How to Write a Simple Business Plan: The Complete Guide
Young entrepreneurs find it challenging to develop a business plan. This is because they are still uncertain of how things will pan out in their business. So, they resolve to just winging it and see what happens. However, with a well-written business plan, you stand a greater chance of turning your startup into a successful business.
This article simplifies the process of writing a business plan. Following the described process below can help you create a simple business plan that can help you navigate your startup journey.
Why you need a business plan?
This may not be an obvious question, but many young entrepreneurs silently ponder the need for a business plan. To reiterate the need for a business plan, here’s a simple list of reasons why your startup needs a business plan.
- The startup market is like an ocean wave. Your business is the ship. You, as the entrepreneur, are the captain. A business plan is your compass. Without it, the chances of you reaching your target destination are left to luck and are extremely slim.
- Creating a business plan helps you understand the competition.
- It is needed to secure external funding, especially a formal business plan.
- It helps create milestones and ways to measure your goals.
Although a business plan doesn’t guarantee you success, it helps you clarify your chances of succeeding. It enables you to create real matrics that can be used to determine when you need to continue growing or change cause (pivot).
Writing a simple business plan.
The process of creating a business plan is more or less a Q&A session. It’s a process that challenges you to ask yourself vital questions about your business. Although you may have the answers to these questions in your head, you need to put them down on paper for clarity. You may find out, when writing them, that you never really had it covered.
These are questions that must be answered:
What’s your business about?
Let’s face it! It’s your business, and you know it inside out. However, this could be a tough question to answer when asked by someone that does not know your industry.
To help you answer this question, you need to focus on three things:
- Your offer
- Your customers
What is your business offering?
What product or service is your business offering? Take the time to describe this product in detail.
It’s okay if you’re not finding the right words to describe it. You can write a full article (as long as this one) to describe your offer.
The more you understand your offer, the better you will describe it to others.
After writing a detailed description of your product or service, summarize it in a few sentences. Let’s say two or three sentences work best.
The extended writing is to help make sure you’re not missing anything as you describe your offer.
Also read: How to Make Your Offer Irresistible
What’s unique about your offer?
Don’t get buried in your own head; you’re not the only person offering the same product or service.
Do the needful. Find other existing businesses offering the same services or products. See what their offer looks like. Since you’re in the same market, you can see beyond the simple three-sentence summary that those businesses use to describe their product.
If need be, buy their products and use them; order their services and see what they are doing. This way, you understand what is already offered in the market then compare it with what you intend to provide.
This way, you might just find out that your offer is not different from what is already existing. In my opinion, this is an excellent discovery. It helps you re-evaluate your offering, fine-tune your service or product to serve a unique purpose. This way, you find what sets you out of the crowd.
Once you find this, write it down. If your offer is already unique, write down what makes it unique.
Who are your customers, and how will your product or service help them?
Honestly, your offer isn’t for everyone. You know this. About half of the people I know don’t use Twitter.
You need to define the class of people that your offer will interest. This definition will include the age range of your target customers, their areas of interest, gender, profession, family structure, and many others.
For instance, an ice cream maker like ColdStone is concerned about serving young people who have up to $5 to spend on confectioneries. This may include parents buying these sweets and chocolates for their kids, adults that just can’t get over the perks of childhood, and kids with enough influence on their parents to make them spend on confectioneries.
Once you know your customers and can clearly define them, you will learn how to construct your offer to help them.
People do business with you if your offer helps them satisfy a need. Parents buy ColdStone to stay away from the gnaws of their kids. Adults buy them to fulfill their nostalgic desire to be kids again.
Take a detailed note of how who your customers are and how your offer helps them. Then, go back to your business plan and constructively summarize this in two or three sentences.
Now that your plan contains what your business is about, it’s time to describe how your business will make money.
How will you make enough money and more?
Money! Money!! More Money!!!
Whether you’re starting a non-profit or trying to build a profitable empire, your business needs money to sustain itself. So, your business plan must provide a detailed description of how you will generate money.
To make sure you don’t miss anything in the money generation part of your business plan, these questions must be answered.
How much will you charge your customers for a product or service?
The answer to this question depends on several factors. The primary factor is the cost of production and delivery. The price of your product must exceed the cost of making and shipping it to the customers.
Your target customers are another factor to consider. A product or service targeted at business leaders is priced differently from those targeted at peasants. Because the former has more money to spare, they will be willing to pay more. However, overpricing is a big turn off to even the wealthiest customers. Nobody wants to feel cheated.
A typical example of this variation in pricing is Medium’s Membership Subscription and the HBR Membership subscription. Because Medium is targeting the everyday reader, they are priced at $5 per month. HBR, on the other hand, is targeted at business leaders, professionals, and researchers. Therefore, its subscription is priced slightly higher at $6 for digital access.
