Finding Investors
How Funding Works
Idea Validation Bootcamp
Pitch Deck Bootcamp
Pitching Investors
Product MVP
Product/MVP
Idea Validation
Customer Acquisition
Emotional Support
![](http://writinghelp.online/777/templates/cheerup/res/banner1.gif)
How To Write A Business Plan: A Comprehensive Guide
The Startups Team
How To Write A Business Plan: A Comprehensive Guide
A comprehensive, step-by-step guide - complete with real examples - on writing business plans with just the right amount of panache to catch an investor's attention and serve as a guiding star for your business.
Introduction to Business Plans
So you've got a killer startup idea. Now you need to write a business plan that is equally killer.
You fire up your computer, open a Google doc, and stare at the blank page for several minutes before it suddenly dawns on you that, Hm…maybe I have no idea how to write a business plan from scratch after all.
Don't let it get you down. After all, why would you know anything about business planning? For that very reason we have 4 amazing business plan samples to share with you as inspiration.
![salient features of writing business plan How to write a business plan](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/06/30151704/how-to-write-business-plan-1a-min.jpg)
For most founders, writing a business plan feels like the startup equivalent of homework. It's the thing you know you have to do, but nobody actually wants to do.
Here's the good news: writing a business plan doesn't have to be this daunting, cumbersome chore.
Once you understand the fundamental questions that your business plan should answer for your readers and how to position everything in a way that compels your them to take action, writing a business plan becomes way more approachable.
Before you set fingers to the keyboard to turn your business idea into written documentation of your organizational structure and business goals, we're going to walk you through the most important things to keep in mind (like company description, financials, and market analysis, etc.) and to help you tackle the writing process confidently — with plenty of real life business plan examples along the way to get you writing a business plan to be proud of!
Keep It Short and Simple.
There's this old-school idea that business plans need to be ultra-dense, complex documents the size of a doorstop because that's how you convey how serious you are about your company.
Not so much.
Complexity and length for complexity and length's sake is almost never a good idea, especially when it comes to writing a business plan. There are a couple of reasons for this.
1. Investors Are Short On Time
If your chief goal is using your business plan to secure funding, then it means you intend on getting it in front of an investor. And if there's one thing investors are, it's busy. So keep this in mind throughout writing a business plan.
Investors wade through hundreds of business plans a year. There's no version of you presenting an 80-page business plan to an investor and they enthusiastically dive in and take hours out of their day to pour over the thing front to back.
Instead, they're looking for you to get your point across as quickly and clearly as possible so they can skim your business plan and get to the most salient parts to determine whether or not they think your opportunity is worth pursuing (or at the very least initiating further discussions).
You should be able to refine all of the key value points that investors look for to 15-20 pages (not including appendices where you will detail your financials). If you find yourself writing beyond that, then it's probably a case of either over explaining, repeating information, or including irrelevant details in your business plan (you don't need to devote 10 pages to how you're going to set up your website, for example).
Bottom line: always be on the lookout for opportunities to “trim the fat" while writing a business plan (and pay special attention to the executive summary section below), and you'll be more likely to secure funding.
2. Know Your Audience
If you fill your business plan with buzzwords, industry-specific jargon or acronyms, and long complicated sentences, it might make sense to a handful of people familiar with your niche and those with superhuman attention spans (not many), but it alienates the vast majority of readers who aren't experts in your particular industry. And if no one can understand so much as your company overview, they won't make it through the rest of your business plan.
Your best bet here is to use simple, straightforward language that's easily understood by anyone — from the most savvy of investor to your Great Aunt Bertha who still uses a landline.
How To Format Your Business Plan
You might be a prodigy in quantum mechanics, but if you show up to your interview rocking cargo shorts and lime green Crocs, you can probably guess what the hiring manager is going to notice first.
In the same way, how you present your business plan to your readers equally as important as what you present to them. So don't go over the top with an extensive executive summary, or get lazy with endless bullet points on your marketing strategy.
If your business plan is laden with inconsistent margins, multiple font types and sizes, missing headings and page numbers, and lacks a table of contents, it's going to create a far less digestible reading experience (and totally take away from your amazing idea and hours of work writing a business plan!)
While there's no one right way to format your business plan, the idea here is to ensure that it presents professionally. Here's some easy formatting tips to help you do just that.
If your margins are too narrow, it makes the page look super cluttered and more difficult to read.
A good rule of thumb is sticking to standard one-inch margins all around.
Your business plan is made up of several key sections, like chapters in a book.
Whenever you begin a section (“Traction” for example) you'll want to signify it using a header so that your reader immediately knows what to expect from the content that follows.
This also helps break up your content and keep everything nice and organized in your business plan.
Subheadings
Subheadings are mini versions of headings meant to break up content within each individual section and capture the attention of your readers to keep them moving down the page.
In fact, we're using sub-headers right now in this section for that very purpose!
Limit your business plan to two typefaces (one for headings and one for body copy and subheadings, for example) that you can find in a standard text editor like Microsoft Word or Google Docs.
Only pick fonts that are easy to read and contain both capital and lowercase letters.
Avoid script-style or jarring fonts that distract from the actual content. Modern, sans-serif fonts like Helvetica, Arial, and Proxima Nova are a good way to go.
Keep your body copy between 11 and 12-point font size to ensure readability (some fonts are more squint-inducing than others).
You can offset your headings from your body copy by simply upping the font size and by bolding your subheadings.
Sometimes it's better to show instead of just tell.
Assume that your readers are going to skim your plan rather than read it word-for-word and treat it as an opportunity to grab their attention with color graphics, tables, and charts (especially with financial forecasts), as well as product images, if applicable.
This will also help your reader better visualize what your business model is all about.
Need some help with this?
Our business planning wizard comes pre-loaded with a modular business plan template that you can complete in any order and makes it ridiculously easy to generate everything you need from your value proposition, mission statement, financial projections, competitive advantage, sales strategy, market research, target market, financial statements, marketing strategy, in a way that clearly communicates your business idea.
Refine Your Business Plans. Then Refine Them Some More.
Your business isn't static, so why should your business plan be?
Your business strategy is always evolving, and so are good business plans. This means that the early versions of your business plans probably won't (and shouldn't be) your last. The details of even even the best business plans are only as good as their last update.
As your business progresses and your ideas about it shift, it's important revisit your business plan from time to time to make sure it reflects those changes, keeping everything as accurate and up-to-date as possible. What good is market analysis if the market has shifted and you have an entirely different set of potential customers? And what good would the business model be if you've recently pivoted? A revised business plan is a solid business plan. It doesn't ensure business success, but it certainly helps to support it.
This rule especially holds true when you go about your market research and learn something that goes against your initial assumptions, impacting everything from your sales strategy to your financial projections.
At the same time, before you begin shopping your business plan around to potential investors or bankers, it's imperative to get a second pair of eyes on it after you've put the final period on your first draft.
After you run your spell check, have someone with strong “English teacher skills” run a fine-tooth comb over your plan for any spelling, punctuation, and grammatical errors you may have glossed over. An updated, detailed business plan (without errors!) should be constantly in your business goals.
More than that, your trusty business plan critic can also give you valuable feedback on how it reads from a stylistic perspective. While different investors prefer different styles, the key here is to remain consistent with your audience and business.
Writing Your Business Plan: A Section-By-Section Breakdown
We devoted an entire article carefully breaking down the key components of a business plan which takes a comprehensive look of what each section entails and why.
If you haven't already, you should check that out, as it will act as the perfect companion piece to what we're about to dive into in a moment.
For our purposes here, we're going to look at a few real world business plan examples (as well as one of our own self-penned “dummy” plans) to give you an inside look at how to position key information on a section-by-section basis.
1. Executive Summary
Quick overview.
After your Title Page — which includes your company name, slogan (if applicable), and contact information — and your Table of Contents, the Executive Summary will be the first section of actual content about your business.
The primary goal of your Executive Summary is to provide your readers with a high level overview of your business plan as a whole by summarizing the most important aspects in a few short sentences. Think of your Executive Summary as a kind of “teaser” for your business concept and the information to follow — information which you will explain in greater detail throughout your plan. This isn't the place for your a deep dive on your competitive advantages, or cash flow statement. It is an appropriate place to share your mission statement and value proposition.
Executive Summary Example
Here's an example of an Executive Summary taken from a sample business plan written by the Startups.com team for a fictional company called Culina. Here, we'll see how the Executive Summary offers brief overviews of the Product , Market Opportunity , Traction , and Next Steps .
Culina Tech specializes in home automation and IoT technology products designed to create the ultimate smart kitchen for modern homeowners.
Our flagship product, the Culina Smart Plug, enables users to make any kitchen appliance or cooking device intelligent. Compatible with all existing brands that plug into standard two or three-prong wall outlets, Culina creates an entire network of Wi-Fi-connected kitchen devices that can be controlled and monitored remotely right from your smartphone.
The majority of US households now spend roughly 35% of their energy consumption on appliances, electronics, and lighting. With the ability to set energy usage caps on a daily, weekly or monthly basis, Culina helps homeowners stay within their monthly utility budget through more efficient use of the dishwasher, refrigerator, freezer, stove, and other common kitchen appliances.
Additionally, 50.8% of house fires are caused in the kitchen — more than any other room in the home — translating to over $5 billion in property damage costs per year. Culina provides the preventative intelligence necessary to dramatically reduce kitchen-related disasters and their associated costs and risk of personal harm.
Our team has already completed the product development and design phase, and we are now ready to begin mass manufacturing. We've also gained a major foothold among consumers and investors alike, with 10,000 pre-ordered units sold and $5 million in investment capital secured to date.
We're currently seeking a $15M Series B capital investment that will give us the financial flexibility to ramp up hardware manufacturing, improve software UX and UI, expand our sales and marketing efforts, and fulfill pre-orders in time for the 2018 holiday season.
2. Company Synopsis
Your Company Synopsis section answers two critically important questions for your readers: What painful PROBLEM are you solving for your customers? And what is your elegant SOLUTION to that problem? The combination of these two components form your value proposition.
Company Synopsis Example
Let's look at a real-life company description example from HolliBlu * — a mobile app that connects healthcare facilities with local skilled nurses — to see how they successfully address both of these key aspects. *Note: Full disclosure; Our team worked directly with this company on their business plan via Fundable.
![salient features of writing business plan Business plan: Company synopsis example](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/06/05163929/business-plan-company-synopsis-v2-min.jpg)
Notice how we get a crystal clear understanding of why the company exists to begin with when they set up the problem — that traditional nurse recruitment methods are costly, inconvenient, and time-consuming, creating significant barriers to providing quality nursing to patients in need.
Once we understand the painful problem that HolliBlu's customers face, we're then directly told how their solution links back directly to that problem — by creating an entire community of qualified nurses and directly connecting them with local employers more cost-effectively and more efficiently than traditional methods.
3. Market Overview
Your Market Overview provides color around the industry that you will be competing in as it relates to your product/service.
This will include statistics about industry size, [growth](https://www.startups.com/library/expert-advice/the-case-for-growing-slowly) rate, trends, and overall outlook. If this part of your business plan can be summed up in one word, it's research .
The idea is to gather as much raw data as you can to make the case for your readers that:
This is a market big enough to get excited about.
You can capture a big enough share of this market to get excited about.
Target Market Overview Example
Here's an example from HolliBlu's business plan:
![salient features of writing business plan Business plan: Market overview example](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/06/05164012/business-plan-market-overview-v2-min.jpg)
HolliBlu's Market Overview hits all of the marks — clearly laying out the industry size ($74.8 billion), the Total Addressable Market or TAM (3 million registered nurses), industry growth rate (581,500 new RN jobs through 2018; $355 billion by 2020), and industry trends (movement toward federally-mandated compliance with nurse/patient ratios, companies offering sign-on bonuses to secure qualified nurses, increasing popularity of home-based healthcare).
4. Product (How it Works)
Where your Company Synopsis is meant to shed light on why the company exists by demonstrating the problem you're setting out to solve and then bolstering that with an impactful solution, your Product or How it Works section allows you to get into the nitty gritty of how it actually delivers that value, and any competitive advantage it provides you.
Product (How it Works) Example
In the below example from our team's Culina sample plan, we've divided the section up using subheadings to call attention to product's key features and how it actually works from a user perspective.
This approach is particularly effective if your product or service has several unique features that you want to highlight.
![salient features of writing business plan Business plan: Product overview](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/06/30141328/business-plan-product-overview-min.jpg)
5. Revenue Model
Quite simply, your Revenue Model gives your readers a framework for how you plan on making money. It identifies which revenue channels you're leveraging, how you're pricing your product or service, and why.
Revenue Model Example
Let's take a look at another real world business plan example with brewpub startup Magic Waters Brewpub .*
It can be easy to get hung up on the financial aspect here, especially if you haven't fully developed your product yet. And that's okay. *Note: Full disclosure; Our team worked directly with this company on their business plan via Fundable.
The thing to remember is that investors will want to see that you've at least made some basic assumptions about your monetization strategy.
![salient features of writing business plan Business plan: Revenue model](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/06/30141332/business-plan-revenue-model-min.jpg)
6. Operating Model
Your Operating Model quite simply refers to how your company actually runs itself. It's the detailed breakdown of the processes, technologies, and physical requirements (assets) that allow you to deliver the value to your customers that your product or service promises.
Operating Model Example
Let's say you were opening up a local coffee shop, for example. Your Operating Model might detail the following:
Information about your facility (location, indoor and outdoor space features, lease amount, utility costs, etc.)
The equipment you need to purchase (coffee and espresso machines, appliances, shelving and storage, etc.) and their respective costs.
The inventory you plan to order regularly (product, supplies, etc.), how you plan to order it (an online supplier) and how often it gets delivered (Mon-Fri).
Your staffing requirements (including how many part or full time employees you'll need, at what wages, their job descriptions, etc.)
In addition, you can also use your Operating Model to lay out the ways you intend to manage the costs and efficiencies associated with your business, including:
The Critical Costs that make or break your business. In the case of our coffee shop example, you might say something like,
“We're estimating the marketing cost to acquire a customer is going to be $25. Our average sale is $45. So long as we can keep our customer acquisition costs below $25 we will have enough margin to grow with.”
Cost Maturation & Milestones that show how your Critical Costs might fluctuate over time.
“If we sell 50 coffees a day, our average unit cost will be $8 on a sale of $10. At that point we're barely breaking even. However as we scale up to 200 coffees a day, our unit costs drop significantly to $4, creating a 100% increase in net income.”
Investment Costs that highlight strategic uses of capital that will have a big Return on Investment (ROI) later.
“We're investing $100,000 into a revolutionary new coffee brewing system that will allow us to brew twice the amount our current output with the same amount of space and staff.”
Operating Efficiencies explaining your capability of delivering your product or service in the most cost effective manner possible while maintaining the highest standards of quality.
“By using energy efficient Ecoboilers, we're able to keep our water hot while minimizing the amount of energy required. Our machines also feature an energy saving mode. Both of these allow us to dramatically cut energy costs.”
7. Competitive Analysis
Like the Market Overview section, you want to show your readers that you've done your homework and have a crazy high level of awareness about your current competitors or any potential competitors that may crop up down the line for your given business model.
When writing your Competitive Analysis, your overview should cover who your closest competitors are, the chief strengths they bring to the table, and their biggest weaknesses .
You'll want to identify at least 3 competitors — either direct, indirect, or a combination of the two. It's an extremely important aspect of the business planning process.
Competition Analysis Example
Here's an example of how HolliBlu lays out their Competitive Analysis section for just one of their competitors, implementing each of the criteria noted above:
![salient features of writing business plan Business plan: Competion analysis example](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/06/05164106/business-plan-competitive-analysis-v2-min.jpg)
8. Customer Definition
Your Customer Definition section allows you to note which customer segment(s) you're going after, what characteristics and habits each customer segment embodies, how each segment uniquely benefits from your product or service, and how all of this ties together to create the ideal portrait of an actual paying customer, and how you'll cultivate and manage customer relationships.
Customer Definition Example
![salient features of writing business plan Business plan: Customer definition](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/06/30141303/business-plan-customer-definition-min.jpg)
HolliBlu's Customer Definition section is effective for several reasons. Let's deconstruct their first target market segment, hospitals.
What's particularly successful here is that we are explained why hospitals are optimal buyers.
They accomplish this by harkening back to the central problem at the core of the opportunity (when hospitals can't supply enough staff to meet patient demands, they have to resort on costly staffing agencies).
