A guide highlighting the key elements that should be in your business plan and why
A guide highlighting the key elements that should be in your business plan and why
When the topic of business plans comes up, it tends to polarize people into two separate camps: those that think business plans are worth the effort to put together and those that think that unless you're trying to raise money, writing a business plan is a waste of time. For Ellen Rohr, a business consultant and founder of Bare Bones Biz, the answer lies somewhere in between. "The primary purpose of a business plan is to help you gain clarity and hold yourself accountable for moving in the direction of what you want," she says. "The secondary purpose is to attract investors, or get a loan, or get buy-in from your spouse, partner, parent, kid, team members, or whomever. Unless you have your intentions for your business written down, you might miss an opportunity to communicate it to someone else or even to clarify things for yourself."
Said another way, writing a business plan is not something that needs to take you months of effort, says Rohr, who wrote a book called, The Weekend Biz Plan. In fact, your best bet might be to start by crafting a business plan outline where you highlight the key elements that both define your vision for your business while also defining some of the key first steps you'll take to make that vision a reality. The point of doing this is to make sure the plan gets used, not stuffed in some drawer," says Rohr. "So the best place to focus is on the activities in the process that move you to action."
Inc.com asked Rohr to guide us through the key elements that should be in your business plan outline and why:
How to Write a Business Plan Outline: Your Mission
"One of my colleagues has a standing bet that if anyone can recite their company's mission statement by heart, he'll give them the $100 he keeps in his wallet," says Rohr. "That $100 bill hasn't moved in years." The point, of course, is that most entrepreneurs turn into novelists when it comes to writing their mission statement. Rohr says that you should be able to write yours in a maximum of 25 words and ideally in eight. "Your mission statement should be a simple answer to the question: Why are you doing this?" she says. "The simple answer is to define exactly why this business gets you out of bed in the morning."
Dig Deeper: 5 Tips for a Useful Mission Statement
How to Write a Business Plan Outline: Your Goals
This section should answer the question of what you want to have listed in terms of dollars, numbers, hours, percentages—some achievable thing, says Rohr. "Focus on the notion of, 'This is what I want to have,'" she says. "Just pick something. I'm less concerned with what the goal is than as much as you pick some point on the horizon that you can aim toward." That could mean targeting $1 million in sales, hiring five new people for your team, or even allocating two hours a day to the tasks that you love to engage in. "The key to goal setting is to find ones big enough to inspire you but not big enough to collapse you," says Rohr. "You don't necessarily have to achieve your goals. But if you get good at picking ones that [you can] accomplish, and then creating new ones, your confidence will increase."
Dig Deeper: How to Set Business Goals
How to Write a Business Plan Outline: Your Elevator Speech
Next up: Focusing on your outward message, explaining what problem or frustration your business solves. "This is where you give the short answer to the question, 'What do you do?' " says Rohr, who adds that you can have more than one elevator speech depending on your audience. You might have a different pitch for your potential customers as you would to, say, an investor, or even members of your team. "Whatever the speech is, it should also be aligned with your mission and goals," says Rohr.
Dig Deeper: How to Master Your Elevator Pitch
How to Write a Business Plan Outline: The Financial Plan
If you're using your business plan to attract investors, you'll need to get your money position straight, says Rohr, focusing on what you own and what you want to own. "You'll need to prove that you know your assets from your elbows," she says. You'll also need to know your financial goals as defined in a budget, which also build on the goals you set in the earlier section of your plan. "Focus on what you want to have happen in terms of what you want to spend money on and how much you want to bring in, including what you want in leftover profits," says Rohr, which helps you set your prices. "Most people set prices based on what their competition does, which is a big mistake," she says. "The key is to focus on how much you want and where you want to be."
Dig Deeper: How to Write the Financial Section of a Business Plan
How to Write a Business Plan Outline: The Marketing Calendar/Plan
The point of marketing is to get someone to reach in your direction as opposed to sales, which is when someone buys something to help them solve a problem, says Rohr. "That means at this point, you need to make a list of the things that you can do to make people reach out to you that also fit within your budget," she says. Three of Rohr's favorite areas to focus on right now are: acquisition, e-marketing, and testimonial. With an acquisition, the goal would be to buy a faltering company and turn their phone number or URL into a lead generator for your business. E-marketing strategies would be to use social media sites like Facebook and Twitter to promote your business as well as spending time on search engine optimization and even an e-newsletter. You should also consider turning your early customers into promotional agents for your business by taking pictures of the work you did for them and then reaching out to that person's peers and colleagues. Just as importantly, you also need to set dates that you are going to take all these actions, says Rohr. "Many business owners would rather just hang their shingle out and hope that customers come calling," she says. "But you need to take action—especially if you want to land investors. They want to see how you plan to get potential customers to reach in your direction."
Dig Deeper: How to Write a Marketing Plan
How to Write a Business Plan Outline: The Org Chart
Even if you plan on running a sole proprietorship, you still won't be able to do everything involved in running your business by yourself, whether that might be setting up your website or preparing for tax season, says Rohr. That's why it's important to set up an organization chart to define who you plan to have do the tasks you need in your business—even if they're subcontractors. "Filling out an org chart let's you see where you can reach out for help," says Rohr. "And it gives investors and bankers confidence that your plan isn't just to work 23 hours a day to pull off your vision."
Dig Deeper: The Benefits of a Flat Company
How to Write a Business Plan Outline: The Top Projects List
This is the section where you need to list five projects that will help your new business start moving in the direction of fulfilling its mission and goals, says Rohr. "The difference between a to-do item and a project is that a project has many to-dos associated with it," she says. "Sending your mother flowers is a to-do. Writing an operations manual for how someone can answer the phone at your business is a project. I don't care what they are, but they should focus on solving a problem or capitalizing on an opportunity." Rohr also suggests making a mix of easier and harder projects so that you can build confidence by making progress. If you have employees or contractors, "don't forget to assign names to each project to define who is responsible for it," says Rohr.
Dig Deeper: Tools for Managing Projects and Collaborating With Co-workers
How to Write a Business Plan Outline: Your Story, the Executive Summary
Once you have nailed down all the details of your plan, it's time to spend less than a page answering the key questions about your business: The what, the why, the for whom, the how much, the by when, and the where. You could even think about this section as the one you would hand over to Warren Buffet if he was sitting next to you on the plane and asked you, "So what do you do?" If your Elevator Speech is the 25-second summary of your business, your Executive Summary is the two-minute version, says Rohr.
Dig Deeper: How to Write an Executive Summary
How to Write a Business Plan Outline: Keep At It
After you're done with all the prior steps, consider going back to each of the prior sections and revisiting your answers, tweaking them where necessary. "A good business plan is never done but is also never wrong," says Rohr. "The point is simply to help you define what you want and to help you take inspired action in the direction you want to go."
DARREN DAHL is a contributing editor at Inc. Magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, NC.