First Step In Writing a Business Plan

The first step in writing a business plan is not the numbers or explaining the product. In fact, the first step does not include ANY writing.

Your first step of a business plan: Identify Why You Are Writing It

For example, if you are writing a business plan just to guide your own actions in the upcoming months, that business plan is going to have different content and look very different than something prepared for the bank.

Why is this step so important? By knowing the reason for your business plan and its audience, you are able to make your business plan more effective in whatever purpose you have selected.

Here are some examples of different business plan audiences, and the format of the business plan;

The Bank
Institutions know exactly what type of information they want in order to grant you a loan or a line of credit. So use their templates that are found on their websites, as you know that they'll be getting what they want. This increases the likelihood that you will be getting a loan. A standard business plan for a bank is over 20 pages in length.

Private Investors
Individuals are a little different than a bank. Sometimes a document isn't required as much as a presentation! There should be an emphasis on the numbers as they want you to 'show them the money'. But this plan would look very different than something you give to a bank.

The 3 Fs: Family, Friends, Fools
Family, friends, and fools are the most likely individuals to support a start-up. These individuals will be very interested in the 'how' you are going to do things and watching you get sales and traction. To convince the 3Fs to contribute time or money, you can imagine this will be a different approach.

Employees, Customers, Suppliers, and Other Stakeholders
There are times that you will show people your business plan just to ensure that they want to do business with you. These types would be less numbers and content heavy. Write about the values and what makes the company different, plus it would probably be under 10 pages.

Yourself
Business plans are often written just to help the owner of a company organize themselves and test their concept. This would be action oriented with sales forecasts and a budget. Sometimes these are only 1 page in length or up to 5 pages making them flexible to the ongoing changes within a business.

By starting with the 'why' in a business plan, you will end up with a better plan.