What is a Business Plan?
The following is an outline for how to write a business plan step by step. There is a lot of information, and it can seem overwhelming as you review each section, but try to look at each section independently and focus on just that part of the plan before moving to the next. One thing you will find as you work each section of the business plan is there is a lot of redundant information that carries from one area to the next in your business plan; for example a lot of information from your industry analysis research will carry over into your marketing and operations plan. Each step is like a building block for the next.
It is important to note, though, that while the Executive Summary is the first section of your plan, it is really the last section you will want to write! The reason for this is your Executive Summary is a snap-shot of your entire business plan, and you won't have all the facts and information until you complete all the other sections.
Investors will want to see that you are an expert in the industry you are seeking to enter. While doing the research required to write a thorough business plan seems like a daunting task, as you work through it and do your research you will become armed and equipped with the knowledge necessary to stand your ground when you present it to an investment firm. They will ask questions about your industry and ask for details, to ensure they are investing in not only a knowledgeable person, but a business, that is starting on a solid foundation. Additionally, your research may open doors and facilitate ideas that you didn't even think of when you begin your venture. This can be both good and bad. The good is through your research you may recognize an opportunity in the industry you are seeking to enter and this could segue into a niche, or competitive advantage that you weren't aware of in the beginning. The bad, which really isn't a "bad," is you may find in your research that the industry you are seeking to enter really isn't a good venture to pursue... if you determine this while in the research phase of your business, this will save you a lot of time, blood, sweat, and tears... and potentially money that would have been invested in the business.
It is also important to remain objective in your research. Often our mind (our psychology) only wants to look at the good in something we believe in, so we may lean toward being subjective and refuse to accept evidence that isn't consistent with our belief. If we are excited about an entrepreneurial venture, we may not want to "see" research that shows a venture may not be a great pursuit. And because of the peripheral effects of escalation of committment, we may have invested countless hours gathering data and conducting research, which makes it very difficult to confront the fact a business may not, after all, be a great pursuit. Continuously ask if you are being completely honest with yourself in your analysis - ensure you are being objective. Conversely, there are faults in every business, and business model. So in your research you will, WILL, find flaws that will present risk to your business... entrepreneurs are rewarded for this risk. As long as you remain objective and are aware of the these faults, and document that they are known (with a risk mitigation plan) then you have done your due diligence and an investor will feel more confident in your proposal. This outline will help walk you through how to create a business plan step by step.
How to Write a Business Plan
BrainstormingWhile brainstorming isn't necessarily "part" of the business plan, I think it's a good exercise to run through to get the creative juices flowing. Uninhibited brainstorming allows you to throw out as many ideas as you can think of (regardless of feasibility). Just throw them out there and worry about analysis of the ideas after the brainstorming session is completed. It's especially good to do this with several people, as this will facilitate diverse thoughts... and you may come up with a pivotal idea that will help your business carve it's way into a new niche market.
Business Plan Sections
The remaining sections of the outline should be a part of your business plan. Whether you're seeking financing through a bank, a venture capital firm, or any other method that exists out there, they will want to see that you have thoroughly evaluated the business you are pursuing. Statistics are not in your favor (a majority of businesses fail, and it often takes an entrepreneur several failed businesses before they find the "right" one). Showing you have fully analyzed the components that make up your market is critical... not only for investors to see, but in the process of completing your research you may find that the business you hope to pursue really isn't a solid business venture (for any number of reasons). On the other spectrum, in your research you may find that there is a specific market out there for your good or service that you didn't originally see; the process of writing a business plan will help with focus and potentially reshape your idea.