Let me be real for a second: business plans are overrated.
I’m going to give you some boss tips for writing one anyway, but only if you promise not to obsess over it.
The vast majority of entrepreneurs waste way too much time trying to perfect their business plan instead of just getting out there are doing something. You don’t learn nor do your earn from planning, you learn and earn from acting.
Research from Babson College, one of the best entrepreneurship programs in America, has shown that there’s basically no correlation between a start-up’s business plan and its revenue years down the road. (1) Self-made Internet millionaire Neil Patel has never written a single business plan, and he’s doing pretty well.
That being said, business plans can be very helpful for formulating a clear vision of your idea and raising money. So here are my finest advice gems for coming up with your perfectly imperfect business plan.
36. Imperfect action
“Winners take imperfect action while losers are still perfecting the plan.”
The key to writing a successful business plan is to fire the perfectionist within you. Do a 90-day challenge: every day, for 90 days, you have to do something to move your business forward. Not plan something, DO something. Even if it scares you.
35. Read one book about business plans
One solid book on business plans should give you plenty of useful business plan writing tips and tricks. Once you finish your business plan book, close it and get to work because remember that taking action is the most important step to succeeding.
34. Know your target market
Don’t be afraid to narrow down, because you can always expand later on. Apple’s very first business plan spelled out their target market clearly:
“As word processors are replacing typewriters in the real world, students need to learn word processing, not just typing. MAC will help the student of the 80’s learn the tools of the 80’s.” (2)
That’s why, in the late 80s and early 90s, most American schools used Macintosh computers. However, Apple has clearly expanded its target market exponentially since then.
33. Sales cures all
Mark Cuban drives this one home every chance he gets. Getting sales is more important than even having a business plan, or having the infrastructure to support future growth. (3)
Plans are all talk, sales are proof. Mark Cuban, or any smart investor for that matter, won’t throw down money on the greatest idea in the world if it has zero sales. Get out there and nail down some sales first, then plan for growth.
32. Interview customers
Once you know your target market, you need to understand them in and out. No better way to do this than interviewing the customers you’ll later be selling to.
Write up a list of interview questions, then go interview at least 20 customers. Don’t try to pitch them your idea, but listen to their ideas instead. Show sincere interest in what they have to say, collect their answers, and include key quotes from customers in an appropriate place within your business plan.
31. Get a financial consultant
The biggest red flag is a business plan that doesn’t have a clear picture of the business’s current and projected financials. You should know how to answer any question thrown at you, from turnover rates to gross profit and net profit.
If you’ve got a solid business idea and niche experience but just aren’t good with numbers and financials, get a financial consultant. Check out Fiverr for affordable freelancers in their financial consulting and business plan section. (4)
30. Tailor your plan to your audience
Your business plan is going to be seen by multiple interested parties, so write up a version that “speaks” to each audience. Make a private one for yourself as well and use it as a guide to moving your business forward.
This worked for Liat Tzoubari, who founded Sevensmith. She wrote up several different business plans for different audiences, one for the bank, one for venture capitalists, one for herself. She researched her potential investors before meeting with them and tailored her business plan accordingly, just like you’d do for a job application. (5)
29. Get a second opinion
When you’ve written a draft of your plan, find someone knowledgeable about business, like an accountant or a business advisor, to review the whole thing and offer you constructive criticism. They could catch areas that need more explanation, claims that need data to back them up, and other questions that your eventual audience might ask.
28. Get several proofreaders
Poor spelling and grammar demonstrate inadequate preparation and a lack of professionalism when it comes to business. Not just for the sake of proper English usage, either – millions of dollars in sales can be lost due to a single spelling error. (6)
It’s going to be hard for you to spot errors after gluing your eyes to the plan for several hours, so hit up friends, family, and colleagues (after running it through Grammarly or another spellchecker) to read through your document and point out grammar and spelling errors.
27. Have proof for every claim you make
Vague statements without proof won’t get you very far in business. Bring facts and data to the table for every single claim you make, whether it’s about sales, management, market position, or something else.
26. Avoid superlatives and other strong adjectives
Sounds nit-picky, but any effort to hype up your audience with words like “incredible”, “terrific”, or “unbelievable” will fall flat. You’re writing a business plan, not an infomercial, so impress your audience with your business plan and the data you’ve gathered.
25. Skew your estimates
That’s right – don’t give them the numbers you’re really projecting. You want to err on the conservative side, you know, underpromise and overdeliver.
A good rule of thumb is to take your projected costs and add 25% for unforeseen overages, then take your projected revenue and cut it in half. If your business plan survives with these pessimistic estimates, you know you can make it through anything unexpected. (7)
24. Nail down an elevator pitch
Don’t waste your time writing up a 100-page business plan unless you can explain it all in one minute.
Humans have a pretty depressing attention span – on average, about 8 seconds. (8) It doesn’t matter what you wrote on page 26. If you can’t hook someone in the first 8 seconds, it’s over.
