How to Write a Business Plan | Step-by Step | For Beginners in 2022

Summary

The video emphasizes the importance of creating a solid business plan before starting a company. The speaker shares insights from personal experience, explaining how a business plan can help avoid common pitfalls and attract investors, partners, and funding. The video outlines three types of business plans—traditional, lean, and non-profit—and breaks down a step-by-step guide to crafting an effective plan. Topics covered include market research, products and services, marketing strategies, financial projections, and management planning. The speaker also shares tips on using the plan to secure financing and grow the business.

Takeaways

• 📈 Developing a business plan is crucial for avoiding trial and error and saving time and money in your business journey.
• 📊 A business plan helps you evaluate your competitive advantage and product-market fit before launching a business.
• 💼 Writing a business plan forces you to think about key aspects like market entry, team building, and potential investors.
• 📝 There are three types of business plans: traditional (detailed), lean (short and concise), and non-profit (impact-focused).
• 💡 Market research is vital to understanding your industry, target audience, competitors, and potential regulations.
• 📋 A business plan has six core sections: executive summary, market research, products/services, marketing/sales, management, and financial projections.
• 💰 Financial projections include initial costs, ongoing expenses, and revenue forecasting, which are critical for growth planning.
• 🎯 A marketing strategy should include both traditional and digital methods, with an emphasis on organic marketing for long-term, cost-effective growth.
• 👥 Your management plan should outline the manpower needed, including team roles or whether you'll manage tasks solo.
• 💵 Use your business plan to secure financing, keeping it professional, concise (under 10 pages), and easy to read with templates and clear headings.

Q & A

Why is having a business plan important?

A business plan is crucial because it helps prevent wasting time and money, ensures a competitive advantage, and provides clarity on product-market fit. It also forces entrepreneurs to evaluate their business strategies and helps in finding investors, partners, and team members.

What are the three common types of business plans mentioned in the video?

The three common types are: 1) Traditional Business Plan, which is detailed and used for raising money from banks or investors, 2) Lean Business Plan, a shorter version that highlights only essential information, and 3) Non-Profit Plan, which includes details about the organization’s positive impact on the world.

What are the six core sections of a business plan?

The six core sections are: 1) Business Summary/Executive Summary, 2) Market Research, 3) Products and Services, 4) Marketing and Sales Strategy, 5) Management Plan, and 6) Financial Projections.

What should be included in the market research section of a business plan?

The market research section should include analysis of the industry growth or decline, target market demographics, market size, competitors’ strengths, pricing strategies, and any relevant regulations, laws, or licenses.

Why is market research considered the most important step?

Market research is crucial because it helps validate whether a business idea is viable. It provides insights into competition, market demand, and potential challenges. If the research shows low demand or high competition, it may signal that the business idea isn’t worth pursuing.

How should one develop a marketing and sales strategy in a business plan?

The marketing and sales strategy should outline how the business will attract and convert customers. This can include traditional marketing strategies, such as advertising and PR, or digital strategies, such as social media marketing, blogging, and influencer collaborations. Organic marketing, like content creation, is also recommended for long-term growth.

What is the importance of an organic marketing strategy?

Organic marketing is vital because it allows businesses to acquire customers without spending on ads, giving them a competitive advantage. Though it takes time to show results (1-2 years), organic strategies like blogging and social media can help scale businesses more effectively.

How can financial projections be made for a business plan?

Financial projections should include estimates for initial startup costs, ongoing expenses, and forecasted revenue. For revenue, you calculate it based on the price of your product or service, estimated sales volume, and customer retention rate. It’s important to be conservative in these estimates to avoid overestimating potential revenue.

What are some tips for using a business plan to get financing?

To use a business plan for financing: 1) Use a professional template, 2) Anticipate and answer questions from potential investors or lenders, 3) Keep the plan brief and concise, ideally under 10 pages, 4) Make it easy to read with clear headings and simple language, and 5) Know the plan inside out to handle follow-up questions.

