Food Mentors: The Essential Business Plan for Food Entrepreneurs
Don’t even think about not creating one
There are two divergent, fiercely contested views on the usefulness of a business plan.
- It’s essential. Don’t be a big baby. Just do it already, you wuss.
- It’s a waste of time and a distraction, and it might kill your company (if it doesn’t kill you first).
Both are true. Maddening, I know. Like everything else in the highly specialized world of food, it takes a bit of McGyvering to take the good with the bad, and make the business plan work for you, rather than against you.
With that in mind, here’s our guide — including tools, tips, and real-life experience — to help you get the most out of the Business Plan, without letting it swallow you whole.
The Business Plan as Necessity
Case Study: A few days ago, I caught up with April Wachtel of Swig & Swallow in between meetings at Brooklyn FoodWorks. Did she ever have to write a business plan for her company? “Yes,” she grimaced. Not a happy experience, clearly. But has it been useful for her business? “Not really.” Swig & Swallow had already existed for a few months when April wrote her business plan. “I had it all in my head. I just put it down in the language and format they wanted.” It’s still all in her head; having a written plan doesn’t make her path as a business owner any clearer or easier.
So why do it at all? Sounds like a big waste of time. “It was a requirement when we applied to Accion for funding,” April corrected me. Swig & Swallow was accepted, and the loan became a major turning point for the business.
Take Away: Rather than treating it as an overall guideline for developing her business, April used it for one thing only: to apply for funding. This clarity of purpose made the business plan a selective, impactful tool, rather than a self-imposed, and potentially inhibiting, rule in the company’s trajectory.
1. USE THE BUSINESS PLAN FOR FUNDING
As April’s case illustrates, one good reason for writing a business plan is applying for funding, which will give you a specific goal, a juicy carrot, and a hard deadline — ensuring you don’t get stuck in the murky process, possibly never to be seen again.
- GRANTS. Stoke your ambition — make the business plan your first stab at getting a grant! Here are some resources for researching out grants, including a general grant portal, a list of small business grants and a list of grants for women.
- MICRO LENDERS. As a small food business, you’re a good candidate for a loan from a wide range of micro lenders. Take a look at VEDC, NYBDC , and Swig & Swallow’s lender, Accion, for a start.
- ACCELERATORS & COMPETITIONS. Feeling competitive? Why not scratch that itch and write your business plan with a food accelerator or pitch deck competition in mind — like this FoodBytes one that’s coming up real soon!
- BANKS. At some point — probably pretty soon — you will start looking at Small Business Loans as an avenue for financing the next stage of your business. First thing they ask for? You guessed it: a business plan.
2. USE THE BUSINESS PLAN FOR KNOWLEDGE
Maybe you’re not at the point where asking for money is a priority or an option. Here are three other benefits to writing a business plan that are useful at any time in your company’s life.
It’s a Checklist! A successful food business is a body of integrated parts — product, package, financial entity, business organization, brand, market. Food makers often make the mistake of working on one part of their business before moving on to the next, leading to a lopsided frankenbusiness with missing limbs and organ failure. Instead, you should be working on all parts of the company at once, a little at a time. To this end, a business plan can serve as an essential checklist.
For instance: Does your business have a pricing strategy? “As a finance guy, I don’t even comment on anyone’s business plan until I see a spreadsheet that walks through the pricing strategy and economic model,” FoodWorks founder Drew Barrett told me when I asked him about his take on business plans. “But you’d be surprised how many people start the business without knowing how to price their product or how much it will cost to make the product.” Which brings us to . . . .
It’s a Feedback Machine! A business plan can work much the same way as a taste-testing, but instead of testing for the viability of the product, you’re testing for the feasibility of the business. As with food, to get feedback on your business from an incubator founder, mentor or business assistance program, you need to give people something tangible to “consume” and react to. It doesn’t get more tangible than a business turned into a 20 page book.
