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How to Write an Informal Business Plan

If you’re not seeking investors, or want to jump into the market quickly to launch your product or service, then an informal business plan can help you clarify your startup’s goals, sales strategy, and target market. At the least, writing it all down will help you crystallize your thoughts, set your priorities, and keep you on track.

An informal business plan should contain, at the minimum:

A company description and mission statement. Describe your business in a few brief paragraphs, including your legal structure (for more on that, see pages 70–75) and the type of unique services or products you provide. Also include a brief description of the management team, detailing each person’s responsibilities.

An overview of your target market. Be specific about the customers you serve, including any demographics you might have, such as age, income, location, purchasing habits, buying cycles, and willingness to adopt new products and services. A goal in this section is to prove that you know your customer, which is important for marketing your company.

Elon Musk's first business plan for tesla

"Build sports car. Use that money to build an affordable car. Use that money to build an even more affordable car. While doing above, also provide zero emission electric power generation options. Don't tell anyone."

- ELON MUSK, summarizing his business plan in 2006 in a blog post on Tesla's website

An overview of the competition. Identify the current (or potential) competitors in your area or online who sell a service or product similar to yours, and identify their strengths and weaknesses. Gather this information by checking out their websites and marketing materials, or visiting their locations.

Marketing and sales strategy. Describe how you will promote your business, whether that’s through advertising, social media campaigns, promotional literature, or public relations. Define how you will get your product or service to customers, including whether you need sales representatives (inside or external) to promote your products. Identify what differentiates you, particularly when it comes to price, product, or service.

An overview of your finances. Include your startup costs, your operating costs, and revenue estimates. Keep your expectations realistic and honest: The biggest mistake entrepreneurs can make is to be overly optimistic with sales estimates. Include a cash-flow statement, as lack of cash is one of the biggest reasons small businesses fail.

Colleen DeBaise

Colleen DeBaise is contributing editor at Inc., podcast host at The Story Exchange, founder of the Hampton Bee, and author of The Wall Street Journal Complete Small Business Guidebook. She has written for The New York Times, Entrepreneur, BusinessWeek, SmartMoney, and other national publications.

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