First United : The Basics of Writing a Business Plan for Your New Business

If you're in the process of starting a new business - or just thinking about it - a thoughtful business plan is an essential tool. This document will provide a road map for getting your business up and running, sharpen your focus on the many details involved, and can serve as a document to secure loans or persuade investors to believe in your vision. There's no right way or wrong way to write a business plan. You'll find plenty of models, advice, and fill-in templates online, but a good place to start is an overview of the basics.

Business Plan Basics

Although no two business plans are alike, most share elements that address the key issues involved when launching a business. Let's take a look at the common sections and content you may want to include in your business plan.

Executive summary

As its name suggests, the executive summary provides a brief, concise overview of your business. It should grab a reader's attention and entice them to continue reading. An executive summary is a necessity for longer business plans, so you may not need one, depending on the length of your business plan and its intended audience.

Value proposition

A value proposition provides a clear, compelling statement about the unique value that your new company and its products or services will bring to customers. In essence, it's a promise of what your company will bring to the market. For example, Uber's well-stated value proposition is 'Uber is the smartest way to get around. One tap and a car comes directly to your door. Your driver knows exactly where to go. And payment is completely cashless.'

Customer segments

The next section of your plan will specify your target market, whether you're aiming for a mass market (a broad group), a niche market (a narrower group), or other types of markets. For example, a mass-market would be the target for a time-management smartphone app, but a store selling children's clothing would be focused on a niche market.

Revenue streams

The next section specifies where your company's revenue will come from. This varies from business to business, and your company may have more than one revenue stream. Examples include the sale of goods or services, subscriptions or membership fees, licensing fees, and advertising fees.

Cost structure

This section describes the various costs you expect your business to face. These include fixed costs, such as rent and salaries, as well as variable costs, such as hourly labor and raw materials.

Key activities

This is the part of the business plan where you list the essential things your business needs to do to prosper. These activities may change over time as your company moves from a startup to an established business, so for now focus on what it needs to do to establish itself in the market and remain competitive. Key activities can include business development, market research, sales, marketing, and product development.

Key resources

Key resources are the things you'll use to deliver your business's value proposition. Common resources are capital, employees, equipment, expertise, and relationships.

Key partnerships

In this section, you'll list the other businesses or services you'll need to operate your business effectively. This includes manufacturers, suppliers, subcontractors, and other strategic partners. Place particular emphasis on the suppliers or partners that are critical to the success of your business. For example, if you're opening a homemade ice cream shop, your dairy suppliers will be critical.

Channels

This section has two parts: distribution channels and communication channels

Distribution channels encompass the ways that you will deliver your product or service to customers. Common distribution channels include wholesalers, retailers, and the internet (e-commerce). Some businesses - a home landscaping service or a restaurant - may deliver their goods or service directly to customers.

Communication channels refer to reaching your customers to explain your value proposition, attract new customers and retain existing customers, and make sales. Common communications channels are television, billboards, public relations, and the internet.

The Benefits of a Business Plan

At this point, you may be thinking, 'Gee, do I really need to do all this?' Writing a business plan requires a lot of work, but thinking about, researching, and organizing all of the key information relevant to your new business will pay off in the long run.

If you're seeking outside funding from investors or a business loan, you'll almost certainly need a formal business plan. But even if you're bankrolling the business yourself, a business plan will get you started on the right foot, steer you in the right direction, and help you build your company. The benefits include helping other stakeholders understand your business, gaining a deeper understanding of the market that your business will operate in, focusing your initial strategies on the issues that matter most, and helping you plan for expenses, especially those you may have overlooked otherwise.