Writing a business plan is an art form. However, unlike the process of some artists, writing a business plan in a freeform kind of format is never a good idea. It is better to have a process that you follow. That is why I have personally developed my own process over the years. This process is the same one I use whether I am writing a business plan for a pre-revenue startup, designing a startup pitch deck, or writing a feasibility study for a multi-billion dollar publicly-traded company. There are a lot of steps in writing a business plan. The first one in my process is….
Determine the audience for the business plan.
In the past I have not been an advocate for startups writing business plans. That is because things change so fast in the startup industry that a lengthy business plan can become obsolete quickly. But lately, with some of the startups I have been working with through SouthFound I have started to change my mind. I find that writing a business plan that is more feasibility study than operating plan is helpful. Either way it is key that you think about the audience. Is it investors or lenders? Maybe you will share it with key early employees so that they better grasp where what the company is trying to accomplish. Similar to how you should consider having multiple versions of a pitch deck you should have different versions of your business plan depending on the audience.
My next step in writing a business plan is…
Come up with a list of key questions that your business plan should address.
In order to write a good business plan, that properly tells the story of your business, you need to anticipate and answer the questions that the audience is going to ask themselves. Using the first step you should have identified that audience. If you know your audience then you can anticipate the questions or objections they will have. While there are always some unique questions that you will be asked, there are also some common questions that your business plan should answer.
That is why, as part of my own process development, I established a list of the common questions that need to be addressed in most business plans. The same is true for designing a pitch deck. There are common things that a pitch deck should address as well. Although due to the shortened length of a pitch deck addressing them all is difficult.
For each business plan I am going to write I list the questions out in a document and then I…
Make a bulleted list of the key findings and statements I need to include in the business plan.
This provides me with a nice outline to work from as I am doing my research. So, for example, for a business plan outline about a fintech budgeting app the company might look like:
- Where is the company headquartered? Dallas, Texas because the founder is from there and wants to stay in Dallas to give back to his company. Plus there are plenty of people with the necessary experience in and around Dallas
- Is the company officially incorporated? Yes, the founder(s) determined, along with guidance from their attorney and accountant, that a limited liability company (L.L.C.) was the best structure for their purposes
- Who owns shares in the business? The founder retains 80% of outstanding shares; 15% is held by the first investor in the business; the remaining outstanding shares are being held for key employees
As you can see, once I have answered all of the questions I had come up with there will be a lot of information already covered that you can then expand upon.
Those are the first steps to writing a business plan that I take.
If you’d like a copy of my business plan question template you can download that swipe file here.