Having an actionable business plan as an entrepreneur is one of the best ways to secure investors and give some direction to your new organization. However, developing a thorough business plan that makes sense for your company can be a significant challenge — especially if you have never been through the process before.
Knowing how others have managed creating a solid plan is remarkably helpful. Even if you don't follow their steps exactly, you still get a much better sense of the framework you need, as well as a look at any potentially unseen issues ahead.
To help get you going, we asked 13 entrepreneurs from YEC to weigh in on the most effective processes to use to craft a solid business plan and why these methods work. Here's what they said:
1. Sell Something First
Although it sounds harsh, I'd advise newer entrepreneurs to sell at least one unit of their product or service before making a business plan, preferably more. It's too easy to sit in front of a computer and tweak your website or business plan while trying to make it perfect. The only way to know if it's good is to speak with real or potential customers. Then be open to continuously iterating. - Brian Samson, True North
2. Draw Out a Mind Map
When I'm brainstorming business ideas, the first thing I do is draw out a mind map. This starts with a core idea in the center, with tangential ideas branching off to form a web. The result is a messy but comprehensive visual representation of common thought patterns relating to that core idea. From there, I whittle down my mind map until I have a handful of concepts to form into a business plan. - Bryce Welker, Crush The PM Exam
3. Use LivePlan
LivePlan is great for building a business plan because it's simple to use and comprehensive. It's also particularly beneficial to rookies because it goes through the process step by step. It can help create financial calculations and forecasts, and you can import data from other software titles, as well. - Andrew Schrage, Money Crashers Personal Finance
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4. Start With the Answer
I find the most important thing for a clear business plan is to start by defining the problem you are solving and how you are solving it in a single sentence. I find this works, as it not only forces you to have a clear picture in mind of what you are actually doing and why at the get-go, but it also imbues the same clarity on anyone who is going to read or otherwise digest the plan. - Sasha Kucharczyk, Preteckt
5. Ditch the Plan, and Focus on Model
Business plans are a wordy mess of aspirational thinking that will require massive revision. Your time spent wordsmithing every last sentence is better spent on the fundamentals and bullet-level ideas. How does your business make money? What are the operational needs at scale? What testable assumptions drive your business? A great Excel model and slides are 10 times better, and show you understand return on equity. - Trevor Sumner, Perch Interactive
6. Know Your Growth Formula
The book "Hacking Growth: How Today's Fastest-Growing Companies Drive Breakout Success" by Sean Ellis and Morgan Brown mentions that the most successful startups have a growth formula. For example, a typical SaaS business' growth formula might look something like this: "web traffic * email conversion rate * active user rate * conversion to paid subscribers + retained and resurrected subscribers = subscriber revenue growth." Know your formula and have a plan for each variable. - Chris Christoff, MonsterInsights
7. Identify Compelling Behavior
Not all ideas are business ideas, and not all business ideas are good business ideas. People often fall in love with their businesses without understanding that others (aka your customers) need to fall in love with it, too. Forget the business plan. First things first, identify the compelling behavior or need people are willing to act on. - Leyda Hernandez, C'est Du Luxe
8. Start With the Opportunity
Planning is an incredibly important part of a business, and not just at the beginning. The biggest difference between your first plan and your ongoing (annual) plans is your initial business plan should state with conviction what the opportunity is and why you're in a good position to pursue it. When times get tough, you'll want to look back and be reminded of this. - Fan Bi, Menswear Reviewed
9. Decide if There Is Really a Market
Starting lean is great. More importantly, when you are starting this process, be certain to really consider your audience. There are many clients who come to us with products or services that have a great plan, but have no clue that with the best SEO in the world, there really is no market for what they are selling or producing — a tough reality to face for a business owner. - Matthew Capala, Alphametic
10. Build a Forecast
Once I start to consider a new business idea, I work to estimate the size of the opportunity. I start with a simple financial model that allows me to see the base case, an optimistic high case, and a pessimistic low case. I then ask myself, "is the base case big enough?" Does this only work if we hit the high case (which would lead me to kill the idea due to the unbalanced risk-reward ratio)? - Jonathan Gass, Nomad Financial
11. Make the Plan Compact
You must find the essential core of your idea and tell that story. What makes you special, what makes this idea work, and what your unique insights are. Since you're just starting out, you probably don't know all the details yet and that's OK — focus instead of what makes your team well suited to solve this problem. By keeping the plan simple, your idea will spread to the right people faster. - Raad Ahmed, LawTrades
12. Start With a High-Level Framework
A detailed business plan can run on and contain a bunch of irrelevant information if it's not structured right from the beginning. As in anything in life, I encourage people to start at the high level, then expand from there. You should put together a decent one-pager first, as this will be important for initial partnership and investment pitches anyway. Feedback from these pitches will help guide you. - Andy Karuza, FenSens
13. Reach Out to the SBA
Uber-focus on building a perfect business plan can doom a business before it's even off the ground. Yes, it is critical that you plan, research and have a clear vision, but don't get bogged down. Find a good starting guide. A great free and in-person resource is the SBA, which often partners with SCORE, retired execs helping entrepreneurs succeed. - Joey Kercher, Air Fresh Marketing