Business Tips from SCORE: A business plan gives owners a guide to their operations

One of the sure ways of launching a business that will fail is not to plan its launch and growth.

Most budding entrepreneurs’ eyes roll back in their head when they hear “business plan.” It doesn’t have to be complicated or voluminous. It might be as simple as a one-page Business Model Canvas – BMC − plan or if needed a deeper dive with a full business plan. But there’s no better way to think through important issues and gain focus in your business than by creating a guide.

Not only will building a business plan help you get a better handle on where you are and how you’ll grow, but it’s an absolute necessity if you seek outside investment.

A business model is a way of describing how the enterprise will make money. Strategyzer’s Business Model Canvas is a 9-block process that explores, initially, value proposition (your offer, but not what you are selling), customer segments (to whom are you making the offer(s)), communication channels (how will you reach your customer segments). Then validate your assumptions. Then follow-up with customer relationships, activities, resource and strategic partners, expenses and revenue streams. The right side of the BMC canvas focuses on the customer and market or external factors that are not totally under your control. The left side focuses on the internal that is mostly in your control. The middle is the value proposition that represents the exchange of value between your customers and your business.

Here’s an easy guide on how to build a business plan step-by-step.

Step 1: Describe the “Big Idea” in an executive summary

Think of the executive summary as an explanation of your unique selling proposition. You want someone to be able to immediately grasp what your company does and the value you bring to the market.

This section should include a mission statement, brief explanations of the products or services you plan to offer, a basic introduction of key team members and where your company is located. If you’re seeking financing, you’ll also need to include basic information about your finances and plans for use of borrowed funds.

Step 2: Conduct a market analysis

This is where you’ll get into more detail by describing your industry and where your business fits into its landscape. Some questions to answer:

• What exactly does your business do?

• What do you sell and why do you sell it?

• Why is your product or service needed?

• Who’s going to benefit from the products or services you provide?

Step 3: Introduce your team with a company description

In this section, include information like the legally registered name of your company, your business address, the company’s legal structure (LLC, sole proprietorship, etc.) and key team members.

If your company is large, consider using an organizational chart to show who’s in charge of what. Also, include any special skills or unique experience your team has that will help advance your mission.

Step 4: Describe the value of your products and services

Piggyback on what you wrote in your market analysis to give details about your products and/or services. Give a thorough explanation of what your product or service does, how it works, your pricing structure, your ideal customer and your distribution strategy.

If you have intellectual property like patents, copyrights or trademarks, mention those as well, along with any research you plan to conduct or have completed.

Step 5: Describe your “go to market” strategy with a marketing and sales plan

How are you going to acquire customers? How are you going to create loyalty? There’s no right or wrong strategy here, only the strategy that makes sense given your current circumstances, the market and your customers’ attitudes. Over time, this may evolve, which is fine!

You can describe your sales process, how you’ll initially attract prospects, how you’ll deepen that attraction into a purchase, what a typical sales cycle might look like, what happens after the sale and so on.

Step 6: Dive into the numbers with a financial analysis

Depending on how long you’ve been in business, you may not have a lot of concrete numbers for this section. Or, you may have a lot.

If you’re a startup, you’ll have to supply financial projections — forecasted income statements and balance sheets, for example. Be detailed for the first year, breaking down your projections quarterly or, even better, monthly.

If you’re established and are writing the plan to guide your growth strategy, you should include profit and loss statements, balance sheets, cash flow statements, a section for metrics like profit margin and a statement of your total assets and debts. This is also a great place to include any charts and graphs that help tell the financial story of your business.

Step 7: If you need funding, explain why and for what

If you’re seeking outside investment, use this section to provide details about your capital needs. How much do you anticipate needing over the next three to five years, what will it be used for, what are the terms you’re seeking, what opportunities will it allow you to exploit, and how will it help you meet your growth targets? And, don’t forget to include your “skin in the game” investment. A critical step for lender evaluations.

Step 8: Anything else to include?

If you want to include additional information — resumes, leases, permits, bank statements, contracts, photos, charts, diagrams, etc. — include them at the end of your plan in an appendix.

Regardless of which format you select remember that a business plan is a guide, compass and companion for you to reach your business objectives.

Contributed by Marc L. Goldberg, Certified Mentor, SCORE Cape Cod & the Islands, www.score.org/capecod, 508-775-4884. A SCORE Mentor Can Help You Build a Detailed Business Plan. Sources: ASK Score 2023, An Easy Guide to the Business Model Canvas, Creately Blog, May 18, 2022.

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This article originally appeared on Cape Cod Times: How to build a successful business plan in eight steps