On top of that, we are also told how big of an opportunity going after this customer segment represents (5,534 hospitals in the US).
This template is followed for each of the company's 3 core customer segments. This provides consistency, but more than that, it emphasizes how diligent research reinforces their assumptions about who their customers are and why they'd open their wallets. Keep all of this in mind when you are write your own business plan.
9. Customer Acquisition
Now that you've defined who your customers are for your readers, your Customer Acquisition section will tell them what marketing and sales strategy and tactics you plan to leverage to actually reach the target market (or target markets) and ultimately convert them into paying customers.
marketing Strategy Example
![salient features of writing business plan Business plan: Customer acquisition](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/06/30141259/business-plan-customer-acquisition-min.jpg)
Similar to the exercise you will go through with your Revenue Model, in addition to identifying which channels you're pursuing, you'll also want to detail all of relevant costs associated with your customer acquisition channels.
Let's say you spent $100 on your marketing plan to acquire 100 customers during 2018. To get your CAC, you simply divide the number of customers acquired by your spend, giving you a $1.00 CAC.
10. Traction
This one's huge. Traction tells investors one important thing: that you're business has momentum. It's evidence that you're making forward progress and hitting milestones. That things are happening. It's one of the most critical components of a successful business plan.
Why is this so important? Financial projections are great and all, but if you can prove to investors that your company's got legs before they've even put a dime into it, then it will get them thinking about all the great things you'll be able to accomplish when they do bankroll you.
Traction Example
![salient features of writing business plan Business plan: Traction](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/06/30141311/business-plan-traction-min.jpg)
In our Culina Traction section, we've called attention to several forms of traction, touching on some of the biggest ones that you'll want to consider when writing your own plan.
Have I built or launched my product or service yet?
Have I reached any customers yet?
Have I generated any revenue yet?
Have I forged any strategic industry relationships that will be instrumental in driving growth?
The key takeaway here: the more traction you can show, the more credibility you build with investors. After all, you can't leave it all on market analysis alone.
11. Management Team
Here's what your Management Team section isn't: it's not an exhaustive rundown of each and every position your team members have held over the course of their lives.
Instead, you should tell investors which aspects of your team's experience and expertise directly translates to the success of this company and this industry.
In other words, what applicable, relevant background do they bring to the table?
Management Team Example
![salient features of writing business plan Business plan: The Team](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/06/30141320/business-plan-management-team-min.jpg)
Let's be real. The vast majority of startup teams probably aren't stacked with Harvard and Stanford grads. But the thing to home in on is how the prior experience listed speaks directly to how it qualifies that team member's current position.
The word of the day here is relevancy. If it's not relevant, you probably don't need to include it in your typical business plan.
12. Funding
Funding overview.
The ask! This is where you come out and, you guessed it, ask your investors point blank how much money you need to move your business forward, what specific milestones their investment will allow you to reach, how you'll allocate the capital you secure, and what the investor will get in exchange for their investment.
You can also include information about your exit strategy (IPO, acquisition, merger?).
Funding Example
![salient features of writing business plan Business plan: Funding](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/06/30141315/business-plan-funding-min.jpg)
While we've preached against redundancy in your business plan, an exception to the rule is using the Funding section to offer up a very brief recap that essentially says, “here are the biggest reasons you should invest in my company and why it will ultimately benefit you.”
13. Financials
Spreadsheets and numbers and charts, oh my! Yes, it's everybody's “favorite” business plan section: Financials.
Your Financials section will come last and contain all of the forecasted numbers that say to investors that this is a sound investment. This will include things like your sales forecast, expense budget, and break-even analysis. A lot of this will be assumptions, or estimates.
The key here is keeping those estimates as realistic as humanly possible by breaking your figures into components and looking at each one individually.
Financials Example
![salient features of writing business plan Business Financials](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/06/30141307/business-plan-financials-min.jpg)
The balance sheet above illustrates the business' estimated net worth over a three-year period by summarizing its assets (tangible objects owned by the company), liabilities (debt owed to a creditor of the company), and shareholders' equity (source of financing used to fund the assets).
In plain words, the balance sheet is basically a snapshot of your business' financial status by laying out what you own and owe, helping investors determine the level of risk involved and giving them a good understanding of the financial health of the business.
If you're looking to up your game from those outdated Excel-style spreadsheets, our business planning software will help you create clean, sleek, modern financial reports the modern way. Plus, it's as easy to use as it is attractive to look at. You might even find yourself enjoying financial projections, building a cash flow statement, and business planning overall.
You've Got This!
You've committed to writing your business plan and now you've got some tricks of the trade to help you out along the way. Whether you're applying for a business loan or seeking investors, your well-crafted business plan will act as your Holy Grail in helping take your business goals to the next plateau.
This is a ton of work. It's not a few hours and a free business plan template. It's not just a business plan software. We've been there before. Writing your [business plan](https://www.startups.com/library/expert-advice/top-4-business-plan-examples) is just one small step in startup journey. There's a whole long road ahead of you filled with a marketing plan, investor outreach, chasing venture capitalists, actually getting funded, and growing your business into a successful company.
And guess what? We've got helpful information on all of it — and all at your disposal! We hope this guides you confidently on how to write a business plan worth bragging about.
Ronald Calderon
Great info for feedback my current business plan!
Upgrade to join the discussion.
Business Plan
A summary document that outlines how and why a new business is being created
What is a Business Plan?
A business plan is a summary document that outlines how and why a new business is being created. New entrepreneurial ventures must prepare formal written documents to outline their long-term objectives and the means to be employed to reach said objectives. The business plan underlines the strategies that need to be adopted in order to reach organizational goals, identify potential problems, and devise custom solutions for them.
![salient features of writing business plan Business Plan](https://cdn.corporatefinanceinstitute.com/assets/business-plan-1024x683.jpeg)
In addition, potential investors look at business plans to evaluate the risk exposure of a particular entrepreneurial venture. Startups that try to attract employees and investors use business plans to solidify their claims regarding the potential profitability of a particular business idea. Existing companies may use business plans to deal with suppliers or manage themselves more effectively.
- A business plan is a summary document that outlines how and why a new business is being created.
- New entrepreneurial ventures must prepare formal written documents to outline their long-term objectives and the means to be employed to reach said objectives.
- Existing companies may use business plans to deal with suppliers or manage themselves more effectively.
Why Use a Business Plan?
Owing to the following benefits of a well-researched and comprehensive business plan, preparing one is highly recommended, but not a mandate.
1. Feasibility
Entrepreneurs use a business plan to understand the feasibility of a particular idea. It is important to contextualize the worth of the proposed product or service in the current market before committing resources such as time and money. It helps to expand the otherwise limited view of a passionate innovator-turned-entrepreneur.
2. Focusing device
Formulating a concrete plan of action enables an organized manner of conducting business and reduces the possibility of losses due to uncalculated risks. Business plans act as reference tools for management and employees as they solidify the flow of communication, authority, and task allocation.
3. Foresight
The process of preparing a business plan often creates many unintended yet desired results. It functions on the principle of foresight as it helps one realize future hurdles and challenges that aren’t explicit. It also brings a variety of perspectives on the forefront, eventually leading to a more comprehensive future plan of action.
4. Raising capital
A business plan is an effective way of communicating with potential investors, and the level of expertise and time used in preparing a business plan also gives professional credibility to entrepreneurs . It analyzes and predicts the chances of success for the investor and helps to raise capital.
Features of a Good Business Plan
1. executive summary.
The executive summary functions as a reading guide, as it highlights the key aspects of the plan and gives structure to the document. It must describe ownership and history of formation. It is an abstract of the entire plan, describes the mission statement of the organization, and presents an optimistic view about the product/service/concept.
2. Business Description
This section presents the mission and vision of an organization. Business descriptions provide the concept of one’s place in the market and its benefits to future customers. It must include key milestones, tasks, and assumptions, popularly known as MAT. Big ideas are redundant without specifics that can be tracked. Fundamental questions to be answered include:
- Who are you?
- What is the product or service, and what are its differentiating characteristics?
- Where is the opportunity located?
- When will you start implementing your plan and expects cash flows or profits?
- Why should customers choose your company?
- How do you plan to run the business in terms of structure and regulatory compliance?
3. Market Strategies
The market strategies section presents the target consumer group and the strategies needed to tap into it. It requires meticulous analysis of all aspects of the market, such as demography, cultural norms, environmental standards, resource availability, prices, distribution channels , etc.
4. Competitive Analysis
The competitive analysis section aims to understand the entry barriers one could face due to other companies in the same or complementary sectors. The strengths of existing companies could be co-opted into one’s strategy, and the weaknesses of existing product development cycles could be exploited to gain a distinct advantage.
5. Design and Development Plan
It outlines the technical details of the product and its development cycle within the realm of production. In the sphere of circulation, it focuses on marketing and the overall budget required to reach organizational objectives.
6. Operations and Management Plan
The operations and management plan describes the cycle of business functions needed for survival and growth. It includes management functions such as task division, hierarchy, employee recruitment, and operational functions such as the logistics of the value chain , distribution, and other capital and expense requirements. The managers’ backgrounds must also be briefly included.
7. Financial Factors
The financials section should include the company’s balance sheet and cash flow projections. Financial data is imperative to provide credibility to any assertions or claims made about the future profitability of the business. The aim is to provide an accurate idea of the company’s value and ability to bear operational costs and earn profits.
Common Mistakes to Avoid While Writing a Business Plan
- The plan must not begin by stressing the superiority of one’s product or service, but instead by identifying a genuine problem faced by the consumer. The plan should then be presented as a way of bridging that gap between consumer expectations and industry offerings.
- A team’s expertise is displayed not by listing their academic achievements and employment history, but by stressing how the team’s experience is best suited for a particular industry sector or product. Often, teams with members who have failed in a past venture are successful in attracting capital.
- The most common mistake is to offer an excessively optimistic view of the opportunity. There is no market without competition and no venture without some degree of risk, and a business plan must portray the objective truth with sincerity.
Additional Resources
CFI is the official provider of the Financial Modeling and Valuation Analyst (FMVA)™ certification program, designed to transform anyone into a world-class financial analyst.
In order to help you become a world-class financial analyst and advance your career to your fullest potential, these additional CFI resources will be very helpful:
- 5 P’s of Marketing
- Business Model Canvas Template
- Profit Model
- Balanced Scorecard
- Value Proposition
- See all commercial lending resources
- Share this article
![salient features of writing business plan Excel Fundamentals - Formulas for Finance](https://static.corporatefinanceinstitute.com/lms/course_image/d58fad35-cb68-440b-a93f-4ad1c061ff79.png)
Create a free account to unlock this Template
Access and download collection of free Templates to help power your productivity and performance.
Already have an account? Log in
Supercharge your skills with Premium Templates
Take your learning and productivity to the next level with our Premium Templates.
Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI's full course catalog and accredited Certification Programs.
Already have a Self-Study or Full-Immersion membership? Log in
Access Exclusive Templates
Gain unlimited access to more than 250 productivity Templates, CFI's full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more.
Already have a Full-Immersion membership? Log in
![salient features of writing business plan](https://www.business.org/app/uploads/2020/08/Card_Ratings_Banner_desktop.png)
Home > Business > Business Startup
How To Write a Business Plan
![salient features of writing business plan Stephanie Coleman](https://www.business.org/app/uploads/2023/02/steph-coleman-bw-150x150.png)
We are committed to sharing unbiased reviews. Some of the links on our site are from our partners who compensate us. Read our editorial guidelines and advertising disclosure .
![salient features of writing business plan How-to-write-a-business-plan](https://www.business.org/app/uploads/2023/02/How-to-write-a-business-plan-eabc28aa-9170-495e-81ae-5ff0462be0a8.jpg)
Starting a business is a wild ride, and a solid business plan can be the key to keeping you on track. A business plan is essentially a roadmap for your business — outlining your goals, strategies, market analysis and financial projections. Not only will it guide your decision-making, a business plan can help you secure funding with a loan or from investors .
Writing a business plan can seem like a huge task, but taking it one step at a time can break the plan down into manageable milestones. Here is our step-by-step guide on how to write a business plan.
Table of contents
- Write your executive summary
- Do your market research homework
- Set your business goals and objectives
- Plan your business strategy
- Describe your product or service
- Crunch the numbers
- Finalize your business plan
![salient features of writing business plan](https://www.business.org/app/uploads/2021/07/Home-page-email.png)
By signing up I agree to the Terms of Use and Privacy Policy .
Step 1: Write your executive summary
Though this will be the first page of your business plan , we recommend you actually write the executive summary last. That’s because an executive summary highlights what’s to come in the business plan but in a more condensed fashion.
An executive summary gives stakeholders who are reading your business plan the key points quickly without having to comb through pages and pages. Be sure to cover each successive point in a concise manner, and include as much data as necessary to support your claims.
You’ll cover other things too, but answer these basic questions in your executive summary:
- Idea: What’s your business concept? What problem does your business solve? What are your business goals?
- Product: What’s your product/service and how is it different?
- Market: Who’s your audience? How will you reach customers?
- Finance: How much will your idea cost? And if you’re seeking funding, how much money do you need? How much do you expect to earn? If you’ve already started, where is your revenue at now?
![salient features of writing business plan](https://www.business.org/app/uploads/2022/10/credit-cards-icon.png)
Step 2: Do your market research homework
The next step in writing a business plan is to conduct market research . This involves gathering information about your target market (or customer persona), your competition, and the industry as a whole. You can use a variety of research methods such as surveys, focus groups, and online research to gather this information. Your method may be formal or more casual, just make sure that you’re getting good data back.
This research will help you to understand the needs of your target market and the potential demand for your product or service—essential aspects of starting and growing a successful business.
Step 3: Set your business goals and objectives
Once you’ve completed your market research, you can begin to define your business goals and objectives. What is the problem you want to solve? What’s your vision for the future? Where do you want to be in a year from now?
Use this step to decide what you want to achieve with your business, both in the short and long term. Try to set SMART goals—specific, measurable, achievable, relevant, and time-bound benchmarks—that will help you to stay focused and motivated as you build your business.
Step 4: Plan your business strategy
Your business strategy is how you plan to reach your goals and objectives. This includes details on positioning your product or service, marketing and sales strategies, operational plans, and the organizational structure of your small business.
Make sure to include key roles and responsibilities for each team member if you’re in a business entity with multiple people.
Step 5: Describe your product or service
In this section, get into the nitty-gritty of your product or service. Go into depth regarding the features, benefits, target market, and any patents or proprietary tech you have. Make sure to paint a clear picture of what sets your product apart from the competition—and don’t forget to highlight any customer benefits.
Step 6: Crunch the numbers
Financial analysis is an essential part of your business plan. If you’re already in business that includes your profit and loss statement , cash flow statement and balance sheet .
These financial projections will give investors and lenders an understanding of the financial health of your business and the potential return on investment.
You may want to work with a financial professional to ensure your financial projections are realistic and accurate.
Step 7: Finalize your business plan
Once you’ve completed everything, it's time to finalize your business plan. This involves reviewing and editing your plan to ensure that it is clear, concise, and easy to understand.
You should also have someone else review your plan to get a fresh perspective and identify any areas that may need improvement. You could even work with a free SCORE mentor on your business plan or use a SCORE business plan template for more detailed guidance.
Compare the Top Small-Business Banks
$0.00 | ||||||
$0.00 | ||||||
$0.00 | ||||||
$10.00 (waivable) | ||||||
$0.00 |
Data effective 1/10/23. At publishing time, rates, fees, and requirements are current but are subject to change. Offers may not be available in all areas.
The takeaway
Writing a business plan is an essential process for any forward-thinking entrepreneur or business owner. A business plan requires a lot of up-front research, planning, and attention to detail, but it’s worthwhile. Creating a comprehensive business plan can help you achieve your business goals and secure the funding you need.
Related content
- 5 Best Business Plan Software and Tools in 2023 for Your Small Business
- How to Get a Business License: What You Need to Know
- What Is a Cash Flow Statement?
Best Small Business Loans
![salient features of writing business plan Stephanie Coleman](https://www.business.org/app/uploads/2023/02/steph-coleman-bw-150x150.png)
5202 W Douglas Corrigan Way Salt Lake City, UT 84116
Accounting & Payroll
Point of Sale
Payment Processing
Inventory Management
Human Resources
Other Services
Best Inventory Management Software
Best Small Business Accounting Software
Best Payroll Software
Best Mobile Credit Card Readers
Best POS Systems
Best Tax Software
Stay updated on the latest products and services anytime anywhere.
