Getting started is usually the hardest part of any project. The first time I wrote a business plan, I was pretty overwhelmed. It seemed like such a huge task. I knew that once I got started, the momentum would carry me through. Yet, I wasn’t sure where to start. If you’re wondering where to start when writing your business plan, read on.
After writing more than sixty plans over the last year, I’ve found that the best place to start writing a business plan is with the market analysis section. This information will shape most of the other parts of the business plan.
You want to give yourself the best start possible. So let’s go deeper into what section to start with and what parts to save for later.
Where Not to Start Writing Your Business Plan
Before we cover the best section to start with, let’s talk about which parts to avoid beginning with.
First of all, don’t start with the executive summary. This section is meant to summarize the rest of the plan. And of course, you can’t summarize something you haven’t written yet. So, save it for the end.
Most people will begin with the most comfortable sections to write, those that talk about your business and what makes it special or unique. For example, your business’s history, your products, or the management sections can be easier to write.
Indeed, the sections about you and your business don’t require any research. Yet, they’re also the sections where business owners tend to ramble, oversell, and jump from one topic to another.
Another problem that tends to arise is that business owners build out a business model with assumptions about their market, competition, and revenue that just aren’t true. Many of these mistakes can be avoided by finishing some of the more challenging sections first.
The last thing you want to do is base your business’s success on the assumption that there’s a market for your product or service that doesn’t exist.
Why You Should Start Writing with the Market Section
Ah yes, the section that almost all of my clients avoid: the market analysis.
Sure, maybe doing research and gathering statistics is boring. And yes, as I said earlier, the other sections may seem more straightforward to complete.
But the information you lay out in the industry and market section will be the foundation for the other parts of your business plan.
Topics like your competition, pricing structure, and marketing strategy will need to be developed based on the market you identify in your market analysis. You’ll also find industry trends and characteristics in your research. These can be valuable as you develop aspects of your business model during the planning process.
The market analysis will dictate how you should plan to successfully capture market share. If you have not yet defined your market, you really can’t create an effective marketing plan. Likewise, if you don’t understand what drives demand in your industry, you can’t create a proper sales plan.
The information you include in your market analysis will shape the rest of your plan. This information consists of the total size of your market, how your market is segmented, and the market segments that you’ll target.
Also, try to find information about how your market purchases your products or services, what drives revenue, and any critical trends in your industry.
Because so much of a business’s success relies on good market and industry information, the best place to start is with a market analysis.
By starting with this section, you will have an opportunity to think about your business from a more informed viewpoint, and the other parts will be easier to write. You can write them while keeping in mind the research you’ve done and the data you’ve found. This will lead to more effective business planning overall.
Some Other Good Places to Start Writing your Business Plan
A proper market analysis can provide a good foundation for your business plan and make it easier to write other sections. Yet, there are a couple of other parts that may be suitable to start writing. One other good place to start is with an analysis of the competition.
I’ve had quite a few clients tell me that no one else is doing what they’re doing. That there just isn’t any competition. It usually turns out that, with a little bit of searching, there is another company offering something similar.
Don’t be afraid to really look for competition and to do it early in the process. You’ll be wasting your time if you write a large portion of your plan only to find out that you missed a competitor that offers a similar product or service.
Remember, there is probably something similar out there.
There might not be a company doing exactly what you’re doing or offering exactly the same product. Still, there will most likely be a company offering a solution to the problem. That’s why it helps to look for alternatives to your product or service rather than direct competitors.
Not only do you want to identify the competition and alternatives that exist in the marketplace, but you also want to think about how you’re different. What’s your competitive advantage? How will you differentiate yourself? The answers to these questions will shape the other sections of the plan.
Another optional place to start writing your business plan is the financial section. By starting with the financial section, you can begin to think about your necessary expenses and what revenue you’d need to generate to cover them.
It’s hard to make an educated guess about the revenue you’ll earn without a proper market analysis. Yet if you can determine the sales you’ll need, so you cover your expenses, you can begin to understand the size of the market you’ll need to sustain your business.
Writing a business plan is a big task. Many of the sections build off of each other. You’ll want to start writing your business plan with a section that’ll give you an excellent foundation for the rest of the plan. To achieve this, the best place to start is the market analysis.
Starting there will save you time, help you structure your marketing and sales plans, and help you estimate your revenue potential.
If you’re still in the early planning stages and not ready to write your formal plan, feel free to start with any section you’d like. You can use the business plan template as a brainstorming outline to get all of your ideas on paper.
Just remember, though, that you can avoid making weak assumptions by building your business plan with proper, reliable market data. Understanding the size of your market, its segments, and their characteristics will make you a more informed and better-prepared business owner. It will also make writing your business plan a breeze.
If you have any questions about retail or commercial banking, send me an email at email@example.com. To stay up to date on new blog posts, subscribe to The Helpful Banker below.