When starting a business or running one, having a business plan can provide glue, a guide to how the business functions and operates, what it does, and how it makes profits.
A business plan can include how you manage your employees or hire them. It also outlines positions and their duties.
When starting a business, you only have to go for a traditional business plan if you are looking for an investment, as investors will ask for more details.
Sometimes business plans do not need to be as completed as they usually are.
A business plan can be a one or two-page outline of the most fundamental part of your business, written in bullet point form. Maybe an organization structure mapping of your marketing strategy and financial projections.
There are two business plan formats. A traditional business plan and a lean business plan.
A traditional business plan structure typically has the following sections:
- Executive summary
- Product and Services
- Market Analysis
- Marketing and Sales
- Organization and Management
- Financial Projection and Metrics
- Appendix
Why a Lean Business Plan
A lean business plan is a simplified business plan template. A lean business plan allows you to plan, execute, measure, review, and repeat without the difficulties that a traditional business plan presents.
Unlike the traditional business plan, a lean business plan provides a structure of a business plan that is as effective as a traditional business plan but for internal use only.
A lean business plan lets you create a simple yet effective business plan that works for most small businesses and startups. Simple enough that anyone can follow and execute.
Flexible enough to adapt as your business grows and still maintain the fundamental structure of the plan and the integrity of your business goals. Unless, of course, you want to pivot or change it altogether.
Usually, a Lean business plan may contain the following sections:
Company Description
Company description gives an overview of what you do and what you sell, your business modal, and what type of business are you.
This is where you can look into why you are starting your business, what pain points are looking to solve, and what makes you different from the competitors.
Structure your company description in the following format in just a few bullet points.
- Business type. What type of business is your business, solo, partnership, or other types of business?
- Industry description. Give a brief description of the industry as a whole, including recent sales trends and other relevant financial statistics on current market trends in the industry. What are the new ways of fulfillment and customer experience and what makes you as a business successful in this industry?
- The niche of your business. Describe how your business will find a niche in this larger industry picture. This can be a sub-category of an existing category or sector within the industry.
- Business model. Describe your value proposition and profitability. Give details on how your business makes a profit and how it provides value to its customer.
- Competition Analysis. Give a comprehensive overview of your competition. Outline how you see your business outperforming potential rivals, and how you will improve on existing services or products. Make a list and analysis of your competitors, outlining their advantages and disadvantages and how you are unique.
Financial Summary
A Financial summary provides an insight into the profitability of your business, and aspects of your debt and equity. This is where you also indicate your estimated business expenses and financial forecast.
In a lean business plan format, the focus should be on cash flow, income statement, and break-even analysis.
- Cash flow tracks the flow of cash in a business over a given period and shows the cash at hand at any given period.
- The income statement is your expected income, revenues, cost, and expense over a given period.
- Break-even analysts show the level of sales you need to cover for your business to get neither profit nor loss from trading. When the difference between your total revenues and your total expenses is zero.
Product And Services
The Products and Services section outlines the services and products that your business will be offering your customers.
Give enough details of the kind of products and services your customers should expect, such as size, color, timeline, etc. And why should the customers buy from you? What value are you offering them?
To write your products and services as part of the plan, answer the following questions.
- Why is your product or service needed? Give details as to why your product is needed for your targeted market. What makes it different from the existing ones?
- What are the benefits that your product and service offer? Compared to the competition, what makes your services different, and what unique features does it have? Is it an upgrade or a streamlined version?
Market Analysis
Marketing analysis is an overview of the market within your industry. It showcases the validation of your business idea.
Marketing analysis outlines your market research by quantifying and analyzing your market size, market value, competition, and potential customers.
To write a Market Analysis, answer the following questions.
- Who are my potential customers?
- What are my customers’ buying habits?
- How large is my target market?
- How much are customers willing to pay for my product?
- Who are my main competitors?
- What are my competitors’ strengths and weaknesses?
Marketing Plan
A marketing plan is the advertising strategy of your business. A marketing plan will help you identify the target market, advertising channels, pricing models, and business location and measure your marketing effort.
A marketing plan can outline using the following bullet points.
- Market target. Or buy person is where you determine who your customers are, what is their demographic and psychographics, etc.
- Marketing Channels. Where will you market your business, social media, SEO, PPC, or print media?
- Location. If you are selling physical products, location matters. Where your business is located can determine the success of your business.
- Price. What is the cost of your products and services?
Customer Segmentation
Customer segmentation helps you group your customers into separate groups identified by common characteristics or traits.
Customer segmentation will help you in finding your customer base and allows you to create targeted promotions and advertising.
Customer segmentation allows you to create a buyer persona based on who they are and what they do.
Who they are
- age
- gender
- relations status
- location
- etc
What they do
- Spending habits
- Hobbies
- etc
Operations plan
The operations plan outlines the logistics and operations of your business. Outlines details of how you operate as a business, equipment used, personnel involved, processes, inventory, and other elements required to produce your product and services.
The operations plan could include the following information:
- Production. Provide details of your manufacturing process, how long it takes, and the key ingredients. If it is a services-based business, provide details of what it takes to deliver the services.
- Equipment. What equipment do you use, such as software and hardware?
- Facilities. What are the required or needed facilities? You have to list things such as office, land, mortgage, and other elements.
- Supplies. What is the chain of materials and supplies, mortgage, and inventory management?
Conclusion
A lean business plan allows you to take small steps and incrementally adapt your business plan as your business grows. A lean Business Plan is usually for internal use only. It will help you streamline your business plan for management and other business processes.
As your business grows, it will be best to adapt your business plan to a traditional one, especially if you are looking for investment.
