This article is a guest post from Deborah Sweeney, the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Twitter @mycorporation.
Amid COVID-19, individuals are using time spent at home to pursue their dreams. They are cooking, writing, gardening, and playing music. These same people may also be working out the details for a unique service or offering they would like to provide to meet the needs of consumers. Time spent in quarantine, for many, is opening the doors for entrepreneurship.
Once you understand the “why” for starting a small business, you’ll need to draft a business plan. This document acts as the blueprint for the company. It details how you will work to reach its various goals and milestones over time. Entrepreneurs may write a business plan draft using two different formats: traditional and lean.
Traditional Business Plans
A traditional business plan is around 30-40 pages long. It is a highly detailed document that examines a small business roughly three to five years into its future. A traditional business plan documents the following aspects of a small business.
- Executive summary. This is a brief summary of the business, what it does, and its industry and location. It also provides insight into why consumers will invest in your products and services.
- Business description, concept, and strategy. This section takes a closer look at the stage of development your company is currently in as well as its overall goals in business.
- Industry analysis. In a traditional business plan, this analyzes direct and indirect competitors and competition.
- Market analysis. Who is your target audience? Clearly define the needs of your target market and strategies for attracting and retaining this audience.
- Organization and management. This section is where you’ll find the biographies and responsibilities of your staff members.
- Financial projections. This portion takes a closer look at the cash flow of the small business and its finances.
- Financing request. Entrepreneurs that are seeking funding from investors will outline their financing request in a traditional business plan.
Some entrepreneurs may not know these specifics yet — and that’s okay. If you don’t feel ready to compose a traditional business plan, you may draft a lean business plan instead.
Lean Business Plans
A lean business plan is much shorter than a traditional business plan. Some lean business plans are no longer than a single page! Lean business plans cover four core elements:
- Value proposition
- Key partnerships, resources, and activities
- Customer segments, channels, and relationships
- Revenue streams
This is an ideal structure for entrepreneurs that would like to start their business quickly or simply have businesses that are straightforward and easy to explain. Here’s how to start writing a lean business plan.
Writing a Lean Business Plan
A lean business plan takes a summary approach instead of fully detailing each item like that of a traditional business plan. Here’s what you need to know about writing each aspect of a lean business plan.
1. Value proposition.
This is a clear statement that sums up what your small business will bring to its respective market. What are its original qualities? Does it have certain problem-solving abilities that other businesses lack?
2. Key partnerships, resources, and activities.
This section covers additional information about the partners, such as vendors or suppliers, working alongside your business. It also details the startup’s strategies for gaining a competitive advantage in business. This portion of a lean business plan also includes information about resources that may be used to create value for your target audience. For example, these resources may be intellectual property and financial capital.
3. Customer segments, channels, and relationships.
This is akin to market analysis in a traditional business plan. You will summarize your audience, how you plan to reach this audience and your strategies for building a lasting relationship together. Any further techniques for establishing a standout, satisfactory customer experience is also included in a lean business plan.
4. Revenue streams.
Finally, it’s time to wrap up the lean business plan by detailing how the company will earn money. Explain and list each revenue stream that your startup uses to generate revenue. If you have a cost strategy you’ll need to briefly define it in this section as well.