Why is it recommended to create a business plan even if you don’t seek external funding?

Creating a business plan helps entrepreneurs clarify their business strategy, evaluate potential challenges, and structure their operations effectively. It serves as a roadmap and forces them to think through important details, ultimately guiding better decision-making.

Outlines

00:00

📋 The Importance of a Strategic Business Plan

In this opening paragraph, Sean emphasizes the significance of writing a business plan before launching a company. Drawing from his own entrepreneurial experience, he explains that many businesses fail due to a lack of planning, leading to wasted time and money. He encourages viewers to create a business plan to evaluate ideas, strategize market positioning, and recruit necessary team members. The plan serves as a vital roadmap that can also be reviewed by trusted advisors or consultants for feedback.

05:02

💡 Why You Need a Business Plan

Sean outlines five key reasons why a business plan is essential. First, it helps entrepreneurs develop their pitch to potential clients, investors, or partners. Second, a strong plan can attract investors by showing a clear strategy for success. Third, it helps entrepreneurs find reliable business partners. Fourth, it's crucial for securing traditional funding, as banks and lenders want assurance that the business can repay loans. Finally, a business plan serves as a personal guide, helping entrepreneurs determine their next move and refine their business strategy.

10:03

📑 Three Common Types of Business Plans

Sean describes three types of business plans entrepreneurs can consider. The traditional business plan is comprehensive, often required by investors or banks, and contains detailed sections from executive summaries to financial projections. The lean business plan, much shorter and possibly one page, focuses on conveying essential information and is suitable for internal use or small teams. The nonprofit plan resembles a traditional plan but also includes how the organization will create a positive impact on society.

15:05

📝 How to Write a Business Plan Step by Step

Sean outlines the six key sections every business plan should have: business summary (executive summary), market research, product and service lines, marketing and sales strategy, management plan, and financial projections. He begins by highlighting the importance of market research to understand industry trends, target demographics, competition, and regulatory requirements. He advises entrepreneurs to reassess their idea if the research reveals a challenging landscape, as it might be best to abandon the idea early on.

💼 Building Your Products, Services, and Strategy

After conducting market research, Sean advises entrepreneurs to clearly define the products or services they will offer and how these solutions will address market needs. He stresses the importance of explaining the pricing model, production costs, and any intellectual property involved. He also highlights the need to develop a marketing and sales strategy, emphasizing the value of organic marketing over traditional methods. Sean shares his personal experience with the success of organic marketing and advises viewers to incorporate it into their business plan early on.

👥 Building Your Management Team and Financial Projections

Sean focuses on the importance of outlining a management plan in the business strategy. Entrepreneurs need to determine who will handle various roles in the company, such as marketing, customer service, and sales. If running a solo operation, time management becomes crucial. He also discusses financial projections, covering startup costs, ongoing expenses, and revenue forecasts. Sean advises using average industry data and being conservative in projections to avoid raising red flags for investors and setting unrealistic expectations.

💵 How to Use Your Business Plan for Financing

In this final section, Sean provides tips for using a business plan to raise money or recruit key hires. He recommends using a professional business plan template, like the one from LawDepot.com, to ensure all necessary sections are included. Entrepreneurs should anticipate potential questions from investors and ensure the plan flows logically. Keeping the plan brief (ideally under 10 pages), easy to read, and concise is crucial. Finally, Sean advises entrepreneurs to be thoroughly familiar with their plan, as potential investors will likely ask detailed follow-up questions.

Keywords

💡Business Plan

A business plan is a strategic document outlining the goals, structure, and operational strategy of a company. In the video, the speaker emphasizes the importance of creating a business plan before launching a venture to prevent time and money waste. It serves as a roadmap for the business and helps in attracting investors, securing funding, and recruiting partners or team members.

💡Executive Summary

An executive summary is a concise section of a business plan that outlines the key points of the entire document. According to the video, it's often the first thing potential investors or partners will read and can be used as a pitch for the business. The speaker suggests memorizing this summary to efficiently communicate the core aspects of the business.

