The following business plan template will outline everything you need to know to write an effective business plan. This was what I used to open Goldwyn & Sons and is based on the resources provided by the city, the banks and Tough Minded Leadership (the best book on leadership as per Dan “The Trillion Dollar Man” Peña).
On your title page, include the following details (otherwise the bank won’t know how to contact you):
- “2-year plan business plan”
- Name of author
- Contact phone number
- Contact email address
- Date submitted
Table of Contents
The table of contents lists out everything in your business plan so that it’s easier for the reader to find the content they’re interested in.
The executive summary provides a high level overview of your business plan. In many cases, the reader will read the executive summary first and skip to the section of the plan they’re most interested in.
The executive summary must be written last. To write the executive summary, you have to summarize each section of your business plan, place them all into one page and make it coherent. That requires the rest of the plan to already be completed. That’s why it has to be written last.
Your executive summary should provide an overview of the following items:
- Business Idea
- Products and Services
- Market and Marketing Plan
- Operations Plan
- Business Structure
- Factors that will contribute to your success
- Financial Highlights and Requirements
Description of Business
Describe your business. Explain what it does and provides, who it serves, where it is located, why it’s unique and its area of expertise. Your whole business plan will further flesh out this single statement.
Vision & Mission Statement
Write out your vision and mission statement here. You’ll learn how to write this in the 2020 guide to starting your own business.
A goal is something you’re aiming to achieve some time in the future. Write out your short term goals (goals you aim to achieve within 2 years) and your long term goals (goals that you aim to achieve after 2 years). Make sure your goals are detailed and have a deadline. For guidance, read about SMART goals).
Tasks, Timelines and Assignments
Tasks are actions you must complete to achieve your goal. For each task, be specific, be granular, specify the start date and end date and specify who is responsible for the task. It could be you, your partner, your investor, your contractor, your supplier, your banker, etc.
What industry are you part of?
What are the trends in the industry?
What is the future outlook of the industry? In other words, what will happen in the future from your perspective?
Why is now the right time for you to open your business? Is it because the economy is doing well, your finances have lined up, you are in front of a great opportunity or something else?
Who is your target market? If you were to give them a name, what would they be called? How would you describe them?
What is their age, gender, income, education, type of residence, type of work and hobbies?
What is their area of residence, their area of work, the route they take to commute to work or other recreational activities?
What are their motivations? What is the reason they are looking for your service?
How often do they buy? Are there reasons why they would buy more or buy less? Does their buying frequency change throughout the year or due to some important occasion?
In addition to your target market, what other groups of people would benefit from your service? If these groups of people were given a name, what would they be called? What would be their demographics, geographics and psychographics?
Products & Services
What are your products? What are your services? How much do they cost? Do the prices change throughout the year? What is your markup on products you’re retailing? What is so unique about your product and service compared to others? Are there patents and copyrights involved?
Is your pricing above, at or below market average? Why are your prices at this level? How will your market respond to these prices? What will your price portray you as? Are you for the mass market, the high-end or somewhere in between?
Overview of Competition
Provide a description of the competitors you are facing. How many competitors are there in your area? What are their names? Where are they located? Why are they your competitors? Who are the top 5 competitors you are going head-to-head against.
Strengths, Weaknesses, Opportunities and Threats
What are your strengths, weaknesses, opportunities and threats?
- Strengths: your business’ characteristics that make you stronger than everyone
- Weaknesses: your business’ characteristics that make you weaker than everyone
- Opportunities: outside conditions that will make your stronger than everyone
- Threats: outside conditions that will make you weaker than everyone
What are the strengths, weaknesses, opportunities and threats that your competitors have? Make sure you list out something for each section as it shows you’ve really analyzed who you’re going up against.
Common mistakes and resolutions
What are the common mistakes committed by your competitors. How will you avoid / resolve them?
Primary Market Research
Go out, physically contact your market and get their input regarding your product and service. Primary market research is about data you collected or had someone collect for you specifically. This can include surveys and interviews. A big thing when surveying and interviewing clients is the following:
- Don’t rely on family and friends for data. It’s very difficult for them to be frank.
- Avoid questions that can be answered with “Yes”, “No” or “Maybe”. You want to ask questions that will generate a longer response. For example, “How will this product benefit you?” is better than “Will you use this kind of product?”
- Ask questions that probe past behavior instead of future behavior. For example, “Will you use this kind of product?” is a future oriented question. A better question would be, “Have you used this kind of product?”
Why is it better to ask past behavior questions? Everyone thinks they’ll do better in the future than they did in their past. But, past behavior is always a better indicator of future behavior.
Once you’ve completed your research, describe your research. How many people did you speak with? What were the results? Were there any data trends you could see (perhaps motivation, location, gender, etc.) that you can take advantage or be wary of? Are there any predictions you can make that would benefit your business? Is there a way you can validate those predictions with more primary research?
Secondary Market Research
Secondary research refers to research conducted for other people / purposes. For example, if you use search engines like Duck Duck Go, Google, Google Trends, Google Analytics, newspapers or journals, those constitute secondary research. What did you use? What were your findings? Were there any trends you could take advantage or be wary of?
Strategic Alliances & Key Partners
In addition to your competitors, you also have allies, other businesses who can benefit you and who you can benefit. List out those businesses and describe how can you help each other.
