It’s 2016, and technology isn’t the only thing that’s changing at a rapid pace. Everything about the way we do business is different than it was a decade, or even 5 years, ago. That means we need to update how we approach even the most fundamental aspects of starting a business — including writing a business plan.
In this post, we’ll talk about how business plans have changed over the years, what to include and leave out, and provide some templates for writing your own business plan, fit for 2016.
We’ll be discussing this topic in our fireside chat, How to Create the Modern Business Plan for Your Startup, on Wednesday, June 15th. Don’t forget to RSVP!
Okay, let’s get started.
What the Experts Had to Say
We wanted to find out what exactly makes the business plans of today different from traditional ones, so we asked small business experts for their opinion. Here’s what they had to say:
What’s the difference between modern and traditional business plans?
JILL BIGELOW, PELV-ICE LLC:
A modern business plan is presented as a deck (powerpoint or other slide presentation). It is generally backed up by a 3-5 year projection model as well. Gone are the days of a 30+ page business plan.
ERIC MICHAEL SALES, ERIC MICHAEL SALES PUBLIC RELATIONS:
The biggest difference that I can speak on, that I’ve seen, is its brevity. Once a massive rolling document that spanned nearly a hundred pages, sometimes more, it’s now more-or-less an extended Executive Summary.
KURT OSTERGAARD, STIRLING INSURANCE SERVICES:
Traditional = 50 pages gathering dust on a shelf. Modern = a 1 page drawing a la Business Model Generation or Lean Canvas.
KYLE GOLDING, THE GOLDING GROUP:
Speed and technology. Modern business plans are still built on traditional business models, but have to take into account the speed at which products are developed, enter the market, and are upgraded. The barrier to entry for new business is lower than ever. A business can be started and see success for much less up-front commitment than ever before thanks to modern technology. Production, marketing, internal communications, customer acquisition, etc. are all easier to manage and more effective today, but only if incorporated into the business plan and executed at a high level.
JOAN McCOY, BUSINESS 360 NORTHWEST:
There is no real difference between a modern business plan and a traditional business plan except for the use of technology. We can use technology to provide more connectivity and interactivity so we have the opportunity to update a plan with new information in real time. That one difference allows an owner to be more nimble.
MATT WILHELMI, INDIVIDUAL ADVANTAGES:
A traditional business plan focused, in part, on the 4 P’s of Marketing (Price, Product, Place, and Promotion). It was thought that if these four items could be addressed, the business would have the basic foundation of a traditional business plan. Today, modern business plans need to focus on SAVE (Solution, Access, Value, and Education). These four fundamental marketing pieces have replaced the 4 P’s.
DANIEL FEIMAN, BUILD IT BACKWARDS:
Most traditional business plans were really operating plans for a year or 2. The best modern business plans are more strategic (5 years+).
What to Include
Now that we have a better idea around what makes modern business plans unique, let’s chat about what goes into one. The most important sections to focus on are the executive summary, financial projections, and your pitch deck.
The executive summary is essentially just a condensed version of the whole business plan. It functions as an extended elevator pitch to get buy-in for you and your business idea. Partners, investors, and anyone else should be able to read the summary and have a good feel for what your business is about and the potential it holds.
It’s usually good to write your executive summary last, so you can best capture everything else in your plan. You also want to keep it relatively short — while your whole plan might take up ten or even twenty pages, keep the summary to about one page. The key is to distill the important information into one really concise section.
For more help with your summary, check out Writing Your Executive Summary in Grasshopper Academy.
Your pitch deck is where the bulk of information about market conditions and your strategy will be explained. Using a presentation software (like PowerPoint or Prezi) means you can tell your business’ story in a much more compelling way. Include plenty of graphs, tables, and other visuals.
Your executive summary isn’t the only part of the plan that should be concise — feel free to leave out any extra or unnecessary information. Using bullet-points on a slide, instead of writing out full paragraphs, will help you keep this in mind. The bulk of your pitch deck should address these questions:
- What’s going on in the market right now? Detail the conditions, consumer trends, and competitors in the space.
- What are you going to do? Explain what your business will do or produce, and how it’s different from what’s already out there.
- How will that change the market? Talk about how your company will change and shape the market. What will it look like in 5 years?
- Pivots. What will happen if your plans don’t pan out? What if the market doesn’t respond to your product? Here, you’ll discuss your contingency plans.
Just as some of our experts highlighted above, modern business plans usually include financial projections for about 3-5 (or more) years out. While it’s great to be optimistic, be careful to ensure that your estimates are reasonable and based on hard financial models.
Some of the documents you’ll draw up include:
- Revenue projections. Where will revenue come from and when do you expect it?
- Operational expenses. What operating costs will you need to be prepared for What will they cover? How will expenses grow as the business scales?
- Cash flow. When will money flow into and out of your business? How will it be used?
Financial projections serve as a barometer for the fiscal health of your business — but to potential investors or partners, they can also serve as a reality check to ensure your expectations are realistic.
What to Leave Out
What you leave out of your business plan is almost as important as what you include. Here’s a brief (by no means definitive) list of what not to include in your plan:
- Unrealistic projections. Like I said, financial projections aren’t just about your business — they’re also about proving you have a firm grasp on reality even when it comes to launching your dream company. Most people reading your plan will see right through overly optimistic predictions, so keep your head out of the clouds.
- Fluff. Anything that isn’t 100% necessary — leave it out. Fluff and redundant information will cloud the water and make it harder for truly valuable information to shine through.
- Lengthy operating plans. Really specific planning, especially for 3-5 years out, just isn’t necessary. Your business will be in a completely different place by then, so a foundational strategy is all you need right now.
Modern Business Plan Templates
On to the good stuff — now that you know what goes into crafting a business plan for 2016, here are some helpful templates to get you started.
Microsoft Office’s template is a PowerPoint presentation that tells you step-by-step what information to include and helps tell your story in a visually compelling way.
LivePlan created a simple template for creating a business pitch one-pager, which can often take the place of a full, extensive business plan when it’s not really needed.
U.S. Small Business Administration
As usual, the SBA has your back with an easy fill-in-the-blank business plan template. It takes you bit-by-bit through all of the questions your plan should answer.
If you need a little more help before diving in, check out the exclusive handouts in Grasshopper Academy’s Developing a Business Plan course.
Get to Planning
You officially have the knowledge and tools you need to create a comprehensive and irresistible business plan that’s fit for 2016 and beyond. No more excuses — get out and get started planning and launching your new business.