💡Market Research

Market research involves gathering and analyzing information about a market, including competitors, target audience, and industry trends. In the video, the speaker describes this step as crucial for determining the feasibility of a business idea, helping to avoid ventures in oversaturated markets or those with low demand.

💡Lean Business Plan

A lean business plan is a simplified version of a traditional business plan, often just one page long. The speaker advocates for this format, especially when starting a new venture, as it conveys only the most important information. It is particularly useful for internal planning or onboarding team members.

💡Traditional Business Plan

A traditional business plan is a comprehensive document that includes detailed sections such as financial projections, marketing strategies, and company structure. In the video, the speaker mentions that this type of plan is often required when seeking funding from banks or venture capital firms because of its thoroughness.

💡Financial Projections

Financial projections are estimates of future revenue, expenses, and profitability. The speaker emphasizes that this section of the business plan helps potential investors or lenders assess whether the business can generate enough income to repay loans or provide returns. It involves forecasting initial costs, ongoing expenses, and expected revenue growth.

💡Organic Marketing

Organic marketing refers to unpaid strategies like blogging, social media, and content marketing to attract and retain customers. In the video, the speaker stresses the long-term value of organic marketing as a cost-effective way to build a business, using personal experience to show how this strategy significantly boosted his company's growth.

💡Products and Services

This section of a business plan describes the products or services a business will offer, their unique value proposition, and pricing models. In the video, the speaker highlights how understanding the market problems helps to develop products that solve customer needs. He also notes that product development will undergo multiple iterations as the business evolves.

💡Management Plan

A management plan outlines how the business will be structured in terms of leadership, roles, and responsibilities. The speaker advises thinking carefully about manpower, whether it’s done solo or with partners, as this will affect the business’s growth rate. He suggests including this plan in the business plan to pitch to potential partners or investors.

💡Pitch

A pitch is a brief presentation or explanation of a business idea to potential investors, partners, or clients. The speaker emphasizes the importance of being able to clearly and concisely pitch the business using the executive summary, as it will be necessary in many situations, from raising funds to hiring key team members.

Highlights

Starting a company with less than $500 can lead to significant growth, as evidenced by the speaker's own experience.

A strategic business plan is crucial to prevent wasting time and money, and to avoid common startup pitfalls.

Writing a business plan forces you to evaluate your business ideas, options, and strategies.

A well-crafted business plan can be taken to trusted advisors for review and feedback.

The importance of a business plan is underscored by its ability to prevent failures due to lack of planning.

A business plan serves as a roadmap and a valuable asset for your business.

The plan helps in developing pitches for various stakeholders, including clients and team members.

Attracting investors is easier with a comprehensive business plan that outlines company building strategies.

Finding active business partners is facilitated by a clear and well-articulated business plan.

Traditional funding from banks or the SBA often requires a solid business plan for loan approval.

Creating a business plan is essential for determining your next business moves and strategies.

There are three common business plan formats: traditional, lean, and non-profit, each serving different goals.

A traditional business plan is detailed and typically required for raising funds from banks or venture capital firms.

A lean business plan is a concise version, useful for onboarding key hires or personal use.

A non-profit plan is similar to a traditional plan but includes details on the positive impact the organization will have.

The business plan should include six core sections: business summary, market research, products/services, marketing/sales strategy, management plan, and financial projections.

Market research is critical to understanding the industry landscape, target market, market size, competitors, and regulations.

If market research indicates a saturated market or low demand, it may be best to reconsider the business idea.

The products and services section should detail how the offerings will solve market problems and provide unique value.

Developing a marketing and sales strategy is essential for attracting attention and converting it into customers.

Organic marketing strategies, such as blogging and social media, can provide a significant competitive advantage.

The management plan should outline the manpower needed to manage various business operations.

Financial projections include startup costs, ongoing expenses, and revenue forecasts, with a focus on being conservative.