Your strategy will be composed of smaller tactics, but all the tactics should somehow contribute to your strategy. Provide an overview of your strategy. What is the end goal you are trying to achieve?
Describe all the tactics you will use to market your business. Include the date it needs to be implemented by, the cost, and as many notes as you think relevant. Tactics can include social media, direct mail advertising, strategic alliances (mentioned above), billboard advertising, etc.
Market Risks & Solutions
List out your market risks and solutions. Market risks are risks you face regarding the environment, economy, culture, trends and consumer behavior. For example, if you’re selling a certain style of clothing, a market risk could be if that type of clothing goes out of style.
Operations & Management
Describe who you and your partners are. What makes you qualified to run this business? List out your relevant experience and your work history. Your goal is to reassure the reader that you are the best person for running this show. Some of you don’t believe you are the best person, but if you came up with the idea and you plan to see it through and no one else thinks it’s worth while, then you are best the person to do this.
Staff & Personnel
What jobs are there in your business? What are the job titles and what are their duties, qualifications and wages? Is there a possibility for bonuses to be handed out based on performance? How many positions are there for this job?
Staff Recruitment Plan
How will you find the most qualified people for these roles? I’d highly recommend the book Tough Minded Leadership for this.
Staff Retention Plan
How will you maintain employee satisfaction and growth? I’d highly recommend the book Tough Minded Leadership for this.
Who are your mentors and advisers? Who are you seeking for guidance as you venture through this journey? The more senior or seasoned this individual is, the more favorably your business plan will look.
Describe your location. If you are going to deliver your services at a physical location, give the address or the proposed area. Describe why the area is favorable, the square footage and the plans for the interior layout. Mention if you’ve received zoning approval (even verbal is enough).
What equipment will you need for your business? Describe where you’re going to it get from and the cost of each item.
If you’re going to retail any products, where will you get those products from? Who are your backups in case the main supplier is stalled for some reason?
If you’re making any products, what is your manufacturing process? Will you be outsourcing it? Will you be creating it from your own factory or home? What advantage does your process have over other manufacturing options? What are your other options in case your proposed method does not work? Have you determined the cost of manufacturing? Are there economies of scale you can take advantage of?
Economies of scale refer to the fact that manufacturing costs per item can go down the more you produce. For example, if you hand stitch one dress shirt, that could cost $100. But, if you machine stitch 1000 dress shirts, each shirt could cost $1.
What are your operating hours? What is your daily schedule look like? What is your monthly and yearly schedule? What is each staff member responsible for? Make innovation, improving client experience, and employee satisfaction as part of your operational plan.
Delivery & Distribution
Where will you be providing your products and services?
Taxes, Rules & Regulations
Address all the following points. If you cannot, provide an answer as to how you will receive them and by when.
- Business name registration or incorporation
- Sales tax registration number (in Ontario – GST/HST CRA number)
- Zoning Certificate
- Building Permit
- Liquor Sales License (if applicable)
- Food Handler Certificate (if applicable)
- Business License from the city or town
- Any other city licenses / permits / certificates / registrations (simply call the city and ask them what you need to open a business)
- Any industry licenses / permits
- Insurance including general liability insurance and mandatory worker safety insurance if applicable (in Ontario – WSIB)
Operations Risks & Solutions
What are your operational risks and how will you resolve them? List out every possible operational risk that can happen. It’s important to list them all out so you can plan a resolution in advance. If you don’t list out the problem, you won’t have a resolution. Operational risks can include customer injury, worker injury, drinking on the job, owner absence, lawsuit or defamation, among many other examples.
Reassure the bank by describing all the financial advantages you and your business have. This can include your savings, access to equity, business experience, low business risk, or buyer commitments. As an example of buyer commitments, Tesla allowed interested customers to put down $100 deposits for the Cybertruck. They now have 200,000 deposits. Having a similar accomplishment tells any bank how interested the market is for your product or service.
Describe any financial challenges your business will face and how you will resolve them.
How much of a loan do you require? What will you use it for? What is your budget for the next 3 years and 5 years?
Assumptions for Sales Forecast
When the bank reviews your 2-year cash flow forecast, they may not easily understand where all your numbers are coming from. This is the time to describe where all the numbers are coming from. Why are there sudden spikes in your sales forecast? Why does it change seasonally?
Assumptions for Expenses
Just like the sales forecast, you should also give an explanation for expenses.
Cash Flow Notes
The bank / investor will be primarily interested in net cash flow. If it’s red, why is that? If it’s wildly swinging, why is that? Why is it seasonal?
After you finish writing your business plan
After you finish writing your business plan, complete the following:
- Check for grammar errors
- Ensure your sentences are pithy and readable
- Use bullet points where possible
- Make sure to define any industry jargon
- Make sure to provide the full name for any acronyms
After all that, give your business plan to someone to read for their feedback. Address any points brought up and you’re ready to submit these to banks, investors and grant boards in order to get financing.
Even if you don’t use your business plan to acquire finances, your business plan will act as the ultimate road map for your business. As you progress through your tasks and achieve your goals, you may need to update your business plan and 2 year cash flow forecasts. Feel free to do that.
Book Recommendations & More Information
For more information you can read this and other articles on LinkedIn