or more.
Of course, you can find very detailed requirements for business plans with the exact amount of pages each component should be. However, we would like to repeat that it is only your choice to decide what the size of your business plan should be.
As long as your business plan looks complete and provides all the information you would like to include, that is the perfect size. Finding the right balance is very difficult, so you should try to not repeat the most common business plan mistakes to get it done right.
Strict & boring, or how to show your individuality visually
The question about the visual presentation of a business plan might be concerning as well, especially when it comes to startups and businesses from the creative industry. That’s why the answer will be quite contradictory: it depends. There are a lot of factors that are important to take into consideration when you are working on the visual part of your business plan.
It is important to notice that we are talking about the written and printed presentation of your business plan, not the presentation you will do for your business pitch (which we will talk about later).
For example, a bank can ask you to give them your business plan to see it and be prepared before your business plan presentation itself. So you will provide them a printed version of your business plan.
In general, many businesses and startups should go for a formal layout. It might be difficult to predict what type of person will read your business plan and if he or she feels positive about creative approaches and innovations.
So it is better to not risk it and be taken as a careless or not serious entrepreneur. Our free business plan templates might be a good choice if you would like to make a serious and well-prepared impression.
You should also revise the charts and illustrations you prepared for your business plan to make sure they are relevant. If you don’t really know how to make them by yourself, you should consider hiring a professional graphic designer or asking your friend with design skills for some help.
If you represent the creative community, and your startup is connected to the creative industry (graphic design agency, new fashion line, online magazine, etc.), you can use your business plan to show off your creative vision.
However, try to keep the balance and stay serious with it. For example, you can add some graphic details and use an interesting font, but don’t go for drawings on each page to show how creative you are. It is always a good idea to stay serious and professional in what you do.
A compelling video is a way better to show your product in action than just screenshots or stock images
Of course, it is possible to do something really innovative with your business plan. For example, there is a business plan made in Pinterest. It is obviously a very informal way of presenting a business plan, but if you think it can suit your situation, then why not try it as well?
Terence Channon, the Managing Director of the Saltmines Group which helps early stage projects with technical support, offers businesses to create a compelling video showing their product, customer acquisition results and team instead of a standard business plan, saying that it is a way better to show your product in action than just screenshots or stock images.
Business pitch: impress your potential investors
When your business plan is ready, it is time to present it to your potential investors or partners. This process of presenting your business plan is called a business pitch. It might happen in person as well as by email or by other means of communication. If you are looking for financial support, check how you should prepare for your business pitch and what you should include in it.
Preparing for a business pitch: key points
A business pitch and a business plan are not the same thing. Your business plan is the overview of your future or existing business. Your business pitch is the presentation of your business plan to investors. It is crucial to understand that the content of these two things may differ. However, the content of a business pitch is quite similar to your business description.
Your business pitch should be informative, concise and straight to the point. These are the key points you should include to make your business pitch successful:
- The problem your product/service will solve. There must be a problem that your product or service will be made to solve, otherwise investors might take it as an unnecessary investment. For example, there is a lack of coffee shops in your local area, or all the apps for counting steps can’t deliver accurate data.
- The solution to this problem. Describe how your product or service will solve the problem you’ve mentioned in the beginning.
- Your target market. Describe your potential customers realistically, without exaggerations. The more specific you are, the more realistic your sales potential will be. After your business plan preparation you will have the necessary data based on the research you did, so you can use some numbers to prove your words.
- Your competitors. Present briefly what your competitors offer, highlighting their disadvantages and how you can turn them into your advantages. You should present the reasonable points of why a customer will buy your product instead of theirs.
- Your key team members. Highlight the achievements of your team members and what they can bring to your project.
- Overview of your financial projections. Describe briefly your financial forecasts, but don’t go too much into the details — investors can read your business plan to see more information or ask you direct questions if needed. It is more important to describe how your business will operate financially: how you see your income, how much your expenses will be, etc.
- Your specific goals. Make your business project more specific by providing the information about your milestones. Talk about the steps you have already made and what your next steps are.
Prepare your business pitch speech in advance and practice by presenting it to the mirror or your family members to feel confident about what you say. It will be helpful when presenting your business idea to your potential investors or partners.
Visualization of your words: should you use a slide show?
When you are going to pitch your business idea, you might think of adding a slide show to visualize your words and make it more memorable for your listeners. Having a slide show is a traditional part of a business plan presentation, and many investors expect it to be included when you present your business idea.
Therefore we recommend you have one to highlight your professionalism and serious attitude to your project. Moreover, it will help your listeners to understand the information you share in a more comprehensive way.
These 4 tips will make your slide show an essential part of your business pitch.
1. PowerPoint is not the only tool
Of course, you can prepare your presentation in PowerPoint going by this traditional way. Furthermore, it has a lot of different features to make great presentations you might not know about. You can also get our free presentation template for your pitch. But why not add some innovative features to your presentation? For example, Prezi is a great trendy tool for effective presentations. It has a lot of different templates, so you can choose one or customize it and make it very individual. But don’t go too much into the artistic side: make it look impressive, serious and high quality.
2. Don’t make it too long
There is no need to visualize every word: try to make it as informative and reasonable as possible. 10 slides would definitely be enough. Remember that visual presentation is here to make your business pitch more interesting, not boring.
3. Don’t place too much text on your slides
You shouldn’t write down every word you are planning to say. It is better to add text that might be difficult to understand when listening to it, such as names, numbers, etc. You can also add summaries of your points to make them stronger.
4. Your final slide should be your call to action
You should finish your business pitch with the major point: what you expect from them, so you can immediately start the discussions with your potential investors.
By following these tips your slide show will become a great addition to your business pitch.
If you managed to finish reading this guide, now is the time for you to decide how your business plan should look: what type you would like to choose, what components to include, how to visualize it, and what to prepare for your business pitch. Let’s sum up the main ideas:
We hope this guide was helpful and gave you a clear idea what to do in order to turn your idea into a successful business.
This blog post was first published on the InvoiceBerry blog by Bernard: How to Write a Great Business Plan: Full Guide by Krystsina.
Alla is one of the marketing spirits at InvoiceBerry, a simple online invoicing software that helps small businesses and freelancers. She loves social media and blogging.