Setting up a business involves a number of tasks and obligations. The development of a business plan, for example, is a must if you want to come across as professional to sponsors and other businesses. Business plan software, which is available both in free and paid versions, can help get you up and running.
Prospective entrepreneurs use a business plan to work out their business idea in writing and to document the planned implementation. Using the business plan, you can verify how feasible your business idea is as early as possible.. Additionally, it takes on the role of a roadmap for the foundation phase and often guides the newly-founded business throughout the following years. A business plan fulfills the following functions for prospective entrepreneurs:
- Assessment of feasibility and profitability: In creating a business plan, you assess whether your business idea is attainable. The goal of this assessment is to figure out the feasibility (is my idea executable?) and profitability (is my idea financially advantageous?).
- Information document: Potential sponsors such as investors, funding institutions, and banks require a business plan. However, the business plan is also a significant document for potential business partners.
- Roadmap: A business plan supports the founder before as well as after business creation by implementing necessary tasks. The business plan acts as a road map, which notes future goals that require taking into account and planning for new developments.
- Who is a business plan written for?
- How to write a business plan: here are your options
- How to make a business plan yourself
- Having your business plan built externally
- What should you watch out for when writing a business plan?
Who is a business plan written for?
As a prospective entrepreneur, you should create the business plan principally for your own benefit. Nevertheless, you are generally dependent on the financial support of external institutions when founding a business. Accordingly, a business plan should aim to represent its start-up plans in a meaningful way. The following groups take the business plan’s entrepreneurial template seriously and use it as a basis for making decisions:
- Business plan for investors and banks: Banks and investors use the business plan to decide whether to offer a credit.
- Business plan for business partners: Potential business partners are interested in your business plan, as well, although the evaluation of the business idea is paramount in this case.
- Business plan for the unemployment office: In the United States, some states have Self-Employment Assistance programs that include financial support for the newly-founded business throughout the following years.
How to write a business plan: here are your options
The preparation of a business plan represents the first big challenge, especially for new and unexperienced entrepreneurs. It is very time-intensive, but ultimately worthwhile. There is no better way to prepare yourself for your upcoming self-employed status than intensely grappling with the intricacies of your business idea. First and foremost, founders should decide whether they want to write a business plan themselves or have it built by someone else.
How to make a business plan yourself
Many founders decide to resort to templates and tools due to the complexity of a business plan and how time-intensive making one is. Searching online for supportive resources often results in being presented with countless free and fee-based offers. But how do templates and tools differ in terms of their usage, and what are the advantages and disadvantages of creating a business plan yourself?
Business plan template
Business plan templates provide the user with an overall structure as well as additional information and tips for content-related requirements. The pre-prepared structure of the document and the available notes will make it possible for you to create your business plan quickly and with less effort than if you were doing it on your own. However, the templates in question are usually general templates that should be personalized.
Business plan tool
If you are a founder who is creating a business plan for the first time, we recommend that you use a tool. During the software-supported creation process, you will work through the structural elements step by step and answer predetermined questions. Furthermore, business plan tools utilize a plausibility check, which detects possible inconsistencies in your plan. With the aid of prefabricated wording templates, the tool will ultimately assist you in entering all of your entered data into a continuous text.
Most available tools help you create the entire business plan, including your budget and liquidity plan, but vary in price. The Enloop web app is an example of a powerful, comprehensive solution. With it, you can create one simple business plan for free, and more complicated ones by choosing from one of their different fee-based packages, the most expensive of which costs $39.95 per month. Another example of comprehensive business plan software is StratPad, which also allows you to complete one business plan for free, in addition to various fee-based options, of which a $179 annual payment is the most expensive.
Writing a business plan yourself: advantages and disadvantages
Intensive examination of own business idea
The complexity of a business plan requires investing a lot of time
Avoid forgetting important components
Templates and tools only use general content and wordings, meaning special content features and extra emphases must be manually integrated
Many founders are often missing experience with the creation process
Having your business plan built externally
A professional business plan is especially significant for potential sponsors, investors, and lenders. Often, the first impression determines whether or not financial assistance is given. Consequently, founders can lower their risk of a rejection by working together with an external specialist. Besides the complete creation of your business plan by experts, there is also the option have a self-created business plan proofread or to simply have a part of it replaced.
Who knows how to make a business plan?
