For the past 20 years, my company and I have written business plans for thousands of firms. Interestingly, over this time, many aspects of business planning have stayed the same. Specifically, the three core reasons why entrepreneurs must create a business plan have not changed in decades. But today, business plans must deal with modern-day realities such as crowdfunding, chatbots, artificial intelligence and more.
Below, you’ll learn the keys to creating a winning modern-day business plan.
Why you must create a business plan
Entrepreneurs have and continue to need business plans for three core reasons:
- To prove the viability of your company
Particularly for startup companies, the act of creating your business plan helps determine the viability of your business opportunity.
For example, if you learn the market size is too small, you may not want to launch the venture. Likewise, if you uncover that established competitors pose too big of a threat, or the capital requirements of the business are too much, you should consider pursuing a different opportunity.
- To market your company to others
Rarely does an entrepreneur create a business plan and keep it to themselves. Rather, their business plan is often shown to prospective investors or lenders who you want to fund your company. It’s often shown to potential employees you’d like to join you. And many times, it’s shown to prospective partners; other companies with whom you can form mutually beneficial relationships.
Without a business plan in place, it’s often impossible to effectively market your company to these key groups.
- To create a roadmap to follow
A great business plan will detail the key steps your company must accomplish to achieve success. It identifies the milestones you need to attain and when, as well as what human and financial resources you need. This gives you a written action plan to execute upon, aiding in your success.
The key sections of your modern-day business plan
Below is an overview of each of the sections your business plan should include, including factors that differentiate today’s plans from those of the past.
The company analysis section of your business plan should start by providing background information on your company. When was it launched? Where are you located? What have you accomplished?
It must also explain your company vision and/or mission statement. This part of the company analysis section has evolved over time as more companies’ missions include aspects other than profits, such as social and environmental responsibility.
Your industry analysis section must detail the industry in which you are competing, its size and trends that are affecting it. Years ago, completing this section relied primarily on accessing market studies. Today, new questions need to be asked and answered, like has the industry already been disrupted or is it ripe to be disrupted soon?
Likewise, in recent years it has become much easier to distribute both products and services globally. This increases potential market sizes, but also competitive threats.
Traditional business plans detail customer needs and target customer demographics. Completing this exercise is even more critical today as online customer targeting has become so advanced.
In the past, online advertising was mostly restricted to the keyword searched by the user or the general website the user was on. Today, you can add significant additional demographic and psychographic criteria to pinpoint the precise customers you’d like to reach.
As mentioned above, today’s competitive analysis must often include competitors located in a wide geographic region, as companies can reach much further today. Fortunately, there are also many new tools available to “spy” on your competitors.
For example, there are multiple websites which will tell you the demographic profiles of customers who visit your competitors’ website. Many of your competitors might even list their key customers on their websites. They also typically list their management team members. This gives you a wealth of great competitive information. For instance, don’t hesitate to look at the bios of their team on LinkedIn to identify the best backgrounds of people you should hire.
Your marketing plan identifies how you will target and serve customers. In today’s businesses, it’s much more common to use new technologies such as artificial intelligence to find and prospect clients. If applicable, include this information in your business plan.
Your operations plan details the key operations processes your company will fill and the milestones you hope to achieve and when.
With regard to operational processes, today companies can be run much differently than in the past. For instance, major customer service roles may be provided by chatbots. Outbound sales prospecting could be outsourced or streamlined by employing artificial intelligence technologies. And key operational roles can be virtually staffed both domestically and internationally.
Your management team section should document the key players on your team. As mentioned above, no longer do your team members need to reside in the same city, state or even country.
Technology has given entrepreneurs and companies the flexibility to work with others seamlessly throughout the world. Leverage this fact to create the best management team you can at the cost you’re able to pay.
Key aspects of your financial plan, such as your financial projections, have not changed over the years. But technology has significantly lowered the costs to start and scale a company. Be sure to identify and leverage such technologies.
Likewise, funding traditionally came from banks, angel investors and venture capital firms. Today, entrepreneurs can use crowdfunding, which was in its infancy just a decade ago, to raise initial funding to prove a business concept.
Finally, and most importantly, is your executive summary. This section of your business plan appears first and summarizes the key points from the other sections. Be sure to use this section to excite your readers and encourage them to read the rest of your plan.
Your modern-day business plan
While the purpose and structure of today’s business plan doesn’t differ much from plans of the past, you have learned there are many aspects within your plan that should reflect today’s realities. Fortunately, these realities have made it cheaper, faster and easier to start and grow a great company. So, don’t hesitate to leverage them!
Originally published Aug. 30, 2019.