Here are some of the components you should include in your company overview:
Promotion may be the bulk of your plan since you can more readily dive into tactical details, but the other three areas should be covered at least briefly—each is an important strategic lever in your marketing mix.
A SWOT analysis looks at your strengths, weaknesses, opportunities, and threats. What are the best things about your company? What are you not so good at? What market or industry shifts can you take advantage of and turn into opportunities? Are there external factors threatening your ability to succeed?
This information will vary based on what you’re selling, but you should be specific enough that it’s unquestionably clear who you’re trying to reach—and more importantly, why you’ve made the choices you have based on who your customers are and what they value.
Market analysis
To define your values, think about all the people your company is accountable to, including owners, employees, suppliers, customers, and investors. Now consider how you’d like to conduct business with each of them. As you make a list, your core values should start to emerge.
When the cash you have coming in is greater than the cash you have going out, your cash flow is positive. When the opposite scenario is true, your cash flow is negative. Ideally, your cash flow statement will help you see when cash is low, when you might have a surplus, and where you might need to have a contingency plan to access funding to keep your business solvent.
Your products or services will feature prominently in most areas of your business plan, but it’s important to provide a section that outlines key details about them for interested readers.
Once you identify your main competitors, answer these questions about each one. And be objective. It's easy to identify weaknesses in your competition, but less easy (and a lot less fun) to recognize how they may be able to outperform you:
While you may use your business plan to attract investors, partners, suppliers, etc., never forget that the goal of your business plan is to convince you that your idea makes sense.
But say you decide to open a clothing store. You could focus on high fashion, or children's clothes, or outdoor wear, or casual--you could segment the market in a number of ways. If that's the case, provide detail on segmentation that supports your plan.
The Competitive Analysis section of your business plan is devoted to analyzing your competition--both your current competition and potential competitors who might enter your market.
Sales and Marketing
As you map out your plan, you may discover issues or challenges you had not anticipated.
Fortunately, most entrepreneurs have a better handle on their operations plan than on any other aspect of their business. After all, while it may not seem natural to analyze your market or your competition, most budding entrepreneurs tend to spend a lot of time thinking about how they will run their businesses.
The Market Opportunities section for our cycling rental business could start something like this:
4. Potential joint ventures. Joint ventures are like partnerships between two companies. A joint venture is a formal agreement to share the work--and share the revenue and profit. As a new company, you will likely be an unknown quantity in your market. Setting up a joint venture with an established partner could make all the difference in getting your business off the ground.
Reuben Yonatan, founder and CEO of GetVoIP, recommends categorizing competitors as primary and secondary. Learn as much as you can about your primary competitors because they often represent your end goal, but don't overlook the others. "With secondary competitors, extract as much insight as possible. For example, try to determine why they are not at the top of the food chain. Could it be their pricing?" he says.
Additionally, consider getting help from professionals, especially regarding regulatory or legal issues and financial planning. You want to get it right, especially if you will use your business plan to secure bank or investor funding.
"What's the market value, how does it operate, what are the needs, and who are your direct and indirect competitors? You need to understand the ins and outs of how the market works, and how the profit is made," says Zohar Gilad, CEO and co-founder of InstantSearch+.
Lavinsky also recommends looking for market information on industry association websites and in research reports available online. In addition, check trade journals as well as the Bureau of Labor Statistics and the Census Bureau.
3. Get Smart About Your Industry and Market
Writing a business plan can seem intimidating, especially when you don't know how to get started. It helps to know that it doesn't need to be long—we aren't talking about high school term papers here, particularly if it's just for internal purposes. And the writing process is also a lot easier when you know where to find some of the information you need.
The primary purpose of the financial plan, says Phil Santoro, co-founder of startup studio Wilbur Labs, is to document how much money you need to start the business, and how or when the business will generate revenue and profit.
Audience Insights data from your Facebook business page will provide valuable intelligence, as will customer insights tools SparkToro and Audiense.
Here's advice that will help you write a thorough, accurate document.
The bottom line is that it’s always a bad idea to copy and paste a plan and use it as-is. There are lots of variables that will make your business different from any other. If you do copy and paste, it will be obvious to a bank or investor that you didn’t take the time to make the plan your own.
Business planning tools like LivePlan make writing your plan much simpler and more intuitive, with a step-by-step process to follow through each part, including your financials. It’s especially useful if you’re seeking a bank loan or you plan to pitch to investors, in part because you’re able to create your financials without wrangling spreadsheets.
Keep in mind that your outline should change a bit to fit the type of business you’re involved in. For example, the business plan outline for a restaurant should be different from the business plan outline for a daycare. Consider an outline to be a help and a guide, not a constraint.
Do you even need a business plan? The short answer is yes, but if you’re not certain, check out this article on the 8 reasons having a business plan is important for your business.
Business plan software
Accelerators, incubators, and co-working spaces are not always distinctly defined entities. There is quite a bit of a grey area, and every program in the U.S. is different.
The U.S. ecosystem of startups and small business includes many accelerators and incubators. Some of them are nonprofits sponsored by local governments and/or educational institutions, and some are for-profits.
Also, when you’re looking at sample plans, don’t feel like you have to find a plan that’s for a business exactly like yours. A plan for a vegetarian restaurant is going to have a lot of similarities with a plan for a steak house, for example. It doesn’t need to be an exact match.
After you’ve made your business plan, Business Sorter also helps you stay accountable to it. You can create tasks, give them deadlines, and assign them to team members―giving you basic project management tools to make sure your business plans become business actions. (Oh, and did we mention that Business Sorter has the lowest starting prices of any software on this list?)
While some small-business owners don’t see the point of creating a formal business plan, it can have some concrete benefits for your business. For example, one 2016 study found that business owners with written plans are more successful than those that don’t. 1
If you ever seek business funding (from, say, banks, angel investors, or venture capitalists), you’ll have to prove that your business deserves the money you want. A formal business plan―complete with financial data and projections―gives you a professional document you can use to make your case. (In fact, most potential investors will expect you to have a business plan ready.)
A business plan can do a lot for your business. It can help you secure investors or other funding. It can give your company direction. It can keep your finances healthy. But, if we’re being honest, it can also be a pain to write.
GoSmallBiz: Most extra features
Data effective 01/04/21. At publishing time, amounts, rates, and requirements are current but are subject to change. Offers may not be available in all areas.
PlanGuru is pretty pricey compared to our other picks, but you might find its forecasting features worth paying for. PlanGuru has some of the most extensive forecasting we’ve found. For example, while other software offers financial forecasts of up to 5 years, PlanGuru lets you forecast up to 10.
Don’t worry though―you still get all the business planning help you need. GoSmallBiz gives you business plan templates, step-by-step instructions, and the ability to create financial projections. And if you get stuck, GoSmallBiz will put you in touch with experts who can offer advice.
Data effective 1/4/21. At publishing time, amounts, rates, and requirements are current but are subject to change. Offers may not be available in all areas.