So, you’ve been asked to write a business plan. It’s likely that your mind is filling with images of long documents, bad memories of writing term papers, and worries about doing market research and creating financial forecasts.
Take a deep breath.
It doesn’t have to be that way. Today, I’m going to walk you through an easier way to get your business plan started, and show you how to develop a winning strategy.
But first, let’s talk about why you’re writing a business plan.
Most businesses start the planning process because they are applying for a loan or seeking funding from investors. But, beyond needing to develop a plan that will impress the bank or your investors, you want to build a solid company. You want to develop a sound strategy that will help your business grow and be successful.
Unfortunately, while traditional business plans will help you develop strategy, they have several drawbacks.
Traditional business plans take too long to write, they’re rarely updated, and they are time consuming to read.
Now, there may be a point in your business career that you will need to deliver a formal business plan to a bank, investors, or other business partners. But, until that point, I recommend that you start your planning with a simpler process—a pitch—that will help you develop your business strategy.
Building a pitch takes less than 20 minutes. You can even build several of them in an afternoon to try out different business ideas.
A pitch forces you to distill your ideas for your business into the core of your strategy. As planning expert Tim Berry says, “a good strategy is about what you’re not doing.”
And, once you have nailed down your business strategy, you can expand on it with a longer business plan document that fleshes out the details of your pitch.
What to include in your pitch:
Your pitch is a very high-level overview of your business. Each section should only be a few bullet points, so you should be able to complete an initial draft of your pitch in 20 minutes or less.
1. Your identity: What sets your business apart from others? What’s your focus? For example, a bike shop’s identity might be, “High quality biking gear for families and regular people, not just for gearheads.” With this identity, this bike shop has focus. It describes who they are and what they are trying to do. Ideally, you should be able to describe your identity in one or two short sentences.
2. The problem you are solving: How are you helping your customers? What problem will they go to you to solve? Don’t think that your business doesn’t solve a problem; for example, a new restaurant would fill a need for a particular type of cuisine, or a certain atmosphere that is not currently available in a certain neighborhood.
3. Your solution to the problem: How does your business solve a customer’s problem? What is your product or service? Make sure your product or service is addressing your customer’s needs.
4. Your customer: Who is your ideal customer? A great exercise is to create a buyer persona, but you can just jot down some notes at this stage about who your customer is. Focus on a specific type of customer or certain groups. Focusing on “everyone” is not a sound business strategy.
5. The competition: Who is your competition, and what sets you apart? How are you better or different than other options available to your customers?
6. Sales channels: How will you reach your target customers? Do you have a single storefront? Are you selling online? Do you rely on distributors to get your products onto store shelves?
7. Marketing activities: How will you let your customers know about your product or service? Do you need to go to trade shows? Will you buy online advertising?
8. Your team: Probably the single key to a successful business is a great group of people to turn an idea into reality. Do you have the right people? If you need additional key team members to help you build the business, identify them here.
9. Your business model: “Business model” sounds like a confusing term, but really it’s just a fancy way of talking about how you will make money. In the early stages of fleshing out your business idea, you can just write down a few bullet points about how you will make money and what your key expenses will be. As you refine your business idea, you will want to turn these initial notes into a sales forecast and an expense budget. But for your initial 20-minute pitch, just write down a short list of the things you will charge for and the important expenses that you will have as you run the business.
10. Milestones: Ideas are nothing without execution—you need to turn your idea into a real business. Use the “Milestones” section of your pitch to list the critical things that need to be accomplished to start your business. Do you need to find a location? Maybe you need to get FDA approval for a new medical device. List the key milestones you need to accomplish here. Ideally, add approximate dates and list who will accomplish each task.
11. Partners and resources: If you need to work with other companies or business partners to get your idea off the ground, list those partners and resources here. Do you need a manufacturer or supplier for your products? Do you need a distributor to get your product on store shelves?
That’s it! A first pass at creating a pitch should only take 20 minutes or so. Set a timer and jump right in. Just getting everything down on paper is a great first step. The beauty of the pitch format is that you can come back and revise as you go.
How to use your pitch:
Now that you have a first draft of your pitch, or maybe even several different pitches, you need to put it to use.
First, you’ll want to use your pitch to identify the key assumptions about your business. Typically, those assumptions are around what famous entrepreneur and investor Marc Andreessen calls “product/market fit.” What that really means is that you’ve found a group of potential customers who have the problem you say they have, and who are willing to spend money on your solution.
Your pitch includes assumptions about who your customer is, what problem they have, and what kind of solution they want.
As a next step, you’ll want to go out and talk to potential customers and verify that they do indeed have the problem you’ve assumed they have and that they’re willing to spend money on your solution.
As you gather feedback from potential customers, you’ll refine your pitch. This is where you’ll be glad that you started with a pitch instead of a detailed business plan. The pitch is easy to update and revise as you go. You can quickly update it with new information as needed.
Now, if you don’t need to present a plan to outsiders, this may be all the business plan that you need. But, if you do need to create that formal business plan document, you can use your pitch as the key outline for that document. The business plan may also document more details about your marketing plan, product plan, or hiring plans, but ultimately, your business plan will just expand on and provide additional detail for each section of your pitch.
Tools to create a pitch for your business:
If you need additional help creating your pitch you could try out LivePlan which will help you create a visual pitch that you can easily share with business partners.
Or, download our free business pitch template. Use post-its or just write quick notes about your business strategy to see if your business idea has what it takes to build the company you want.
Did you know: this article is part of our Elevator Pitch Guide? Everything you need to know about creating your pitch, from Bplans.
Would you’d rather leave the business plan writing to the pros? Check out LivePlan’s business consulting—you’ll get an MBA-written business plan in five business days.