It’s a Pitch Deck (in long form)! A business plan is the narrative, long-form version of what eventually becomes an investor pitch deck. By writing the plan, you’ll be gathering all the information needed for a credible, powerful deck. Two birds with one stone! In fact, one of the software tools we list below for writing business plans also offers a pitch deck template. That’s no coincidence. Once you get the former done, the latter is a breeze.
It’s Superman! Well, it’s not superman exactly, but it is proof of the three key strengths you should possess as a business founder. Did you have the disciplineto research and gather all the information? Did you have the resilience to expose your plan to criticism? Did you have the efficiency to move through the snags and finish in a timely fashion? Discipline, resilience and efficiency: Better test-drive these key strengths with a business plan — and improve where necessary! — than with the business itself.
TOOLS FOR CREATING A BUSINESS PLAN
Searching the internet for business plan tools can become an overwhelming project in itself. Here are a few of the most useful resources that should get you on your way.
GUIDES FOR WRITING A BUSINESS PLAN
Some great insights explaining what actually goes into a business plan, including tips on how to write your intro (“Executive Summary”), and a sample business plan.
- An outline of a small business plan
- Entrepreneur’s insightful explanation of the seven components of the business plan.
- Dig even deeper with Shopify’s Ultimate Guide to Business Plans
- Some great tips on writing a compelling Executive Summary
- Here’s an example of a completed Business Plan
TOOLS AND TEMPLATES FOR YOUR BUSINESS PLAN
A list of the top tools and templates on the market to create your own plan.
SBA — The SBA offers a generic Business Plan tool that guides you through each step as you write.
PROS: Free; savable; can be updated over time; downloadable as PDF. CONS: No industry samples; you can’t build financial projections (manual imput); not customizable; not sharable.
SCORE — This template has a huge amount of questions (150) but is generic enough to be customizable.
PROS: Free, savable, customizable, PDF or Word. CONS: No industry samples; can’t build financial projections (manual imput); not sharable.
LAWDEPOT — If you have all your information handy, this is a clear, simple template that walks you through each section.
PROS: Easy to use, free with a trial subscription, downloadable as PDF. CONS: Little guidance, limited-time usage, no industry samples, can’t build financial projections, not sharable.
LIVEPLAN — It’s $140 a year. BUT . . . the most beautiful and easy to use tool (with infographics!) that makes your plan look like a million bucks. It even has a financial projection builder and over 500 industry samples.
PROS: Beautiful, customizable, industry samples, financial projections builder, info graphics, sharable. CONS: $140 a year if paid annually or $19.95 a month if paid monthly.
The Business Plan as Evil
At the top of the post, I mentioned how business plans have their dark side. Here are a couple of suggestions April Wachtel left me with for inoculating yourself while completing your mission like a champ.
1. DANGER: Paralysis. The Business Plan replaces actual action. It lets you talk about it, instead of being about it. Worst of all, it can trap you in a particular problem, leaving you disheartened or overwhelmed over an idea that is completely immaterial to your reality.
ANTIDOTE: Short-Term Actions/Long-Term Vision. While your business plan might seem like reality, remember that it’s your immediate day-to-day priorities, set against the backdrop of a clear long-term vision, that is your business’s actual road map. Alternating between the very short view and the very long view, while keeping the middle distance flexible and open to iteration, is the most workable “plan” you can give yourself in a fast-changing marketplace.
2. DANGER: Confirmation Bias. Writing a business plan is a long, immersive slog — and the process can make your ideas and projections become ingrained “facts” in your mind. This form of confirmation bias can condition you to stick to your plan and resist change — precisely when your company needs to iterate the fastest.
ANTIDOTE: Exposure to Feedback. Maximize your opportunities for getting feedback, and be willing to apply it. Getting as many people as possible to experience and react to your product and business model forces your mind to think from their perspective — helping you stay nimble to ways you can improve it.
Written by Monika Norwid