Professional Documents
Culture Documents
for 2018]
by: Tim Berry
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This article is part of our “Business Planning Guide”—a curated list of our articles that will
help you with the planning process!
Start from the very beginning understanding that your business plan ought to be specific to your
business needs and objectives. Every business ought to have a plan, but not every business needs
a full formal plan with carefully crafted summaries and descriptions.
If you don’t have a specific immediate need to show a formal business plan to a banker or
investor, then you are probably better off doing just a lean business plan, for your internal use
only.
To make the best impression on banks and investors, your business plan should be presented in
the standard business plan format and contain the necessary business plan elements.
Your business plan should present what a banker or venture capitalist expects to see, in the order
they expect to see it in. Following a standard business plan outline will keep you on track, and
save you from botching your best chance at getting your business funded.
Want to just skip ahead and download our free business plan template? Just click here.
For example, although the executive summary comes as the first business plan section, I
recommend writing it after everything else is done, so you know exactly what appears in the rest
of your business plan.
Likewise, although the management summary is usually presented toward the end of a finished
business plan, it might be an easy place to start writing. And some people prefer to start with a
mission statement, or strategy summary. Others like to focus on the numbers first, so they start
with a sales forecast or spending budget. Start where you like, and get going. A healthy business
planning process will always involve circling back often to check results and revise as necessary.
You can click each of the above links to jump directly to that business plan section. See an
example of a completed business plan here, and learn even more about writing a business plan
here.
Write this last. It’s just a page or two that highlights the points you’ve made elsewhere in your
business plan.
It’s also the doorway to your plan—after looking over your executive summary, your target
reader is either going to throw your business plan away or keep reading, so you’d better get it
just right.
Summarize the problem you are solving for customers, your solution, the target market, the
founding team, and financial forecast highlights. Keep things as brief as possible and entice your
audience to learn more about your company.
2. Opportunity
Describe the problem that you solve for your customers and the solution that you are selling.
It is always a good idea to think in terms of customer needs and customer benefits as you define
your product offerings, rather than thinking of your side of the equation (how much the product
or service costs, and how you deliver it to the customer).
Sometimes this part of the plan will include tables that provide more details, such as a bill of
materials or detailed price lists, but more often than not this section just describes what you are
selling and how your products and services fill a need for your customers.
3. Market analysis summary
You need to know your target market—the types of customers you are looking for—and how it’s
changing.
Use this business plan component to discuss your customers’ needs, where your customers are,
how to reach them and how to deliver your product to them.
You’ll also need to know who your competitors are and how you stack up against them—why
are you sure there’s room for you in this market?
4. Execution
Use this business plan section to outline your marketing plan, your sales plan, and the other
logistics involved in actually running your business.
You’ll want to cover the technology you plan on using, your business location and other
facilities, special equipment you might need, and your roadmap for getting your business up and
running. Finally, you’ll want to outline the key metrics you’ll be tracking to make sure your
business is headed in the right direction.
It should describe the organization of your business, and the key members of the management
team, but it should also ground the reader with the nuts and bolts: when your company was
founded, who is/are the owner(s), what state your company is registered in and where you do
business, and when/if your company was incorporated.
Be sure to include summaries of your managers’ backgrounds and experience—these should act
like brief resumes—and describe their functions with the company. Full-length resumes should
be appended to the plan.
6. Financial plan
At the very least this section should include your projected profit and loss and cash flow tables,
and a brief description of the assumptions you’re making with your projections.
You may also want to include your balance sheet, your sales forecast, business ratios, and a
break-even analysis.
Finally, if you are raising money or taking out loans, you should highlight the money you need to
launch the business.
Listen to Tim Berry discuss lean business planning:
1.1 Problem
1.2 Solution
1.3 Market
1.4 Competition
1.5 Financial Highlights
2.0 Opportunity
4.0 Execution
7.0 Appendix
I believe they should also have a separate projected balance sheet, projected business ratios, and
market analysis tables, as well as personnel listings.
I also believe that every business plan should include bar charts and pie charts to illustrate the
numbers.
While every business owner should have an ongoing planning process to help them run their
business, not every business owner needs a complete, formal business plan suitable for
submitting to a potential investor, or bank, or venture capital contest. So don’t include outline
points just because they are on a big list somewhere, or on this list, unless you’re developing a
standard business plan that you’ll be showing to someone who expects to see a standard business
plan.
Consider lean business planning—writing a business plan doesn’t have to be a long, painful
process. Instead, you can use the Lean Planning method to get started easier and finish faster.
Lean Planning will help you start your business in a way that improves your chances of success.
This methodology is baked into LivePlan.
Don’t make common mistakes. I’ve seen thousands of business plans, good and bad, and I can
tell you that avoiding these common business planning errors will put you far ahead of the curve.
Tim Berry
Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on
Twitter @Timberry.