23. Use infographics
Visuals are effective, and infographics are at the top of the list when it comes to explaining complex concepts in a persuasive way. Visuals are processed 60,000 times faster than text by the brain, and according to the Wharton School of Business, people who use visuals to persuade are 17% more effective than people who rely solely on text. (9)
Hit up Upwork for an infographic artist that costs less than your Friday night, and start implementing visuals. (10)
22. Emphasize your experience
Many investors would prefer that an entrepreneur has some sort of experience in the industry they’re launching their business in. If you (or your team, if you have one) have any experience in the field in your industry, emphasize it in the plan.
Don’t make it sound like a resume-like list, though. Give a concise description of you and each of your team member’s knowledge of your business’s products, competition, industry, potential customers, etc.
21. Don’t hide your weaknesses
Being honest about your weaknesses will always pay off more than attempting to hide them. But don’t highlight them too much, either – this will make you sound insecure, not a very attractive trait to find in an entrepreneur.
Address your weaknesses openly with your audience, but also demonstrate your plan to minimize or combat these weaknesses to show your audience that you’re proactive.
20. Avoid long documents
Attention spans are shortening by the day, so having long documents with giant chunks of texts isn’t going to do you any favors in acquiring investment capital. In fact, many successful business plans are no longer than 10-15 pages.
Keep it short and sweet, only giving them the essentials. Don’t fluff. If your audience wants more information, they’ll ask you for it.
19. Bootstrap
There’s a lot of talk about finding investors here, but bootstrapping is blowing up in the start-up world. That is, funding your start-up all on your own, 100% independent from the pull and influence of big investors.
Facebook, Apple, Coca-Cola, and eBay were all bootstrapped, and according to the Harvard Business Review, bootstrapped companies actually attract better talent. (11)
18. Set SMART goals
Real talk: most goals are useless. In fact, studies show that talking about your goals can actually reduce the likelihood of you actually reaching them. (12)
That’s because most goals are vague and fluffy, filled with unicorns and rainbows and no actionable way to reach them. SMART goals are specific, measurable, achievable, realistic, and time-sensitive. Make sure any goal you discuss in your business plan meets these criteria.
17. Track pricing trends
If you’re selling a product or service, especially through e-commerce, you need to pay attention to pricing trends within your industry before developing your business plan.
Luckily, there are some fantastic price tracking tools out there to help you. CamelCamelCamel is a popular, easy plug-in that you can add to your browser, and PriceZombie is a great price tracking software that also takes into account product quality. (13) (14)
16. Prioritize customer acquisition
Serial Silicon Valley entrepreneur Steve Blank’s book The Four Steps to the Epiphany: Successful Strategies for Products that Win pretty much put the final nail in the coffin of the “product development” model of business. (15)
Build it, and they might not come. Instead of focusing most of your business plan on product development, make customer acquisition a priority. That means marketing aggressively and often. If you’re doing something digital, you’re going to do a lot of A/B testing and develop a plan that involves SEO, content marketing, and lead generation.
15. Perform competitor analysis
Analyzing your competition is easier now than ever thanks to the internet. Figure out their traffic analytics, backlinks, and conversion rates on Ahrefs and Alexa. Use Spyfu to figure out the PPC keywords they’re bidding on.
Stalk their blog and social media accounts like they’re your ex. Read their reviews. Find their and their customers’ pain points. Mimic what’s working for them in a way that fits your business, and avoid what’s not working for them.
14. Spell out ROI
If a stranger comes up to you and says you should give them money, you’re not going to wonder what makes them awesome enough to deserve your money. You’re going to want to know what’s in it for you.
Same deal with business plans for investors. Sure, you’ve got to have a great idea and prove yourself competent. But in the end, they’re not looking to know how baller you are. They want to know how much money you can make them.
If you’re presenting a business plan to investors, a study from the Harvard Business Review shows that most investors want a 40-60% return, compounded annually. (16) Calculate your estimated sales, profit growth, and figure out equity offerings based on this ROI.
13. Offer at least 25% equity
Figure out your company’s valuation in the business plan and decide how much equity you’re willing to give up.
The basic formula is pretty simple: take the amount of money you’re trying to raise and divide it by your company’s valuation. If you’re looking for $4 million and value your company is worth $12 million, be ready to give up 33% in equity. Most first-round investors take between 25% and 45% in equity. (17)
12. A/B testing
Throw $100 on Facebook ads to test your product/service. Take all those ideas you brainstormed and create a series of Facebook ads for them, running each one for $10. Find what works.
42% of failed start-ups said a lack of market need for their product was the reason they failed. (18) Make sure there’s a market need for your idea before you build it out.
11. Make it a low-cost startup
The second reason start-ups fail is a lack of sufficient capital – about 30% of them tank because they run out of money. (19) But now thanks to the internet, you can start up with costs near zero to make bootstrapping it easier.
Work for free the first 6 month-1 year. During this time, you and a partner don’t take a salary: that’s free labor.
