What’s your best advice for first-time founders building a business plan?
These answers are provided by Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most successful young entrepreneurs. YEC members represent nearly every industry, generate billions of dollars in revenue each year and have created tens of thousands of jobs. Learn more at yec.co.
1. Make Sure You Know Your Audience
Your business revolves around its customers, so it’s important to make sure you know your audience like the back of your hand before diving into your business plan. You need to write your business plan so your audience understands your vision and where you plan to take your company.
2. Determine the Goal of Your Plan
Ask yourself why you’re writing a business plan in the first place. Are you doing it to give yourself additional clarity and determine whether the business is viable? Or are you doing it to raise capital? Having a clear understanding of this will help you figure out what parts of the business plan to really focus on. Not all of it has to be perfect — focus on the end goal.
3. Begin by Writing a Pitch
Begin by writing a pitch. Formulate a one-page overview of your business that is ultimately a high-level overview of all the nitty-gritty details the plan will entail. This starts the process of understanding your business better while creating something you can easily share with interested investors or potential business partners.
4. Don’t Spend Too Much Time on It
Don’t spend too much time on your business plan. Most of your time should be spent building and selling a product. What you learn while building your business will almost certainly obsolete the initial plan and the assumptions it is based on. An exception is when you are actively seeking funding, in which case a comprehensive business plan may prove valuable as an investor marketing tool.
5. Study Your Competition
When you begin a business, you must understand what your competition is — but study them from the perspective of learning about their mistakes. View their customer base, their products and processes to find gaps you can fill. When you understand this, evaluating your own business plan becomes more powerful, and you also know what you are up against.
6. Make Sure You Can Back Up the Numbers
Make sure you can back up the numbers you include. Many business plans, especially from inexperienced entrepreneurs, use extremely optimistic projections for how much of the market they can grab and how quickly they’ll be able to grow. This is meant to impress lenders or investors, but it often does the opposite and can be a red flag. Do your research and make sure you can back everything up.
7. Don’t Focus on Having the Perfect Plan
If you’re a first-time founder, the last thing you want to do is get stuck in the perfection cycle and have the “perfect” business plan. It’s unrealistic with your first business. Focus on revenue-generating activities. Get cash flow. Don’t depend on an investment. Focus on product market fit and go out and get your sales to fund a basic business plan. Keep it simple, stupid (K.I.S.S).
8. Look for Inspiration Online
Look for inspiration. Countless examples of business plans can be found on the internet. Read a range of them to get an idea of what to include in yours. Make sure that you use reliable sources from credible providers. You can even get a course off Udemy that teaches you how to write a business plan. The first business plan you write will be daunting, but the more you write, the easier it gets.
9. Be Concise With Your Executive Summary
Be concise with your executive summary. In some cases, potential investors won’t read further than your executive summary. Therefore, it’s important that you clearly state the market problem that your business will solve, how it’s going to solve it and how your business differentiates from the competition. In other words, succinctly spell out your value proposition.
10. Have Someone Else Read It
Have someone else read it after it’s done so they can identify gaps or confusing portions to rewrite. Then, have a professional editor or proofreader go through it to catch any typos, grammar errors and missing punctuation, which can distract from your plan. They can even help you with the structure and organization, especially if this is your first time writing one.
11. Seek Professional Advice
A mistake that has long-term repercussions is to not take and not pay for professional advice. It’s true that you can do a search online for virtually any advice you need, but this won’t help you get more nuanced information. Work with legal and accounting professionals even if it’s expensive. Also, never compromise on marketing. You need to spend wisely and consider it a strong investment.
12. Account for Future Revisions
One thing you have to prepare for when building your first business plan is revisions. We all know that things rarely work out exactly as we planned. Leaving some wiggle room for revisions will help you build a plan that you can stick to, instead of boxing yourself in and getting stressed out.