Most organizations have a business plan whether they need one or not. Some business plans are simple and may even exist only in a business owner’s or board director’s mind. Other business plans are complex and evolving. Creating a business plan demands for leaders or owners to think through the process of making an organization successful. The process of planning is as important as the execution.
The best time to write a business plan is to complete it before the business or organization launches. If it doesn’t happen then, it should happen as soon as practicable after the business or organization gets up and running.
Design Business Plans According to Need
For organizations that are small and don’t need much in the way of outside funding or assistance, it’s sufficient to have a simple business plan with a simple income and expense forecast. A profit-and-loss sheet helps to plan for income and expenses. In addition, small organizations should have a basic plan for developing resources and planning how to use them.
Large organizations and organizations that plan to seek donors or investors will need a finely detailed business plan. The business plan usually includes a balance sheet, business ratios and a detailed plan for cash flow.
Alternatively, organizations can start with a simple business plan and add details when it comes time to ask donors and investors to help.
The important thing to remember is to make a careful business plan. Once you design a business plan, you’ll want to be sure that you meet those expectations.
Why Do Organizations and Businesses Need a Business Plan?
Business plans provide the leaders of companies with guidance and direction. They serve as a sort of roadmap for top-level leaders to move forward and make decisions that will ultimately lead to the organization’s or business’s success.
Business plans usually set forth what owners and leaders want to accomplish over the next year. They also usually have long-term plans that shows what they’d like to achieve over the next three to five years.
Investors, lenders and donors usually request to see a business plan when an organization makes an application for funding. A strong business plan helps organizations and businesses get things done.
Components of a Business Plan
Whether your business plan is for you alone or will be shared with others that you will be asking assistance from, the Small Business Association has suggestions for the components to your business plans, as well as how to structure it and write it, from the Executive Summary to the Appendix.
The Executive Summary is the first page of your business plan. It’s a short summary of what’s in the rest of your business plan. The recommended length of the Executive Summary is one page. The reason for this is because funders, lenders or investors usually read the Executive Summary before going any further. If it piques their interest, they’re apt to look at the rest.
The Executive Summary is the place to share why your business is uniquely qualified to succeed. Here, you will highlight your best selling points, so be sure to give a strong opening hook. The rest of the summary should be pretty straightforward. Keep it clear, concise and relevant.
The section on the company description is pretty self-explanatory. Think of it as an elongated version of your elevator speech. Describe who you are, what you do, who you do it for and why you decided to do it.
The next few sections get into the nitty-gritty of your business or organization. In the market analysis section, you’ll want to write a convincing scenario about why people should want to donate to your organization or invest in it. This is the section to talk about why people volunteer to help.
Your market analysis should account for a description of your benefactors, including their demographics and profiles. Write about who they are and why they need your organization to exist.
The market analysis should also include your competitors, and you’ll want to articulate what your strengths and weaknesses are in comparison to theirs.
Navigating your way through the market analysis section may also help you identify some business opportunities that you may not have thought of.
Organization and Management
Take this section to talk briefly about the composition of your board of directors and describe any staff that you hired and what their duties are. If you have an advisory board, describe their composition and the areas of the advisory board members’ expertise.
Service or Product and Operations
This section is for detailing what products or services your organization offers now and what you plan to develop or offer in the future. It should describe your action plan in reasonable detail. Outline your short-term plan for the coming year and your long-term plan for the next two to five years.
Marketing and Sales
Hopefully, you’ve thought about your outreach plans. Briefly discuss your marketing plans for reaching out to your benefactors, members and donors. Describe any promotions that you will use and any marketing channels or social media platforms where you plan to publicize your organization. The description here will include things like paid ads, networking, events and whether you plan to charge for services or products now or in the future.
This is a prime section to describe what you need from the funder, investor or lender. How much money do you need? What will you use it for? How do you hope that they will help? How will this funding affect your cap table?
It’s always difficult for startups to make financial projections because there aren’t any past statistics to base them on. This section doesn’t necessarily have to be accurate. Funders, investors and lenders will be assessing your business plan on how all the parts come together to form a viable and sustainable plan moving forward. You can and should revise the business plan once you have more accurate data to rely on.
You can put most anything applicable in the Appendix section or leave it out altogether. Here’s where you can list resumes, permits, licenses, certifications or any other documents individuals or groups might ask for.
SCORE offers a template for a business plan for a startup business, which is a good starting point for all organizations. Business plans need to grow and evolve concurrently with business development. Organizations and businesses should evaluate their business plans at least annually, and more often if the business is growing rapidly.