Develop an app/program/website using open source programs: that’s free product development.
Use unpaid digital marketing techniques like SEO, social media, and content marketing to build a buzz: that’s free customer acquisition.
10. Launch with a minimum viable product
All the testing and investment calculations in the world aren’t going to guarantee your idea makes it big. Only time and experience will do that.
Get yourself an MVP (minimum viable product) and put it out there. You can always pivot if needed.
Groupon launched with just 20 friends using an app to coordinate and purchase things in groups for group discounts. (20) Now they’re doing $3.14 billion in sales. (21)
9. Update it as you go
Things rarely go completely as planned in business. Your product might not sell, some new competition might enter the market and steal customers from you, or maybe a new revenue opportunity presents itself after you’ve launched your business.
It’s ok if any of that happens. You can adjust your business plan as needed to reflect your current situation, as long as you’re continually making progress.
8. Register in Wyoming
Location, location, location.
Wyoming has one of the best tax climates in the country for new businesses. No corporate tax, no income tax, no gross receipts tax. Cha-ching.
It’s also a very low-cost place to start up. Delaware and Puerto Rico (6% flat tax) are also worth considering. (22)
7. Crowdfunding
The vast majority of businesses fail to sustain themselves due to cash flow problems (82% to be exact). (23) But giving up too much equity early on to investors means you lose control of the company and limit its potential.
Crowdfunding brings in cash flow and lets you keep 100% equity. You’re going to have to be a marketing whizz or otherwise, you’ll have to hire one (you can find crowdfunding campaign writers on Upwork and other freelancer sites), but a successful Kickstarter or Gofundme campaign can net you even more than a big VC (venture capitalist).
Husband and wife duo Yoganshi and Hiral Sanghavi designed the “World’s Best Travel Jacket” and put it up on Kickstarter with a goal of raising $20,000. They hit their goal in FIVE hours, and in the end, raised $9.2 million in what ended up being one of the most successful Kickstarter campaigns ever. (24)
6. Format for skimming
Most people won’t read your entire business plan, or even most of it. Eye scan studies show that the vast majority of people read pages in an F-pattern – they read all the headers and intros down the left side of the page and then scan from left to right just on the sections that interest them most.
Also, readers, especially web users, spend 80% of their time reading “above the fold,” which on a website, is the part visible without scrolling, and on a printed document, the first half the of the first page. (25)
Format your business plan accordingly. Put everything you think people MUST know about your business in the first couple of paragraphs, and use lots of headings and bolded keywords for other important information to catch their attention.
5. Write the executive summary last
This is the bread and butter of your business plan: it’s a lot like a written form of your elevator pitch. For those skim-readers, these few paragraphs are all they’re going to touch.
Your executive summary is at the beginning of your business plan, and it spells out the main points of your company, product/service, target market, and financial projections. It’s what they read to decide if they’re intrigued enough to hear more.
Focus on perfecting the executive summary. Write it after you’ve done all the other sections, as you’ll have a clear picture of your market, product, and financials.
4. Target your customer (DIG)
People think phrases like “middle-aged moms” is a target market. Hint: it’s not. You need to dig deeper than that if you want to hone in on a market effectively. Use the DIG method for targeting your customers:
Demographics: Go farther than age and gender. Occupation? Location? Income? Nationality? Birth month? Political party?
Interests: Nail down your customer’s personality. What are their hobbies and passions? Temperament? Lifestyle? Opinions?
Platforms: Where are these people active? Facebook? Instagram? Online communities and forums? Professional networks? Figure out where they hang.
3. Know your SEO
A marketing plan without SEO research is a marketing plan from the 1980s. You can’t create a successful business without Google.
First step: keyword research (SEMrush, MOZ, KWFinder). Figure out what your target keywords are going to be. Second step is to develop a content plan based on your keywords and start building up backlinks by getting mentions on high authority websites. Network. There you go, 80% of SEO done. You’re welcome.
2. Start a blog
Obviously I’m a big fan of this one. You need to have a website that’s optimized for SEO, and starting an industry relevant blog is one of the best ways to do that.
But blogging is so much more than SEO. It’s also one of the best (and cheapest) ways to build name recognition, credibility, and trust. Why do you think I spend 20+ hours researching and writing posts like this one?
1. Generate leads for local businesses
There are a lot of factors when it comes to start-up failure: sub-par products, lack of funding, and low sales are easily the top 3. But lead generation is one of the most consistent and guaranteed factors if you know what you’re doing (SEO).
What if you could cut out all the messy, risky factors of starting a business and JUST focus on lead generation? Start a lead generation business. Pick a niche (small, think limo services in Tallahassee, Florida), optimize a website for SEO and lead generation (easier than you think), and sell those leads to a local business in your niche. They’ll fork over huge money for a stack of fresh leads, and you can keep reeling them in while you sleep.
It’s digital. It’s automated. It’s scalable. Doesn’t get any better than that.
via https://mlmcompanies.org/writing-your-next-business-plan/
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