How to Create a Business Plan

The moment we land on a business idea, we get all excited to start! I truly believe in taking fast action and being decisive. I’ve done this exact thing when I started my first business. But that isn’t always the smartest thing to do, as I would soon learn.

Why Create a Business Plan

Initially, not having someone or something to guide me on to the right path costed me a lot of pain in terms of loss of business, money, time and effort. The lack of a business plan was the culprit!

This reminds me of one of my favourite sayings by Benjamin Franklin –

“When you fail to plan, you are planning to fail”

Now, I’m not saying that you must have everything down in black and white, although that would be great! But writing down some important aspects of a business is always very helpful. Who am I to speak, you might ask? As I mentioned earlier, I’m the person who started her first business without a business plan. I started because I was told I take great pictures and I should get paid for my work.

I am also the person who started her second business with a business plan. A meticulously written out blueprint of what I want my business to look like.

When you do this exercise, you start thinking very deeply and you start to uncover gaps in your business model. You might never have thought of them, otherwise.

Start Simple, Then Build Up

I believe a business plan should be a living document so that you can always change it in accordance to market trends and forecasts. Sometimes it’s difficult to know everything in advance.

You don’t have to start with one of the extra long, traditional business plan templates. You can start with a business model canvas. The business model canvas allows you to quickly map out your ideas for each of the components. Sometimes this could be sufficient for a small business to start up quickly. But if you’re planning on finding an investor, you’ll need to prepare very meticulously. Depending on your level of preparedness or details, you could lose a huge funding opportunity.

Advantages of Having a Business Plan

However a business plan is not meant for just attracting investors. You’re basically laying out the following:

A plan on how to attract and serve your clients
Creating a marketing strategy
Pricing your products or services
Creating your sales and income projections
Creating your operations systems
Planning your exit strategy

Additionally, it’s not just a projection of some dream numbers. When you put down concrete numbers in your business plan, you tend to regard them as solid goals for your business. This forces you to get up and look for clients so you can meet your goals

Create a Business Plan

Creating a business plan may seem daunting at first, but it shouldn’t be. There are lots of online resources available starting from the full-blown traditional templates to easy-to-use Web tools. You can definitely use the business model canvas that I linked to earlier.

During a recent networking event where I was presenting my experiences with creating a business plan, I spoke about the Scotiabank Business Planning Tool. This would definitely work well for Canadians, but it’s generic enough for starters, in case you’re outside Canada. The tool’s really easy to use and allows you to save your work. It has a Guide that comes along with it, so you can look it up for reference. But it comes pre-populated with a lot of explanations and instructions, so that could be of great help as well.

When using these traditional forms, be prepared to invest a lot of time on the actual creation of the document. When I created mine, I was actively running a photography business and working at my day job. Therefore, it took a lot longer than it should have.

Additionally, I was being really thorough as I was looking at applying for funding. If the numbers don’t make sense, your request will definitely be disapproved.

Scam Alert

I just wanted to bring your attention to potential business planning scams. I almost fell into one such scam when looking around for a business grant. If you’re in Canada, beware of the company leadershipgrants.ca.

They invite you to submit your business plan and set you up with a business planning consulting firm that charges $1999 to write your business plan for you.

When you do submit your business plan, they supposedly ask you for more money to actually give you a list of grantors and other investors. In all probability, they’ll take your business plan and sell it for more money! So, no matter where you are, be very careful when you’re looking for funding.

Important Sections

Executive Summary

The Executive Summary should be captivating in case you’re applying for funding. Regardless, it should be so well written that in the event of your showing your business plan to potential collaborators, your idea will be attractive right away!

Business Description

The Business Description section is where you talk about the history and the big idea behind your business. This can be another point where you can capture the attention of your reader.

Outlining your products and services will help you gain clarity about what you’re trying to offer to your target audience. This is where you think about your value proposition – the incredible and irresistible offer that your client cannot refuse.

A SWOT analysis (Strengths, Weaknesses, Opportunities and Threats) will help you identify what you need to improve and what threats to anticipate. Most small businesses fail to do this exercise and when they go out of business within the first two years, they have no idea what happened. Having an excellent idea of your strengths and opportunities arising out of them, as well as a comprehensive idea of your weaknesses and threats arising thereof, will keep you grounded.

The Market

Researching your Market, or not researching it will determine the success of your product/service offering. It’s sometimes difficult to find all the information you’re looking for. You could end up paying for in-depth reports. But if you’re a small business owner, this might be hard. My advice is for you to be as thorough as possible when doing your market research. If you can test out your idea in front of your real audience and get feedback, that would help you to quickly revise your offer.

Competition is everywhere! If you are an inventor, then you’re lucky. Otherwise, most everything is available in the market. But you might just have a unique aspect to your offering. That is the only thing that will set you apart. So be sure to do your due diligence on your competitors. It’s not an uncommon practice for you to be a mystery shopper and shop your competitor’s products or services. However, remember to be respectful of them and it’s not good to plagiarize. Although, if you did plagiarize, you wouldn’t be able to stand apart. Just sayin’! 🙂

Operations and Systems

Operational processes and systems will determine the level of your success. If you’re the kind that flies by the seat of their pants, in all likelihood, you won’t have a system you can replicate. Systems are a critical component of scaling your business. If you know what’s working, you can reuse that system over and over again. If you don’t have a system, you won’t know what you did that brought you great results – it’s that simple! So, make sure you’re systematizing everything, starting from your marketing, your operations, your sales, etc.

Financial Summary & Capital Requirements

The Financial Summary and Capital Requirements sections will give you the inside view of where your working capital will come from, what your sales could mean to your business, what are your operational costs on a daily, monthly and annual basis, etc. Not knowing your financials will soon run your business to the ground.

Conclusion

It’s imperative that your business will go through ups and downs. But how well you navigate those dips and spikes will depend on how well you’ve planned for them. Having a business plan will prepare you for the inevitable rollercoaster ride that every entrepreneur takes. Make sure you build your business bottom up and lay a strong foundation. A tall building can only stand as strong as its foundation, isn’t it?