A step-by-step guide to creating a successful business plan.
A successful business plan encapsulates a great new idea and a path for its eager entrepreneurial founder(s) to bring that idea to fruition. Sadly, though, many entrepreneurs have stumbled on this most basic element. This step-by-step plan will help you avoid doing the same.
Start-ups often share a common journey – at least in their initial establishment. The founder tends to be the centre of attention at gatherings; be they family barbecues or business meetings, they’re always ready with some new idea to test on the assembled group. Some will wonder whether this illustrious talker will be disciplined enough to convert their many words into actions. And the first of those actions is to document their ideas into a business plan.
How long should a business plan be?
While there is no fixed rule on how long a business plan should be, a good starting point is to look at how much time is spent verbalising an idea.
Given that most words are two to three syllables long, the average person speaks approximately 100–130 words per minute. Talking for, say, 15 minutes – assuming the entrepreneur dominates the conversation in that time – would equate to the delivery of approximately 1500 words. As the entrepreneur sharpens their spiel – or “elevator pitch” – about their great new idea, a reasonably refined concept and opportunity will emerge.
“A successful business plan encapsulates a great new idea and a path to bring that idea to fruition.”
However, don’t be fooled into thinking that’s as far as it goes. People’s responses often come in the familiar form of “sounds like you have thought it out” or a casual “I get the picture”. These can give entrepreneurs a false sense of comfort that their idea has been understood and accepted by their audience.
The unspoken challenge contained in such comments is this: Do you have the discipline to actually walk the walk and draft a business plan encompassing all the various factors? After all, every outing has used approximately 1500 words – and not necessarily the same words each time.
A picture tells a thousand words
This famous phrase emerged in the US early last century, when advertising executive Fred R. Barnard used the phrase “One look is with a thousand words” to describe the benefits of graphic design and photography in advertising.
Consider this phrase in the context of a business plan. A business plan is effectively a snapshot of a new idea and how it can reasonably be brought to market. And so, for any prospective entrepreneur, a blank sheet of paper or blank Word doc can be a terrifying thing!
Every word used should contribute towards painting the big picture while adding colour and perspective to the grey areas.
12 steps to a successful business plan
A business plan can be any collection of random words. What makes for a successful business plan is a document that clearly articulates the business concept, route to market, unique selling points, operational requirements, risks and opportunities. It provides clarity to an otherwise blurry image for anyone who sees it – whether they be prospective investors, lenders, board members or directors. And, perhaps most crucially, the entrepreneur themselves.
Consider this step-by-step approach to create a business plan worthy of the name.
1. Write it down
While talking endlessly about your new idea is great, the next step is walking the walk.
Put your idea down in writing, both for the benefit of informing key stakeholders and keeping yourself focused. There are so many things happening at once when launching any new business venture, making it easy to forget even crucial details.
2. Find a template that works
Don’t make things harder on yourself than they need to be. Creating a business plan can be a huge time drain. Find a template for a business plan: others have done the hard work for you, allowing you to concentrate on filling in the blanks. There’s really no need to spend hours searching for the “perfect one” – they all look the same when blank. Be decisive: choose one and that’s step 2 done.
3. Read the template
That’s right – don’t race to fill in all the sections as fast as you can; this isn’t a high school exam. Read the template and see what inputs it demands. This should take say 15 minutes. Now jot down your ideas into any section that looks about right. Don’t worry if they’re wrong at this stage – things can always be edited.
4. Stay focused
Keep going with jotting down your ideas until you’re tired or, more likely as an entrepreneur, bored. Then stop and do something else. Don’t waste your time if your attention is no longer focused on the task at hand. Come back to it later with renewed focus.
By now, you’re probably suffering from a racing mind. There are so many dot points that all need expanding. So do it! Flesh out those points with more detail. Keep going until step 4 comes into play again.
6. Read over your work
Read through all the points that you’ve written. You probably have the equivalent of two business plans! Now reread them and see how points can be refined for a less-informed audience. Acronyms and buzzwords will need expanding and explaining. The goal is to take the crowd with you on a journey of interest and possible investment opportunity.
7. Put it out there
Summoning all the courage you can muster, share your work. Preferably with a business associate instead of family members – you’re after constructive criticism and useful feedback.
At this stage, there’s nothing wrong with titling the document as an “initial draft” or similar protective title: that’s precisely what it is.
8. Review the feedback
Review what your first reader has said. This will be the nicest review you ever get. The real test is when you offer it to an investor or potential guinea pig of your entrepreneurial venture, being your family.
9. Compare business plans
Find a sample of a completed business plan on Google. Read it as if you were being asked to invest in a stranger’s great new idea. You’ll soon see what draws you into their concept and any questions you’re left with – both of which can be applied to your own business plan.
10. Take a break
Being too involved can cloud your perspective. So, take a break and review your business plan after a few days. Then continue reworking it in preparation for the next entrepreneurial “walking the walk” test: give the business plan to an accountant. The cost of this accounting advice is irrelevant; it will likely be the cheapest expense on your journey but will deliver your greatest return on investment.
11. Go back to step 8 and repeat
You now have a lot of insightful and qualified feedback on your business plan. Use it to further refine your document and fill in any remaining knowledge gaps.
12. Share it with your family
These are the biggest risk-takers in any start-up venture! Relatives are the ones most likely to stump up cash to invest in your business or become your first customers – or both. If your family can buy into the ideas outlined within your business plan, you have begun to walk the walk of an entrepreneur. It’s time to put things into action. Good luck!.
This article first appeared in issue 33 of the Inside Small Business quarterly magazine