By signing up, you agree to our Terms of Use and Privacy Policy .
Disclaimer: The information featured in this article is based on our best estimates of pricing, package details, contract stipulations, and service available at the time of writing. All information is subject to change. Pricing will vary based on various factors, including, but not limited to, the customer’s location, package chosen, added features and equipment, the purchaser’s credit score, etc. For the most accurate information, please ask your customer service representative. Clarify all fees and contract details before signing a contract or finalizing your purchase.
Our mission is to help consumers make informed purchase decisions. While we strive to keep our reviews as unbiased as possible, we do receive affiliate compensation through some of our links. This can affect which services appear on our site and where we rank them. Our affiliate compensation allows us to maintain an ad-free website and provide a free service to our readers. For more information, please see our Privacy Policy Page . |
© Business.org 2024 All Rights Reserved.
- Sources of Business Finance
- Small Business Loans
- Small Business Grants
- Crowdfunding Sites
- How to Get a Business Loan
- Small Business Insurance Providers
- Best Factoring Companies
- Types of Bank Accounts
- Best Banks for Small Business
- Best Business Bank Accounts
- Open a Business Bank Account
- Bank Accounts for Small Businesses
- Free Business Checking Accounts
- Best Business Credit Cards
- Get a Business Credit Card
- Business Credit Cards for Bad Credit
- Build Business Credit Fast
- Business Loan Eligibility Criteria
- Small-Business Bookkeeping Basics
- How to Set Financial Goals
- Business Loan Calculators
- How to Calculate ROI
- Calculate Net Income
- Calculate Working Capital
- Calculate Operating Income
- Calculate Net Present Value (NPV)
- Calculate Payroll Tax
How to Write a Business Plan in 9 Steps (+ Template and Examples)
Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.
If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.
Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.
You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.
Let’s get started.
What Do You Need A Business Plan For?
Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.
1. Secure Funds
One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.
For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.
A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.
Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.
2. Monitor Business Growth
A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:
- The business goals
- Methods to achieve the goals
- Time-frame for attaining those goals
A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.
You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.
3. Measure Business Success
A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.
Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.
You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.
4. Document Your Marketing Strategies
You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.
Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.
In your business plan, your marketing strategy must answer the questions:
- How do you want to reach your target audience?
- How do you plan to retain your customers?
- What is/are your pricing plans?
- What is your budget for marketing?
![salient features of writing business plan Business Plan Infographic](https://www.founderjar.com/wp-content/uploads/2021/07/Business-Plan-Infographic.jpg)
How to Write a Business Plan Step-by-Step
1. create your executive summary.
The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.
![salient features of writing business plan Executive Summary of the business plan](https://www.founderjar.com/wp-content/uploads/2021/07/Executive-Summary-of-the-business-plan.jpg)
Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.
A good executive summary should do the following:
- A Snapshot of Growth Potential. Briefly inform the reader about your company and why it will be successful)
- Contain your Mission Statement which explains what the main objective or focus of your business is.
- Product Description and Differentiation. Brief description of your products or services and why it is different from other solutions in the market.
- The Team. Basic information about your company’s leadership team and employees
- Business Concept. A solid description of what your business does.
- Target Market. The customers you plan to sell to.
- Marketing Strategy. Your plans on reaching and selling to your customers
- Current Financial State. Brief information about what revenue your business currently generates.
- Projected Financial State. Brief information about what you foresee your business revenue to be in the future.
The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.
Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.
View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:
- Who is your target audience?
- What sector or industry are you in?
- What are your products and services?
- What is the future of your industry?
- Is your company scaleable?
- Who are the owners and leaders of your company? What are their backgrounds and experience levels?
- What is the motivation for starting your company?
- What are the next steps?
Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.
The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.
If you are writing your business plan for your planning purposes, you do not need to write the executive summary.
2. Add Your Company Overview
The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.
Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.
Your company overview should contain the following:
- What products and services you will provide
- Geographical markets and locations your company have a presence
- What you need to run your business
- Who your target audience or customers are
- Who will service your customers
- Your company’s purpose, mission, and vision
- Information about your company’s founders
- Who the founders are
- Notable achievements of your company so far
When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.
If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.
- Who are you targeting? (The answer is not everyone)
- What pain point does your product or service solve for your customers that they will be willing to spend money on resolving?
- How does your product or service overcome that pain point?
- Where is the location of your business?
- What products, equipment, and services do you need to run your business?
- How is your company’s product or service different from your competition in the eyes of your customers?
- How many employees do you need and what skills do you require them to have?
After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.
![salient features of writing business plan It describes what your business does](https://www.founderjar.com/wp-content/uploads/2021/07/Company-Description-describes-what-your-business-does.jpg)
The company description or overview section contains three elements: mission statement, history, and objectives.
- Mission Statement
The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.
Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”
When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:
- Founding Date
- Major Milestones
- Location(s)
- Flagship Products or Services
- Number of Employees
- Executive Leadership Roles
When you fill in this information, you use it to write one or two paragraphs about your company’s history.
Business Objectives
Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.
3. Perform Market and Competitive Analyses to Proof a Big Enough Business Opportunity
The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.
Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.
This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.
Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?
You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.
Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?
Illustrate the competitive landscape as well. What are your competitors doing well and not so well?
Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.
Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.
Market Analysis
Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.
![salient features of writing business plan Market Analysis for Online Business](https://www.founderjar.com/wp-content/uploads/2021/07/Market-Analysis-for-Online-Business.jpg)
The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.
A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.
- Market Research
To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.
- Your target market’s needs or pain points
- The existing solutions for their pain points
- Geographic Location
- Demographics
The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.
Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.
You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.
How to Quantify Your Target Market
One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:
- Your Potential Customers: They are the people you plan to target. For example, if you sell accounting software for small businesses , then anyone who runs an enterprise or large business is unlikely to be your customers. Also, individuals who do not have a business will most likely not be interested in your product.
- Total Households: If you are selling household products such as heating and air conditioning systems, determining the number of total households is more important than finding out the total population in the area you want to sell to. The logic is simple, people buy the product but it is the household that uses it.
- Median Income: You need to know the median income of your target market. If you target a market that cannot afford to buy your products and services, your business will not last long.
- Income by Demographics: If your potential customers belong to a certain age group or gender, determining income levels by demographics is necessary. For example, if you sell men's clothes, your target audience is men.
What Does a Good Market Analysis Entail?
Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.
![salient features of writing business plan Market Analysis Steps](https://www.founderjar.com/wp-content/uploads/2021/07/Market-Analysis-Steps.jpg)
You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:
- Industry Description. You find out about the history of your industry, the current and future market size, and who the largest players/companies are in your industry.
- Overview of Target Market. You research your target market and its characteristics. Who are you targeting? Note, it cannot be everyone, it has to be a specific group. You also have to find out all information possible about your customers that can help you understand how and why they make buying decisions.
- Size of Target Market: You need to know the size of your target market, how frequently they buy, and the expected quantity they buy so you do not risk overproducing and having lots of bad inventory. Researching the size of your target market will help you determine if it is big enough for sustained business or not.
- Growth Potential: Before picking a target market, you want to be sure there are lots of potential for future growth. You want to avoid going for an industry that is declining slowly or rapidly with almost zero growth potential.
- Market Share Potential: Does your business stand a good chance of taking a good share of the market?
- Market Pricing and Promotional Strategies: Your market analysis should give you an idea of the price point you can expect to charge for your products and services. Researching your target market will also give you ideas of pricing strategies you can implement to break into the market or to enjoy maximum profits.
- Potential Barriers to Entry: One of the biggest benefits of conducting market analysis is that it shows you every potential barrier to entry your business will likely encounter. It is a good idea to discuss potential barriers to entry such as changing technology. It informs readers of your business plan that you understand the market.
- Research on Competitors: You need to know the strengths and weaknesses of your competitors and how you can exploit them for the benefit of your business. Find patterns and trends among your competitors that make them successful, discover what works and what doesn’t, and see what you can do better.
The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.
Here are some questions you can answer that can help you position your product or service in a positive light to your readers.
- Is your product or service of superior quality?
- What additional features do you offer that your competitors do not offer?
- Are you targeting a ‘new’ market?
Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.
Competitive Analysis
In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.
![salient features of writing business plan Four Steps to Create a Competitive Marketing Analysis](https://www.founderjar.com/wp-content/uploads/2021/07/Four-Steps-to-Create-a-Competitive-Marketing-Analysis.jpg)
Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.
Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.
The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.
Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.
When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.
Find answers to the following questions after you have identified who your competitors are.
- What are your successful competitors doing?
- Why is what they are doing working?
- Can your business do it better?
- What are the weaknesses of your successful competitors?
- What are they not doing well?
- Can your business turn its weaknesses into strengths?
- How good is your competitors’ customer service?
- Where do your competitors invest in advertising?
- What sales and pricing strategies are they using?
- What marketing strategies are they using?
- What kind of press coverage do they get?
- What are their customers saying about your competitors (both the positive and negative)?
If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.
![salient features of writing business plan How to Perform Competitive Analysis](https://www.founderjar.com/wp-content/uploads/2021/07/How-to-Perform-Competitive-Analysis.jpg)
If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.
Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.
The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.
Direct vs Indirect Competition
You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.
There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.
If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.
In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.
For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.
There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.
Factors that Differentiate Your Business from the Competition
There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.
1. Cost Leadership
A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.
A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.
2. Product Differentiation
Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.
Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.
3. Market Segmentation
As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.
If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.
4. Define Your Business and Management Structure
The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.
Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.
If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.
Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.
The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.
Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.
Management Team
The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.
Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.
![salient features of writing business plan Create Management Team For Business Plan](https://www.founderjar.com/wp-content/uploads/2021/07/Create-Management-Team-For-Business-Plan.jpg)
A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.
Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.
Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.
If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.
Key Questions to Answer When Structuring Your Management Team
- Who are the key leaders?
- What experiences, skills, and educational backgrounds do you expect your key leaders to have?
- Do your key leaders have industry experience?
- What positions will they fill and what duties will they perform in those positions?
- What level of authority do the key leaders have and what are their responsibilities?
- What is the salary for the various management positions that will attract the ideal candidates?
Additional Tips for Writing the Management Structure Section
1. Avoid Adding ‘Ghost’ Names to Your Management Team
There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.
Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.
2. Focus on Credentials But Pay Extra Attention to the Roles
Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.
While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.
Organizational Chart
![salient features of writing business plan Organizational chart Infographic](https://www.founderjar.com/wp-content/uploads/2021/07/An-organizational-chart-helps-to-identify-how-best-to-structure-your-management-team.jpg)
Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.
If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.
An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.
You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.
5. Describe Your Product and Service Offering
In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.
Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.
The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.
If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”
Your product and service section in your business plan should include the following:
- A detailed explanation that clearly shows how your product or service works.
- The pricing model for your product or service.
- Your business’ sales and distribution strategy.
- The ideal customers that want your product or service.
- The benefits of your products and services.
- Reason(s) why your product or service is a better alternative to what your competitors are currently offering in the market.
- Plans for filling the orders you receive
- If you have current or pending patents, copyrights, and trademarks for your product or service, you can also discuss them in this section.
What to Focus On When Describing the Benefits, Lifecycle, and Production Process of Your Products or Services
In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.
When describing the benefits of your products or services, here are some key factors to focus on.
- Unique features
- Translating the unique features into benefits
- The emotional, psychological, and practical payoffs to attract customers
- Intellectual property rights or any patents
When describing the product life cycle of your products or services, here are some key factors to focus on.
- Upsells, cross-sells, and down-sells
- Time between purchases
- Plans for research and development.
When describing the production process for your products or services, you need to think about the following:
- The creation of new or existing products and services.
- The sources for the raw materials or components you need for production.
- Assembling the products
- Maintaining quality control
- Supply-chain logistics (receiving the raw materials and delivering the finished products)
- The day-to-day management of the production processes, bookkeeping, and inventory.
Tips for Writing the Products or Services Section of Your Business Plan
1. Avoid Technical Descriptions and Industry Buzzwords
The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.
A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.
2. Describe How Your Products or Services Differ from Your Competitors
When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.
If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.
For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.
3. Long or Short Products or Services Section
Should your products or services section be short? Does the long products or services section attract more investors?
There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.
If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.
Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.
The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.
If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.
A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.
4. Describe Your Relationships with Vendors or Suppliers
Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.
Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.
5. Your Primary Goal Is to Convince Your Readers
The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.
When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.
While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.
Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.
Key Questions to Answer When Writing your Products and Services Section
Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.
- Are your products existing on the market or are they still in the development stage?
- What is your timeline for adding new products and services to the market?
- What are the positives that make your products and services different from your competitors?
- Do your products and services have any competitive advantage that your competitors’ products and services do not currently have?
- Do your products or services have any competitive disadvantages that you need to overcome to compete with your competitors? If your answer is yes, state how you plan to overcome them,
- How much does it cost to produce your products or services? How much do you plan to sell it for?
- What is the price for your products and services compared to your competitors? Is pricing an issue?
- What are your operating costs and will it be low enough for you to compete with your competitors and still take home a reasonable profit margin?
- What is your plan for acquiring your products? Are you involved in the production of your products or services?
- Are you the manufacturer and produce all the components you need to create your products? Do you assemble your products by using components supplied by other manufacturers? Do you purchase your products directly from suppliers or wholesalers?
- Do you have a steady supply of products that you need to start your business? (If your business is yet to kick-off)
- How do you plan to distribute your products or services to the market?
You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.
6. Show and Explain Your Marketing and Sales Plan
Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.
The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.
There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.
In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.
Outline Your Business’ Unique Selling Proposition (USP)
![salient features of writing business plan Unique Selling Proposition (USP)](https://www.founderjar.com/wp-content/uploads/2021/07/Unique-Selling-Proposition-USP.jpg)
The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).
Target Market and Target Audience
Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.
![salient features of writing business plan Target Market Vs Target Audience](https://www.founderjar.com/wp-content/uploads/2021/07/Target-Market-Vs-Target-Audience.jpg)
Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.
Creating a Smart Marketing and Sales Plan
Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.
Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.
Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.
Your Positioning Statement
Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.
Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?
Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market
- What are the unique features or benefits that you offer that your competitors lack?
- What are your customers’ primary needs and wants?
- Why should a customer choose you over your competition? How do you plan to differentiate yourself from the competition?
- How does your company’s solution compare with other solutions in the market?
After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.
All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.
Here is a simple template you can use to develop a positioning statement.
For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].
For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.
“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”
You can edit this positioning statement sample and fill it with your business details.
After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.
Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.
You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.
Basic Rules to Follow When Pricing Your Offering
Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.
- Covering Your Costs: The price you set for your products or service should be more than it costs you to produce and deliver them. Every business has the same goal, to make a profit. Depending on the strategy you want to use, there are exceptions to this rule. However, the vast majority of businesses follow this rule.
- Primary and Secondary Profit Center Pricing: When a company sets its price above the cost of production, it is making that product its primary profit center. A company can also decide not to make its initial price its primary profit center by selling below or at even with its production cost. It rather depends on the support product or even maintenance that is associated with the initial purchase to make its profit. The initial price thus became its secondary profit center.
- Matching the Market Rate: A good rule to follow when pricing your products or services is to match your pricing with consumer demand and expectations. If you price your products or services beyond the price your customer perceives as the ideal price range, you may end up with no customers. Pricing your products too low below what your customer perceives as the ideal price range may lead to them undervaluing your offering.
Pricing Strategy
Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.
![salient features of writing business plan Pricing strategy influences the price of offering](https://www.founderjar.com/wp-content/uploads/2021/07/Pricing-strategy-influences-the-price-of-offering.jpg)
- Cost-plus Pricing: This strategy is one of the simplest and oldest pricing strategies. Here you consider the cost of producing a unit of your product and then add a profit to it to arrive at your market price. It is an effective pricing strategy for manufacturers because it helps them cover their initial costs. Another name for the cost-plus pricing strategy is the markup pricing strategy.
- Market-based Pricing: This pricing strategy analyses the market including competitors’ pricing and then sets a price based on what the market is expecting. With this pricing strategy, you can either set your price at the low-end or high-end of the market.
- Value Pricing: This pricing strategy involves setting a price based on the value you are providing to your customer. When adopting a value-based pricing strategy, you have to set a price that your customers are willing to pay. Service-based businesses such as small business insurance providers , luxury goods sellers, and the fashion industry use this pricing strategy.
After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.
As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.
There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.
Advertising
Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.
Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.
Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.
A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.
Public Relations
A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.
Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.
