Has anyone dismissed your business idea as nothing more than a dream?
The reality is, until you have some concrete progress to show people, very few will believe that you can succeed.
One way to show that you’re serious is to create a business plan.
As soon as you say, “have a look at my business plan,” people understand that you’re taking this seriously.
This is important not only for personal relationships, but also if you want to get a loan or funding. You’ll need to prove that you have a plan for success – a business plan.
This guide will show you how to create a business plan, but a bit differently than most guides.
Traditionally, plans are several pages long.
We’re going to aim to make one much shorter, typically somewhere between one and three pages.
Why? For a few reasons:
- Business plans are estimates. The longer you spend on your business plan, the longer it will be until you get real data.
- Business plans are flexible. You can edit yours as you work on your business, because you will run into problems you hadn’t even considered.
- It’s enough to show you if you’re overlooking any major part of your business.
- The 7 Standard Parts of a Business Plan
- A Step-By-Step Approach to Creating a Simple Business Plan
- Business Plan Examples and Templates
The 7 Standard Parts of a Business Plan
Our “minified” business plan will still incorporate the main parts of a business plan. However, we’ll avoid going into unnecessary detail whenever possible.
Here is a quick overview of what a typical plan would contain:
- Executive summary – This is a one-page summary of the entire business plan.
- Introduction – Gives an overview of the purpose of your business and the problems it solves.
- Market fit – Analyzes the size of your market, as well as how you’ll stand out from competitors.
- Marketing plan – Describes how you plan to acquire customers and grow.
- Operations plan – The logistics of your business. Things like location, structure, and legal concerns.
- Management plan – Who will be running the business, and with what roles and responsibilities.
- Financial plan – How much financial support will you need, and where will you get it. Can you project the earnings of the business?
If you examine those sections closely, you’ll see how much guess work is involved.
Take a marketing plan for example. Until you actually start to try and market your product to potential customers, it is a pure guess as to how well it will work. Conversion rates depend on so many variables that you just can’t model.
That’s why it doesn’t make sense to spend a week on a marketing plan for a small business. You might find after one day of executing it that you should try marketing on a completely different channel or customer segment.
Instead, we’re going to essentially make an executive summary. We’ll include all the most important information at a relatively high level.
As you implement your plan, you can add or edit it with accurate information, without the wasted time of a full-blown business plan.
A Step-By-Step Approach to Creating a Simple Business Plan
There are 5 main sections that you’ll want to include in your simplified business plan.
Remember that these are suggestions, but you can always add or subtract sections. I’ve included a variety of templates and examples in the next main section, but you can also just create your plan in a simple text document.
Break Down the Problem
Every business should be created to solve a problem, and that’s where your business plan will start.
There are a few smaller questions that you should answer here in one to three sentences:
- What problem do you solve? This should be a one-sentence, specific answer.
- Who do you solve it for? While many people might be able to use your product or service, identify the one group of people that need it most.
- How many people have this problem? Get a rough estimate based on Google searches, social media groups, or foot traffic studies.
The most important thing here is to have a clear picture of the problem you’re solving, and knowing that there’s a specific audience that really wants your solution.
What Is Your Solution?
After defining the problem, you need to define your solution (your product) and understand how it may fit into the marketplace.
Here are the top questions you should answer:
- How will you solve the problem? Be as detailed as possible.
- How will you offer the solution in a way that people will actually pay for it? For example, your solution might need an interactive app so that people can customize it for themselves.
- How will you differentiate yourself from competitors? Explain the two or three most important factors from a potential customer’s perspective. Describe how your competitors perform in those factors, and how you can stand out from them. Use an advantage matrix if you’re having trouble.
- Who will create your solution? Describe your management team, business structure, and any employees or contractors that will build and sell your solution.
You can go into a decent amount of detail here, but remember that your product will likely change drastically once you get actual customer feedback.
How Will You Reach Customers?
Too many small businesses are created without any plan to get customers, and then they never get off the ground.
Investors and banks look for a solid customer acquisition plan because they want to know that you will actually generate revenue.
The main questions you need to answer here are:
- Where will you find customers? List your primary acquisition channels. This could be content marketing, search engine optimization, conferences, etc.
- How will you explain your business in a compelling way? This relates to how you differentiate from competitors. You need to be able to explain your product, and why it’s better in just a few sentences.
- How will you evaluate your marketing success? List the key metrics that will determine if your marketing is making or losing you money. Typically these will be things like customer lifetime value, conversion rates, etc.
This is often a tough part for small businesses, but being able to define your customers will help your marketing in the near future.
What Are the Obstacles You’re Facing?
Every business has obstacles of some kind. It’s important to identify the greatest threats to your success, and have an idea of how you’ll overcome them.
The most common obstacles are:
- Capital requirements – How much money do you need to launch? How much do you need to sustain and grow?
- Customer loyalty to competitors – If your competitors are strong, it can be difficult to get customers. Or, customers may have invested so much time in a competing product that they don’t want to move to another one.
- Legal barriers – Depending on your solution, you should do a reasonable amount of research to determine any legal challenges you might run into. Consulting a lawyer is the best option if possible.
- Product sourcing – If you’re selling a physical product, finding a reliable, cost-effect product source can be difficult.
There are many others depending on the specific business. You want to identify these challenges now so that you can plan for them. Otherwise, you risk spending a lot of resources building your business and having it unexpectedly taken away or shut down.
What Does Success Look Like? (Optional)
Another way to frame this is: If you get traction with your product, what sorts of revenues and profits can you expect?
This is optional because it involves so much guessing at this point.
If you pick a large market, the difference between 1% and 2% market penetration could be huge.
If you choose to include this section, the types of questions you should answer are:
- What is an acceptable month over month (or annual) growth rate? This will depend on the type of your business (e.g. software businesses can grow much faster than brick and mortar).
- What profit margin should we target? Will this change as time goes on?
Business Plan Examples and Templates
If you haven’t written business plans before, it’s difficult to do from scratch.
Even if you have, a template still helps you break up all the information in your head into manageable chunks.
I’ve researched and found the best templates and examples that I could to make this easier for you.
One Page Business Plan Templates
This is a mix of editable templates that will guide you through the steps we went over above.
While the questions and sections might be slightly different, they have the same general purpose:
- $100 startup business plan – An editable PDF template.
- LeanStack – a tool for building a one-page business plan.
- GoForthInstitute two-page business plan – A little more in-depth than the rest.
- The Balance one-page business plan – A template that can be pasted into Word or Excel.
Example Business Plans
Example plans should help clarify any parts that you still have questions about.
There are far too many industries to include business plan examples for all of them. However, here is a rather diverse list of examples:
- Bike Shop Business Plan
- Bakery Business Plan
- Pharmacy Business Plan
- Medical Equipment Business Plan
- Automobile Restoration Business Plan
- Accounting and Bookkeeping Business Plan
- Software Publisher Business Plan
- Cell Phones Retailer Business Plan
- Clothing E-commerce Site Business Plan.
Note that these are examples of full business plans. The concept of one-page business plans is still relatively new, and there aren’t many examples out there. Focus on the first page, the executive summary, when creating your own.
There are more examples across different industries in this excellent collection of short business plan examples.
Business plans are an essential part of proving you’re serious about creating a successful company, both to yourself and others.
For most small businesses, you shouldn’t spend weeks creating a business plan that reads like a novel.
Instead, create a one to three-page plan that summarizes all the most important aspects of your business at a high level.
Use the step-by-step process in this guide, along with the template and examples to break things down and avoid getting overwhelmed.