Every successful business starts with a solid business plan. A business plan is a foundational document that lays out who you are as a company and where you are headed. It not only helps you set and track goals, but it also makes a case for why banks and prospective investors should offer you funding.
While a variety of formats exist, there are a few universal elements and insights that all business plans should include. In honor of National Write a Business Plan Month, review your business plan and make sure it answers the following questions:
- What does your business do? It’s important to explain precisely what your business does, elevator pitch-style. For example, describing your clothing store as a “mid-priced boutique selling locally-sourced clothes and jewelry for women in their 30s and 40s” tells a potential investor much more than simply calling it a “women’s clothing store.” Being descriptive can help you gain additional clarity about the vision of your business.
- Who is your target customer? You’ll want to make sure your business plan outlines in detail who your target customer is, getting specific in terms of demographics. This step may require you to do some extra market research, but it will pay off in showing potential funders that you do your homework. Market research may also help you determine if you need to enhance your digital footprint. Has the COVID-19 pandemic affected the way your target customers shop? Do they prefer to order online or visit a physical location? You should be proactive in answering these questions.
- How will you make money? Of course, from a big-picture perspective, you’ll make money by selling your products or services. But the details are just as critical. Banks and potential investors will want to see financial projections and pricing plans. If your business is brand-new, they’ll want to know whether you have existing funding sources in place or if you’re starting from scratch. It will also be important to outline the costs of running your business. Learn more about funding your business here.
- What niche are you filling? What sets you apart from the competition? Within the Business Model Canvas framework, this is your “Unique Value Proposition” (UVP). With a UVP, the Business Model Canvas asks business owners to consider what specific need they are meeting for their customers. Answering these types of questions will allow you to take a step back from your business and validate why someone would choose you over a competitor — and help you explain to potential funders why they should choose you over your competitors, too.
For more tips on how to write a business plan, take our free How to Write A Business Plan course. You can also consult business planning experts at SBA resource partners like SCORE, Women’s Business Centers, Small Business Development Centers, and Veteran Business Outreach Centers for free feedback on your business plan.