Content Marketing
Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,
![salient features of writing business plan The Benefits of Content Marketing](https://www.founderjar.com/wp-content/uploads/2021/07/The-Benefits-of-Content-Marketing.jpg)
Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.
Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.
If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.
Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.
When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.
- Is your choice of packaging consistent with your positioning strategy?
- What key value proposition does your packaging communicate? (It should reflect the key value proposition of your business)
- How does your packaging compare to that of your competitors?
Social Media
Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.
You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.
![salient features of writing business plan Most popular social media platforms](https://www.founderjar.com/wp-content/uploads/2021/07/Most-popular-social-media-platforms.jpg)
Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.
Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.
You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.
![salient features of writing business plan Choosing the right social media platform](https://www.founderjar.com/wp-content/uploads/2021/07/Choosing-the-right-social-media-platform.jpg)
Strategic Alliances
If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.
Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.
The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.
Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.
Steps Involved in Creating a Marketing and Sales Plan
1. Focus on Your Target Market
Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.
2. Evaluate Your Competition
One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.
You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.
These questions can help you know your competition.
- What makes your competition successful?
- What are their weaknesses?
- What are customers saying about your competition?
3. Consider Your Brand
Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.
4. Focus on Benefits
The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.
Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.
5. Focus on Differentiation
Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.
Key Questions to Answer When Writing Your Marketing and Sales Plan
- What is your company’s budget for sales and marketing campaigns?
- What key metrics will you use to determine if your marketing plans are successful?
- What are your alternatives if your initial marketing efforts do not succeed?
- Who are the sales representatives you need to promote your products or services?
- What are the marketing and sales channels you plan to use? How do you plan to get your products in front of your ideal customers?
- Where will you sell your products?
You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.
The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.
7. Clearly Show Your Funding Request
If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’
A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.
Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.
In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.
Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.
If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.
Funding Request: Debt or Equity?
When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.
Case for Equity
If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.
Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.
Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.
Case for Debt
You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.
When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.
Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.
Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.
You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.
Additional Tips for Writing the Funding Request Section of your Business Plan
The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.
If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.
You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.
If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .
Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.
8. Detail Your Financial Plan, Metrics, and Projections
If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.
The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.
If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.
Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.
If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.
When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.
The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.
Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.
Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.
Use Graphs and Charts
The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.
Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.
Address the Risk Factors and Show Realistic Financial Projections
Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.
You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.
What You Should In The Financial Plan, Metrics, and Projection Section of Your Business Plan
The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.
A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.
Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.
1. Sales Forecast
Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.
One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.
For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.
![salient features of writing business plan Benefits of Sales Forecasting](https://www.founderjar.com/wp-content/uploads/2021/07/Benefits-of-Sales-Forecasting.jpg)
Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.
Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.
For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.
![salient features of writing business plan Factors that affect sales forecasting](https://www.founderjar.com/wp-content/uploads/2021/07/Factors-that-affect-sales-forecasting.jpg)
2. Personnel Plan
The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.
However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.
The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.
![salient features of writing business plan True HR Cost Infographic](https://www.founderjar.com/wp-content/uploads/2021/07/True-HR-Cost.jpg)
3. Income Statement
The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.
![salient features of writing business plan The income statement section](https://www.founderjar.com/wp-content/uploads/2021/07/The-income-statement-section.jpg)
Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.
The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.
- Sales refer to the revenue your business generates from selling its products or services. Other names for sales are income or revenue.
- Cost of Goods Sold (COGS) refers to the total cost of selling your products. Other names for COGS are direct costs or cost of sales. Manufacturing businesses use the Costs of Goods Manufactured (COGM) .
- Gross Margin is the figure you get when you subtract your COGS from your sales. In your income statement, you can express it as a percentage of total sales (Gross margin / Sales = Gross Margin Percent).
- Operating Expenses refer to all the expenses you incur from running your business. It exempts the COGS because it stands alone as a core part of your income statement. You also have to exclude taxes, depreciation, and amortization. Your operating expenses include salaries, marketing expenses, research and development (R&D) expenses, and other expenses.
- Total Operating Expenses refers to the sum of all your operating expenses including those exemptions named above under operating expenses.
- Operating Income refers to earnings before interest, taxes, depreciation, and amortization. It is simply known as the acronym EBITDA (earnings before interest, taxes, depreciation, and amortization). Calculating your operating income is simple, all you need to do is to subtract your COGS and total operating expenses from your sales.
- Total Expenses refer to the sum of your operating expenses and your business’ interest, taxes, depreciation, and amortization.
- Net profit shows whether your business has made a profit or taken a loss during a given timeframe.
4. Cash Flow Statement
The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.
![salient features of writing business plan Cash Flow Statement Example](https://www.founderjar.com/wp-content/uploads/2021/07/Cash-Flow-Statement-Example.jpg)
5. Balance Sheet
The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.
You can get the net worth of your company by subtracting your company’s liabilities from its assets.
![salient features of writing business plan Balance sheet Formula](https://www.founderjar.com/wp-content/uploads/2021/07/Balance-sheet-Formula.jpg)
6. Exit Strategy
The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.
You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.
Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.
Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.
![salient features of writing business plan Exit Strategy Section of Business Plan Infographic](https://www.founderjar.com/wp-content/uploads/2021/07/Exit-Strategy-Section-of-Business-Plan-Infographic.jpg)
Key Questions to Answer with Your Financial Plan, Metrics, and Projection
Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.
You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.
Here are some key questions to answer to help you develop this section.
- What is your sales forecast for the next year?
- When will your company achieve a positive cash flow?
- What are the core expenses you need to operate?
- How much money do you need upfront to operate or grow your company?
- How will you use the loans or investments?
9. Add an Appendix to Your Business Plan
Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.
The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.
When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.
Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.
You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.
If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.
A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.
The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.
People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.
Common Items to Include in the Appendix Section of Your Business Plan
The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:
- Additional data about the process of manufacturing or creation
- Additional description of products or services such as product schematics
- Additional financial documents or projections
- Articles of incorporation and status
- Backup for market research or competitive analysis
- Bank statements
- Business registries
- Client testimonials (if your business is already running)
- Copies of insurances
- Credit histories (personal or/and business)
- Deeds and permits
- Equipment leases
- Examples of marketing and advertising collateral
- Industry associations and memberships
- Images of product
- Intellectual property
- Key customer contracts
- Legal documents and other contracts
- Letters of reference
- Links to references
- Market research data
- Organizational charts
- Photographs of potential facilities
- Professional licenses pertaining to your legal structure or type of business
- Purchase orders
- Resumes of the founder(s) and key managers
- State and federal identification numbers or codes
- Trademarks or patents’ registrations
Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.
Tips and Strategies for Writing a Convincing Business Plan
To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.
1. Know Your Audience
When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.
The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.
Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.
- A business plan used to address a company's board members will center on its employment schemes, internal affairs, projects, stakeholders, etc.
- A business plan for financial institutions will talk about the size of your market and the chances for you to pay back any loans you demand.
- A business plan for investors will show proof that you can return the investment capital within a specific time. In addition, it discusses your financial projections, tractions, and market size.
2. Get Inspiration from People
Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.
To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.
When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.
3. Avoid Being Over Optimistic
Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.
The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.
In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.
The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.
To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.
4. Keep it Simple and Short
When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.
One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.
Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.
You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.
To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.
5. Make an Outline and Follow Through
A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.
For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.
To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.
This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:
- Table of contents
- Introduction
- Product or service description
- Target audience
- Market size
- Competition analysis
- Financial projections
Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.
6. Ask a Professional to Proofread
When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.
You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.
In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.
Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.
Business Plan Examples and Templates That’ll Save You Tons of Time
1. hubspot's one-page business plan.
![salient features of writing business plan HubSpot's One Page Business Plan](https://www.founderjar.com/wp-content/uploads/2021/07/HubSpots-One-Page-Business-Plan.jpg)
The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.
Hubspot’s one-page business plan template is divided into nine fields:
- Business opportunity
- Company description
- Industry analysis
- Target market
- Implementation timeline
- Marketing plan
- Financial summary
- Funding required
2. Bplan’s Free Business Plan Template
![salient features of writing business plan Bplan’s Free Business Plan Template](https://www.founderjar.com/wp-content/uploads/2021/07/Bplans-Free-Business-Plan-Template.jpg)
Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.
The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.
3. HubSpot's Downloadable Business Plan Template
![salient features of writing business plan HubSpot's Downloadable Business Plan Template](https://www.founderjar.com/wp-content/uploads/2021/07/HubSpots-Downloadable-Business-Plan-Template.jpg)
HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.
The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.
There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.
4. Business Plan by My Own Business Institute
![salient features of writing business plan The Business Profile](https://www.founderjar.com/wp-content/uploads/2021/07/The-Business-Profile.jpg)
My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.
The comprehensive template consists of a whopping 15 sections.
- The Business Profile
- The Vision and the People
- Home-Based Business and Freelance Business Opportunities
- Organization
- Licenses and Permits
- Business Insurance
- Communication Tools
- Acquisitions
- Location and Leasing
- Accounting and Cash Flow
- Opening and Marketing
- Managing Employees
- Expanding and Handling Problems
There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.
5. Score's Business Plan Template for Startups
![salient features of writing business plan Score's Business Plan Template for Startups](https://www.founderjar.com/wp-content/uploads/2021/07/Scores-Business-Plan-Template-for-Startups.jpg)
Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.
The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.
There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.
The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.
6. Minimalist Architecture Business Plan Template by Venngage
![salient features of writing business plan Minimalist Architecture Business Plan Template by Venngage](https://www.founderjar.com/wp-content/uploads/2021/07/Minimalist-Architecture-Business-Plan-Template-by-Venngage.jpg)
The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .
There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.
7. Small Business Administration Free Business Plan Template
![salient features of writing business plan Small Business Administration Free Business Plan Template](https://www.founderjar.com/wp-content/uploads/2021/07/Small-Business-Administration-Free-Business-Plan-Template.jpg)
The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.
There are five sections in the two SBA’s free business plan templates.
- Executive Summary
- Company Description
- Service Line
- Marketing and Sales
8. The $100 Startup's One-Page Business Plan
![salient features of writing business plan The $100 Startup's One Page Business Plan](https://www.founderjar.com/wp-content/uploads/2021/07/The-100-Startups-One-Page-Business-Plan.jpg)
The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.
There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.
9. PandaDoc’s Free Business Plan Template
![salient features of writing business plan PandaDoc’s Free Business Plan Template](https://www.founderjar.com/wp-content/uploads/2021/07/PandaDocs-Free-Business-Plan-Template.jpg)
The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.
There are 11 sections in PandaDoc’s free business plan template.
- Executive summary
- Business description
- Products and services
- Operations plan
- Management organization
- Financial plan
- Conclusion / Call to action
- Confidentiality statement
You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)
PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.
10. Invoiceberry Templates for Word, Open Office, Excel, or PPT
![salient features of writing business plan Invoiceberry Templates Business Concept](https://www.founderjar.com/wp-content/uploads/2021/07/Invoiceberry-Templates-Business-Concept.jpg)
InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.
Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.
Alternatives to the Traditional Business Plan
A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.
Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.
Business Model Canvas (BMC)
The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.
![salient features of writing business plan Business Model Canvas (BMC) Infographic](https://www.founderjar.com/wp-content/uploads/2021/07/Business-Model-Canvas-BMC.jpg)
The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.
Segments of the Business Model Canvas
The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.
![salient features of writing business plan Segments of the Business Model Canvas](https://www.founderjar.com/wp-content/uploads/2021/07/Segments-of-the-Business-Model-Canvas.jpg)
- Key Partners: Who will be occupying important executive positions in your business? What do they bring to the table? Will there be a third party involved with the company?
- Key Activities: What important activities will production entail? What activities will be carried out to ensure the smooth running of the company?
- The Product’s Value Propositions: What does your product do? How will it be different from other products?
- Customer Segments: What demography of consumers are you targeting? What are the habits of these consumers? Who are the MVPs of your target consumers?
- Customer Relationships: How will the team support and work with its customer base? How do you intend to build and maintain trust with the customer?
- Key Resources: What type of personnel and tools will be needed? What size of the budget will they need access to?
- Channels: How do you plan to create awareness of your products? How do you intend to transport your product to the customer?
- Cost Structure: What is the estimated cost of production? How much will distribution cost?
- Revenue Streams: For what value are customers willing to pay? How do they prefer to pay for the product? Are there any external revenues attached apart from the main source? How do the revenue streams contribute to the overall revenue?
Lean Canvas
The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.
![salient features of writing business plan The lean canvas is a problem oriented alternative to the standard business model canvas](https://www.founderjar.com/wp-content/uploads/2021/07/The-lean-canvas-is-a-problem-oriented-alternative-to-the-standard-business-model-canvas.jpg)
Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:
- Problem: Simple and straightforward number of problems you have identified, ideally three.
- Solution: The solutions to each problem.
- Unfair Advantage: Something you possess that can't be easily bought or replicated.
- Key Metrics: Important numbers that will tell how your business is doing.
Startup Pitch Deck
While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.
Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.
![salient features of writing business plan Startup Pitch Deck Presentation](https://www.founderjar.com/wp-content/uploads/2021/07/Startup-Pitch-Deck-Presentation.jpg)
Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.
Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.
![salient features of writing business plan Airbnb Pitch Deck](https://www.founderjar.com/wp-content/uploads/2021/07/Airbnb-Pitch-Deck.jpg)
Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.
- Cover/Introduction Slide: Here, you should include your company's name and mission statement. Your mission statement should be a very catchy tagline. Also, include personal information and contact details to provide an easy link for potential investors.
- Problem Slide: This slide requires you to create a connection with the audience or the investor that you are pitching. For example in their pitch, Airbnb summarized the most important problems it would solve in three brief points – pricing of hotels, disconnection from city culture, and connection problems for local bookings.
- Solution Slide: This slide includes your core value proposition. List simple and direct solutions to the problems you have mentioned
- Customer Analysis: Here you will provide information on the customers you will be offering your service to. The identity of your customers plays an important part in fundraising as well as the long-run viability of the business.
- Market Validation: Use competitive analysis to show numbers that prove the presence of a market for your product, industry behavior in the present and the long run, as well as the percentage of the market you aim to attract. It shows that you understand your competitors and customers and convinces investors of the opportunities presented in the market.
- Business Model: Your business model is the hook of your presentation. It may vary in complexity but it should generally include a pricing system informed by your market analysis. The goal of the slide is to confirm your business model is easy to implement.
- Marketing Strategy: This slide should summarize a few customer acquisition methods that you plan to use to grow the business.
- Competitive Advantage: What this slide will do is provide information on what will set you apart and make you a more attractive option to customers. It could be the possession of technology that is not widely known in the market.
- Team Slide: Here you will give a brief description of your team. Include your key management personnel here and their specific roles in the company. Include their educational background, job history, and skillsets. Also, talk about their accomplishments in their careers so far to build investors' confidence in members of your team.
- Traction Slide: This validates the company’s business model by showing growth through early sales and support. The slide aims to reduce any lingering fears in potential investors by showing realistic periodic milestones and profit margins. It can include current sales, growth, valuable customers, pre-orders, or data from surveys outlining current consumer interest.
- Funding Slide: This slide is popularly referred to as ‘the ask'. Here you will include important details like how much is needed to get your business off the ground and how the funding will be spent to help the company reach its goals.
- Appendix Slides: Your pitch deck appendix should always be included alongside a standard pitch presentation. It consists of additional slides you could not show in the pitch deck but you need to complement your presentation.
It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.
Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.
Advantages of the Business Model Canvas, Lean Canvas, and Startup Pitch Deck over the Traditional Business Plan
- Time-Saving: Writing a detailed traditional business plan could take weeks or months. On the other hand, all three alternatives can be done in a few days or even one night of brainstorming if you have a comprehensive understanding of your business.
- Easier to Understand: Since the information presented is almost entirely factual, it puts focus on what is most important in running the business. They cut away the excess pages of fillers in a traditional business plan and allow investors to see what is driving the business and what is getting in the way.
- Easy to Update: Businesses typically present their business plans to many potential investors before they secure funding. What this means is that you may regularly have to amend your presentation to update statistics or adjust to audience-specific needs. For a traditional business plan, this could mean rewriting a whole section of your plan. For the three alternatives, updating is much easier because they are not voluminous.
- Guide for a More In-depth Business Plan: All three alternatives have the added benefit of being able to double as a sketch of your business plan if the need to create one arises in the future.
Business Plan FAQ
Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time. They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.
Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans. A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.
A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs. Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.
The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.
A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.
Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.
Exlore Further
- 12 Key Elements of a Business Plan (Top Components Explained)
- 13 Sources of Business Finance For Companies & Sole Traders
- 5 Common Types of Business Structures (+ Pros & Cons)
- How to Buy a Business in 8 Steps (+ Due Diligence Checklist)
Was This Article Helpful?
Martin luenendonk.
Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.
This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.
- Search Search Please fill out this field.
What Is a Business Plan?
Understanding business plans, how to write a business plan, common elements of a business plan, the bottom line, business plan: what it is, what's included, and how to write one.
Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
![salient features of writing business plan salient features of writing business plan](https://www.investopedia.com/thmb/Q919UgFxwYXjgrqoFhjc5V7cFqE=/90x200/filters:no_upscale():max_bytes(150000):strip_icc():format(webp)/adam_hayes-5bfc262a46e0fb005118b414.jpg)
- How to Start a Business: A Comprehensive Guide and Essential Steps
- How to Do Market Research, Types, and Example
- Marketing Strategy: What It Is, How It Works, How To Create One
- Marketing in Business: Strategies and Types Explained
- What Is a Marketing Plan? Types and How to Write One
- Business Development: Definition, Strategies, Steps & Skills
- Business Plan: What It Is, What's Included, and How to Write One CURRENT ARTICLE
- Small Business Development Center (SBDC): Meaning, Types, Impact
- How to Write a Business Plan for a Loan
- Business Startup Costs: It’s in the Details
- Startup Capital Definition, Types, and Risks
- Bootstrapping Definition, Strategies, and Pros/Cons
- Crowdfunding: What It Is, How It Works, and Popular Websites
- Starting a Business with No Money: How to Begin
- A Comprehensive Guide to Establishing Business Credit
- Equity Financing: What It Is, How It Works, Pros and Cons
- Best Startup Business Loans
- Sole Proprietorship: What It Is, Pros & Cons, and Differences From an LLC
- Partnership: Definition, How It Works, Taxation, and Types
- What is an LLC? Limited Liability Company Structure and Benefits Defined
- Corporation: What It Is and How to Form One
- Starting a Small Business: Your Complete How-to Guide
- Starting an Online Business: A Step-by-Step Guide
- How to Start Your Own Bookkeeping Business: Essential Tips
- How to Start a Successful Dropshipping Business: A Comprehensive Guide
A business plan is a document that outlines a company's goals and the strategies to achieve them. It's valuable for both startups and established companies. For startups, a well-crafted business plan is crucial for attracting potential lenders and investors. Established businesses use business plans to stay on track and aligned with their growth objectives. This article will explain the key components of an effective business plan and guidance on how to write one.
Key Takeaways
- A business plan is a document detailing a company's business activities and strategies for achieving its goals.
- Startup companies use business plans to launch their venture and to attract outside investors.
- For established companies, a business plan helps keep the executive team focused on short- and long-term objectives.
- There's no single required format for a business plan, but certain key elements are essential for most companies.
Investopedia / Ryan Oakley
Any new business should have a business plan in place before beginning operations. Banks and venture capital firms often want to see a business plan before considering making a loan or providing capital to new businesses.
Even if a company doesn't need additional funding, having a business plan helps it stay focused on its goals. Research from the University of Oregon shows that businesses with a plan are significantly more likely to secure funding than those without one. Moreover, companies with a business plan grow 30% faster than those that don't plan. According to a Harvard Business Review article, entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don't.
A business plan should ideally be reviewed and updated periodically to reflect achieved goals or changes in direction. An established business moving in a new direction might even create an entirely new plan.
There are numerous benefits to creating (and sticking to) a well-conceived business plan. It allows for careful consideration of ideas before significant investment, highlights potential obstacles to success, and provides a tool for seeking objective feedback from trusted outsiders. A business plan may also help ensure that a company’s executive team remains aligned on strategic action items and priorities.
While business plans vary widely, even among competitors in the same industry, they often share basic elements detailed below.
A well-crafted business plan is essential for attracting investors and guiding a company's strategic growth. It should address market needs and investor requirements and provide clear financial projections.
While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.
Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.
The length of a business plan can vary greatly from business to business. Regardless, gathering the basic information into a 15- to 25-page document is best. Any additional crucial elements, such as patent applications, can be referenced in the main document and included as appendices.
Common elements in many business plans include:
- Executive summary : This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
- Products and services : Describe the products and services the company offers or plans to introduce. Include details on pricing, product lifespan, and unique consumer benefits. Mention production and manufacturing processes, relevant patents , proprietary technology , and research and development (R&D) information.
- Market analysis : Explain the current state of the industry and the competition. Detail where the company fits in, the types of customers it plans to target, and how it plans to capture market share from competitors.
- Marketing strategy : Outline the company's plans to attract and retain customers, including anticipated advertising and marketing campaigns. Describe the distribution channels that will be used to deliver products or services to consumers.
- Financial plans and projections : Established businesses should include financial statements, balance sheets, and other relevant financial information. New businesses should provide financial targets and estimates for the first few years. This section may also include any funding requests.
Investors want to see a clear exit strategy, expected returns, and a timeline for cashing out. It's likely a good idea to provide five-year profitability forecasts and realistic financial estimates.
2 Types of Business Plans
Business plans can vary in format, often categorized into traditional and lean startup plans. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.
- Traditional business plans : These are detailed and lengthy, requiring more effort to create but offering comprehensive information that can be persuasive to potential investors.
- Lean startup business plans : These are concise, sometimes just one page, and focus on key elements. While they save time, companies should be ready to provide additional details if requested by investors or lenders.
Why Do Business Plans Fail?
A business plan isn't a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections. Markets and the economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All this calls for building flexibility into your plan, so you can pivot to a new course if needed.
How Often Should a Business Plan Be Updated?
How frequently a business plan needs to be revised will depend on its nature. Updating your business plan is crucial due to changes in external factors (market trends, competition, and regulations) and internal developments (like employee growth and new products). While a well-established business might want to review its plan once a year and make changes if necessary, a new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.
What Does a Lean Startup Business Plan Include?
The lean startup business plan is ideal for quickly explaining a business, especially for new companies that don't have much information yet. Key sections may include a value proposition , major activities and advantages, resources (staff, intellectual property, and capital), partnerships, customer segments, and revenue sources.
A well-crafted business plan is crucial for any company, whether it's a startup looking for investment or an established business wanting to stay on course. It outlines goals and strategies, boosting a company's chances of securing funding and achieving growth.
As your business and the market change, update your business plan regularly. This keeps it relevant and aligned with your current goals and conditions. Think of your business plan as a living document that evolves with your company, not something carved in stone.
University of Oregon Department of Economics. " Evaluation of the Effectiveness of Business Planning Using Palo Alto's Business Plan Pro ." Eason Ding & Tim Hursey.
Bplans. " Do You Need a Business Plan? Scientific Research Says Yes ."
Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."
Harvard Business Review. " How to Write a Winning Business Plan ."
U.S. Small Business Administration. " Write Your Business Plan ."
SCORE. " When and Why Should You Review Your Business Plan? "
![salient features of writing business plan salient features of writing business plan](https://www.investopedia.com/thmb/yjqZQJnlOFzHB44kAW3vh4tzyaQ=/400x300/filters:no_upscale():max_bytes(150000):strip_icc():format(webp)/Primary-Images-best-startup-business-loans-5112018-438ee29e880843e4a2f5ca6c750f9082.jpg)
- Terms of Service
- Editorial Policy
- Privacy Policy
![salient features of writing business plan A close up photograph of entrepreneurs looking at charts.](https://cdn.prod.website-files.com/60ca98553057a474fd7cb407/645c0ac321edfd414499fddd_63078bff63eb8cfe701f84ed_pexels-fauxels-3184292-(1).jpeg)
How to Write the Perfect Business Plan: 10 Essential Steps
Whether you’re starting a new small business or are already years into operating one, a business plan is one of the best ways to clarify your long-term vision. Follow our step-by-step guide to writing a highly effective business plan.
Download Template
Fill the form below to download this template
Thank for you submitting the information.
Click below to download template.
Calculating Stripe fees for customer payments is easy with our calculator. Enter the payment amount to calculate Stripe's transaction fees and what you should charge to receive the full amount.
Our calculations are based on Stripe's per-transaction fees of 2.9% plus $0.30.
Calculate how much you’ll pay in Square fees for online, in-person, and manually-entered payments.
Enter your loan information to get an estimated breakdown of how much you'll pay over the lifetime of your loan.
PayPal fees can be confusing. Our calculator helps you understand how much you’ll pay in fees for common transaction methods.
hether you’re starting a new small business or are already years into operating one, a business plan is one of the best ways to clarify your long-term vision. While every business plan is different, there are several key elements to consider that will benefit you in the long run.
Follow our step-by-step guide to writing a highly effective business plan.
What is a business plan?
A business plan is a document that outlines your business goals and how you plan to achieve them. Ideally, this will become your roadmap for marketing, sales, finance, and growth.
In other words, a business plan is...
- An explanation of your overall vision.
- A valuable tool to plan and track your business fundamentals.
- An overview of your path to profitability, which can help get funding for your company.
Do You Need A Business Plan?
While it’s not a requirement, having a business plan is strongly recommended. In a recent QuickBooks survey , nearly 70% of current business owners recommended writing a business plan.
Creating a business plan is especially useful in the following scenarios:
- Applying for business loans
- Seeking additional rounds of funding or investors
- Growing your employee headcount
- Attracting top-level management candidates
- Looking for opportunities to scale your business
10 Steps To Creating A Comprehensive Business Plan
While not every business plan is the same, there are a few key steps you should take to create an effective and comprehensive document:
1. Create an executive summary
Think of an executive summary as your company's elevator pitch in written form. It should be 1 to 2 pages in length and summarize important information about your company and goals. If you are pitching your business plan to get funding, you should ensure your executive summary appeals to investors.
What should you include in an executive summary?
- An overview of your business
- Your company mission statement
- A concise description of products or services offered
- A description of your target market and customer demographics
- A brief analysis of your competition
- Financial projections and funding requirements
- Information about your management team
- Future plans and growth opportunities
- An overall summary of your business plan
2. Write your company description
Your company description is a more detailed and comprehensive explanation of your business. It should provide a thorough overview of your company, including your company history, your mission, your objectives, and your vision. A company description should help the reader understand the context and background of the business, as well as the key factors that contribute to its success.
What should you include in your company description?
- Official company name
- Type of business structure
- Physical address(es)
- Company history and background information
- Mission statement and core values
- Management team members and their qualifications
- Products and services offered
- Target market and customer segmentation
- Marketing and sales strategy
- Goals (both short- and long-term)
- Vision statement
Novo Note : The company description is your chance to expound on the pain points your company solves. It should also give a reader an accurate impression of who you are.
3. Conduct and outline market analysis
This is one of the most important steps in building a business plan. Here, you will assess the size and dynamics of the market your business operates in.
How to conduct a market analysis
Market analyses include both quantitative and qualitative data. You may want to conduct surveys or lean on existing industry research to gather this information. You’ll want to answer:
- What is the size of the market?
- How much revenue does your industry generate?
- What trends are impacting this industry?
- Where are opportunities for innovation?
- What are the most well-known companies in the industry? What tactics do they use to sell to customers? How do they price their offering?
- Where are there gaps in the market?
- What are your customer demographics? What problems do they have that need solving? What are their values, desires, and purchasing habits?
- What barriers to entry, if any, exist? These could include startup costs, legal requirements, environmental conditions that impact consumer behavior, and market saturation.
What is your target market?
In this section, you will specify the customer segment(s) you’re targeting . You can divide customers into small segments organized by age, location, income, and lifestyle. The goal is to describe what type of consumer will be most interested in your offering.
Novo Note : Regardless of your company’s size, understanding the trends and opportunities within your target market enables you to build a more effective marketing plan to distinguish yourself from the marketplace and grow your business. This analysis might also help you find potential customers or new products you could offer.
4. Analyze your competitors
After conducting a market analysis, you need to do a deep dive into your competitors. Look at how the competition is succeeding or failing and how each competitor has positioned itself. For example, you might want to evaluate your competitors’ brand, pricing, and distribution strategies.
How to conduct a competitive analysis
You’ll want to research your competitors and ask the following questions:
- What are their strengths?
- What are their weaknesses?
- What are their customer reviews like?
- How do they price their offering(s)?
- What are their value propositions?
- What marketing and sales channels do they leverage?
- How are they growing and evolving?
Novo Note : After you develop a strong understanding of the competitive landscape, consider how your business is unique. Solidifying your competitive advantage can help you appeal to your target audience.
5. Describe your products or services
This is your chance to go into more detail about the products and services you offer! Use this opportunity to note where your offering or service differs from others in the industry. Highlight the standout features of your product, your company’s unique ability to solve customer problems, and your product roadmap.
What to include:
- Your product catalog
- Key differentiating features
- Information about the production process
- The resources required for production
- Plans for future product releases
6. Define your marketing and sales strategy
Your marketing plan describes your strategy for connecting with your target market and generating leads. It doesn't need to be full-fledged at this point, but it should answer who you're trying to sell to and how you plan to target them. Investors also want to know how you plan on selling your brand and breaking into the market, so make sure to consider their perspective as you develop your marketing strategy.
- Your sales and marketing budget
- Your key sales and marketing objectives
- Details about your sales process and sales goals
- Platforms or strategies you’ll employ to reach your target audience
- PR initiatives, content ideas, and social media strategies
7. Gather your business financials and outline financial projections
Your financials section lays out your company's past and current performance. You can also include a roadmap that dives into financial projections for your business. Aim to include projections for the next five years at a minimum.
- Income statements
- Cash flow statements
- Balance sheets
- Explanation of any significant changes
Novo Note : Novo offers integrations with accounting software like Quickbooks and Xero , allowing you to seamlessly access all your financial information within your business checking account .
![salient features of writing business plan sign up for Novo: powerfully simple business banking with no hidden fees](https://cdn.prod.website-files.com/60ca98553057a474fd7cb407/62c4a8c6030e1e8e1dc85dd0_Frame%207825%20(1).png)
8. Describe your organization
Your business plan should also include an organizational chart that maps your company’s structure.
What to include :
- Company’s management structure
- Other key personnel, along with their roles and responsibilities
- Expertise of your team (feature any specialists or experts)
Novo Note : This is also a good place to explain the legal structure of your company — for example, if you are an LLC , a corporation, or a sole proprietorship .
9. Outline your funding requests
If you’re looking for business funding, include an outline of any funding requests and requirements.
- Why you are requesting funding
- What the funding will be used for specifically
- Desired terms and conditions of funding
- The length of time over which the funding will be used
- Type of funding required (for example, debt or equity)
Novo Note : Propose a five-year funding plan, and aim to be as detailed as possible about how you will utilize the funds to grow your business.
10. Create an appendix
The last section, the appendix, includes supporting documents and additional information not listed elsewhere in your business plan. Not all of these items are necessary to include, so you’ll need to evaluate which are most relevant to your business. You might also want to include a table of contents to help keep the appendix organized.
Items to consider including:
- Bank statements
- Business credit history
- Legal documents
- Letters of reference
Sample Business Plans
Need an example to help you through the process? Check out the Small Business Administration’s downloadable examples or this even more in-depth one from Harvard Business School.
Tips For Creating A Great Business Plan
Here are some of our favorite tips for creating the most effective and efficient business plan:
- Keep it short and sweet : You want to be sure people will actually read your business plan, so stay on topic and to the point.
- Make it digestible : No need to use the fanciest terminology or draft up the most complex graphs. Keep wording and ideas simple and straightforward — it’s the most impactful way to get your information across.
- Triple-check your work : There’s nothing worse than noticing a grammar, spelling, or mathematical error when you’re presenting your vision. So proofread… and then proofread again!
- Start early : It’s never too late to write a business plan, but the earlier you do it, the stronger your strategy for growth and expansion will be from the start.
- Reference credible sources : If you are going to reference third-party research in your business plan, lean on sources that are widely recognized as authorities. Try tapping into trade associations and government resources, like U.S. Census data or data from the Bureau of Labor Statistics.
- Set yourself apart : Wherever you can, explain why your product or service stands out and how it can solve a problem.
- Be objective : Avoid the instinct to only showcase the good. Stakeholders and investors want to know that you are realistic and have a contingency plan if you hit a bump in the road.
Updating Your Business Plan
As with most situations in business (and life), things change! So don’t think that your business plan has to be set in stone after you create it. Instead, you should plan to return to it once a year and make updates.
