You’ve decided to start a new business. This is a time of great excitement — and when you really need to get your ducks in a row in order to have the best chance for success. Enter your startup business plan … but where to begin if you’re writing a business plan for the first time?
You’re in the right place.
Your plan doesn’t have to be a long, drawn-out document filled with statistics and profit expectations. And your business plan will evolve when you start to gravitate toward or prioritize certain goals over others.
Many new business owners feel trepidation when even thinking about writing a business plan, probably because many have never written one.
How to write a startup business plan
There are various steps and tips to consider when writing a business plan. With this article, you’ll learn the structure and necessary sections of a business plan.
- What to include when writing your first business plan.
- The five W’s for writing a business plan.
- Your business plan is your roadmap.
Ready to get started? Let’s go!
What to include when writing your first business plan
First, you’ll want to outline your plan. A formal business plan is going to include the following sections:
- Executive summary: This is the introduction to your plan summarizing what lies within.
- Company description: This should include history, location, size, goals.
- Market analysis: Here you talk about your market demographics showing a need or desire for your product or service.
- Organization and management: Detail your business structure and team.
- Service or product: Describe your service or product in detail.
- Marketing and sales: Include strategies you will employ to market and sell to your target audience.
- Funding request: Describe where your funds will come from and/or any supplemental funding you might need.
- Financial projections: To attract investors, you’ll need to cover your sales forecast, budget for expenses, your cash flow statement and a balance sheet. Including a profit and loss statement is also recommended.
- Appendix: The last portion of your business plan is used to note resources, legal documents, marketing materials, trademarks, patents, contact info, spreadsheets, etc. Essentially, this is anything that backs up the previous sections of your plan.
Feeling overwhelmed? That’s understandable.
But this is a process that you will want to push through so that you have all the details you need to support the start of your new business and the growth you hope to achieve.
The purpose of your plan, whether just for yourself or to entice investors, will determine how much detail you will include.
There are also business plan templates for you to use.
Now, let’s talk about how you can determine the basic questions your plan should answer so you can put pen to paper.
The 5 W’s for writing a business plan
Depending on your situation (you need funding, for example ), a comprehensive business plan might ultimately be the way to go.
However, here is a simple set of questions designed to help you think through some of the basics of your startup business that can help you to create your first business plan.
We can assume that one of your primary business goals is to get people to buy what you’re selling.
Whether you’re selling a product or a service, on the other side of that transaction is a person who’s going to hand you money.
But who is that person? Have you identified your ideal client or target market?
Think about who your target customers are. Jot down some notes with all the information you have that can help identify who they are. Gender, income, location, habits — you get the idea.
If you don’t know what types of customers you want, you’ll have a hard time finding them.
Whether your goal is acquiring more clients and creating a team of employees under you, or working freelance until you save enough money to start developing courses, put it on paper.
Track your business activities and fees as your customer base grows
Now add a timeline to keep yourself on track.
As you gain new clients, keep this timeline in mind and see if any distractions are preventing you from reaching your goals. Then use that new information to update your business plan.
Maybe you want to work with small startups who need your advice. If you work fast, you might prefer operating on a project rate instead of an hourly rate.
Define what a perfect client means to you and keep this in mind when you’re developing your income stream for your plan.
You might also want to write down ideas for how you’ll attract these clients (other than your website). Will you go out and hit the pavement? Or will you use social networking sites to find new customers? How about advertising, and where?
Then, add these details to the section that outlines the marketing agenda you will use to attract new business.
Going through this process when developing your business plan will also help when you’re looking for clients.
It was a wise Ben Franklin who said: “By failing to prepare, you are preparing to fail.”
Here is where you determine specifically what it is you are offering the market.
You want to be able to state in a clear and compelling way why your product or service is the solution the market needs and the benefits your product will provide.
Imagine you are at a party and you’re introduced to someone new. After exchanging names, you’ll likely be asked, “What do you do?” Do you have a good answer? That’s known as your elevator pitch — short, sweet and concise, so that anyone can understand.
That’s a much better answer, don’t you agree? I’ve stated exactly who it is I serve, what service I offer, and how I go about it.
Determining income after the “what”
Once you determine your “what,” you’ll need to know how much money you can make.
Most of us would love to earn an unlimited amount of money, however, for our business plan we need to nail down some financial projections.