When using a business plan for financing, use a template, put yourself in the investor's position, keep it brief, make it easy to read, and know the plan inside out.

Transcripts

how to write a business plan step by

step now i started my first company with

less than 500 and i was able to grow it

into one of the fastest growing

privately held companies according to

inc magazine but listen i went through a

lot of trial and error along the way and

i wish i really wish i spent more time

developing a strategic business plan

before i got started and i know right

you may be thinking

no no no sean i don't need a business

plan i got everything i need right here

but listen having a great business plan

is super important because it can

prevent you from wasting your precious

time and money and honestly many people

fail because they start operating a new

business without any plan and then

suddenly they start to realize they have

no real competitive advantage or no real

product to market fit for example and so

sitting down and writing out a plan

really forces you to think about your

business ideas like evaluating all your

options and your business strategy like

what are you going to do to be seen in

the marketplace and developing your

business teams like what people may you

need to bring into your venture do you

need investors partners or recruit some

type of key role what and so i like to

go through writing out a business plan

before you launch because what you can

do is take your plan to a trusted

advisor or mentor or consultant or even

your local sbdc or small business

development center and have them review

your plan evaluate it and give you some

feedback but first you need to have a

great plan in place and if you watch

this video until the end then you're

going to learn the three types of

business plans you can write how to

write a great plan step by step in my

tips for using your plan to get

financing hey there i'm sean a self-made

millionaire and entrepreneur and right

now i'm on a mission to help people

start fun and grow their business all

right let's get this party started with

number one why do you need a business

plan man there are so many many valuable

reasons to have one i like to think

about your business plan as not only a

road map but as your first real business

asset because make no mistake about it

when you invest time and money into

creating a thorough plan if you execute

it you will make money as a result

alright so here's a list of reasons why

i think you should have a thorough plan

in place number one it helps you develop

your pitch you're always going to be

pitching your company whether it's to

prospective clients and customers or to

potential team members you want to work

for you and so on well every business

plan has an executive summary which you

can memorize to help you pitch your

company number two it can help you find

investors because of course before

someone decides to give you any money

they're going to want to know exactly

what you're going to do to build up a

successful company which your plan

should cover number three a great

business plan helps you find active

business partners if you happen to know

someone who is ambitious or built a

successful company before heck even your

best friend is going to want to know you

know i love you man but

what exactly is your plan okay number

four it helps you get traditional

funding from a bank or the sba a big

step in getting approved for any small

business loan is providing your lender

with a business plan because they want

to know with strong confidence that you

have the ability to repay them ideally

with interest and the fifth reason to

create a business plan is it helps you

determine your next move if you don't

want to create a business plan for any

other reason you should at least create

one for yourself i personally spend

hours just pacing back and forth with my

computer and a whiteboard trying to

think about how to attack different

markets and then i dump it all into an

easy to read business plan now i want to

hear from you okay why are you watching

this video like why are you developing a

business plan are you trying to raise

money are you trying to get a partner or

are you just trying to do it for

yourself tell me down in the comment

section below chapter number two let's

talk about the three common business

plan formats so there is no one way to

write a business plan they can range

from a business plan being one page to

several pages with detailed graphs and

reports and i'm gonna talk about the

three types and ultimately the business

format you choose depends on your

personal goals so the first type is what

is called a traditional business plan

this is the standard plan that usually

has about six to seven sections spending

from an executive summary to financial

projections

now typically if you're trying to raise

money from a bank or a venture capital

firm they're going to want to review a

traditional business plan with a lot of

detailed information the next type is

called a lean business plan now this is

a much much shorter version of a

traditional plan and you could choose to

make it just one page because ultimately

the goal is to just convey the most

important information about your company

in the shortest amount of time possible

in general if you're trying to onboard a

key hire or just use it for yourself

then a lean business plan will suffice

in fact this is the type of business

plan i like to create when i'm starting

any new venture another type of business

plan is called a non-profit plan this

