If you’ve tested out and developed your concept through a process of discussion, completed your SWOT analysis, and chosen your business model, it’s time to put pen to paper and write out your Business Plan.
This step separates the wannabe’s from the serious entrepreneurs. It may be daunting, but it’s critical. The Business Plan is your road map for the early years of your business. It projects technical, operational, sales & marketing, and financial performance 3-5 years ahead, establishing critical milestones and decision points for you and your current or potential investors.
The Purpose of the Business Plan
Thinking through all of the elements of your business plan will force you to confront in advance the many risks and pitfalls that can confound even the smartest, most energetic entrepreneur. It will give you a greater likelihood of success. And, not coincidentally, it will demonstrate to would-be investors or lenders whether the potential return of investing in your enterprise is worth the risks. Finally, the rise of business plan competitions has created many opportunities for entrepreneurs to pitch their plans and compete for the attention of investors as well as for valuable prize money.
Elements of a Good Business Plan
There are many templates available for developing a business plan. We recommend that you register for an account to use the free public-source tool offered by the U.S. Small Business Administration. It includes:
- Business Plan Executive Summary. Your executive summary is a snapshot of your business plan as a whole and touches on your company profile and goals. Read these tips about what to include.
- Market Analysis. Before launching your business, it is essential for you to research your business industry, market and competitors.
- Company Description. Your company description provides information on what you do, what differentiates your business from others, and the markets your business serves.
- Organization & Management. Every business is structured differently. Find out the best organization and management structure for your business.
- Marketing & Sales. How do you plan to market your business? What is your sales strategy? Read more about how to include this information in your plan.
- Service or Product Line. What do you sell? How does it benefit your customers? What is the product lifecycle? Get tips on how to tell the story about your product or service.
- Funding Request. If you are seeking funding for your business, find out about the necessary information you should include in your plan.
- Financial Projections. If you need funding, providing financial projections to back up your request is critical. Find out what information you need to include in your financial projections for your small business. You will probably want to secure the assistance of a CPA or other financial expert here to help you run the correct calculations and factor in net present valuations and risk discount factors. Without these, your raw projections of revenues and costs will not hold up to scrutiny by experienced bankers and investors and you will lose important credibility.
- Appendix. An appendix is optional, but a useful place to include information such as resumes, permits and leases. Find additional information you should include in your appendix.
Rigor and Discipline
It may be tempting to skimp on this step, but don’t. One of the most important reasons for writing the business plan is that it forces you to ask and answer hard questions about your proposed business.
- Do you really have a viable product?
- Will the market buy it and specifically which market segments will buy it?
- How will you compete?
- How will you sell, market, and distribute it?
- What are your real up-front investment costs and how do you discount or depreciate them over time?
When you calculate potential revenues, what risk factor should you use to discount it? (i.e., don’t be overly optimistic – assign real discounted values based on hard-nosed assumptions).
The more you think through all of the things that could go wrong, as well as the things that could go right, the more likely you are to be successful.
CAMPUS BUSINESS MODEL ASSISTANCE
- Your EVE Podio Account: go to the Business Plan tab and add Business Plan checklist
- Lally School of Management Business Plan Competition
- Lally School Entrepreneurs In Residence (EIR)
- Severino Center Entrepreneurship Programs