How will you collect payments?
This question gets kicked under the carpet too often. Nevertheless, it’s a crucial part of your business plan.
Your customers may not be able to see you in-person to pay cash. Even if they do, they may not have the cash to spend; instead, they have a credit or debit card to use.
If you’re offering a web-based service or customers can order your product online, you have to find the media with which your customers can pay you. It could be via PayPal, Stripe, Interswitch or Quickteller, and other POS services. Now, some businesses even include crypto payment options. The most important thing is that customers pay for your offering, and they do so with all convenience.
Define every payment medium and write them down in your business plan to get started.
When will you get paid?
Sounds like a simple question to brush off? I don’t think so.
Inasmuch as you want to get paid immediately your product or service is required, it doesn’t always happen that way.
Some businesses offer subscription-based pricing. Some offer a prepaid system where customers use products or services that they’ve paid for already. Many others are postpaid, where customers pay after using the product.
A clear understanding of your product and the market will help you determine when your customers will like to pay you for your business.
Once you understand this, take it into account and draft your business plan with that in mind.
With these three questions, the money problems of your business are solved almost completely. A more serious challenge to consider, however, is where the money will be coming from.
How will you get customers?
Since you’ve defined your target customers in the first part of your business plan, this part pushes you in to answer the question of how you will get them to do business with you.
Where will you find your customers?
Again, don’t get buried in your head. Your customers are not everywhere, and they will never be.
Although all farmers need rainfall, some are really trying to dry their nuts.
The people you want to serve, where would they be, and when will they be there?
Even though your customers may be on the internet, what websites and platforms do they spend most of their time?
Are they on Facebook, Instagram, or Twitter? Are they researchers surfing their way through APA, Wiley, and MedPlus? They could be finance enthusiasts, navigating Bloomberg and similar platforms most of the time.
If they are not on the internet, where then will they be? In front of their TV, at a basketball stadium, or watching an NFL match? Where exactly are you going to find them?
Once you know where to find your customers, you will know where to look. Then, you can direct your marketing campaigns correctly.
Also read: Understanding Market Research For Dummies
How will you attract your customers?
Another vital question. Humans are unpredictable, and as such, you must understand the behaviors of your target customers.
Bonuses may seem attractive, but it’s a big turn-off to some customers.
Based on your offering and the target customers, discount sales may or may not be an excellent incentive to attract customers.
When you understand your customers, you will know what really makes them excited. When they are excited, they will likely give your product or service a try.
For many subscription businesses, a free trial is often enticing. Netflix uses that to win subscribers. Medium and many other companies use that too.
For some businesses, Freemium pricing does the magic. Whatever you believe will work for your business, write it down.
At this stage, it’s okay to be unsure of what will work. You list a few options and how you intend to implement them. While you build your business, do well to experiment.
Some startups have multiple strategies to attract their customers. They test each to find the one that best suits their business needs.
Whether you have an irresistible offer and the most precise customer targets, you need to get started to actualize your goals as an entrepreneur. To truly get started, you need to answer the next sets of questions in your business plan.
What do you need to get started?
Even if you choose to just wing it, you still need some resources to get started. At this stage, you need to give a detailed description of what you need and how you will get them before you kick off.
What do you need, and what do you currently have?
A clear understanding of the things you need to get started will help you know how prepared you are. Also, you can realize how much assistance you need to set everything in motion.
Assuming you want to start a digital agency, of course, a computer and a stable internet connection are necessities. Also, marketing needs, recruiting talents, invoicing solutions, and many others are needed to ensure that you serve your customers well.
The list of needs will not only include material possessions. It should also include the right skills that are needed to get things in motion. At this point, you should be able to know whether or not you need a co-founder—one with the skills that complement yours.
Good marketing and business management skills are sweet to have, but you could find someone with good development and programming skills helpful in the long run.
After having this long list of necessities, create another list of what you already have. This should include the skills at your disposal already, your computer, and your total savings set aside to fund the business, etc.
At this stage, don’t expect to have it all figured out. At every step, you shouldn’t. However, creating an elaborate list of what your business needs and narrowing the list down to the essential ones will help you determine what your business can survive without in the meantime.
After making a list of these available resources, you will be able to ascertain the help that you need.
How much do you need to get started?
Since you already have your resources stated out, you should be clear on what your needs are. Collate the costs of hiring the skills that you need direly and the cost of materials required to get the business off the ground.
Furthermore, how much do you need to sustain the business until it starts generating enough revenue for self-sustenance? This includes utility bills, salaries, marketing, etc.
Put these needs together and generate their money value. Less your savings from this total needs. What you will have is the amount of money you’ll need to get started.
