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How I Wrote a Business Plan

Tyler Coen
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Nov 20 · 9 min read

In my last article I talked about the factors that led me to finally start a business. Now
that I had an idea and inspiration to pursue that idea, I had to figure out what was
next. The next logical step for me was to develop a business plan. There are people
who say that a business plan is worthless. I am not one of those people. I fall into the
Dwight Eisenhower camp that believes plans are worthless but planning is
indispensable.

First, I will go over some of the general tips that apply to the business plan as a whole.
Next, I will discuss how I structured my business plan including some specific tips I
discovered along the way. Let's get started.

Photo by William Iven on Unsplash

General Tip #1 — Do It Yourself

This should be a no brainer but don’t pay anyone to do your business plan for you.
You should know every aspect of the plan. Where the numbers came from. How you
got the data. What the data means. If someone else does your business plan you likely
won’t be able to answer the minutiae details you’ll need to.

It doesn’t matter if you’re terrible at presentations. One book I read that helped me
develop my presentation skills was Show & Tell by Dan Roam. This book will help you
with any presentation, not just business plans. If you’re terrible at speaking in front of
others, practice. Give your elevator pitch to friends and family. Get comfortable
talking about your business because you’re going to do it a lot.

General Tip #2 — Use the Small Business Administration

I was genuinely surprised at how good the Small Business Administration (SBA)


website was. They offer tons of free services and guides that will help you through
every aspect of starting your business. The SBA will connect you with lenders and
local mentors to help you along the way. I actually met with some mentors along the
way and they had a ton of resources for free. For a government agency I was actually
blown away at how helpful they were.

The following highlights the way I laid my business plan out and what I learned.
There may be better ways to do it but this way led to funding for me so I call it
successful.

Photo by Jason Dent on Unsplash

Part 1 — Elevator Pitch

I used a modified version of the elevator pitch to tell my story. I skipped the target
customer and statement of the need or opportunity. I cover those more in-depth later
on in the slide deck. I start with identifying the product name and product category.
“Black Dog Beer Shop is a craft beer store selling packaged beer for in-home
consumption.” You know who we are and what we do from the first sentence.

Next, I highlight the compelling reason for people to come to my store. “We feature a
strong selection of local craft beers from around the state.” I then compare us to some
well-known competition. Be specific. If you can actually name competitors it shows
you’ve done your homework, you know your landscape, and you know how you can
differentiate. If you haven’t differentiated, go back to the drawing board.

The elevator pitch should identify your company, what category you operate in, your
unique value proposition, and how you’re different than your competitors.

Photo by Marvin Meyer on Unsplash

Part 2 — The Team

I’ve actually heard conflicting advice on this section. Some people say to include the
information, some people say don’t bother unless you have someone from Google or
Harvard. For me, I included it because I was a solo founder. I wanted to show my
background but also highlight my gaps and how I planned to fill them. I spelled out
the kinds of people I wanted to hire and what strengths they would have. Knowing
your strengths and weaknesses and understanding how you can leverage them is key.
As a side note, I was able to attract the talent that perfectly filled the roles I described
at the beginning.

Photo by Austin Distel on Unsplash


Part 3 — Market Summary

Understanding the market is probably the most challenging part of the business plan
outside of financials. If you don’t understand the total addressable market then you
have no idea how big you could be or even if there is a market. You really want to
niche down to understand your market. If you’re too broad you won’t focus your
product. If you’re too narrow you won’t sell anything.

I started with a broad definition of my market focusing on statistics at the national


level. I looked at things like per capita spending, trends over time, and consumption
changes. Hopefully your market is expanding. If it’s contracting, be prepared to
explain why and how you will do things differently and turn it around.

At this point, I niched down to what I wanted to focus on. In my case I went down to
the neighborhood area because I am a physical location. I used some of the national
statistics and applied them to the local populations. I also identified my target
customers and how many existed in my area.

Photo by Quino Al on Unsplash

Part 4 — Opportunity/Competition

In the previous section you identified the market, now you want to address the
opportunities in that market. Is the target market underserved? If it’s served, do you
have a unique/better way to serve it (Uber vs. taxis)? Can you leverage a new or
emerging technology to do something better? What you’re trying to answer is why is
now the best time to do this? You don’t want to release a faster horse the day the
Model T is coming out.

This is your opportunity to dissect the competition. Identify your competitors and
what you’re unique value proposition is. What gives you the edge? How are you
different? If you can’t answer these questions convincingly, it’s time to go back to the
drawing board. It’s also important to understand potential competitors. How will you
protect your brand or company? Don’t hide from competitors, understand them.

