How to Write a Business Plan (Back 2 Basics 01)
A business plan is the foundation of your business. If you don't have a clear idea of your mission and your goals, you're basically throwing junk at the wall and waiting to see what sticks. However, business plans are boring and long so many of us skip this step. Don't worry, this business plan is short and sweet. Feel free to dig more in-depth if you'd like to get more details down, but for now, let's focus on the basics.
(BTW this post is part of our Back 2 Basics 10-week series. Click here to learn more & sign up for the challenge!)
Before you begin writing a plan, you have to evaluate your business. These questions will help you to dig deep and focus on how you want your business to develop from here.
(oh and don't forget to grab the downloadable worksheet at the live workshop or on the challenge page - it's a template of these questions and topics to help you build a plan)
A. WHAT IS YOUR WHY?
Why are you starting a business? Don't give an easy answer like "to help people" or "to make money". We're digging deep here. Why did you start THIS business?
If you wanted to make money you could become a drug dealer (don't do that), or if you want to help people, you could give up your life and go build schools in 3rd world countries (you can do that if you want). Instead, you choose to start THIS business - so explain WHY.
Take a second and write down why you picked this business and why you want to do this. If you're really struggling with this question - or if it makes you question your entire business, consider taking a pause on this challenge and reading "Start With Why" by Simon Sinek. It's an awesome book and you should read it regardless, but it might help you answer this question a little better.
B. WHERE DO YOU WANT TO BE IN 6 MONTHS, 1 YEAR AND 5 YEARS?
Don't be afraid to think big on this one. If you want to make 2 million dollars every month in five years, write it down!! But also write where you'd be happy. If you'd be happy with making enough money to cover your grocery bill every month, write that too. Then write something in between that would make you brag about it to your friends.
Make dream goals, baby goals and realistic goals for each of the three steps. Work like you're after that dream goal, stay humble like you're making that baby goal and be proud when you hit your realistic one.
Keep in mind, these goals don't have to focus on money. Maybe you want to quit your job and work from home. Or maybe you want to build something you can add to a resume. Whatever your goals are, write them down. Be sure to follow some basic "goal writing rules" while you do this step. Writing your goals in a specific way can help you better understand them which makes it easier to achieve them.
We all have goals, they might vary from business to business but we all have them. Maybe your goal is to make more money, spend less time on client work, automate a system, get to inbox zero. Whatever it is, there are some characteristics you need all your goals to meet. These should not change your goal, it should just define and better narrow your goal.
- Your goal should challenge you
- Your goal should be attainable
- Your goal must have a deadline
- Your goal should be measurable
- Your goal should be positive
We’ll use “make more money” as our example for these guidelines to help break these down. For number one, our goal should challenge us, we don’t want the goal to be “make $10 more than last month”. Unless that’s an extreme challenge your goal should be bigger.
When we make big goals, goals just on the cuff of insane, we hit those insane goals and push our business more than we ever thought possible. It’ll feel great to aim for $10,000 and come up only $500 short, but it won’t feel as satisfying when you only get $10 over your tiny goal. Aim small, miss small.
C. WHO IS THIS FOR?
The most important part of your entire business is your customer. Your audience/target market/dream client/reader - they should be the center of this mini-plan. You do not have a business without consumers to purchase your products and services, so your need to shift your focus on them.
Who is your consumer? Is it young parents trying to go to classes and work? Is it a 45-year-old woman looking to start her own business? A college-aged guy hoping to graduate early? Whoever your ideal client is, write it out.
Keep in mind a couple things as you work on this,
- Who will be able to afford your product/service?
- Is it a need or a want, who wants/needs it?
- What are that person's goals and how does your product/service help them reach it?
- Where are these people? Do they shop online, in stores? Do they use Twitter or only email?
- Make an imaginary client, give them a name, age, look, background, hobbies, and goals. This person is your ideal consumer.
D. HOW CAN YOU FUND THIS BUSINESS?
Will you need loans or savings to start? Are you going to be scrappy and DIY everything until you make a little cash? Will you put $100 of your own money in to start? Figure out where you'll be getting the money you need to get going. Even if you only need $10 for a domain name, figure it out right now.
If you've already started your business, how will you fund your business in the future? Will you rely on credit cards for investments? Do you need to make X amount of sales before being able to pay for equipment? Figure this out now, before you NEED it later.
Make a list of all your expenses (monthly and yearly). Figure out how much you're making in sales each month and make sure you're not in the negatives. Find ways to cut out expenses you don't need or ones that aren't absolutely necessary to your business. Maybe you're making more than you realized - in that case, find a couple things to invest in. A better cloud backup, new equipment, a part-time VA. Use your money wisely and set up a good accounting system to keep track of it all.
STEP 2. OUTLINE
Alright, by now you should have a little better understanding of your business, which means it's time to get writing. This mini-business plan can be as long as you want. If mini for you in 1 page, awesome. If "mini" is 30 pages, go grab some coffee.
As you start on the outline, keep in mind that this plan is going to need to be easily updated and accessed. Don't just write it on post-it notes, or print it out then delete the files.
I'm a huge fan of Evernote and Dropbox. I wrote my business plan in InDesign, saved it as a PDF, and uploaded both files to my Evernote, Dropbox and Documents folder on my laptop. I also printed a copy of my business mission and goals and keep it above my desk where I see it every day.
To help you out, I made an outline which you can download and use which you can grab in the live workshop or from the challenge page. but feel free to make your own using this general format:
- The Overview
- Your mission statement
- Your "Why"
- 6 months
- 1 year
- 5 years
- Ideal Customer
- How you'll find them
- How you'll sell to them
- List your products and their price
- List the materials or tools needed
- List where you'll sell it
- Explain your business process, what are the steps you take to make your product/service
- Marketing and Sales
- What 3-4 social media channels will you focus on?
- How will you build your email list?
- What advertising methods will you use?
- How will you fund your business
- What are your financial goals for your business
- How much will it cost to start up
Now that you have your thoughts down and your outline finished, you can fill in the sections. You have most of the content you need from your answers in the first step, this step is all about detailing those ideas and organizing them into categories that make it easy for you to reference later.
A business plan is not a one-time thing. Every year (more like every day), you and your business will change. Those changes can be good, bad, or a combination of the two - regardless, updating your business plan will keep you on track to meet your goals and help you track how your business changes.
Personally, I update my business plan every 6 months or after a big change, such as a re-brand or new product launch. I update my goals and add notes about my current stats, followers, and income. This is why I like using Evernote for my business plan because I can easily add PDF files, images and text to a note with my PDF plan right there.
Set an event or reminder on your phone/calendar/laptop so you remember to review your plan and update it regularly. And NEVER delete old plans. Looking back at what has changed (even if it was a negative change) will help you learn and evaluate what works.
05. Watch the Webinar
Sometimes you just need a real example to work off of. Catch the workshop live on 3/14/17 at 4pm MST or catch the replay later. Everyone taking part in the Back 2 Basics challenge will get access to all the videos in the series, every workbook and download all the slides.