Countless management and tax consultants are trained in creating business plans. Founders profit from the experience and know-how of these experts. The professionals are trained to avoid common mistakes and identify possible weaknesses in the business idea. Even though the actual creation is handled by the professionals, a successful business plan requires close cooperation with the founder during this process. The founder supplies not only content-related information, but is also actively involved in important decisions and developments. In the end, the founder should fully understand their own business plan and be able to convey its contents to possible lenders in a comprehensible way.
Cost and duration of the creation
While there are already many free templates and tools available online, working with an external expert is tied to high prices. The offers available on the internet vary widely and are dependent on individual factors, like your objective and business idea. If you want to apply for a founder credit or other financial assistance, the stakes for having a high-quality business plan are significantly higher, which requires putting more effort into its creation. This is also the case when your business idea entails a new and extraordinary concept that necessitates a comprehensive explanation.
The price of having a business plan created for you starts at an average of $1,500 if you choose to seek a consulting firm’s help, and ranges anywhere from $3,000 to $50,000 if you hire a private consultant. The exact price depends on the complexity of the business plan, among other factors. Considering the scope of the project and the size of the desired credit, you can make sense of it and compare prices. Exercise caution with exceptionally affordable offers, as these are usually not trustworthy. How long it takes to create is also dependent on the scope of the business plan, and can vary widely.
Receiving external help with writing your business plan: advantages and disadvantages
Benefit from experts’ know-how and experience
High chances of getting credits and financial assistance approved
Founder runs the risk of not being sufficiently integrated in the creation process
Avoid forgetting important elements
Content and structure are guaranteed to be correct
What should you watch out for when writing a business plan?
If you know how to write a business plan and choose to do so, you get to determine its content, composition, and form on your own. However, if you don’t yet have any experience with the creation process, a factor as small as the implementation of the structure can be difficult. Experts, on the other hand, know exactly what a strong structure looks like, which parts of the content are crucial, and which formal aspects must be taken into account.
What goes in a business plan?
There are currently no internationally standardized guidelines for the content, composition, or form of a business plan. Nevertheless, it is possible to determine elements that are found in every good business plan. We advise you to take the following points into account when drafting:
- Executive summary: summary of the business plan
- Company description: unique selling point, goals, products and services, customer benefits
- Founder profile: expertise, experiences, leadership qualities
- Market analysis: industry, competition
- Target group: customers, customer segments
- Strategy and implementation: proposal, price, sales, advertising, marketing budget
- Company organization: legal structure, organization, management team, departments and employees
- SWOT analysis: strengths, weaknesses, opportunities, threats
- Financial plan and projections: capital requirements, financing model, repayment schedule, interest schedule, cash flow statement, operating costs plan, sales plan, gross proceeds calculation, viability plan, minimum sales calculation, liquidity plan
Decisions about the sequence and prioritization of your points should be made based on the nature of your business. A business model with never-before-seen products or services, for example, requires a more comprehensive description of the business idea than a model that is based on established concepts. With an established business model, on the other hand, you should precisely depict how your idea differs from its competition.
You can find additional information about business plans in the free How to Write a Business Plan course provided by the United States Small Business Administration. This course provides an extensive explanation about business plans and their components, as well as a “Checklist for Success” for guidance.
Additional business plan requirements
It is not only the content of a business plan that needs to be convincing, but also its composition and form. The content of a successful business plan is comprehensibly and logically structured. A recognizable structure illustrates a thoughtful approach when creating a business plan, and therefore a well-prepared foundation. However, the final document should usually be a maximum of 50 pages for basic plans and a maximum of 100 pages for more complex ones. The complexity of your business plan is ultimately determined by factors like the scope of the business idea and the information that needs to be conveyed.
Making the content concrete is just one of the five tips that we want to send you on your way with. Here are the others:
- Make your content concise: Formulate the content of your business plan with as much precision as possible, and avoid unnecessary filler words. Potential investors want to find out the relevant information quickly and easily.
- Set yourself apart from the competition: The more skillfully you differentiate your product or service from its competition, the more success your prospective business creation promises.
- Be realistic: To be able to take on real challenges and opportunities, it is important that your business plan is written objectively.
- Take advantage of visual tools: Use graphics, diagrams, and images to illustrate your idea. That being said, be careful to only use these visual tools at meaningful points and in moderation.