Photo by Adeolu Eletu on Unsplash

Part 5 — Business Concept

This is your opportunity to really dig into the details of the business. Pay close
attention to the questions people ask when you give your elevator pitch. This is where
you want to answer those questions. How are you going to serve the market? Why is
your way better? What technology or methods are you going to use? How will you
advertise or build a following? Some things I covered included what we’re offering,
how we’re offering it, and our plan for growing the customer base.

This is also a good opportunity to conduct a SWOT analysis looking at Strengths,


Weaknesses, Opportunities, and Threats. I would do this with a twist and focus on
Weaknesses among current competition and Threats to the industry as a whole. In the
craft beer industry there are threats from younger generations drinking less or
switching to hard seltzer. You need to be aware of threats like that and address them.
I reiterate some of these at the end of the presentation.

Part 6 — Goals and Objectives

This is the fun part! What goals to you want to set for your company? Use SMART
goals that are Specific, Measureable, Assignable, Relevant, and Time-Based. They can
be goals such as capturing a certain share of the market or reaching a certain level of
monthly revenue. It could be something like daily active users, net promoter score,
likes or downloads. What gets measured gets managed.

If you’ve study your market and your competitors, you should have a pretty realistic
idea of what your goals should be. Don’t be afraid of stretch goals, they can push
yourself and your company. You don’t just start a business to break even. Be
ambitious but realistic. I made quarterly goals for the first year then goals for 3 and 5
years. This shows you have a vision for your company which is important as a
founder.

Photo by Michael Longmire on Unsplash

Part 7 — Financials

For me, this was the hardest part of the business plan. Because I was opening a
physical space, I had to find out rent rates in my area for spaces I could afford. I had
to figure out payroll using sites like Glassdoor.com to find average salaries in my area.
I used information such as the average annual revenue of businesses in my area. I got
insurance quotes and used small business loan calculators to guess on payments. I
compared point of sale processing fees and employee benefits programs. I reached out
to potential suppliers to get inventory numbers. Having never owned a business
before I also had to look at average margins. I played with my sales mixture to see
how much of each item I would have to sell.

It took me quite a while to track down all the information. Still, nine months later, I
am making adjustments to these numbers. Keep in mind that at the beginning this is
an estimate. As you get the actual numbers you want to continue to adjust. I’ve
changed my financials countlessly over the past 9 months. Another thing that might
be helpful is to create a 3 year projected cash flow. Your best bet is to use Excel or
Google Sheets. I found plenty of examples online and I just made them work for me.
Learn to use formulas, this will save you countless hours.

If you’re seeking investment or financing you want to include what you are going to
use that money for. In my case I was asking for around $400,000 for construction
and capital investment in things like refrigerators, shelving, and inventory. Always
have a plan for the money and don’t pull a Neumann and buy a private jet.

Photo by Michał Parzuchowski on Unsplash

Part 8 — Risk/Reward

Towards the end of the presentation I listed the risks and rewards. The rewards
spelled out some of the promising trends and how I was going to capitalize on them.
More importantly, I laid out the risks and how I was going to mitigate them. If you
think there aren’t any risks to what you’re doing chances are you’re wrong. There are
inherently risks in any business venture and being aware of them are key. I uncovered
many of these by simply doing some research on google and reading articles about the
industry I was pursuing. We covered some of these in the Opportunity/Competition
section but this allows you to better spell out how you’ll capitalize or hedge against.

Photo by Glenn Carstens-Peters on Unsplash

Part 9 — Key Issues

Finally, I closed with some of the key issues we needed to tackle. These were the high-
level decisions that needed to be made in the coming months. The first one was
securing funding. Next, I included things like locking down a location and hiring a
construction team. These are the big-picture items that can serve as signposts for
where you’re going. There will be countless smaller decisions along the way but these
issues chart your progress.

Conclusion

There are a number of ways to write a business plan. Some people say you don’t even
need one. I think that is a little extreme. By working through the business plan you
can better prepare yourself and your business. For me it was an iterative process. I
tried several different variations until I found the one that worked. There are three
things I would keep in mind. One, this is just an estimate and a plan, it doesn’t have to
be perfect. Two, you don’t get extra points the more slides you have. Brevity is key but
know the details. Three, you don’t need every investor only one (or two). You will be
turned down a few times. Keep trying and listening to feedback. If an investor of
friend asked a question you don’t have the answer to that’s a clue you need to do more
research.

This is what worked for me. You may have different methods to create a business plan
and that’s fine. Hopefully you took something helpful away from how I created mine.

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