How to Develop a Business Plan

Is it easy? No. But we have resources to make the process flow more smoothly.

Why Do a Business Plan?

There are several reasons why developing a business plan prepares you for running a business.

• Determining the feasibility. All the research and analysis comes into action here. The plan should fine-tune the product or service, then pinpoint the market, competition, production or employee functions, marketing and finally sales strategies. Better to make mistakes in the plan than after the storefront opens.

• Setting goals. Crafting your objectives and goals for the company naturally morphs out of creating the business plan.

• Secure funding. Lenders, venture capitalists, business angels: all require quantitative information and research supporting claims before giving up money. The plan can and should clarify stages of growth and how funding or a revenue stream will accommodate these stages.

• Defining the “road map.” When you’re knee-deep in day-to-day operations, it’s easy to say something such as “Ah, marketing. I’ve got to look into that at some point.” Then a year goes by. Lay out the facets and functions of the company upfront, and you’ll “work your plan” and the timetable by which these functions will be activated automatically.

• Work within core competencies. Remember, you went into business to start X service or develop Y product. A business plan will help you stay focused on this course and force you to work through the action necessary for success. A really good business plan will incorporate contingencies such as diversification or unexpected opportunities.

• Statistically, a business plan leads to success. More than half of all business owners who neglect to write a business plan fail within the two years.

How to Develop a Business Plan

Whatever your product or service might be, to know how to develop a business plan is to take ownership of particular aspects of your business. Keep it simple -- the plan need only be 10-25 pages long, depending on the reviewer -– in easy-to-read language. Save the finite details for the presentation.

A business plan might include the following:

• Executive summary, featuring objectives, mission and keys to success.

• Company summary, which also might show the management hierarchy.

• Product or service summary, outlining the particular intent of the product or service.

• Market analysis, including target marketing, industry analysis, sales strategy, product/service analysis and marketing strategy.

• Management structure, which expands on the duties of key staff and areas of employee growth.

• Business activity summary, especially important if requesting larger funding.

• Budget and forecasts models, detailing budgetary guidelines, revenue structure and forecasted revenue.

• Supporting documentation, which could be anything from prospective partnerships to management team qualifications.

It’s hard to pinpoint just how long it will take to develop a full business plan, but figure in two-to-three weeks of research for each stage of the business presented and each year projected. It's advised to keep an outline, a summary and a full business plan on hand for review and reference.

S.W.O.T.

Within your business plan, it’s necessary to recognize and come up with solutions for the S.W.O.T.:

• Strengths
• Weaknesses or challenges
• Opportunities
• Threats

These four components may differ greatly in the beginning of the business than three years later, but the foundation this exercise provides will prove beneficial later.

Business Plan Software

If you don’t consider yourself to be a strong writer or want additional assistance developing a business plan, consider using business plan software. Many of the fields are provided and may even prompt you to research more information than you have on hand.

A caveat: don’t just “plug and play” with this software, because it won’t help you run the business later. Use it as a tool to make constructing the plan easier, but make sure to include the individual components that present your company as a worthwhile venture.

Additional Resources

If the thought of developing a business plan on your own is overwhelming, here are a couple of resources:

Consider free consultations with members of SCORE: Service Corps of Retired Executives. These volunteers can not only help you with your business plan, but also offer advice on other issues.

More Business is a hotspot for business plan samples, networking and other entrepreneurial issues.