So what exactly is a business plan and why do I need one? Well, you don’t necessarily need a business plan to start a business, but there definitely are some advantages to having one.
A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. – Wikipedia
There are literally thousands of definitions of a business plan that you can find online. Wikipedia provides one that is as good as any. There is of course a bigger article there if you want to read, but the above one sentence definition will suffice for most purposes. I would, though, tweak the above to:
A business plan is a document that covers what the business is, what are the business goals, the reasons they are believed attainable, and the plan for reaching those goals.
There are two changes I made.
First, a business plan is not always a formal statement. It can be one; but it can also be an internal informal note that you make for your own business. This is a very important distinction because too often startups feel that the only purpose of a business plan is to show something to external stakeholders like investors. And for that they believe a need for an extremely polished presentation – which leads to never actually making one unless absolutely needed.
Second, and very importantly, the Wikipedia definition missed the crucial point of “What the business is”. Today, when there is an information overload on everyone, it is imperative that your business plan clearly tells what exactly the business is before proceeding further.
So, how do you make a business plan? The most common course of action is to do a quick Google search for business plan templates. Once you pick one of the dozens of the freely available ones, you can simply fill in the text and call it a day. That is good enough for a quick (albeit dirty) workaround. However, hopefully you want to put more effort into your own business! And the effort starts with identifying who you are and where you want to go.
I would recommend a twin step process. First, let us revisit the above definition, separate it into four parts and structure our thoughts before moving on to a template.
What is the business? In one sentence who are you? Do not use any buzzwords, keep it as short as possible. We, withStartups.com are an online news & resource portal that focuses on the Indian startup scene through founder interviews, opinion pieces and knowledge articles. You could be an online bus ticketing company that connects private bus operators to consumers to provide real time access to inventory and booking. You could be a real estate portal that combines high quality UI/UX with updated listings and community reviews to property buyers and sellers. You could also be a tablet manufacturing company or an app development company or anything else. The point is can you structure it so that this one sentence can make someone identify immediately with who you are? Another way to do this, which is used by highly innovative companies, is to precede this sentence by an analogy – We are the dropbox of physical groceries (new idea!), we are the Google of technical articles etc etc.
What are the business goals? So you know who you are now. But what do you want to do? Withstartups.com wants to make a resource base that answers and guides young startups. We also want to give a platform to entrepreneurs to share their story and opinions. We want to bring together mentors who want to share their knowledge and so on. For your goals, the last thing that you want to put is “I want to make money!”. That cannot be a goal; it can definitely (and should) be a side effect of your goals but cannot be the main one. Maybe your goal is to deliver fresh organic food to as many consumers as possible at the lowest possible rate. Or to make a messaging app that connects millions of users. Notice that these are not too far off from what you did in point 1, in many ways they are just an extension to that one sentence of ‘What is the business’. Also try not to make the goals too broad – make them specific, make them in stages and make them sequential.
Why are the goals believed attainable? This is asking for your competitive advantages. Why do you think you can do what you said above. Look, anyone can have goals. I could write a goal, “I want to make a flying car”. But is there any reason why I think that goal is attainable (for me)? Ofcourse not! I believe that my goal for withStartups.com can be attained because, I have experience related to content, education and startups. In some ways, this site & above goals are connected to one or more of these skills. We also have a similarly skilled team that can think about startups and then articulate those thoughts. What about you? Are your goals connected to your experience? Or your passion? Or your connections? Or are you simply rich enough to materialize those goals? Maybe the environment where your business will operate – market size, growth rates etc is why your goals are attainable. Find out about your competitors, perhaps the fact that you are differentiating yourself very well is the reason. Whatever may be the case, write them down. Don’t fool yourself, make sure that you are convinced of what you writing.
Plan for reaching those goals? Okay, now the simplest part left of how to reach those goals :-). Starting from scratch, withStartups.com needed a website, a content strategy, a team and so on. We needed to plan the content then take it in front of people via social media or search engines. What is your plan? Do you need a specific platform or perhaps a physical location? How will you get that? Do you have the resources for that? If not, how will you get those resources? Do you need a team or partnerships or investors? How will you test and market your products? There are literally a hundred question you could put here. Rather than get bogged down, take a blank piece of paper. Draw a stick figure representing your customer at one end. Draw your idea at other and connect both with a straight line. Now place sequential points on this line to figure out the journey. If you are totally stuck, this should give you a great starting point to figure out your plan.
The second part of the twin-step process is much simpler. Now pick up a template and fill everything that you figured out.
I recommend this one page template – pretty famous now and known as the Business Model Canvas.
This is a simple, durable and all that you need template. Here you will get a chance to fine tune the above four answers in an objective manner. Yes, this template is likely not usable for presenting to investors but the content gathered would definitely be. There are plenty of flashy tools to make this into a presentable slideshow. I personally use Google Drive’s presentation and find it much simple and efficient. You can ofcourse choose your own tool – from Prezi to Adobe’s suite, there is no dearth of options.
Conclusion? A business plan is definitely a useful document to have irrespective of the reason. So make one, if only to keep track of how your plan has changed as your idea reached its destination!