National Write a Business Plan Month: Some useful tips on writing a business plan for your enterprise
22 Dec 2021
In Elk River, entrepreneurs and business owners are crucial to our thriving community and economy. Elk River’s Economic Development Office Authority is here to support new and existing businesses in the community.
Do you own a business? Are you just beginning the process of starting your own business? In either case, you can provide a sense of direction to your enterprise’s daily operations with a business plan. A well-written business plan can help you measure and guide your company goals. December is “National Write Your Business Plan” month, and there is no better time than now to explore how to create that key pillar of business success.
What is a business plan?
A business plan is a short ( often 3 to 5-pages) document that outlines a company’s goals and strategies for achieving those goals. It also outlines the internal and external processes a business needs to meet its financial projections and customer expectations.
Why is it important to create a business plan?
Having a business plan in place is important for many reasons:
- Helps you monitor your finances
- Provides the opportunity for unique partnerships and investments
- Makes you appealing to top-tier talent within your industry
- Gives you a foundation from which you can refer to make further business decisions
- Helps foster business growth within and beyond your industry.
Tips for creating a business plan
Here are some tips for creating a well-written business plan:
Determine your reasoning for creating a business plan before you start writing:
To create a plan that can be used to guide your business’ long-term decision making, you first need to establish your expectations and the goals you want to achieve by implementing one.
Establish a time frame for completing the goals you outlined in your plan:
By giving yourself a deadline to achieve your goals, you’ll motivate yourself and your employees to complete tasks in a timely manner. For long-term goals that require a shift in industry or brand identity, you might allow one to two years, whereas short-term goals like paying off short-term debts might be achievable within a few months.
Make sure you have reasonable goals:
It’s also important to set reasonable goals that can be achieved within the timeframe you set for your business. For example, with your budget, it might be impossible to create and launch four new products within two years, but it might be reasonable to create and launch two new products within that same time frame. Revisit your company’s mission statement to remind you of your organization’s purpose and to help you prioritize the most reasonable goals.
Business plans help you run your business
A business plan is a roadmap for how to structure, run, and grow your new business. It’s a way to think through the key elements of your business.
Pick a business plan format that works for you
There’s no right or wrong way to write a business plan. What’s important is that your plan meets your needs.
Most business plans fall into one of two common categories: traditional or lean startup.
Traditional business plans are more common, use a standard structure, and encourage you to go into detail in each section. They tend to require more work upfront and can be dozens of pages long.
Lean startup business plans are less common but still use a standard structure. They focus on summarizing only the most important points of the key elements of your plan.
Traditional business plan format
You might prefer a traditional business plan format if you’re very detail-oriented, want a comprehensive plan, or plan to request financing from traditional sources.
When you write your business plan, you don’t have to stick to the exact business plan outline. Instead, use the sections that make the most sense for your business and your needs. Traditional business plans use some combination of these nine sections.
1. Executive summary
Briefly tell your reader what your company is and why it will be successful. Include your mission statement, your product or service, and basic information about your company’s leadership team, employees, and location. You should also include financial information and high-level growth plans if you plan to ask for financing.
2. Company description
Use your company description to provide detailed information about your company. Go into detail about the problems your business solves. Be specific, and list out the consumers, organization, or businesses your company plans to serve. Explain the competitive advantages that will make your business a success. Your company description is the place to boast about your strengths.
3. Market analysis
Competitive research will show you what other businesses are doing and what their strengths are. In your market research, look for trends and themes. What do successful competitors do? Can you do it better? Now's the time to answer these questions.
4. Organization and management
Tell your reader how your company will be structured and who will run it. State whether you have or intend to incorporate your business as a C or an S corporation, form a general or limited partnership, or if you're a sole proprietor or limited liability company (LLC).
5. Service or product line
Describe what you sell or what service you offer. Explain how it benefits your customers and what the product lifecycle looks like.
6. Marketing and sales
There's no single way to approach a marketing strategy. Your strategy should evolve and change to fit your unique needs. Your goal in this section is to describe how you'll attract and retain customers. You'll also describe how a sale will actually happen. You'll refer to this section later when you make financial projections, so make sure to thoroughly describe your complete marketing and sales strategies.
7. Funding request
If you're asking for funding, this is where you'll outline your funding requirements. Your goal is to clearly explain how much funding you’ll need over the next five years and what you'll use it for. Specify whether you want debt or equity, the terms you'd like applied, and the length of time your request will cover. Give a detailed description of how you'll use your funds.
8. Financial projections
Supplement your funding request with financial projections. Your goal is to convince the reader that your business is stable and will be a financial success. If your business is already established, include income statements, balance sheets, and cash flow statements for the last three to five years. Provide a prospective financial outlook for the next five years. Include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, be even more specific and use quarterly — or even monthly — projections. This is a great place to use graphs and charts to tell the financial story of your business.
Use your appendix to provide supporting documents. Common items to include are credit histories, resumes, product pictures, letters of reference, licenses, permits, patents, legal documents, and other contracts.
The Economic Development team is here to help your business thrive in Elk River! Visit our website https://www.econdev.elkrivermn.gov/ for more details on how we can serve you and your business.