Updated: Dec 30, 2022
A business plan is a document that details how you plan to set up and run a company or company. A business plan is usually very long and detailed, but it is important to make sure that you do not include personal details, such as your bank details or social security number in your plan. An "executive summary" should be included as well, which outlines an overview of the objectives and goals of the business.
Here are 12 key factors to consider when writing a business plan. These general principles will help you write a business plan that will serve your purpose (whatever that may be) and become an easy reference for years to come.
1. Don't let it take too long
Use clear and concise language and avoid jargon. When business plans are too wordy, they are less likely to be used as intended and more likely to be forgotten or ignored by stakeholders.
2. Show why you care
Let your passion for your business shine through, and show employees and investors why you care (and why they should).
3. Provide supporting documents
Don't be afraid to have an extensive list of appendices, including team member CVs, customer personas, product demos, and sample internal or external messages.
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4. Reference data
All information related to the market, your competitors, and your customers must reference reputable and relevant data points.
5. Research, research, research
The research that goes into your business plan should take more time than the writing itself. Consider your research follow-up as supporting documentation.
6. Clearly demonstrate your points of difference
At every opportunity, it's important to remember how your product or service sets you apart from your competition and helps solve a problem for your target audience. Do not avoid reiterating these differentiating factors throughout the plan.
7. Be objective in your research
As important as it is to showcase your business and the benefits you provide to your customers, it's also important to be objective in the data and research you reference. It shows the good and the bad when it comes to market research and your finances; you want your shareholders to know that you have thought of all possible contingencies.
8. Know the purpose of your plan
It is important that you understand the purpose of your plan before you start researching and writing. Be clear about whether you are writing this plan to attract investment, align teams, or provide guidance.
9. Identify your audience
In the same way that your business plan must have a clearly defined purpose, you must have a clearly defined audience. Who are you writing to? New researchers? Current employees? Potential collaborators? Existing shareholders?
10. Avoid jargon
Avoid using industry-specific jargon, unless it's completely unavoidable, and try to make your business plan as easy to understand as possible for all potential stakeholders.
11. Don't be afraid to change it up.
Your business plan should evolve with the growth of your company, which means that your document should also evolve. Review and redraw your business plan as needed, and remember the most important factor: have a plan in place, even if it changes.
12. Use it
A business plan shouldn't just be a line item on your to-do list; it should be referenced and used as intended in the future. Keep your business plan close by and use it to inform decisions and guide your team for years to come.
Why is a business plan important?
A business plan is a formal document that outlines your business goals, direction, finances, team, and future planning. It can be geared towards investors, in an offer to raise capital, or used as an internal document to align teams and provide guidance. It typically includes extensive market research, competitor analysis, financial documentation, and an overview of your business and marketing strategy. When written effectively, a business plan can help prescribe actions and keep business owners on track toward meeting business objectives.
Who needs a business plan?
A business plan can be particularly helpful during the early growth of a business and serve as a guiding force amid the uncertainty, distractions, and rapid time developments involved in starting a business. For entrepreneurial ventures, a business plan should be a living and dynamic document that guides decision-making and facilitates intentional growth.