If you’re seriously thinking about starting your own company or even just working as a consultant, you definitely should consider writing a business plan. When I started my company in 2007, I didn’t, and I wish I had. It would have forced me to think about my business goals and objectives as well as plan for how I was going to reach those goals and scale my company.
So, what is a business plan?
A business plan is simply a formalized set of goals, objectives, and statements that represent all aspects of the business planning process, such as declaring a vision and a statement of purpose, defining your product or service and how it is unique and different, establishing your target market and identifying your competitors, developing your go to market strategy, pricing model, key employees, and financial projections.
I want to share with you the key sections of our business plan. In the sections below, I’ll be referring to my company Careerminds as an example. This will hopefully help with the description.
Let’s get into how to write one.
I. Executive Summary
The purpose of the executive summary is to define your business purpose and what specifically you do as a company. For my company, we said: “Careerminds provides scalable, virtual outplacement and career transition services in the United States and Canada.” You may also describe why and how your business came about. For investors, this section needs to be compelling and interesting, so they’ll want to continue reading.
II. Product & Service Overview
This section of your business plan may be the longest part, depending on the number of products and services you plan to offer. Be careful here that you are not trying to offer too many different products. I’ve learned it’s sometimes better to be the best at one thing than to be marginal at many things. You’ll also need to describe your revenue model for your products and services. In other words, what is the SRP (Suggested Retail Price) for your product or service you plan to offer?
III. Product or Service Value Proposition
Your value proposition is a marketing statement that summarizes why a consumer should buy your product or use your service. Our “Value Proposition” is: “Careerminds delivers affordable, virtual outplacement services to organizations that are downsizing or reorganizing”. You can further describe how your product or service is different.
IV. Marketing Information—Market Segments, Research, and Analysis
What market segment does your company compete in? You may discover your product or service serves a new market category, which is great. If you are creating a new market category, you’ll most likely find there is limited competition. Your biggest challenge will be getting people to buy your new product. Part of defining the market segment is determining the size of the market. For example, Careerminds is part of the $3 billion outplacement market, which means that companies spend $3 billion annually on outplacement services. You now have a sense of what your opportunity is as a new company entering the market.
Do you know your competitors? If not, how will you be able to sell against them? You should consider learning as much as you can about your competitors because you’ll need to develop a sales strategy on how you’ll compete. Ask yourself this question: How is my product or service different from the competition? We said: “Careerminds developed a virtual outplacement technology and model that is different from traditional brick and mortar outplacement firms”. The more information you gather from your competitors the better off you’ll be.
VI. Go to Market Strategy
Once you have determined your product, the competition, and the market opportunity, it’s time to now think about how you’re going to take your product to market. It may be very tempting to sell your product to a broad geographic region and to all industries, verticals, disciplines, consumer demographics, etc. I’ve learned, however, that it is important to focus your go-to-market approach on a local area or region and to a specific demographic or industry. The key here is to get traction with your business and then expand to broader areas.
VII. Financial Projections & P&L Forecast
Creating a profit and loss (P&L) forecast is probably the most important exercise you’ll do in the business plan. You need to figure out what your sales are going to be for the next 1-3 years and how you intend to ramp your business. When developing your P&L Forecast, you will most likely make several assumptions in your sales forecast based on target region, sales approach, and employees selling, for example. You’ll also need to determine what it will cost you to deliver your product or service as well as the expenses to keep your business running. The most important section is Net Profit, also called the “bottom line”. This will affect your overall cash flow.
Remember: A good business plan can help to make your business credible, understandable, and attractive to someone who is unfamiliar with your business as well as the market. Raymond Lee is the founder of Careerminds, a virtual outplacement company that uses next-gen techniques to get clients back to work faster.
Raymond Lee will be speaking at Villanova University on Wednesday, October 4th from 6-8pm. He will discuss entrepreneurship. For more information about this event, contact VU SHRM: firstname.lastname@example.org! Check out VU SHRM's other events this semester here.
Raymond Lee, MA is the Founder & CEO of Careerminds Inc., and also the VP of Operations for PSPS: Philadelphia Society of People & Strategy. Learn more about him & connect with him here on LinkedIn!