Be sure to do the following when you review and update your business plan:
- Analyze your progress: Review your original business plan and compare it to your actual financial data. Are you moving in the right direction, or do you need to reevaluate your strategy?
- Consider whether your product offerings need to be adjusted: For example, decide if you want to diversify your product offerings or scale back and focus on a singular product.
- Reassess your overall goals: Perhaps your sales goals have changed with your new marketing strategy. Or maybe your customer’s needs have changed. In any case, be flexible where needed.
We know there’s a lot that goes into creating a business plan, but it’s worth it. There’s no one-size-fits-all formula for developing a business plan, but our steps outlined above will put you on the right track for developing a comprehensive, investor-friendly document.
Take time to review your business plan annually and make changes as your needs and goals change.
Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.
All-in-one money management
Take your business to new heights with faster cash flow and clear financial insights —all with a free Novo account. Apply in 10 minutes .
Why Your Startup Could Benefit from an Accelerator
Why should you convert your sole proprietorship to an llc, overdue invoice how to ask for payment professionally (with examples), spend less time managing your finances.
Take your business to new heights with faster cash flow and clear financial insights—all with a free Novo account. Apply online in 10 minutes.
More Articles On
Operating a business, how to create a small business invoice, taking time off as a solopreneur: how to ensure your business runs smoothly in your absence, 2024's most effective invoicing software for small business: a comprehensive review.
How to Write a Business Plan for a Small Business
![salient features of writing business plan Determined female African-American entrepreneur scaling a mountain while wearing a large backpack. Represents the journey to starting and growing a business and needi](https://pas-bp-wp-cdn.s3.amazonaws.com/bplans/content/uploads/2023/11/07155325/how-to-write-a-business-plan-1.png)
Noah Parsons
24 min. read
Updated September 2, 2024
![salient features of writing business plan Download Now: Free Business Plan Template →](https://no-cache.hubspot.com/cta/default/467363/interactive-174330637568.png)
Writing a business plan doesn’t have to be complicated.
In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.
- The basics of writing a business plan
If you’re reading this guide, then you already know why you need a business plan .
You understand that writing a business plan helps you:
- Raise money
- Grow strategically
- Keep your business on the right track
As you start to write your business plan, it’s useful to zoom out and remember what a business plan is .
At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.
Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow.
A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals.
After writing your business plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business.
We’ll dive into how to use your plan later in this article.
There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create.
It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.
Dig deeper : How to write a one-page business plan
Brought to you by
![salient features of writing business plan LivePlan Logo](https://web-cdn.paloalto.com/common/adbutler/EvergreenAboveAuthor/lp-logo.png?format=auto)
Create a professional business plan
Using ai and step-by-step instructions.
Secure funding
Validate ideas
Build a strategy
- What to include in your business plan
Executive summary
The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.
Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan.
In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .
Your executive summary should include:
- A summary of the problem you are solving
- A description of your product or service
- An overview of your target market
- A brief description of your team
- A summary of your financials
- Your funding requirements (if you are raising money)
Dig Deeper: How to write an effective executive summary
Products and services description
When writing a business plan, the produces and services section is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service.
This is usually called a problem and solution statement .
To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.
This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.
Market analysis
Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business.
A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .
Try to be as specific as possible when you describe your market.
Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.”
Related: Target market examples
Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.
Next, provide any additional information you have about your market.
What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.
Dig Deeper: Learn how to write a market analysis
Competitive analysis
Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers.
Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service.
For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.
A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.
Dig Deeper: How to write a competitive analysis for your business plan
Marketing and sales plan
The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics.
The best place to start with a marketing plan is with a positioning statement .
This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning.
For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.
Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy .
This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services.
While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer.
If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process.
A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.
Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.
Dig deeper: What to include in your sales and marketing plan
Business operations
When writing a business plan, the operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like.
Depending on how your business is structured, your operations plan may include elements of the business like:
- Supply chain management
- Manufacturing processes
- Equipment and technology
- Distribution
Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains.
These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.
If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.
For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.
Dig Deeper: Learn how to write the operations chapter of your plan
Key milestones and metrics
Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.
Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:
- A description of each task
- The proposed due date
- Who is responsible for each task
If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap.
Possible milestones might be:
- Website launch date
- Store or office opening date
- First significant sales
- Break even date
- Business licenses and approvals
You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:
- Conversion rates
- Customer acquisition costs
- Profit per customer
- Repeat purchases
It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.
Dig Deeper: How to use milestones in your business plan
Organization and management team
Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.
Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality.
Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before?
If you still need to hire key team members, that’s OK. Just note those gaps in this section.
Your company overview should also include a summary of your company’s current business structure . The most common business structures include:
- Sole proprietor
- Partnership
Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided?
Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.
Dig Deeper: How to write about your company structure and team
Financial plan
The last section of your business plan is your financial plan and forecasts.
Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast.
A typical financial forecast in a business plan includes the following:
- Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
- Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
- Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
- Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
- Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business.
A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.
Dig Deeper: How to create financial forecasts and budgets
This is the place for additional data, charts, or other information that supports your plan.
Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.
Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.
Dig Deeper : What to include in your business plan appendix
Optional: Business plan cover page
Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.
Your cover page should be simple and include:
- Company logo
- Business name
- Value proposition (optional)
- Business plan title
- Completion and/or update date
- Address and contact information
- Confidentiality statement
Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.
Dig Deeper: How to create a business plan cover page
How to use AI to help write your business plan
Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.
The best way to use AI to write a business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity.
AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers.
There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.
Learn more: 10 AI prompts you need to write a business plan
- Writing tips and strategies
To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .
Determine why you are writing a business plan
Knowing why you are writing a business plan will determine your approach to your planning project.
For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure.
If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.
Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.
Keep things concise
Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it.
So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.
Have someone review your business plan
Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.
Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.
If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.
Use a free business plan template and business plan examples to get started
Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template.
There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).
But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses.
Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples .
We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.
Common pitfalls and how to avoid them
It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started.
Here are a few common mistakes and how to avoid them:
Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.
- Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality.
- Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
- Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
- Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
- Presenting your business plan
The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.
With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas.
A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.
Dig Deeper: Learn what key slides should be included in your pitch deck
Use your business plan to manage your business
One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.
And yet, nothing ever goes exactly as planned – it’s the nature of business.
That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.
Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:
- Did you meet your sales goals?
- Is spending following your budget?
- Has anything gone differently than what you expected?
Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets.
Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees.
Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.
A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.
Learn More: How to run a regular plan review
How to write a business plan FAQ
What is a business plan?
A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.
What are the benefits of writing a business plan?
A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.
Writing a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.
What are the 7 steps of writing a business plan?
The seven steps to writing a business plan include:
- Write a brief executive summary
- Describe your products and services.
- Conduct market research and compile data into a cohesive market analysis.
- Describe your marketing and sales strategy.
- Outline your organizational structure and management team.
- Develop financial projections for sales, revenue, and cash flow.
- Add any additional documents to your appendix.
What are the 5 most common business plan mistakes?
There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:
- 1. Not taking the planning process seriously.
- Having unrealistic financial projections or incomplete financial information.
- Inconsistent information or simple mistakes.
- Failing to establish a sound business model.
- Not having a defined purpose for your business plan.
What questions should be answered in a business plan?
Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.
However, these are the key questions you should ask and answer with your business plan:
- How will your business make money?
- Is there a need for your product or service?
- Who are your customers?
- How are you different from the competition?
- How will you reach your customers?
- How will you measure success?
How long should a business plan be?
The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.
If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.
What are the different types of business plans?
While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.
Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.
Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.
One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.
Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.
What’s the difference between a business plan and a strategic plan?
A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.
However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.
![Content Author: Noah Parsons Content Author: Noah Parsons](https://secure.gravatar.com/avatar/ecb3096c893c6a0c607bf8a7a30f25cd?s=88&d=https%3A%2F%2Fweb-cdn.paloalto.com%2Fbplans%2Fauthors%2Fdefault-author.png&r=g)
Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.
![salient features of writing business plan Check out LivePlan](https://web-cdn.paloalto.com/common/adbutler/EvergreenLeftRail/default.png?format=auto)
Table of Contents
- Use AI to help write your plan
- Common planning mistakes
- Manage with your business plan
Related Articles
![Bakery business owners look over their bakery business plan Bakery business owners look over their bakery business plan](https://pas-bp-wp-cdn.s3.amazonaws.com/bplans/content/uploads/2020/08/19174430/How-to-Write-a-Bakery-Business-Plan.jpg?format=auto)
7 Min. Read
How to Write a Bakery Business Plan + Sample
![Owner of a life coaching business works on writing their business plan. Owner of a life coaching business works on writing their business plan.](https://pas-bp-wp-cdn.s3.amazonaws.com/bplans/content/uploads/2023/05/01161232/Life-Coaching-Business.jpg?format=auto)
5 Min. Read
How To Write a Business Plan for a Life Coaching Business + Free Example
![Overlapping files, folders, charts, graphs, and documents. Represents the information included in a business plan appendix. Overlapping files, folders, charts, graphs, and documents. Represents the information included in a business plan appendix.](https://pas-bp-wp-cdn.s3.amazonaws.com/bplans/content/uploads/2023/12/14150313/What-to-Include-in-Your-Business-Plan-Appendix.png?format=auto)
3 Min. Read
What to Include in Your Business Plan Appendix
![Female entrepreneur sitting at her desk doing manual calculations with a calculator trying to understand what her return on investment will be. Female entrepreneur sitting at her desk doing manual calculations with a calculator trying to understand what her return on investment will be.](https://pas-bp-wp-cdn.s3.amazonaws.com/bplans/content/uploads/2023/02/15143507/57.jpg?format=auto)
1 Min. Read
How to Calculate Return on Investment (ROI)
The LivePlan Newsletter
Become a smarter, more strategic entrepreneur.
Your first monthly newsetter will be delivered soon..
Unsubscribe anytime. Privacy policy .
![Garrett's Bike Shop Garrett's Bike Shop](https://web-cdn.paloalto.com/oim-units/investor-pitch/garrett-card.png?format=auto&width=267&height=185)
![](http://writinghelp.online/777/templates/cheerup/res/banner1.gif)
The quickest way to turn a business idea into a business plan
Fill-in-the-blanks and automatic financials make it easy.
No thanks, I prefer writing 40-page documents.
![LivePlan pitch example LivePlan pitch example](https://web-cdn.paloalto.com/bplans/lp-footer/garrett.png?format=auto&width=265&height=151)
Discover the world’s #1 plan building software
![salient features of writing business plan](https://web-cdn.paloalto.com/bplans/lp-footer/minimize-white.png?format=auto&width=20&height=12)
- Foundations
The Definitive Guide to Writing a Business Plan
| Written by
![salient features of writing business plan](https://startupsavant.com/images/startup-culture/articles/the-definitive-guise-to-writing-a-business-plan.jpg)
This free step-by-step guide to writing a business plan was built just for you, if you aren’t really sure what planning a business is all about. To save time, stress and energy we’ll walk you through everything you need to know without fluff or heavy brain work.
Instead, we’re focusing on the basics. If you’re looking to create a super-dense collegiate 40-page plan, then you should probably take a business planning course at the nearest college.
This guide just covers what your average startup needs to dramatically increase chances of follow-through and success. Enjoy!
Note: Business planning software can help you write a professional business plan that will lead you to success.
Step 1) Create A Business Plan Shortcut
For the sake of argument, let’s say you’re the most gifted cat burglar on earth– a real savvy savant of the steal. Put yourself in the mindset where strategy and planning are time-erasing pleasures, delicious treats that reward you with immense prosperity– not complex tasks that can be skipped or shelved.
Too many entrepreneurs perceive putting a business plan together as some kind of chore. It’s not. When the product or service is something you believe in, it’s as awesome as it is for those cat burglars in the movies, except you’re plotting honest work.
Fact : It’s possible to create your initial business plan in less than an hour!
Let’s build a “lean plan” that’s simple to create and helps you identify core assets. You start with a pitch, a single page overview which can become your executive summary later on. It’s your business strategy all on one page that’s easy to update as you evolve.
You may be thinking,
“ Wait a minute. If I’m not raising money from investors, why do I need a pitch? ”
Well, after years working with entrepreneurs we’ve found a pitch is really the ideal format to document your business idea , share it with others, and quickly adjust as you learn more about/analyze how you’re going to build your brand.
Furthermore, once you have your pitch done you can easily convert it into a presentation-ready business plan with massive clarity. To begin, follow the simple outline below or allow tools like LivePlan (what we used for Startup Savant) to walk you through the entire process with examples and video tutorials.
What To Include in Your Pitch
As you tackle your one-pager, mentally channel Twitter and try to keep each section as short/concise as possible– the size of a solid tweet.
- Mini-Pitch : Typically a refined sentence summarizing your USP (unique selling proposition).
- Market Need : The problem your business solves for your customers.
- Your Solution : How you’re solving the problem through your products and services.
- Primary Competition : The products and services your customers choose today instead of yours.
- Target Market : This is where you detail your ideal client and niche.
- Sales & Marketing : How you plan on marketing.
- Budget & Sales Goals : How much do you project/calculate you’ll sell and how much is it going to cost to make your product or deliver your service? Also, show other key expenses when your business is up and running.
- Milestones : What you’ve achieved so far and your major goals for the next few months and years.
- Team : Why you and your team are the right people to make your company successful.
- Partners & Resources : List primary companies/organizations needed to go the distance.
- Funding Needs : If you need to raise money, how much and where will this capital be going (channels)?
That might seem like a fair amount of work if you’ve never put together a real pitch before, but remember, that’s just one page of content. Another way to look at it is a one page resume for your business.
A Couple Writing Tips
First, you start with the putty. Don’t try to self-edit or curate, just barf everything out on paper as it flows from your brilliant mind. Format each section out and just let it go. That’s putting the basic shape together.
Now you need to let it dry, so walk away for a day (week) or two. After that, begin chipping away and condensing. Cut the fat and keep tightening the ideas until you’re down to one page. Be brutal! Stick to the facts. Numbers are easier, but when you’re tackling words remember the average person these days has a shorter attention span (if not compelled by your ideas) than a goldfish.
Taking Action on This Step
Create a pitch outline from the points mentioned above and refine down to one or two sentences. If you need help, check out LivePlan. It’s a solid tool that walks you through the entire process. Plus, they offer a 50% Discount .
Step 2) What To Include in Your Plan
Now that you have a running outline, it’s time to go deeper into the framework of your platform.
Perhaps you’re thinking the one-page pitch is all you’ll need? That would be like going on a road trip in unfamiliar territory with a map that only shows destinations– no routes, no roads, no other icons whatsoever. Even if you never plan on showing this to anyone, the process of creating a solid plan optimizes everything about you and your business! Here’s a quick overview of what you need to include in your business plan:
- Cover Page/Pitch
- Executive Summary
- Products & Services
- Target Market
- Marketing & Sales Plan
- Milestones & Metrics
- Company & Management Team
- Financial Plan
If you need extra space for product images, detailed financial forecasts, or general additional info, use the appendix. There are three layers of complexity here. First, your pitch with a very brief summary. Then, your Executive Summary that adds details and context. Then into the finer points of the overall business plan.
Not too shabby, right?
Taking Action on The Step
Please revisit your pitch and find a good way to optimize it just a smidgen. The better your pitch, the better the overall plan.
As you fill in the structure, first focus on providing “mental barf” data you can go through and optimize later. Remember, if you need help, LivePlan will walk you through the entire process with video tutorials and examples.
Step 3) Create a Unique Selling Proposition
When copywriters are given a business idea to optimize, they often begin by defining the USP (unique selling proposition) and mini-pitch. A USP can be just a couple words or an incomplete sentence, while the mini-pitch is usually one or two concise sentences.
Just in case you’re fuzzy on the whole copywriter thing, these folks are paid big bucks to write sales and marketing copy which often includes core slogans.
As an example, here’s what the USP and Pitch for Startup Savant sound like:
USP : “ Entrepreneurship Simplified “
Pitch : “ Startup Savant is a free website that shows you how to start a business and own your future .” Now let’s get past the “How to Write Your USP 101” stuff and dive straight into three core truths.
USPs & Pitches Evolve
The first thing a copywriter will tell you if you’re struggling with this is to relax. They know sales and branding copy optimizes (matures) over time, especially in the first 2-5 years in business.
If possible, avoid thinking your USP is set in stone, never to be altered. It’s more like a sculpture that the market chips away at. Your pitch evolves as you and your platform do. What matters is whether your USP & Pitch are as refined as they can be based on where you are now.
