What to Do Before Writing a Business Plan

Do you hate thinking about writing a 20- or 30-page business plan? I don’t blame you. Writing a formal business plan can consume days, or even weeks. One entrepreneur I met said that she’d been writing her plan for two years!

Who has time for that?

Let me share with you something that will ease the pain. Don't even think about writing a business plan until you do some simple preparation.

In fact, if you start with these five things, you’ll find that your business plan will practically write itself:

What to Do Before Writing a Business Plan

1. Describe Your Product or Service

You need to be able to tell me (or any other stranger) exactly what you are going to make or do. Make a list of the features of your product. Decide exactly what it will look like. Only when you have a perfect understanding of what you’re going to offer will you be ready to write a plan to create and sell it.

2. List Your Sources of Income

You don't have to sell your primary product...but you have to sell something. What will it be? Maybe like Facebook you'll give away memberships on a website but sell advertising and games ($4 billion this year!). Or maybe like TiVo you’ll make a low-cost device and sell a subscription service.

3. Put Names in Boxes

Even if you don't have partners or employees, you should be able to describe your perfect team. Draw a simple "box-and-line" organizational chart, or simply list the job titles of all the people you’ll need in the first year. Remember to include sales, operations, and finance.

Some people may even come from outside your company – like a lawyer, an accountant, or finance advisor. Name names if you can, and leave the rest “TBD” – to be decided.

4. Add Up Your Expenses

Business plans need to include two kinds of expenses: startup costs and operating costs. Be sure you can address both. Will you buy machines, computers, or tools before you open your doors? Those are startup expenses. Rent and salaries that keep you going are operating expenses.

List as many expenses as you can in each category. But don’t guess. If you’re not sure about the cost of something, find out now (before it becomes a nasty surprise!).

5. Convince Some Friends

To build a business you’ll need to build credibility. Real credibility is necessary for capital investments and business partners who will support you. So before you build a business plan, make a short list of those people and companies who will be most important to your success, and think about how you are going to win their support.

These five steps may not be easy, but working through them shouldn't take you more than a few hours of careful thinking, jotting down some notes, and making a few clicks around the Web. In less than an afternoon, you can be fully prepared to take the next step of writing a more formal business plan.