Most business plans contain so many numbers and projections that it’s easy to think of them as a scientific papers. They’re not.
There’s an art to the business plan that goes beyond market analysis and competition research.
Ultimately, your business plan is a story. There’s a reason you started your side-hustle, and it’s probably compelling. When you write down your business plan, that needs to come through. Here’s what you’ll need to know to make sure that happens.
Nail the Basics First
When researching business plans, you’ll hear a lot of phrases thrown around. Customers acquisition costs. Expense projections. Net business operation conversions. I only made that last one up.
Don’t let this scare you away. A phrase like “customer acquisition costs,” for example, refers to how much it costs you for each new customers that comes through your door. Whether that comes through Facebook advertising or sponsorship on your favorite podcast, you can’t ignore these expenses when accounting for the total cost of producing and selling your goods.
Here are a few other ideas you’ll likely encounter:
- 12-month expense projections. Including details like transaction fees, which are especially relevant in online sales. Simply total up your estimates of all costs and project them to a full year. It’s not as hard as it sounds; the Small Business Administration offers a calculator for estimating these costs.
- Your marketing plan. How are you going to reach out to customers? What have potential customers already told you? What data do you have on your target customers and their habits?
- Unique value proposition. What makes your business unique, and what can you include in the business plan to demonstrate your unique value proposition?
Don’t put this off, even if you don’t anticipate an official launch any time soon. Statistics from the Harvard Business Review suggest that the “most successful entrepreneurs were those that wrote their business plan between six and 12 months after deciding to start a business.” Writing a plan well in advance of a business launch led to an 8% increase in the chance of success.
Don’t Overcomplicate the Story
In emphasizing the science and the numbers behind your business plan, it’s easy to lose focus on the art of what makes your story so different.
Consider the case of a 9-year-old who put together a simple - and surprisingly engaging - business plan for a dog-walking business. Phase one: Ask parents for help. Phase two: Get them to say yes. Phase seven: Success.
Don’t get lost in the weeds. A business plan should be thorough when it comes to numbers, but simple when it comes to art. Don’t start writing it until the research is done and you know the end. In other words, don’t start until you’re ready to explain your version of “Phase 7: Success.”
Know Your Customer
A business without a customer in mind doesn’t have much of a plan. The Harvard Business Review found that “the sweet spot for writing a plan was around the time when the entrepreneur was actually talking to customers, getting their product ready for market,” and planning marketing.
Those business plans that incorporated these activities increased the chances of success by 27%.
You’ll have covered part of this in your marketing plan. But you can dive deeper into what makes your customers tick - who are they, what do they typically buy, and what will make them buy from your company specifically?
You can find some of this information from competitor research and paying attention to their advertising strategies. Who are they targeting, and why might that be successful? Even starting with broad data from the Census Bureau is better than nothing. But the more you narrow your market research to specific data collection, the more credibility your business plan will have.
Eliminate the Idea that It’s Going to Be 100% Accurate
Your business plan should be thorough, but don’t make the mistake of assuming that you’ll ever match completely with the reality. No one has a crystal ball.
Dwight D. Eisenhower once told a story of when military officials threw away old maps of the Alsace region in France. They figured there was no reason the army would ever need them. Just a few years later, American soldiers were fighting on that exact terrain in France during World War One.
Eisenhower’s point: you never know what reality has in store for you. As Eisenhower said, “plans are worthless, but planning is essential.”
The same is true of business plans. If you find yourself suffering from the business plan variation of writer’s block, you may be trying to do too much. It’s going to be impossible to forecast a business plan with 100% accuracy, and you shouldn’t try. Do your best, but also make sure that you stay open to new ideas.
Allow Room for Discovery
Richard Branson’s first business idea changed immediately. He wanted to set up an alternative school magazine to circumvent the rigid rules of the school’s current magazine. But he noticed something: other school magazines struggled with the same problems. So Branson adapted. He brought in other schools, dug up a telephone book to find a list of potential advertisers, and soon he had a fresh business plan that went beyond what he initially envisioned.
The Harvard Business Review confirms the benefits of allowing room for flexibility, saying “the real key to succeeding in business is being flexible and responsive to opportunities.” Businesses should shift strategies if they find out that their customer base is far different from what they first imagined. This isn’t a weakness; it’s part of the process.
Do It Right, But Stop Assuming It Will Be Perfect
It’s tempting to believe that a perfect business plan will create a perfect business. If you can do the research with 100% accuracy and if you can plan precisely enough, you’ll have a foolproof blueprint for a business that will succeed.
Any business person with experience will tell you that’s not always how it works.
Avoid the need to get your business plan perfect. Do it the best you can - using resources like these ones from Inc.com. But don’t get caught in the trap of imagining you can create the perfect plan. All you can do is find the uniqueness in your business’s story and prepare for the marketplace as thoroughly as possible. If you leave yourself room for change and adaptability, you’ll have a business plan that’s less science and more art. And your plan will be better for it.
Dan Kenitz is a freelance writer based in Wisconsin. He’s previously written for Grasshopper and GoToMeeting. You can follow him on Twitter.