Depending on the amount of money needed, the next thing is to figure out where you will get the money.
Also read: How To Finance A New Business
Where will you get the money?
There are several funding sources for a business startup. We don’t have to jump into finding investors because that can be draining. Until you have a prototype or you’re more confident about your offer, finding investors may be more challenging than usual.
So, look around for possible funding sources. Will funding from family and friends suffice, or do you need to apply for a bank loan?
If funding from family and friends will suffice, you should make a list of the people you will be asking for assistance and how you intend to persuade them to part with their money.
Take all these into account and write them clearly in your business plan because this is what will get you started as you pursue your business goals.
That said, your business goals must be stated clearly in your business plan. Hence, our next question comes in.
What are your business goals?
You’re starting a business to serve customers and make money. How many customers do you want to help, and how much money do you want to make?
If you’re starting an NGO, you’re aiming to help people. The question, however, is: how many people are you planning to support?
These simple but vital questions will help you know what you really want for your business.
Who are you building the business for?
Are you trying to build the business to stand the test of time, or you want to sell it to a giant corporation when it’s time?
Deciding this early will help you stay focused when offers start coming in.
Many companies have been acquired while others have declined acquisition offers even from big businesses like Google.
Co-founders can have severe fuss when offers for acquisition starts coming in at a stage of business growth. This happens when they do not share a similar goal for the company.
Deciding whether you are building your business for growth or another company that brings the best offer will help you avoid this chaos.
How much money do you want to make?
This is an important question that seldom gets a rigid answer. I know that you want to make a limitless amount of money, but I also know fantasy when I see one.
By setting a revenue goal, you have a destination, and you can tell when you’re moving in the right direction.
Decide this and make sure that it’s realistic. Setting unrealistic revenue and profit goals will only frustrate you in the long run and dampen your morale.
This is one underlying cause of many business failures that is never explored. The reason why it’s never explored lies in the fact that it’s immeasurable, but entrepreneurs that have failed because of this can understand.
Nevertheless, you need to understand that setting very low revenue goals isn’t so good either. Make the goal moderately challenging and ensure that you’re not running at a loss as you try to achieve this goal.
Although you have goals and you’re determined to pursue them, it’s just not as easy as it sounds. I understand that. So, it’s time to answer the next sets of questions.
Also read: How You Can Start Small As An Entrepreneur
What is stopping you?
The answer to this question should carry a detailed description of the obstacles on your way.
Is it low internet speed or bad power supply?
Whatever the challenges may be, list them out here—all of them.
You can’t confidently say that you don’t have any obstacles. You do. Look through and write them out.
Usually, there are two sets of obstacles that hold entrepreneurs from starting their business.
- Fear of the competition
- Environmental limitations
Being afraid of the competition does you no good, although it is a motivation when appropriately channeled. To overcome this, do the needed research, analyze your competitors’ strengths and weaknesses, and you will find out that they are as vulnerable as you are. Even more, maybe.
Regarding environmental limitations like bad roads for offline businesses, location issues, health challenges, and others, you are in the best position to find solutions. But putting out a detailed description of the problems and how you intend to overcome them will help you get started; fast and robust.
Starting fast and healthy is very important, and one way to do so is knowing where your opportunities are and chasing them head-on.
Also read: 5 Ways to Overcome Fears In Business
Where are the opportunities?
Tech startups entrepreneurs may not thrive in Texas but put them in the middle of all the opportunities in Silicon Valley and watch them triumph.
Since you have the best understanding of what your business is about, you must know where your biggest opportunities are.
Are you starting a freelance writing agency? You may find great opportunities in freelance marketplaces.
How about other businesses? You could find ample opportunities with other companies within your industry that offer products or services that complement yours. Working with them to provide their customers (and yours) ways to make life easier may bring you closer to success.
If you look closely, you will see opportunities within the competition. You can leverage these opportunities to build a strong customer network.
For example, Dropbox could have seen Google as a competitor because of its Drive service; instead, it saw an opportunity to serve Google Drive users by offering a Google Doc and Spreadsheet integration in its program. With that, users can work directly with Doc or Word.
When you see these opportunities, describe them on your business plan, including how you can use the competition in your favor.
Once all these questions are answered, your business plan is 80% completed. The other 20% is the financial projection for your business, which is usually needed to raise funding and request bank loans.
However, keep in mind that the steps outlined in this article are poised at helping you create a simple blueprint for your business. The information generated from this exercise is not for public use. It’s for you and your startup team.
This business plan helps you get started and keeps you in line with your business goals over time. From this business plan, answers to the most basic questions are expressed. As the business takes off and begins to grow, things will get more complicated and often nerve-wracking. This business plan keeps your foot on the ground.