The general rule of thumb is, if you want to earn just as much as you did before starting your own business, take your previous salary and add 25 percent to it to create what is called an “accrual goal.”
This buffer takes unexpected cyclical downturns into account so you’re not left scrounging for money when, for example, a big customer suddenly goes elsewhere.
So, let’s say you made $40,000 a year. That’s your salary goal. Adding 25 percent to that would make a total of $50,000 a year, which is your accrual goal.
Now if you break that goal down into manageable targets, you need to earn $12,500 every quarter, or about $4,200 every month to meet that accrual goal.
If you’re just working to put food on the table every week, you might be surprised by how far your actual revenue is from your accrual salary.
Don’t let this just be a pipe dream — make it happen by adding realistic income projections to your business plan.
I know from experience that the “fun” part of starting a business is the creative process of refining your idea and day-dreaming about the possibilities.
The hard part is when you have to work through the drudgery of filling out paperwork, researching vendors and doing those hundreds of little tasks you don’t want to do but need to do to get your business idea out of your head and into reality. Your business plan, for example.
How do you get past it? By setting realistic target and launch dates.
After launching, you can continue to refine and look to the next target date.
Put follow-up dates on your calendar to review how things are going and make any necessary adjustments.
Deciding where you’ll sell your products or services is pretty easy. There are two places you can sell: online and offline.
For both of those places, you have the additional options of selling: on your own property or someone else’s.
For example, you could sell from your own website (online, on your property) or you could sell on Etsy (online, on someone else’s property). Or you might sell from both.
How and where you will offer your products or services will trigger a whole series of new decisions.
You’ll want to compare monthly fees, determine whether you need a credit card processor, estimate costs for your own website, and figure out who you need to talk to about business permits.
Owning and operating a business takes serious commitment.
There will be days you’re exhausted, days you’re frustrated, and days you’re stressed to the max. What makes you want to get out of bed on those mornings and go to work? That’s your “why.”
For example, are you running your freelance business like a serious business, or more like work you’re just doing for extra cash on the side?
There is nothing wrong with the latter, but that’s the mark of a hobbyist, not a business owner.
Whether you’re a freelance developer, copywriter or just selling widgets, you know how to create a product that clients are willing to pay for. But that doesn’t guarantee that your business will be profitable.
Setting your vision with your “why”
Your why is that overarching factor that drives what you do.
It might be directly related to your products or services. Or maybe your products and services are just the means to an end.
“There are only two ways to influence human behavior: you can manipulate it or you can inspire it.” ~Simon Sinek
That quote is from Simon Sinek’s book “Start With Why” and the premise is that customers are attracted to WHY we do what we do, not WHAT we do.
TOMS shoes is a perfect example of this. Their “what” is selling shoes. Their “why” is to improve lives by helping people in need. That’s compelling and attractive.
Customers give them business because they believe in what they’re doing. When you know your why, you can attract customers that understand and believe in your why, too.
If you’re using your website to pitch your product, you should already have an “about” page to describe your business to your potential customers.
Essentially, this is the vision you want customers to have of your products, services and skills. This is your why.
You need to answer some questions about your business and your “why” in order to set your vision. For example:
- Do you want to keep a few clients and have free time to develop online courses?
- Do you want to work nights and home-school your kids?
- How long before you expand your offerings? Is there an end goal?
The answers to these types of questions will guide you in creating your first business plan.
Your startup business plan is your road map
Are your wheels turning? I hope so.
Thinking through and determining all these details might not be the most enjoyable part of writing a startup business plan, but it will guarantee that you include the information necessary to your success.
To recap, here are the top items to consider when creating your business plan:
- Create an outline for your business plan.
- Determine your who, what, when, where and why.
- Nail down your vision.
Your business plan is the road map to guide your decision-making for both short-term and future profitability.
It’s how you’ll gauge how close you are to meeting your goals (or how much further you still need to push).
Now that you know how to write a startup business plan, you can see that some of this is just common-sense information that any business that wants to thrive needs to gather.
Any decision you make for your business should be assessed through the lens of your startup business plan. Then update and revise as necessary to reach your goals.
Professional tools like Office 365 from GoDaddy can help you create a professional business plan and achieve your goals.
This article includes content originally published on the GoDaddy blog by Carrie Dils.