one is very similar to a traditional

plan but it also includes detailed

information about how your organization

will leave a positive impact in the

world all right now that we understand

the different types let's get into

chapter number three how to write a

business plan step by step so there are

six core sections you need to have in

your plan you're going to need a section

covering your business summary or your

executive summary your market research

your products and service lines your

marketing and sales strategy your

management plan and your financial

projections let's break it all down so

number one your business summary is

simply okay it basically summarizes your

overall business plan now this summary

can also serve as your lean business

plan or your one page plan as well in

either case this is actually going to be

the last page that you write so let's

move on to step number two and do market

research now this is probably the most

important step you need to know your

landscape your battlefield what market

you are about to enter so take your

business idea and then start answering

questions like okay is the industry

growing or declining and you can use

something like google trends to see the

monthly search value

and acts who is your target market like

what's their age gender income goals

values lifestyles and so on okay and

then how big is the market is it

something very niche is this something

local is this something worldwide okay

who are your competitors what are they

selling what are their prices and why do

their customers like them okay and then

how much regulation is there are there

specific laws or tax codes or licenses

you need to have okay answering these

questions will help you complete the

rest of the plan much much easier now

here's a very important note okay listen

if you do the market research and you

don't like what you find then guess what

it's okay and probably best to stop now

and don't pursue this business venture

because the whole point of doing market

research is to make sure this idea

actually works for example you may find

that the competition is really thick or

there is very little demand in the

marketplace which are two big reasons to

reconsider your business idea and i'm

emphasizing this because sometimes

people fall in love with their business

idea regardless of what the research

says and they decide to move forward

anyway and i think that's just a natural

instinct a natural instinct that many

entrepreneurs have because we like to

see challenges and figure out ways to

overcome them but this can actually

hinder you from finding and building the

right business now there's a lot more

that goes into market research so if you

want to see me make a video all about it

just write a comment below moving on to

step number three i have build your

products and services so look look at

what we're doing okay once we've done

the market research we'll have a better

understanding of what problems exist and

then how we can solve those problems so

now in this section you can simply list

out all your products and service ideas

explain how these will add unique value

to the market explain the pricing model

you have and why the cost to produce

these products and services and any

trademarks and patents you may plan to

file and so on now don't worry about

perfecting your product or service in

this plan because trust me you're going

to have multiple iterations of the

design the features and the services the

point is you want to make it crystal

clear what problems you are solving and

how you're going to produce a solution

to those problems from there you can go

ahead and move on to step number four

develop your marketing and sales

strategy which is basically figuring out

okay how are you going to get attention

and then convert that attention into

customers and clients and there are many

ways that you can go about doing this

one way is traditional marketing

strategies like traditional advertising

billboards tv so on going to events

where you are the host or the speaker or

different pr campaigns like being

featured in the news or other popular

publications but look i am not a fan of

traditional advertising i think it's way

too expensive you can't track results

and you likely won't get any but my

preference is more digital marketing

strategies like facebook advertising

google advertising hiring influencers

and paying for sponsored posts but

regardless of what you decide to do

let me be honest with you one thing i

wish somebody had told me earlier was

take organic marketing seriously now

what is organic marketing well basically

marketing that you can do without

spending any money on ads this is stuff

like blogging and social media marketing

and youtube and podcast marketing and so

in my business once our organic

marketing efforts started to kick in we

quickly scaled from 100 000 a year to

over 3 million dollars per year but look

this strategy takes time it can take

anywhere from one to two years to see

any measurable results from organic

marketing and that's why i'm telling you

now

don't wait because you can get to a

place where you are acquiring customers

and clients for very little cost which

ends up giving you a competitive

advantage so i really want you to think

about it because i highly recommend you

put an organic marketing strategy inside

of your business plan and start

executing that as soon as possible now i

have a great video on how to start a

blog which is one of my favorite organic

strategies so i'll link that video at

the end of this one so you can check it

