If you are thinking of starting your own business and you tell anyone about it, the first piece of advice is usually “write a business plan.” At this point, you run out and buy a book on writing a business plan or get a piece of planning software and start writing. Having a plan is important, but many businesses are started without a written plan. Any plan you write should have a specific purpose.
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Bank Plan:
If you plan to borrow money from a bank, they will most definitely require a written plan. Specifically, they want to know how much you will borrow, how you will use the money, what interest rate can you afford, how you will pay it back, and what you plan to do about paying it back if the business fails. The plan written for the bank should focus on allaying any fears the loan officer has about risk.
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Venture Capital Plan:
Basically, this is a marketing document. You are selling the VCs on how brilliant your concept is, how big the market is, and how well you can execute on your plan. Focus on a clear description of your concept, product, or service. Be extremely clear as to who will buy your products/services and why. Carefully examine the competition and show why your product/service outshines theirs. Describe in depth the management experience your senior team has. If they do not have all the appropriate experience necessary, explain where you plan to acquire that expertise.
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Internal Communications Plan:
You may want to communicate your plan with your employees, partners, or even customers. These plans often start with the vision, then mission, followed by company goals and strategic initiatives to meet those goals. You can use this type of plan to help guide your employees in their decision making. This should be considered to be a marketing document as well.
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Internal Strategy Plan:
As you build your business, writing an internal plan will help you think out your future strategies. You can also use this plan to build metrics around certain products that can be measured in the future. This should be as long or as short as you need to describe your ideas and work through your strategy. It can be written out or just a series of steps and metrics within a spreadsheet.
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Business Concept Plan:
If you think you have a great idea, but are a little fuzzy on the details, writing out a plan can give you a good feel as to whether it is viable or not. The key in this case is to focus on the financials. How much will you need to get going? How long until you turn a profit? How fast will the company grow? Will you be able to get capital to sustain that growth? Focus on understanding what will make you successful in this space.
I am not going to rehash the business plan format or how long or short it should be. Just search for “business plan” and you will find 10 gazillion articles on the subject. Before you do that, understand why you want to write a business plan and focus on the important points.
A last caveat, if you are writing a business plan for external consumption (1, 2, or 3), make sure it has been proofed for clarity and grammatical errors. A bad marketing document is worse than no marketing document at all.