Want to succeed with a new company? Then follow the tried and true rule that gets proven over and over and over again: Write a business plan. It will almost double your chances for success, and if you are going to need any kind of funding it is essential.
Don’t be intimidated by the prospect of writing a business plan. You don’t have to write the world’s greatest plan, and it does not have to be 100 pages and take you six months to do. If you can manage to sit down and even stratch out 10 pages of a business plan from the outline I’ll show you here, that’s a great start. You can take that first version and add to it or change it as you develop your business, or as you meet with a lawyer or a banker to talk over your licensing, business structure and your startup costs.
What matters about a business plan is not how sleek and corporate it looks. What matters is that you “do your homework” on it. The reason business plans are so good is that they force entrepreneurs to think hard about how their business is going to work. You can’t just fudge dreamy numbers on a napkin — you have to make the numbers work. You have to take a hard analytical look at your competition, your customers, and what services you can realistically offer. The process forces you to see the “holes” or the weaknesses in what you thought was going to work. That’s good. Waaaay better to see those problems now, on paper, when you haven’t spent any money than when you’re committed to $150,000 worth of inventory and overhead that you just realized you can’t afford. Writing a business plan may not be a fun way to spend your time, but it saves major headaches later on. Also, if you are going to be pitching your idea to an investor, or asking for a loan from a bank, the first thing they will ask you is if you’ve written a business plan.
No business plan, no money.
There are plenty of business plan software products available, and you can always hire someone to write a plan for you, but that’s extremely expensive, and you will miss out on the critical “doing your homework” benefits. The software is fine, but use it as a template. For this exercise to work, you’re going to need to think a bit. If your spelling or grammar is a bit off, don’t worry. Its the strategic thinking and planning that matters.
These are the standard sections of a business plan. You’ll see variations on this — sections called by different names, some parts considered top-level sections in one business plan where there secondary sections in another — its all fine. Again, the point is the thinking behind the paper. Aim for a business plan that’s between ten and fifteen pages. Anything longer than twenty is usually written by someone who’s trying too hard, or who needs a lot of money and is trying to razzle/dazzle their investors.