This second module describes how to write a pre-business plan for bootstrap start-up business before launching. A bootstrap start-up is a new business that does not require financing from banks or outside investors.
In the first series or module of my Business Plan Fundamentals, I mentioned that there are different types of business plans. A pre-business plan is one of them.
What is a Pre-business plan?
- It is an internal document that measures the probability of success of your planned business. It is sometimes called a “Feasibility Study Plan.”
- It is a living document that you will use as you tweak and grow your business. It is not something that you prepare and then forget about or leave gathering dust in your drawer or bookcase.
- It is not a formal business plan that will be submitted to banking institutions or shown to investors for a business loan.
Prior to putting your pre-business plan together, you should have already identified your market and your close competitors, your customer, what they need and how you will fill those needs that are not being met by your competitors.
If you have not done these yet, get my free e-book, “Road Map: From Business Idea to Launch” and go over the business idea validation process.
As a review, below are the 8 sections of a formal business plan:
- Executive Summary
- Company Description
- Product and Services
- Market Analysis
- Marketing Plan
- Management Strategy
- Financial Plan
What sections are excluded in a pre-business plan?
- Executive Summary: This section is a brief summary of your formal business plan. Its purpose is to introduce your company to those whom you are seeking to procure a business loan. Since you are bootstrapping your business, you do not need an Executive Summary.
- Management Strategy: This section describes or identifies your business partners or key management team players. If you are a solopreneur (the only one working in your company), you do not need this section.
- Appendix: This section is a summary of your charts and financial reports. Appendix is also primarily for the consumption of bankers and investors to give them a glimpse of your existing and projected financial data that are important for them to determine if your business is financially stable.
What sections should be included in a pre-business plan?
- Company Description. You know your company so one or two sentences will suffice for this section.
- Product and Services. This is where you describe both the problem/s of your potential client and how you are going to solve them.
- Market Analysis. Describe your ideal customer here and how many of them there are. You will also describe your competitor/s here and how are your products different from your competitors (also called your unfair advantage).
- Marketing Plan. In this section, you will describe your sales process and marketing activities. How will you sell to your customers? Will it be through the Internet or a storefront? What are the primary ways you will reach your customers?
- Financial Planning. This is where you describe your forecast of sales (revenues) and expenses. Many new entrepreneurs dread this section, especially those who do not like working with numbers. However, this is one of the most important sections of your pre-business plan. If you do not know how much is your revenue and expenses, you might find your business running out of money before long.
- Milestones. This is where you list your primary goals and objectives that you hope to achieve over the next few months. It shows the various activities that you need to do to take your business from idea to reality. Each of the activities should also show who will perform it and the deadline for its completion.
Bear in mind that this is not a graduate thesis. Don’t stress about it. Although you should know your market, you do not have to prove it until you’re trying to find outside investors.
Most of the sections are pretty easy to write. The most “creative” part, financial planning is a little hard to write.
Remember, though that the purpose of financial planning is not guessing the future right, rather setting down expectations and connecting the relationships between spending and revenue. You can adjust the projections as you go through your monthly financial reviews. This exercise will bring you closer to what is really happening in your business’ financial world.
To learn more or if you need help in the creation of your pre-business plan or feasibility study plan, I am here to help you. Send me an email at pacitaf (at) Entreprenalchemy(dot) com. Alternatively, use our comment form below.