- USPs can be creative & full of personality, but they also need to make sense.
- Is your pitch wordy and confusing? Hazy or unclear?
- Sometimes you have the right words, they just need to be in an optimized order.
Always be ready to “kill your darlings” as copywriters would say. Meaning, get rid of any and all words,
“ That aren’t necessary for the idea or concept you’re conveying to make perfect sense within the context it’s delivered, and to whom it’s being written to. ”
You can begin with half a page, but systematically chisel down to a core concept like, Entrepreneurship Simplified.
Your Ideal Customers Will Do It For You
Copywriters care what you have to say as a business owner or marketing manager, but they know you’re not the ultimate authority in terms of advertising copy.
They’re writing for buyers. In any and all ways your business can optimize over the years, your customers, clients and users should steer the course as much as possible. Be on the lookout for their valuable signals and indications!
Hop at 20 Questions
Copywriters ask TONS of questions. They’re a bit like copy-detectives in how they search high and low for very precise data from their clients. Never fear giving your users, clients or customers a megaphone with which to bark their concerns.
We all love sharing our opinions, right? Yes we do. Let us. Prompt us. Ask us. Bribe us with incentives and discounts… then listen… carefully. Easily 9 out of 10 entrepreneurs are given the ultimate USPs on silver platters by their customers but fail to recognize when they see, read, or hear them.
- If you’ve been stressing on your USP, relax. If it doesn’t feel perfect right now, or 100% distilled, let it happen naturally.
- Your audience can and will steer the course if you choose to notice their cues. Ask three people you haven’t spoken to before how they feel about your product or service.
- Are there any indications out there waiting to be plucked? Blog or social media comments and reviews are primary starting points. It only takes one solid indicator for the magic “pivots” to cause your business or brand to see huge boosts.
Step 4) Crafting the Executive Summary
In brief, what exactly is an executive summary? An executive summary (ES) is an overview of your business and your vision. It comes first in formal/informal business plans and is ideally 1-2 pages.
The ES introduces your business to your reader. If you don’t nail it, no one’s going to read any further. And if an ES sucks, despite it being professionally crafted, then the business model itself needs work or isn’t worth your time. Every ES should include a brief overview of the following:
- The problem your business addresses.
- Your solution.
- Your target market.
- Why the timing’s right for your brand.
- Financial forecast highlights, along with initial/current customer acquisition costs (CAC) and lifetime customer value (LCV).
If you’re raising money or presenting to investors, you’ll also want to cover:
- Your existing team and partners.
- How much money you’re looking to raise and the type of exit strategies in place.
Ideally your ES should fit on one or two pages and be able to stand alone, apart from your business plan. A common strategy is to send your ES out to investors/family/friends and then the complete plan if more detail is requested.
Remember to try and position your writing for people who don’t know anything about your business before they start reading. Explain things simply so that anyone can understand your opportunity, whether they be an in-tune player, an 8th grader, or a grandma.
- Over the next couple weeks, refresh your ES!
- Who is the first person you’re going to send your ES to that has no real previous knowledge of what your business is? It helps having someone in mind when writing.
- Find one amazing ES to read over and see what you can learn from it. Here and here are two great examples.
Well done, in the next step we’ll help you explain your product or service and how it makes an impact on customers.
Step 5) Understanding Customers
Once upon a time there was this lovely, vibrant and ambitious entrepreneur who decided to sell organic breast enlargement cream. It sold well for a while, but then her numbers plateaued, and eventually began to decline.
She knew her business needed a makeover after years in the trenches. So, she created an automated incentive program, a 25% discount coupon code offer sent with every order in exchange for an anonymous review with a photograph. Just a simple before/after image showing the front of their body from neckline to belly button (to confirm usage).
They started rolling in and here are the gems she unearthed :
- A small portion of her customers were husbands buying a discreet gift for their wives/girlfriends, but most (85%) were transgender folks in transition.
- For the vast majority of her cis-female customers, larger breasts had more to do with enhancing self-esteem/identity and filling out clothes than attracting mates.
- Almost 100% really hammered down on the fact her cream was all-natural, organic and didn’t cause irritation or allergic reactions.
She went back and dusted off her original copy she put together years before.
From: “ A certified organic breast enlargement cream. ”
To something more along the lines of: “ Increase confidence and femininity through an organic non-allergenic breast enlargement cream. ”
When stuck in a rut, and we all get there as entrepreneurs, the quickest and most effective way out is to look at your predicament from different perspectives.
Begin with the fundamental question, “What problem does my product/service solve for customers?” then look deeper and from unique angles. Who are your buyers? They have the answer. And remember, actions speak louder than words.
Oftentimes we rationalize buying things for one reason, but in reality have a more potent ulterior motive. Sure, her customers want larger breasts, that’s what prompt initial sales. But the needs her product solves in their day-to-day lives are more interesting. It actually made her customers feel more confident, happy, and healthy.
Find one deeper way your product or service materializes in everyday life for your customers. Pay close attention to the simple verbiage you and others use to describe it, e.g. “Your earphones really get rid of all the noise on the bus.”
If possible, get hold of one fresh buyer perspective. Who and where are they? That woman in our example had spent years excluding nearly half her customer base in her advertorial copy. Do you use your own product or service? If so, find a way to record yourself explaining it in the most natural language possible. Use a smartphone or leave yourself a voicemail. Then, just listen.
But wait, what if you’re just starting out and don’t have much to draw on in terms of direct customer or user feedback? Glad you asked! In the next section we’re going to talk about competition, which is another valuable source of indicators.
Step 6) Leveraging Competition
What products and/or services are people choosing instead of yours?
Whether you’re new to the market or not, these so-called “competitors” are really the ideal source of optimization for your brand. And it’s not about being better per se. All things equal, it’s more about uniqueness.
Would you rather be a prettier, more flashy brand trying desperately to stand out, or develop intense brand-character that the right people notice? Once you’ve narrowed down your competitors, look at them from new angles to discover what makes you distinctive.
- Can they help you better define your target market/sub-markets?
- How effective are their social media marketing methods and website copy?
- What do you know about their buyers’ needs?
- What do they make “stand out” when shoulder to shoulder with your brand?
A common practice entrepreneurs use in pitch presentations to venture capitalists or investors is the Comparison Matrix.
![Comparison Matrix Comparison Matrix](https://startupsavant.com/wp-content/uploads/2017/02/Comparison-Matrix.png)
You’ve seen these a zillion times. In short, list your competitors across the top of the page and your features and benefits along the side, then check the boxes for which company offers each. Don’t forget you can be creative here. You may even already use one of these on your website, or within some other marketing media.
- Could these features and benefits be communicated in different, more compelling ways?
- What real need-based copy is being left out?
- How can you simplify it? An easy way is to reduce the number of competitors, so shoot for less players with more interesting copy.
Got time to put something simple together? In reality what we’re looking for are the things about your competitors that help you stand out.
- Think about your biggest competitor: what do they make obvious about your brand?
- What are you doing with more personality from the perspective of ideal clients or customers?
- Could you take your primary competitor’s copy and make it clearer, or more optimized?
All in all, understanding your competition is an important part of the planning process. This is where you find your true competitive advantage.
For a more in-depth look at how you stand up to the competition, check out LivePlan’s Benchmark feature. You can see at-a-glance how you compare to companies just like yours. Tell LivePlan your industry and location, and it shows if/how you’re doing better or worse than your competition.
Now let’s talk about your unique marketing approach. This will help you stand out and connect with your customers on multiple levels.
Step 7) Create a Marketing Plan
Fred is a brand spanking new entrepreneur with a neat new fitness product he believes is going to make a big splash.
He knows exactly who his ideal customers are and his niche is carved out like a Renaissance marble sculpture. Fred’s also managed to get his hands on $100k in debt-free funding (don’t ask us how, this is hypothetical)…
- His product costs exactly $32 to source, make and package.
- To be competitive, and account for shipping/processing, he’s going live at $55.
- Initial margin is about $13 per sale.
Admittedly, that would be pretty amazing, but that’s because we’re coming from a standpoint of experience. Fred’s just showing up to the 21st-Century party. He’s never built, owned, or managed a business before, let alone an ecommerce platform.
He’s never outsourced a graphic artist or content writer before; never had to choose which analytic dashboard to use; never designed a conversion model or tangled with paid advertising platforms. Let’s say Fred called and begged us to lunch. We accepted. And so there we are, the three amigos with Fred sitting on a huge meal ticket drooling for answers.
“ How Do I Market My Product? ”
Once the table conch gets passed to us, we’re going to hit him hard with massive bombshells:
- Tight responsive funnels can be constructed in a couple months with the right designer, or design agency (website, landing pages, ecommerce setup, branding packages, etc.).
- Initial market testing and adjustment can be bootstrapped.
- There are a variety of intuitive and relatively simple software tools, apps, plugins, add-ons, and cloud-based solutions that range from free to expensive.
- It takes a savvy mix of highly-focused content, social exposure and paid advertising.
- It takes a team.
Question is, what advice would you give Fred? That’s what we’d like you to consider. And it needs to be marketing-based. The money’s there, the production system’s in place, it’s just a matter of reaching his fitness-based audience and selling.
Let’s imagine Fred’s offered you a lifetime, no questions asked, 5% share of his company from now till doomsday. All you have to do is provide valuable direction in these three areas:
- Content : What kind of content should he invest in? Blogs, video, infographics, imagery, etc.
- Social : How to handle social media if he a) doesn’t have the time, b) has no clue what works?
- Paid Advertising : AdWords? Facebook? TV? Magazine ads? How does he get to buyers?
Just let your mind wander, and don’t worry, in the next section we’ll talk about setting milestones for your business.
Step 8) Set Milestones
If there’s one specific part of the entrepreneurial journey that we get really nerdy about, it’s the way people verbally describe their trials and successes. We’re listening intently for clues as to how they set milestones and metrics and then track them.
Let’s spend some time pondering the way(s) you’re measuring your journey and how you approach KPIs (key performance indicators) in relation to both your marketing and your competition. Or, if you’re trying to figure out how viable a product idea is, how you’re calculating acceptable setbacks and struggle.
What have you achieved so far and what are your major goals for the next few months or years?
Sure, it’s cliché to talk about tracking milestones in an era of big data, but truth be told too many aspiring entrepreneurs either skip this part until much further down the road when it can’t be ignored anymore, or they only take it seriously in the beginning then fail to stick to the plan.
Avoid Drowning Out Customer Journey!
Of course there are folks who obsess on this part and try to manage a small army of analytic dashboards and amazing software solutions like FreshBooks or Xero.
Once it becomes too much they end up transforming their perspective of the customer journey from something organic into a mesh of math and graphs. Most of their day is spent pouring over dense numbers or marketing data and trying to figure out how to alter this metric or that.
- How many of your milestones are focused entirely on your customers instead of you and your business?
- Instead of views, likes, and shares, what about the amount of service calls you’re getting? How many people are actually reaching out with questions and concerns?
- How well do your metrics allow you to understand each part of their trek from initially discovering your business to making a purchase?
Find ways to do more with less data. It’s always within reach these days, especially when you’re tuned in to your customers!
- Find one way to streamline how you’re dealing with milestones/metrics, or how you intend to.
- Also, look for one single way to be more holistic in your approach to setting goals.
- Find a part of your customer journey/behavior and decide if current metrics help or hinder it.
Need help in this area? LivePlan has a really impressive dashboard to help you set goals and stay accountable over the lifetime of your business. This dramatically increases your chances of success.
Step 9) Refine Aquisition Costs
Without question, failure to clearly know the cost of acquiring customers is a mighty new business demolisher. It’s crushed more entrepreneurial dreams than every economic collapse combined since the creation of fiat currency. To come to grips, or optimize your Customer Acquisition Costs (CAC), begin by figuring out exactly how you’re reaching customers.
Or, if you’re building an initial business plan, how much will it cost to reach buyers on the platforms where they spend their time? Your financials should easily allow you to calculate CAC.
Now, in the simplest terms here’s how:
- Take (estimate) the entire cost of sales and marketing over whatever period of time you’re dealing with, for example when forecasting sales and financials. Make sure to include salaries and any other headcount-related costs.
- Divide that number by the amount of buying customers/clients/users that were acquired within this time.
If you happen to run a purely web-based business, headcount likely doesn’t need to grow as you scale customer acquisition, but it’s a useful metric to include nonetheless.
The second part of this is your Lifetime Customer Value, or LCV, because in most cases 80% of your revenue will come from 20% of overall customers and happen AFTER the initial sale. Never shortchange the follow-through!
If your CAC is too high, it must be able to come down through optimization. If LCV is horrid, then in the long run it’s an unsustainable business model. Or in other words, once CAC exceeds LCV, something needs to change or you’ll have to close shop.
- Begin looking at one stream of cost per lead. So for example, maybe a Google AdWords or Facebook advertising campaign.
- What’s one single way you could get more in touch with a hot-spot within your customers’ buyer experience?
- Let your mind stew a little on the level of ‘touch’ required to increase LCV. How can you up-sell or generate more revenue from each customer long term?
After you make these calculations three or four times, it starts becoming second nature. LivePlan’s forecasting handles this pretty well. It walks you through creating expenses that are a certain percentage of sales.
Step 10) Forecast Sales
Smart entrepreneurs start forecasting sales early on.
And while ‘the numbers’ part of business planning can be intimidating, this exercise is definitely a small mountain worth karate chopping down.
Keep in mind that if you get stuck at any point, LivePlan’s Forecasting and Budgeting feature is extremely helpful. Whether you’re starting a bakery, a subscription software business, or a manufacturing company, LivePlan walks you through the entire forecasting process within a few clicks.
How Detailed Does it Need to Be?
Don’t be too generic and just forecast sales for your entire business. But on the other hand, don’t go nuts and create a forecast for everything you sell if you’ve got a large assortment.
For example, if you’re starting a restaurant you don’t want to create forecasts for each item on the menu.
Instead, focus on broader categories like lunch, dinner, and drinks. Or if you’re starting a clothing brand, forecast key categories like outerwear, casual wear, and so on.
Top-Down or Bottom-up?
In our humble opinion, forecasting “from the top down” can be costly. What that means is figuring out the total size of the market you’re in and trying to capture a small percentage.
For example, in 2015, more than $1.4 billion smartphones were sold worldwide. It’s pretty tempting for a startup to say they’re going to get 1% of that total market. After all, 1% is such a tiny little sliver it’s got to be believable, right?
The problem is this kind of guessing isn’t based on reality. Sure, it looks like it might be credible on the surface, but you have to dig deeper.
- What’s driving those sales?
- How are people finding your new smartphone company?
- Of the people that find out, how many will buy?
Instead of “from the top down,” do a “bottom-up” forecast. Just like the name suggests, bottom-up starts at the bottom and works its way up to a forecast. Start by thinking about how many potential customers you might be able to make contact with.
This could be through advertising, sales calls, or other marketing methods. Of the people you can reach, how many do you think you’ll be able to bring in the door or get onto your website?
And finally, of the people that come in the door, get on the phone, or visit your site, how many will buy?
Here’s an example:
- 10,000 people see my company’s ad online,
- 1,000 people click from the ad to my website,
- 100 people end up making a purchase.
Obviously, these are all nice round numbers, but it should give you an idea of how bottom-up forecasting works. The last step of the bottom-up forecasting method is to think about the average amount that each of those 100 people in our example ends up spending (remember LCV).
On average, do they spend $20? $100? It’s fine to guess here, and the best way to refine your guess is to go out and talk to potential customers. You’ll be surprised how accurate a number you can get with a few simple interviews.
How Far to Forecast
Try forecasting monthly for a year into the future and then just annually for another three to five years.
The further your forecast into the future, the less you’re going to know and the less benefit it’s going to have for your company. After all, the world’s going to change, your business is going to change, and you’ll be updating your forecast to reflect them.
And don’t forget, all forecasts are wrong—that’s fine. Your forecast is just your best guess at what’s going to happen. As you learn more about your business and your customers, you’ll adjust. It’s not set in stone.
- First, remind yourself that ALL forecasts are wrong. Forecasting is more about learning and evolving.
- Without adding too much to your plate, take a look at your monthly sales chart and see what kinds of optimizations forecasting might bring to light. If you aren’t already charting sales, start today or begin planning how.
- Try two easy bottom-up projections with nice round numbers to get the feel for it.
