The moment has arrived where you have to create your business plan. Don’t panic, everything will be fine! Drafting a business plan is not rocket science, as long as you approach it in the right way.
It is quite likely you have heard horror stories about the business plan. These days, business plan opponents launch exaggerated attacks, claiming it stifles agile entrepreneurship. Nothing could be further from the truth! If you want to understand its usefulness and value, I suggest you start with my article, “An Open Love-Letter to the Business Plan.”
Once you understand the usefulness of the business plan, the writing process will seem simple and straightforward. In the end, what is the purpose of the business plan? Its reason can be summarized as follows: It allows you to (1) define a business opportunity, (2) design a viable business model around this opportunity, (3) identify the resources and players who will allow this opportunity to be exploited, and, finally, (4) demonstrate that the opportunity is worth the effort.
As you draft the business plan, you must always keep in mind these four key elements. They will guide your thinking. If you stray from them, you will end up on the wrong track. If you address them, you’re on the right track.
Now, let’s lay this out concretely, and most importantly, step by step. So here is your game plan for efficiently drafting your business plan, and also for how to make best use of the underlying thought process.
Warning, don’t jump into drafting a business plan too quickly! The very first step is to be sure you really want to launch a business in the short term. Emphasize: in the short term! If you have many personal and professional projects and starting a business is more of a medium-term project, don’t waste your time with a business plan. You’ll just have to start over in six months. The market will have evolved during this time and new players will have appeared.
That being said, it is important to separate the business plan process from launching a business. If you want to start a company in the medium-term, you may have already begun the start-up process. For example, if you have made the choice to work in your industry for a year or two prior to your launching, you are already in the start-up phase of your company. The thought process has begun, but at this stage, it is still too early to draft a business plan.
When you have reached the point where you say, “Let’s do this, I’m taking the plunge!” this will be the time to jump into drafting your business plan. You’ll know this moment has arrived when you have made progress along the following four axes: (1) your understanding of your entrepreneurial profile, (2) a clear business idea, (3) an intrinsic motivation related to your project and (4) the capacity to act. As a business start-up coach, helping my clients to move forward along these four axes is an integral part of my role.
Do you feel like an entrepreneur? Do you have a business idea? Are you really ready and motivated? Will you be in business in six months? Then, you’re off! Now is the time to tackle drafting a business plan.
At this stage, the objective is to understand what you are getting yourself into. Will the drafting process take a long time? What are your strengths and weaknesses when it comes to writing? What resources and help will you need?
First of all, take a look at all the different sections of a business plan. Take the time to grasp what a business plan is in general. You can get an idea with Futurpreneur Canada’s An Insider’s Look.
This step should take you a day or two. Simply absorb the business plan structure at your own speed. Take brief notes on what you notice, things that surprise you, or your questions.
At this point, you will really start drafting your business plan. However, you won’t start with the first section, but rather the third (may vary depending on the template). This is the Market Research section. This part of the business plan will allow you to explore your industry and your business sector, and especially to better understand the business opportunity you are facing.
This step addresses four objectives: (1) recording, in one place, everything you already know about your business sector, (2) highlighting what you still need to learn before starting your business, (3) analyzing all data to draw conclusions and (4) clearly formulating the business opportunity you want to attack.
You must understand that the market research is the analytic portion of your business plan. It is in a separate category. In contrast with all the other business plan sections, the market research is for comprehension purposes only, not decision-making. At this stage, nothing is set in stone. This is not when decisions are made. Instead, we are stockpiling an important amount of information, to then try to draw conclusions and lessons.
Once you understand your market well, you can then move on to the following step. Unless you have drilled down to an in-depth understanding, it would otherwise be premature. This step can take from a week to a year, depending on your comfort level with your market. Your previous experiences are the raw materials for your market research.
So now you have a business opportunity? The million-dollar question: Is it viable? There is a huge difference between a business opportunity and a viable company project! At this stage, you will have to ensure that the opportunity you seek is really worthwhile.
You must start by defining the viable business model which could potentially support this opportunity. In order to avoid writing a complete business plan about a non-viable opportunity, at this stage, you need to only create a canvas. To help you, you can use the tool, My Business Model.
Once you have successfully defined a viable business model, you can move on to the next step, planning.
Concretely, how will you implement the business model that you developed in the previous step? What resources will you need? How will your company achieve its mission? How will it attract clients?
We have come to what I call triple planning. Why triple planning? Firstly, because you will have to plan three aspects of your business, i.e., (1) operations, (2) marketing and (3) finances. Also, because you will have to plan these aspects at three levels of logic, i.e., (1) strategic, (2) tactical and (3) operational.
This is the stage when you can complete sections four, five and six of the business plan, i.e., Operations, Marketing and Financing. You need to work on these sections in parallel in the spirit of comprehensive planning. For example, if you choose to advertise on Facebook, this will have an impact on your marketing calendar (marketing section), but also on your daily activities and your human resources (operations section) and finally on your start-up and operating costs (finance section).
You can see that we are now in the decision-making stage of the business plan. This is often the most popular section among entrepreneurs, as it consists of creating the road map for the company. The three plans (Operations, Marketing and Finances) will be a guide for the start-up entrepreneur. More than an action plan, they represent a strategic, tactical and operational plan. After this stage, entrepreneurs are able to say which initiatives they will implement at launch time and, most importantly, why they will do so.
It is now time to return to the very beginning of the business plan in order to draft the first two sections, i.e., the executive summary (section 1) and the business profile (section 2).
Does it seem odd to you to draft the first two sections at the very end? Many entrepreneurs are indeed surprised by this. Nevertheless, it is crucial to do so. These two sections contain the very essence of your business plan. They present all the work you have done in the other sections of the business plan, as well as your in-the-field prospecting.
In a few pages, you are going to convince potential investors that you have a solid product or service, ready for the market, and, especially, that it is worth the investment. This step is the zenith of your business plan, but it is also a natural transition to the next step after drafting a business plan: searching for funding.
Before starting to draft your business plan, you must understand that it is a process that requires you to confront yourself head-on. No matter where your difficulties lie, you can’t escape them. I promise!
Do you have problems researching statistical data? Are numbers your pet peeve? Is selling not really your forte? Do you have issues grasping logistics? Are you uncomfortable spying on your competitors? Does asking a supplier to make a bid stick in your throat? Are you stressed by meeting a commercial landlord? Does a stiff response from a partner leave you bitter? Tell yourself this is just the beginning.
Drafting a business plan requires extremely varied skills. You can’t be good in everything! It’s normal for you to have comfort zones, but they won’t all be. Tell yourself that the business plan brings together all the functions of a company, with no exceptions. While a large company has dozens of different departments to deal with all these functions, as an entrepreneur, you will be completely alone to address them all. You have to be understanding about your capacities, but you must also give yourself the time to evolve, at your own speed.
No entrepreneur has gone through the business plan approach without living a minimum of frustrations and sorrows—but also, fun and excitement. This is normal, it’s natural! The business plan sets out all the elements of your company. Some will excite you, while others will in no way appeal to who you are, nor to your personality.
As with all my clients, I recommend that you draw up a brief list of your strengths and weaknesses prior to starting your draft. You will be better informed of the pitfalls and pleasures you’ll come across while drafting your business plan.
In conclusion, remember the following. Drafting a business plan is a process. The difficulties you will meet during this process will teach you a great deal about yourself. You will meet the same difficulties and successes once you are in business. You must take note of them immediately and draw preliminary lessons from them. This will help you later on.