How to Create a Business Plan from an Idea

If you’re looking to expand the scope of your small business, a business plan is exactly what you need. Business plans are the perfect format for informing potential collaborators of your success, future goals, and company direction. They provide precise details about your business and why it’s a sound venture, encouraging readers to work with you and invest in your plan.

If you’re stuck in the idea stage, writing a business plan will help kickstart your work. It lays out what you want, how you want to achieve it, and what you have to offer the world. We’ll help you learn how to develop a business idea into a plan so you can turn your small business dream into a concrete reality.

What Is a Business Plan?

A business plan explains your strategy for setting, enacting, and reaching your business’s goals. It describes your business, its product or service, how it will or does earn money, and its operations model. Additionally, it might cover your current or potential financing and other smaller details that outline how you expect your business to succeed. Business plans are written for potential investors to convince them they’ll see a return on investment when working with your business.

Why Write a Business Plan?

If you’re interested in turning an idea into a business, a business plan is essential for keeping you on track and recruiting investors. If you want to work with investors and lenders or collaborate with other companies, they’ll want to know exactly what your business is working toward and how you’ll achieve your goals. Having a solid plan helps convince potential partners that you’re serious about making your project work and that you’ve done all the prep work to help make it successful.

Additionally, writing a business plan is helpful even if you don’t plan to seek investors, lenders, or other collaborators. Developing a plan helps you dive into the essential details of creating a business. You’ll have to do lots of research to ensure all your goals, financials, and dates are realistic. A business plan helps you strategically lay out your ideas and forces you to put everything into concrete terms. You’ll be able to clarify your ideas and fully realize your plan without relying on vague goals and buzzwords.

Before Writing Your Plan: Pick a Format

Your business plan can be as detailed or as short as you’d like. The most important thing is that you convey all the essential information about your project. Two of the most common business plan formats are traditional and lean. The right one for you will depend on your goals, business, and the purpose of your plan.

1. Traditional

Traditional business plans are your standard, multipage description of your business’s vision and strategy. They are highly detailed and cover your business summary, product and services, management, financial projections, market analyses, and funding requests. In a traditional business plan, you’ll cover everything an investment firm or lender might want to know about your business. A traditional plan should outline the legal structure of your company (sole proprietorship, LLC, partnership, etc.) and identify your multiyear plan for marketing, management, and financial projections that predict success. These plans are perfect for giving to lenders and venture capital firms since they’ll want the nitty-gritty details of your project before offering you money.

2. Lean

The lean format is shorter than a traditional plan — it’s a couple of pages long and contains only the key elements of your business purpose. You’ll want to include your core partnerships, markets, resources, revenue streams, and cost structure. A lean format is an ideal plan for anyone looking to explain their business quickly. It’s also perfect for companies or groups that want to leave room for changing or refining their business. Lean plans often include helpful charts and graphics that quickly convey essential information about the business.

 

How to Write a Business Plan in 9 Steps

Starting a business plan from scratch can be stressful — how do you go from idea to business plan on your own? You’ll have to put in lots of work to build out your research and goals, but a completed business plan goes a long way toward achieving your dream. Beginning a business plan is often the hardest part. Here’s a rough outline so you can start crafting your plan one section at a time.

1. Write Your Executive Summary.
2. Describe Your Company, Including Your Expertise.
3. State Your Business Goals.
4. Explain Your Products and Services.
5. Detail Market Research.
6. Explain Your Marketing and Sales Plans.
7. Describe Logistics and Operations.
8. Outline Financial Projections and Plans.
9. Include Appendix for Additional Information.

Common Mistakes When Writing Business Plans

It takes a lot of determination to write a successful business plan. You might have to go through some trial and error before you hit on an idea that works on paper. When working on your business plan, avoid making these common mistakes:

• Unrealistic: Don’t be overly optimistic and dramatic about your plan — experts like loan officers will be familiar with your market. Avoid unreasonable sale estimates and timeframes, which could get your idea passed over. Instead, provide the facts as they are. Readers want the truth about your business success and projections to ensure they’re getting what you’ve advertised.  The internet is a great resource for researching your industry’s data and helping to provide realistic expectations.
• Poor spelling and grammar: Always double-check your spelling and grammar. Minor errors you might overlook tell readers you aren’t paying attention to the details. If you won’t review your plan for minor problems, why would they invest in you on a larger scale?
• Leaving out numbers: Include all your financial statements, balance sheet, cash flow statements, and break-even analyses. Readers want hard numbers — they act as concrete evidence and show you’ve been keeping track of your operations well.

Tips for Writing a Successful Business Plan

Now that you have the basics of business plans, here are some tips to help you refine your work. Use these to tweak your project until you get the best possible version of your business to present to others.

• Do your research: Get the hard data on your finances, audience, and goals. Understand who you’re marketing to, what they want, and how you can reach them. Show concrete financial data and projections — these boost confidence in your business and encourage others to get involved. Make sure you give yourself plenty of time to do your research.
• Find a clear goal: The clearest goals are the easiest to understand and the most convincing. If you can lay out straightforward, attainable goals, readers will more likely be convinced by your proposal.
• Be concise: Don’t waste page space on fluff. Tell readers what they need to know. Show them what your business provides, how you know it works, and where it’s going in the future. The more clearly and concisely you can communicate, the easier your instructions will be to follow and the faster you’ll achieve your goals.
• Don’t give up: Not every idea works. If one business idea falls flat, keep going. Some ideas are weak or not refined enough to get past the planning stage. Keep trying and tweaking until you hit the right plan and idea.
• Get help: If writing your business plan proves daunting, contact the Shippensburg Small Business Development Center (SBDC). Their consultants can assist Pennsylvania businesses in Adams, Cumberland, Franklin, and York counties in developing business plans at no cost.

Get Your Business Off the Ground With Cumberland Area Economic Development Corporation (CAEDC)

 

If you’re looking to grow your small business and are ready to share your business plan and goals, CAEDC is here to help. We’ll collaborate directly with you to determine what financial assistance you need to get started. Contact us online today.