Many startups, freelancers and entrepreneurs ask the question, “Can you start a business without writing a formal business plan?” The simple answer to that is “Yes” – sometimes entrepreneurs strike gold the first time around as the right timing meets the perfect circumstances – but the more realistic answer is “Not really.” Developing a successful business is like trying to put together a puzzle, and if you don’t know what picture you’re trying to create, sometimes those puzzle pieces just won’t fit.

So a business plan is really your road map to success, and without it you run the risk of getting lost in the process. Here are few tips to write the perfect business plan that will start you off on the right foot and set the stage for success.

Start with the Big Picture

This is where you dream big. Many business plans start as fantasies, things you only wish you could be doing but aren’t sure how to implement. So, when sitting down to write your business plan, think of the big picture and where you want to be in 5 years. What is your purpose and vision for your business – what is your why? Write this down on a separate piece of paper before moving on to start writing your actual business plan. It will give you something to reference as you try to create a realistic and rational approach to building your business. Understand that your dream may change a little as you are faced with some of the realities of business development, but it’s important to start with the big picture and try to work towards that as best you can.

Create a Blueprint

Now that you have the big picture in mind, it’s time to create actionable steps to make your dream a reality. Your business plan should project 3-5 years in advance and give a general outline of how you intend to grow and generate revenue. This step is all about creating a blueprint for your business to establish how you will build your foundation and how you will expand on that in your first 5 years. Here are some questions to ask yourself to inspire your first steps forward:

  • What need will your business meet and what service will you provide to meet that need?
  • Where will you operate business? Do you need a brick and mortar location, or will you start from a home office?
  • Who will be part of your business? Are you going solo or enlisting the help of likeminded entrepreneurs to start this endeavor?
  • What does each member of your team contribute to the business and what are their qualifications to do so? This is an important question to ask, especially if you intend to seek investors for capitol to start your business.

Do Your Market Research

Once you’ve established your why and answered the basic questions about how you will get started, you’ll want to do some market research. It’s important to understand the industry you are trying to enter and evaluate your competition. Ask the following questions to get a better understanding of the market you are entering and establish your customer base.

  • How big is the market?
  • Who is the competition?
  • What will set you apart from the competition?
  • Who are your target customers?
  • How will you communicate with your target audience? What marketing strategies will be most effective?

Be Realistic with Finances

Perhaps the most unpleasant part of a business plan is getting real with your finances. Having a dream is the easy part, but funding it can be a little more complicated. If you intend to seek investors or a partnership, this is the most important part of your business plan as it is a detailed description of your starting assets and outlines your expected revenue growth. This is where your dream may need to be reshaped to fit your reality. Be fully transparent in answering these questions as it will ensure that there are no surprise costs or roadblocks ahead, and will prevent you from starting a venture that would not be financially responsible.

  • How much money do you need to get started?
  • How much money do you have available to invest in the company?
  • What are your anticipated costs of running the business? Don’t forget to include materials, marketing, utilities, salaries, taxes and additional fees in your calculations.
  • What will you charge for your service or product? How much of that will be profit?
  • Are you considering seeking an investor?

When you’ve asked yourself all these questions, you should have a clear path forward to bring your dream to reality. Remember, a great business plan will convince others of the value of your dreams, but, more importantly, it should validate your ideas and convince you that you’re headed in the right direction.