What is a business plan?
Who are business plans written for?
Entrepreneurs typically prepare written business plans and pitch decks when seeking a round of funding from investors. These materials are designed to give investors an idea of why they should invest in a startup.
Although they are primarily written to obtain funding or gain new partners, they can also be prepared for internal use as more of a “strategic plan”.
are there different types of business plans?
Traditional business plans used for obtaining funding typically follow a standard format, which we’ll outline in the next section. However, there are a couple different variations, most notably the “lean startup” and the “one pager” which are both condensed versions of the traditional business plan.
What does a business plan consist of?
Traditional business plans typically start with an executive summary and then adhere to the following format:
- Company Description and Elevator Pitch
- SWOT Analysis
- Breakdown of Goals and Objectives
- Breakdown of Products and Services
- Market Research and Competitive Analysis
- Leadership and Key Personnel
- Marketing & Sales Plan
- Operations Plan
- Financial Analysis and Projections
Do I need a business plan?
It is very common for new entrepreneurs to get caught up in the planning and strategizing phase of their new business and lose focus on actually doing the work that needs to be done. Writing a written business plan is something that could take even an experienced entrepreneur a significant amount of time to do, as market research and competitive analysis are no easy tasks to accomplish.
Additionally, new entrepreneurs will have a difficult time making accurate assumptions for the financial projections simply because there’s no historical data to look at. All you really can do is take a bottom up approach and make educated guesses based on your pricing strategy and the number of customers you think you will be able to obtain, but these sort of projections are far from accurate and really aren’t worth much in the grand scheme of things.
For these reasons, my dissenting opinion is that new entrepreneurs shouldn’t get too caught up in writing a traditional business plan or making a pitch deck unless you’re seriously trying to obtain funding from venture capital or private equity investors. I would recommend, instead, writing a simple one pager or lean business plan.
It’s great to have a bit of a road map that can keep you on track as you navigate through the waters of small business ownership, but there are more important tasks that you should be focused on as a new entrepreneur instead of spending 2 months doing analysis and writing a detailed 21 page plan for a business with no proof of concept yet.
In my opinion, it’s much better to knock out a simple plan and then circle back to the long format when necessary. Not everyone will agree with my opinion and that’s fine! If you’d like to read more about how to write a business plan, click here >>
