I’ve written some business plans by now and I’ve experienced there’s a clash between what you’re taught, and what you end up doing. Why is that?
Some of the reason lies in the unnecessary BS that business plans usually have. The fluff you write more for show than for substance. No offence to Porter, and his five forces. Traditional business plans also tend to be very long because of this. So lengthy that you end up bored by the process.
If you at all finish the Iliad of text you write, you’re probably not going to use it actively.
I’m here to tell you it doesn’t have to be that way. You can have a short, BS-free business plan that helps you grow your venture instead of a written and forgotten one.
You need a working business plan. One that that helps you develop and commercialize your idea instead of impressing an investor. Leave the ‘showy’ version for a later time.
For now, here is my 3-step guide to making your business plan functional. One you will pick up again after you’ve written it.
In the end you can find the Table of Contents I have for my current business plan. As well as a traditional one I wrote a while ago.
1. Understand your idea
I like to think business plans structure your thoughts just as much as your business. The key here is to write down everything you’ve been thinking of, into your plan, without initially being too critical.
Once you’ve unloaded every idea so far, start structuring them. What is the essence of your business? Try to describe it in the easiest way possible.
Then tell a friend about it and see if they understand your idea. If they do, great, you’ve done a good job of structuring your thoughts. If they don’t, you’re most likely not explaining it good enough, because you yourself don’t understand well enough.
A good tool to structure ideas is the Business Model Canvas (BMC) which is a form you fill out with 9 separate blocks; like ‘who is your customer?’, and ‘what is the value you provide?’. Alexander Cowan has a good step-by-step article on how to use it, check it out here.
You need to figure out what your venture is, and go from raw idea, into a business model. I enjoy using the business model canvas, because it’s a one-pager, which forces you to narrow your ideas. It’s also easy to brainstorm with and to visualise how different parts of your business will be connected.
Now that you’ve understood and structured your idea, you’re ready to move on.
2. Only include the relevant parts
There are plenty of ways to write a business plan. Depending on your business you’ll need to include different parts in the plan. There is no ‘one size fit all’ business plan.
That is the key to step two. Don’t just include all the headings you see in a guide because I, or someone else claimed it’s important. Include it only if you think it’s important, and relevant.
The point in writing a functional business plan is to have every page be worth reading and updating. So, avoid the filler pages. With that said, I will mention parts I usually find important to include:
Problem: Explaining the problem or need your idea solves. Is there even a need, or are you simply looking for one? Do you have a solution, looking for a problem instead? This part is probably the most important section in the business plan. Believe in yourself, but also be self-critical.
Solution: Explaining your idea, as easy and concise as possible. And how it solves the problem. Alex Chuang has a great ‘problem-solution fit’ article you should check out.
Vision & Mission: What do you hope to achieve with your business? How? The difference between them can be confusing, I still mix them up. Check out this article by Britt Skrabanek for a good run-through, and examples.
User & Customer / Market: Who is your customer and who is your user? Yes, they can be different people. Think of a baby’s bottle. The mother is the customer who buys the bottle, but her baby uses it. You need to take both point of views into consideration.
Team: Why are you going to succeed? Explain your own / your teams background and skills. How do you compliment each other. Are you capable of running this business?
Unique selling point / USP: Why your idea is going to succeed. What makes it special or unique?
Competitors / Industry: Who are your competitors? What are they doing? How can you compete with them?
Marketing: How are you going to market your business? Marketing is not the same as advertising. Laura Lake has a good explanation of how they differ, right here.
Critical success factors / CSF: What are the most critical factors for your business to succeed? What can go wrong?
Schedule / Time plan: When are you planning to set each part in motion? This could be in the form of a schedule, milestones or both. A Gantt chart is often used for this task, but I would recommend something easier and more streamlined. Laura Binder over at Monday.com has a good article for that #NotSponsored.
Financials: A simple budget, or financial forecast. How are you going to pay your expenses and get revenue?
Remember that a functional business plan doesn’t need to look pretty. Forget the fancy graphs you end up rewriting down the line anyways.
Don’t write an essay. Keep your business plan short for ease of use later. Start with a simple plan you can add onto when needed. My current business plan was 8 pages long when I first finished it. It’s since grown to 14. Many of the above ‘business plan sections’ are just a couple of lines in my plan. Others are several pages. Tailor it to your need.
Great, you have your idea defined, and your business plan decked out with the most important bits. You’re ready to move on.
3. Execute, learn & update
The last step in having a functional business plan, is to put it into action and do some actual work. Get out there and talk to people; your customers, your competitors. Work on your idea and bring it closer to your goal.
Once you’ve been in execution mode for a while, you’re probably going to notice many of the assumptions you made were wrong or need altering. Good, that means you’ve learned something new and have improved your business in doing so.
DO NOT forget about your business plan!
As soon as you start executing on your idea, you’re going to have a steep learning curve, maybe some new competition shows up, or your ‘need’ changes. Maybe you pivot, like I did. It’s safe to say you’re going to be busy.
For your plan to be functional you need to make a habit of opening and rewriting it to fit your current state. Otherwise it’s going to become outdated real fast, and useless before you know it.
But if you do keep it updated, you’ll also keep your thoughts clear, and your business synced with your current strategies, without forgetting your old ones.
Accurately and easily describe your idea. With a tool such as the Business Model Canvas.
Include only the important business plan parts. Don’t copy-paste a template. Keep your business plan short.
Execute on your business plan. Learn from your experience and alter your previous assumptions to fit your new knowledge. The most important step in creating a functional business plan is to keep updating and using it. In order to do that, don’t dwell on making it perfect initially. Make a rough draft and get to work. Expand it when needed.
My business plan template
Congratulations, now you have some pages of a working business plan!
I’ve shared a business plan I made previously right HERE. That one is ‘investor ready’, and I’ve actually won funding with it. I’ve also shared the ‘table of contents’ for my current functional plan HERE. I’m not showing you my full plan because it’s a mess. Exactly like it’s supposed to be when functional, wink. Notice the functional, current one is shorter.
I hope my guide has helped you make a functional business plan you actually end up using.
See you again next Monday, when I show you how to setup a website for your entrepreneurial venture, even though you don’t know anything about web design or coding, like me.
Until next time fellow entrepreneur!
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