out right after you finish all right

step number five is to build your

management plan and or your management

team and this is where you really want

to start thinking about how much

manpower you need right like who's going

to manage all these marketing campaigns

who's going to be in charge of handling

the services and the clients who's going

to be handling all the new phone calls

and leads that come in and who's going

to go out and recruit the team you need

right and you need to figure out how

you're going to handle these tasks right

are you going to do it are you going to

hire a team or are you going to maybe

partner with someone who has a lot of

experience in one of these areas that

you don't and so if you are recruiting a

business partner or an investor this is

where you can make your pitch and say

hey sean i think you're going to be a

great asset in managing the marketing

side of this business you should come in

now if you're going to do all of this

yourself like you're going to be a solo

entrepreneur or a single member llc then

that's great too but just remember you

alone only have 24 hours in a day which

is likely going to give you about 12

working hours a day so it's probably

going to take you a lot more time to

grow your business so you need to be

very conservative when you get to step

number six which is your financial

projections

here we are going to project our initial

startup costs our ongoing expenses and

forecast our revenue so when it comes to

our initial costs and ongoing expenses

this is pretty simple right you just

need to map out everything you need in

order to start operating your business

and then estimate the cost

common things that people need are a

website a location like setting up an

office or a store sometimes hiring team

members whether that is w2 employees or

contractors getting some inventory and

other assets like equipment and then of

course having a marketing budget and so

on now if you're still not exactly sure

what you need then simply running a

google search should help you out now

the more difficult thing in the forecast

is revenue and most of the time we're

forecasting how we can hit our first one

million dollars right now to forecast

revenue what you would do is take your

average price of your product and

service and then multiply that by how

many units you believe you can sell per

month and then multiply that by the

average client or customer retention

rate for example if you are starting a

consulting company and your average fee

is one thousand dollars per month and

you believe you can get 10 clients per

month and keep those clients at a five

month retention rate then basically

you're forecasting fifty thousand

dollars a month in revenue however there

are many factors that determine how

quickly you can grow revenue such as

your advertising and marketing budget or

if you're in a local market or a

national market or the type of company

you have right like is it a product

company or a service company because in

general you can scale a product much

faster than you can a service because

the service requires you to have more

people which requires more recruiting

and more training so the best advice i

can give around forecasting revenue are

two things okay number one

find the average meaning do some

research and figure out what the average

company in your market or in your

industry typically makes every month or

every year and then number two be

conservative it's a lot more fun to

actually beat your projections than not

to because then you'll feel like a

failure because you didn't reach them

plus if you forecast too aggressively

then this could actually be a red flag

to your potential investors or potential

partners because

many people with business experience

know how difficult it can be to be

profitable in year one all right moving

on to chapter number four i have how to

use your business plan for financing so

if the goal of your business plan is to

raise money or recruit a key hire here

are some tips you need to know number

one use a business plan template because

if you're planning to give this plan to

someone else it needs to be professional

and cover everything the template that i

recommend is from lawdepool.com

they walk you through step by step

everything that needs to be included

inside of your business plan in order to

get financing i'll go ahead and put a

link to them down in the description

below tip number two put yourself in

their position

meaning go through your business plan

and try to see what questions someone

may have after going through it and then

go back and revise your plan to cover

these questions ideally your plans

should flow like a really good story

that is very easy to follow

tip number three keep it brief okay

ideally your plan should be concise and

be no more than 10 pages long because as

albert einstein puts it if you can't

explain it simply you don't understand

it enough

tip number four make it easy to read

have clear headings have simple words

and highlight key points in each section

so people can follow along tip number

five know your business plan inside and

out because

when they're going to have additional

questions and want to confirm your

thinking so you need to be prepared to

handle this now i have some more tips on

a video called how to pitch your

business to investors step by step so

you can check that out as well or you

can watch another video i mentioned i

will link at the end alright so i hope

you enjoyed the video don't forget to

like comment subscribe and all of that

and i'll see you over there