25 Business Plan Tips From Professionals
Looking to start a new business? If you want to succeed you need to have a solid plan. While writing a business plan can be a daunting task, you don’t need a fancy business degree in order to craft a good one. But you do need to have vision, passion, organization and be willing to put in a lot of hard work.
Whether you want to write a business plan for yourself, the bank or to show potential investors, you’ve come to the right place. Here you’ll learn how to create a strong business plan as well as learn from common mistakes that can hurt your chances of success.
Below are 25 tips to writing a business plan from the pros.
(By Abigail Orencia)
Tailor your business plan to your audience.
"You should be writing your business plan with a clear idea of who you are targeting (bank or potential investors) so that you can tailor your business plan accordingly, similar to how you would tailor a resume to a specific job application. Research the bank or potential investors and understand how they work, what they’ve invested in previously and most recently and clearly outline the synergy with your business." -- Liat Tzoubari, founder and CEO, Sevensmith
Offer a solution.
Look at what other businesses are doing.
"My best tip for writing a business plan is to take a step back while you are brainstorming, and come up with strategies that will help you avoid falling into those traps that make so many other businesses fail. You should ensure that your business plan accomplishes these three goals:
1) Appeals to your target customer audience,
2) Differentiates your business as unique,
3) Communicates your value propositions in an articulate manner.
When marketing yourself properly becomes the foundation of your business plan, you will expand your reach and ultimately make your business profitable." -- Sam Baitz, CEO Shield Funding
Support your business plan with industry stats.
"When a new or young company presents financial projections, lenders and investors will want to have data which supports the company’s financial assumptions. Where did the company get its numbers for gross profit and amount of inventory it will need to purchase? If the company is using industry benchmarks, it will gain more credibility in the eyes of investors than saying the company made reasonable estimates. How can you get this data in your business plan? LivePlan offers this functionality as part of its online business plan software or you can comb through U.S. Census Bureau data for free.
Focus on execution.
"Having a unique idea with billion dollar potential is great -- but if you want an investment you’re going to have to clearly demonstrate just how you are going to achieve that potential. Ideas are truly a dime a dozen. Your job is to convince the investor that you have identified the plans, strategies and resources to bring that idea into the market -- and win.
"Think critically about your marketing and distribution strategies (resist the urge to be vague and try to get specific) and their feasibility. How much money will you need to compete in your chosen market? What kinds of people and skills are needed? How long will it take to execute on your plan? If you can confidently, comfortably and convincingly answer these questions realistically, then you’ve got yourself a great business plan!" -- Diane Elizabeth, founder, Skincare Ox
Outline your financial strategy.
"Make sure your business plan conveys a clear separation between your personal finances and business finances. It will reassure investors and simplify your taxes at the end of the year. The easiest way to do this is to set up with a business checking and savings account from the start. Checking allows you to process transactions for regular operation of your business while a high yield savings account allows you to earn interest on idle capital. The free Capital One business checking account and their high yield savings account are a great place to start." -- Jeff White, real estate and small business writer, Fit Small Business
Set specific goals.
"You won’t know if you are still on the right track unless you are clear about where you are going. Identify sales goals that are attainable. Global domination may be desirable but it’s not a realistic or a specific goal. As a manager or a business owner, you should create attainable financial sales goals for a defined period so your team is able to break the goals down into individual objectives." -- Victor Clarke, "the marketing quarterback," Be Better Do More
Share your story.
"Tell a story with your business plan. After countless interviews with commercial lenders and venture capitalist, I heard one thing loud and clear -- they want to know the business owner’s story. What drove them to start their venture. Why are they launching now? How does this fit in with their beliefs. They want to know information like this because when things go wrong (and they will) the business owner is the right person to weather the storm. Understanding someone’s passion and thought process can belay fears from financiers and others looking to back your business." -- Thom Fox, business advisor and host, The Engine Radio Blog
"When creating your business plan, skew your expected startup costs and projected first year revenues. For startup costs, add as much as 25 percent on top of what you project to be prepared for unforeseen costs and overages. When projecting first year revenues, calculate the most conservative amount your business can earn and cut that number in half.
"Too often, entrepreneurs underestimate the true cost of starting their business and over estimate how much their business is likely to earn in the first year. Skewing these numbers accordingly can give you a better idea of what to really expect and if you beat your projections, that’s more cash to grow the business." -- Joel Razi Lutfiyya, JoelRazi.com
Use visual elements.
"Make your business plan fun to read. You can stay professional and still make your business sound exciting. Our business is what many would consider boring, but because it is my passion, I always try to make it exciting when explaining it to someone or writing about it.
"One good way to do this is to use visual elements. A large percentage of people are visual learners, so don’t use only text to lay out your plan. Instead, intersperse visual elements -- charts, graphs, pictures, infographics -- that help tell, and sell, your story and your business." -- Garrett Ball, president. 65Medicare.org
Consider the pricing trends.
Spell it out for your investors.
"Show how your investors will make money! Many business plans lay out their ideas and business model nicely but forget to clarify the single most important thing -- show your investors exactly how you’ll get them their money back plus the return on their investment." -- Tali Raphaely, www.taliraphaely.com
Concentrate on your key demographic.
Focus in on your executive summary and get to the hook early on.
Read a good book about business planning.
Make two business plans, one for investors, and one as a personal, guiding map.
Address certain questions.
Your business plan should answer these questions:
"Which group of clients do you think best match your business? What is the demographic and what issues would those clients face?
"How do you plan on reaching your target market? What media channels would you implement?
"How do want your clients to view your business and what do you want them to take away from your brand?
"What do you think separates you from your competition?
Making sure that you provide the answers to the questions above will ensure a stronger business plan."
-- Debra Dixon Anderson, founder and CEO, Light of Gold PR
Create an outline of the major sections.
Ask others to review your business plan.
Ask your friends and family for advice.
Pay attention to every detail.
"While the big picture is definitely important to where you want your business to be in the future, don’t overlook the details. Financials going three to five years out are crucial to understanding what you need to do to achieve success and imperative if a loan is needed. Think through every income and expense, such as updating software, tax increases as your business grows and all income-generating venues.
"Be creative, but realistic. Crunch those numbers and know what you have to make to stay afloat. I find that this really solidifies the business concept and inspires confidence that the business can be done. Research marketing first and do the financials next, so you have a solid idea of where you are headed before doing the rest of the plan." -- Elizabeth R. Elstien, Write.Research.Edit.Sell.Educate
Never forget to review and revise your business plan.
Don't make empty claims.
Do not focus fully on product development.
Do not make inaccurate financial projections.
Don't hide weaknesses.
"One of the things that we find most small businesses don’t often do is complete analysis of their strengths, weaknesses, opportunities, and threats (SWOT). We recommend that this be done quarterly. Strengths and weaknesses are what your business does well and not so well.
"SWOT shows what makes you special and what your biggest challenges are. It’s important be retrospective to identify your top 5 strengths and weaknesses. A business owner needs to capitalize on their strengths and use them to build their company, while working to mitigate or delegate the company’s weaknesses." -- Heather Schooler, The Money Library