What is a Business Plan, and Why Do You Need One?
When you get an idea for a business, it’s so shiny, new, and exciting that you will probably be tempted to jump right in. Why waste time, right? The sooner you start the ball rolling, the sooner you’ll become a massive entrepreneurial success, which you can put on your college application, which will help you get into the school of your dreams…
Wait. Stop, pause, and take a deep breath.
We know that you are energetic and ambitious. Those are two great qualities you’ll need to get started as a young entrepreneur! But we also know that you are smart. That you pay attention. That you want to do things right.
Before you create your company’s logo, you need to draw up a business plan. It shouldn’t take too long, but it will provide you with peace of mind and guidance as you launch your startup.
WHAT IS A BUSINESS PLAN?
At its most basic definition, a business plan is an outline for your business. You create it before you get started and it will act as a guide for you along your entrepreneurial journey. Your business plan should include a timeline and budget.
BEYOND THE BASICS
Imagine this: you show up to college the day before classes begin. You head to the school bookstore to buy everything you need for your schedule. But you have no syllabus. You don’t know what books your professors expect you to read. You’re not even sure which classes you’re taking. And you have no idea how much money it will cost to buy your materials, nor how much money you have to spend on them.
A business plan is like all the things you’re missing rolled into one document. How much money you’ll need to get up and running. What products, materials, and apps you’ll want to use. How to price your product or service. A realistic but flexible timeline for hitting deadlines and milestones. Marketing ideas. And so on.
A business plan is the difference between that first nightmare scenario of showing up to college with barely any time to get ready and zero idea of what you need to do, versus showing up a few days early to enjoy freshman orientation, get your syllabi and schedule, and know your textbook and class materials budget.
WHAT ELSE DOES A BUSINESS PLAN DO?
As a young entrepreneur, you’ll likely need to raise funds for your startup. Having a well-written, professional-looking business plan will help you get those funds.
Venture capitalists – individuals and corporations that give money to startups – want to know they are spending their money wisely. They’ll want to see your business plan, so they know you’re serious about your startup and intend to see it through.
But even if you aren’t presenting a formal pitch to an investment firm, a business plan proves you’re a serious young entrepreneur. You’re not just chasing a dream – you have the foundation in place to make that dream come true.
HOW TO WRITE A BUSINESS PLAN
Google the term “business plan,” and you’ll see no shortage of templates and suggestions for writing yours. Before you get scared and forget the whole idea, keep in mind that a business plan really only needs:
- A mission statement (“I plan to create an app that will teach toddlers their ABC’s in a way that’s both fun and educational.”)
- Your financial projection (“It will cost $100 to make this app, and I anticipate making a $200 profit in the first 12 months.”)
- A marketing plan (“I will print business cards and leave them at daycares and preschools.”
- A timeline (“I will have a test version of the app by Month 2.”)
Beyond the basics, the rest is up to you. Of course, the more information you add, the better you’ll be as you get started. And the more polished and tidy your plan is, the more likely it’ll be to get (and hold) the attention of professional investors.
BUSINESS PLAN TEMPLATES
Again, there’s no shortage of templates out there to help you focus and craft your business plan. Here are a few to get you started:
- SmartSheet’s Simple Fill-in-the-Blank Startup Template
- ScoutingWeb’s Business Plan Template
- Aha!’s Business Model Canvas
BUT WHAT IF I DON’T HAVE ALL THAT INFORMATION?
The nice thing about a business plan is that you simply fill in the information you already have, do a little bit of research to find out what else you need to know, and ignore the rest. Those of you thinking about starting a private sports coaching business, for example, don’t need to worry about things like “operational management” or brand positioning teams. You will, however, still need to consider areas such as competition, customer pain points, and marketing.
A BUSINESS PLAN IS NOT WRITTEN IN STONE
The purpose of a business plan is to act as your guide along your own personal entrepreneurial journey. It’s not a law. By creating a budget, you have an idea of how much funding you need to get started, as well as how much to charge for your product or service so you can eventually turn a profit. A marketing plan helps you target customers who are most likely to spend money at your business. Timelines keep you on schedule and help you see how far you’ve come. In case of an emergency, a business plan helps you recover quickly and easily.
What a business plan shouldn’t do is stress you out or make you feel like you’re somehow not doing this “right.” The world shifts and changes. You can’t predict the future (yet). Let your business plan guide you in the right direction and keep you focused, but don’t allow it to dictate your dreams. Stay flexible enough to be able to pivot when (not if) needed. And, since very few people succeed with anything on the first try, be prepared to throw your original business plan out the window if you find it’s absolutely not working for you. Then start over with a new, better one.
Creating a business plan won’t take up much of your time, but it’ll save you time, money, and headaches in the future!
The Kantner Foundation awards college scholarships to young entrepreneurs in Florida. Click here to learn more and apply.