While corporate execs like Elon Musk and Mark Zuckerberg may dominate the news cycles and create the impression that large businesses rule the world, the reality is that 99% of American businesses are defined as small, and the majority of those have 20 or fewer employees. According to recent research from the JPMorgan Chase Institute, in fact, nearly half of our nation’s employees work for small businesses, and small enterprises drive 45% of the United States’ gross domestic product.
If you’re dreaming of starting a business, there’s a lot to be excited about, especially when you consider you’ll be contributing to the employment of half the American workforce. But there are some more sobering stats when it comes to launching a business. Nearly 20% fail within the first two years and 50% within the first five. That’s why it’s critical to have a solid plan for your business-owning dreams.
The first place to start is with a business plan template. A business plan template will ensure you consider all the steps involved in a business startup, as well as all the potential challenges. Seventy percent of surveyed business owners recommend writing a business plan before you even begin the process of launching that great idea into a money-making enterprise. Here’s how to do it.
According to research by CB Insights, 70% of business failures are due to either lack of sufficient market for their product or service or cash flow issues. You can avoid falling victim to either by having a business plan template to guide you through key steps to start-up.
A business plan template will help you zero in on what’s critical to starting a business, including the following:
- Providing structure for all your ideas
- Offering you a framework of steps to take to get started
- Helping you discover potential weaknesses in your business idea so you can address them before you launch your enterprise
- Identifying opportunities you may not have considered in your original business idea
- Analyzing your target market so you can zero in on their needs
- Showing potential investors you are organized and professional in your approach and worthy of funding
- Compelling you to run the numbers so you’ll know when you can turn a profit and how much startup funding you’ll need to get there
As you begin working on that business plan template, start thinking about how you plan to manage your company finances too. Part of demonstrating to potential investors or a loan officer at a bank that you’ve thought through your cash flow and capital investment needs is selecting accounting software to help you track and manage revenue and expenses.
You can create your own business plan template easily enough. Here are some key components you should consider including:
- Executive summary and company description: This section will describe what products or services your company plans to provide and what problems it seeks to solve for its potential customers.
- Description of your product or service: Here you’ll detail the products you plan to make and/or sell or the services you intend to offer and the specific niche they serve.
- Target market analysis: In this portion of the plan, you’ll discuss your startup’s likely competitors and how you plan to differentiate yourself. You’ll also talk about who your customers are, what they want or need, and how you will help them meet those wants and needs.
- Organization of your management team: This section will provide background information on you as owner, as well as any co-owners, and will cover key hires you’ve made or plan to make. For each team member, you’ll discuss their specific expertise and explain why each individual is the right hire for the job.
- Financial forecasts and funding requirements: You’ll outline current and future revenue streams, note how much cash you have on hand and need to keep on hand, describe your revenue structure, and detail what funding you need or have already received, as well as where it is coming from.
- Marketing plan: This part of your business plan template will cover how you plan to attract customers and how you’ll market your products and service.
There’s no right or wrong way to format a business plan template, and how detailed yours is may depend on how big your idea is (and how large the company you envision). There are two key types of plans for starting a business: traditional business plans and lean startup plans.
While a traditional business plan template may run 20 to 30 pages, including all the elements noted above along with appendices that might feature business licenses and permits, a lean startup plan might be best if you are starting a business that is simple in scope or that you plan to launch quickly. A lean startup plan might only be a page or two in length and is designed to be modified and refined.
You can access an array of business plan templates online. And don’t forget to investigate other potential tools for launching a successful startup, including accounting software, project management systems, expense tracking options, and payroll tools. The more technology you can employ to standardize processes and streamline operations, the more time you can devote to winning customers and supplying standout services or products.