Just remember that sales forecasting doesn’t have to be hard. Anyone can do it and you, as an entrepreneur, are the most qualified to do it for your business. You know your customers and you know your market, so you can forecast your sales.
But if you decide you’d appreciate help, we highly recommend forecasting your sales with LivePlan. LivePlan automatically generates all the charts and graphs you need and automatically includes them in your plan.
Wrapping Up: Formatting Your Plan
The format of your business plan is critical. It goes a long way toward refining and achieving your goals: raising money, setting the strategy for your team and growing your platform. That being the case, let’s breeze through seven tips that can help you create, refine, and optimize your brilliant business plan.
1. Always Start with Your Executive Summary
An ES should be written for ideal readers, customers, potential investors or team members, or even just to help you ‘goal-map’ your way to where you need to be. Regardless, nailing the Executive Summary is critical in terms of understanding the potential behind your business idea.
2. End with Supporting Documents
The appendix is composed of key numbers and other details that support your plan. At a minimum, your appendix should include financial forecasts and budgets. Typically, it’s wise to include a Profit & Loss statement, Cash Flow forecast, and a Balance Sheet. With practice and a smidgen of savvy software like LivePlan these pages can take a couple hours or so.
You might also use your appendix to include product diagrams or detailed research findings, depending on your business, your industry, and how deep your business plan needs to go given the reader/purpose.
Quick Recap of the Lineup Pitch Executive Summary Products & Services Target Market Marketing & Sales Plan Milestones & Metrics Company & Management Team Financial Plan & Appendix
3. Keep it Short
Let’s face it: no one has time to read a 40-page business plan. If you’ve nailed your ES, you’ll want to follow up with 8 to 12 additional pages at most in support. Instead of trying to cram everything in using small fonts and tiny margins, focus on trimming down your writing (‘kill your darlings’). Use direct, simple language that gets to the point.
4. Get Visual
As the old adage goes, “ A picture is worth a thousand words. ” This is especially true when you’re formatting a business plan. Use charts and graphs to explain forecasts. Add pictures of your product(s). Again, there are plenty of software solutions that make it easy to do more showing and less telling. That said…
5. Don’t Obsess on Looks
It’s your ideas that matter. A beautiful plan that talks about an ill-conceived business with incomplete financial forecasts is never going to beat a plan that’s formatted poorly but discusses a great, clearly explained vision. Spending days making a beautiful plan isn’t going to make your business ideas better. Instead, focus on polishing the words. Trim extra content you don’t need, and make sure ideas are well-presented.
6. Keep Formatting Simple
- For general formatting use single spacing with an extra space between paragraphs.
- If you’re printing your plan, use a nice serif font like Garamond or Baskerville.
- If your plan will mostly be read on a computer screen, go with a sans serif font like Verdana or Arial.
Why choose different fonts for on-screen versus off-screen? Well, research shows readers have higher comprehension when they read a document with a serif font on paper, and higher comprehension reading with a sans serif font on a screen.
Don’t stress too much about this, though. Choose any one of the four fonts mentioned above and move forward.
- For font size, 10 to 12 point is usually ideal and readable for most people. If you need to reduce the font size to make your plan shorter, then you should be cutting content, not adjusting the font size.
- The same rule goes for margins: use typical one-inch margins to make the plan readable.
Cover pages are always a good idea, too. Use the cover page to show off your logo, tagline, and pitch.
Finally, make sure your plan document flows well and doesn’t have any “widows” or “orphans” when it prints out. A “widow” is when the last line of a paragraph appears alone at the top of a page, and an “orphan” is a single word that gets left behind at the bottom of a paragraph.
7. Get a Second Pair of Eyes
The last piece of advice is to get a second pair of eyes. When you’re the only one working on your plan, you can become blind to common errors. Recruit a friend or family member, or even hire a copy-editing professional to give it that last bit of polish. There’s nothing worse than a plan with grammatical or spelling errors. A second pair of eyes will go a long way toward catching the majority of those potential problems or holes.
- Who’s your second, third, and possibly fourth pair of eyes going to be?
- What’s one part of your business plan you could optimize today?
- What’s one piece of visual content you could add to your appendix?
Exclusive Bonus
If you’d like to try LivePlan yourself, here’s an exclusive 50% off LivePlan promo code offered to our readers. You’ll have 60 days of risk free planning with their 100% money back guarantee. Enjoy!
Further Reading
- The 8 Best LLC Services of 2024 September 4, 2024
- How to Start an LLC in 7 Easy Steps (2024) July 24, 2024
- What Is an LLC? August 2, 2024
Topics to Explore
- Startup Ideas
- Startup Basics
- Startup Leadership
- Startup Marketing
- Startup Funding
Browse Tags
Ownr Blog > Ownrship 101 > Business Stages > Managing Your Business > Marketing > The Complete Guide to Writing a Business Plan
The Complete Guide to Writing a Business Plan
![salient features of writing business plan Ownr Author](https://ownr-blog.com/wp-content/uploads/2023/12/Ownr.png)
As an entrepreneur, you might be convinced that your idea is sure to succeed. You’ve spotted a perfect business opportunity and have the skills and knowledge required to meet a need in the market. In reality, no matter how knowledgeable, skilled, and prepared you are, a business plan is a powerful tool that can increase your chance of success
A business plan can help you clarify your goals for the future, your understanding of your market, and your pitch to potential investors. Learning how to write a business plan is far less daunting than it might seem at first if you take things one section at a time. No matter what your business goals are, a business plan is well worth taking the time to write.
- What is a business plan, exactly?
A business plan is a widely recognized business document that provides key information about a business, its founders and key team members, its target market, how it will operate and be structured, and how it will generate a profit.
Since this is such a commonly used document, there are very clear expectations about what information should be included. You don’t have to reinvent the wheel by coming up with a structure for your business plan; you can go through the sections below and make sure you provide the relevant information to the best of your knowledge for each of them.
- Why should I create a business plan?
A business plan could have many different potential audiences. As the foundation for a new business, it will help you set, measure and adjust your goals. It’s also instrumental in securing business funding and partnerships.
- Better understand your business
The first reason to create a business plan is for you to understand the feasibility of your business idea.
It requires you to think carefully and realistically about your business viability. This is a valuable exercise since it gives you a chance to address potential challenges before they become a problem.
Entrepreneurship takes a lot of dedication and resources, and a business plan helps you make sure your business idea is feasible before you sink those resources in something that wasn’t well thought out. Further, by creating this document, when you are starting out, you have something to return to while making sure you’re meeting your business goals. If you aren’t, that’s a good sign you may need to revisit your business plan.
- Secure loans or funding
If you go to the bank for a business loan, they will want to see a viable business plan first. The same goes for any potential lenders or investors in your business. A business plan shows them that you’ve done your research and have the necessary expertise to successfully launch your business.
Your business plan should convince any potential investors or lenders that your business is viable and give them a realistic projection of your growth.
- Apply for grants and contests
Some grant programs require that you submit a business plan to be eligible to apply. For example, if you live in Ontario, the Starter Company Plus program requires that you create and submit a business plan to potentially receive a grant.
- What should I include in my business plan?
While there are lots of business plan templates available, they all include variations of the same sections outlined here.
Ideally, you should aim to complete all of these sections when writing your business plan. If, for some reason, one section doesn’t apply to your business, note why in your business plan. This way, your audience can be assured that you didn’t leave it out because you haven’t thought about it.
- Executive summary
The first section of a business plan is the executive summary and is ideally around a page in length. It’s designed to provide your audience with a summary of your business plan, including:
- A description of your products or services
- An overview of the market your business operates in, including why your business has a competitive advantage
- A summary of your business goals and your financial requirements to meet these goals
- Your projected growth
- For existing businesses, a snapshot of your current situation and any major milestones you’ve reached so far
This may seem like a lot to fit in one page, but remember that the goal is to give your audience a high-level understanding of what your business does and why they should care enough to read through the rest of your business plan.
- Business overview and structure
The business overview section communicates your business history, your vision and mission for the future, and your ownership structure. Your audience should learn what your business does, why you’re starting it, and how you offer something unique.
Your business overview should include:
- The industry you operate in, including high-level information about market size and emerging opportunities
- A description of business activities
- Your mission statement and a description of your vision for the future
- For existing businesses, background information on what you have done so far
- Information about your team, including their salaries. If you are the only person involved, you can provide your professional background
- Your business structure, whether it is a sole proprietorship or corporation
This section is where you begin to show your audience why your business is special and a worthwhile investment for them. It should also communicate the why behind your business. Why did you choose this industry? Why will your business succeed despite competitors? What goals and values will guide your decision making as you grow?
- Your products and services
This section of the business plan is your opportunity to demonstrate how great your product or service is. Go into detail about the features and benefits of your offering.
If your business involves selling a physical product, describe the steps involved in bringing your product to market. For example, if you are starting a clothing business, describe the design process, the material sourcing process and any existing suppliers, the manufacturing process, and how you plan to distribute the product.
If you provide a service, describe how your business is well-positioned to deliver the service to an excellent standard. For example, if you are starting an accounting business, include an overview of accounting services you have successfully provided in the past, and describe any specialized skills you may have that set you apart from other accountants. This business plan section should also provide an overview of your competitive advantage. In the clothing business example, it may be that your materials are ethically sourced and carbon neutral. For the accountant example, it may be your unique experience helping clients in a niche market with their accounting needs.
- Market research
Defining the target market is a critical step for any new business. You need to make sure there is a market for your product or service and show that you have thought about how you will penetrate this market.
Your market research should include the size of your target market. Be as specific as possible in your business plan. While it’s impossible to get a perfectly accurate figure, you can look for government data or industry reports relevant to your industry, research trends in your industry, and make informed guesses to show you arrive at your market size.
For example, if your business is green household cleaning products, saying that every household in Canada is part of your target market is too broad. You’ll need to think about your actual ideal customer and figure out how many people who fit that profile you can reach with your business.
An important part of this section is identifying the key competitors in your market and demonstrating that you offer something unique that differs from them.
An effective way to demonstrate your competitive position within your market is by doing a SWOT analysis. SWOT is an acronym for strengths, weaknesses, opportunities, and threats.
Include a SWOT analysis in the market research section of the business plan by creating a section for each letter in a 2×2 grid.
- Under strengths, list your business characteristics that offer you a competitive edge.
- Under weaknesses, include the areas where you know you are not as developed as your competitors.
- Under opportunities, list any market trends or new developments that you can use to your advantage.
- Under threats, outline market trends or developments that disadvantage your business.
A sample SWOT analysis for a new dentist location might look like this:
S: 15 years of experience, high end facility in a new building
W: first time dental office owner, no existing clients in the area
O: a new condo development will be completed soon with many potential clients moving to the area
T: economic downturn may mean people lost dental insurance, may put off going to the dentist
You might think that including weaknesses and threats in your business plan will discourage potential investors, but the opposite is true. It shows that you can think through potential challenges, which is essential if you’re going to meet and overcome those challenges.
- Marketing strategy and implementation
In this section of your business plan, you can elaborate upon your target market segments and how you plan to differentiate your product for each of these target audiences . You’ll also describe how you will take your product to market.
A target market segment is a further subsection of your target market. For example, you might segment your market by age, profession, income, or geographic location.
Explain how you will promote your business to each of your relevant market segments, and provide a comprehensive marketing plan for each segment.
Your marketing plan should consider as many marketing channels as possible: email marketing, online ads, tv ads, influencer marketing, PR campaigns, trade shows , and more can all be a part of your marketing strategy, but not all of these may be relevant to your particular target market segment. Explain why each component of your marketing strategy is the best choice for reaching your target customer and outline your marketing budget.
Finally, be sure to include how or where your product or service will be sold.
- Organization and team
This section of the business plan is all about your organizational structure. If you are the only person involved in your business, provide a complete overview of your qualifications and why you are the right person to make your business a success.
If you have a larger management team, provide an overview of each role and the qualifications of each team member.
This part of the business plan can also describe where your business takes place. Provide details of your locations, and identify any third parties involved in your business operations such as contract manufacturers.
Include an overview of your daily operations.
- Financial plan and pricing
A key aspect of how to write a business plan is showing you can be profitable. Provide an overview of your pricing structure, including any pricing incentives such as discounts that you plan to offer.
You should include the following:
- An income statement, showing income and expenses for a given period of time
- A balance sheet, listing all business assets against business liabilities. This shows how much equity you own in your business, which will determine the riskiness of lending to you.
- A cash-flow statement, which is similar to an income statement but factors in the timing of income and expenditures to determine if there are periods where your cash flow is negative
If you’re starting out, you will have to use educated guesses to complete this information. Come up with a realistic sales forecast for the first year of your business, and include expected variations due to things like seasonality. It’s important to be realistic with your projections. This shows you’ve done your research to arrive at reasonable estimates.
You may also include an appendix if you wish, with images of your product, packaging, retail locations, or anything else that may be relevant.
By the time you complete your business plan, you’ll be much more acquainted with your own business than when you started.
This powerful document can serve as a guiding light as you make decisions, helping you stick to your plan and vision for success, and access funding to take your business to the next level. Now you know exactly how to create a business plan that works for you and your business.
![salient features of writing business plan facebook](https://www.ownr-blog.com/wp-content/uploads/2023/10/icon-fb.png)
This article offers general information only, is current as of the date of publication, and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.
How to Write a Business Plan: Your Step-by-Step Guide
![salient features of writing business plan Getty Images](https://pilbox.themuse.com/image.png?filter=antialias&h=350&opt=1&pos=top-left&prog=1&q=keep&url=https%3A%2F%2Fcms-assets.themuse.com%2Fmedia%2Flead%2Fhow-to-write-a-business-plan.png&w=700)
So, you’ve got an idea and you want to start a business —great! Before you do anything else, like seek funding or build out a team, you'll need to know how to write a business plan. This plan will serve as the foundation of your company while also giving investors and future employees a clear idea of your purpose.
Below, Lauren Cobello, Founder and CEO of Leverage with Media PR , gives her best advice on how to make a business plan for your company.
Build your dream business with the help of a high-paying job—browse open jobs on The Muse »
What is a business plan, and when do you need one?
According to Cobello, a business plan is a document that contains the mission of the business and a brief overview of it, as well as the objectives, strategies, and financial plans of the founder. A business plan comes into play very early on in the process of starting a company—more or less before you do anything else.
“You should start a company with a business plan in mind—especially if you plan to get funding for the company,” Cobello says. “You’re going to need it.”
Whether that funding comes from a loan, an investor, or crowdsourcing, a business plan is imperative to secure the capital, says the U.S. Small Business Administration . Anyone who’s considering giving you money is going to want to review your business plan before doing so. That means before you head into any meeting, make sure you have physical copies of your business plan to share.
Different types of business plans
The four main types of business plans are:
Startup Business Plans
Internal business plans, strategic business plans, one-page business plans.
Let's break down each one:
If you're wondering how to write a business plan for a startup, Cobello has advice for you. Startup business plans are the most common type, she says, and they are a critical tool for new business ventures that want funding. A startup is defined as a company that’s in its first stages of operations, founded by an entrepreneur who has a product or service idea.
Most startups begin with very little money, so they need a strong business plan to convince family, friends, banks, and/or venture capitalists to invest in the new company.
Internal business plans “are for internal use only,” says Cobello. This kind of document is not public-facing, only company-facing, and it contains an outline of the company’s business strategy, financial goals and budgets, and performance data.
Internal business plans aren’t used to secure funding, but rather to set goals and get everyone working there tracking towards them.
As the name implies, strategic business plans are geared more towards strategy and they include an assessment of the current business landscape, notes Jérôme Côté, a Business Advisor at BDC Advisory Services .
Unlike a traditional business plan, Cobello adds, strategic plans include a SWOT analysis (which stands for strengths, weaknesses, opportunities, and threats) and an in-depth action plan for the next six to 12 months. Strategic plans are action-based and take into account the state of the company and the industry in which it exists.
Although a typical business plan falls between 15 to 30 pages, some companies opt for the much shorter One-Page Business Plan. A one-page business plan is a simplified version of the larger business plan, and it focuses on the problem your product or service is solving, the solution (your product), and your business model (how you’ll make money).
A one-page plan is hyper-direct and easy to read, making it an effective tool for businesses of all sizes, at any stage.
How to create a business plan in 7 steps
Every business plan is different, and the steps you take to complete yours will depend on what type and format you choose. That said, if you need a place to start and appreciate a roadmap, here’s what Cobello recommends:
1. Conduct your research
Before writing your business plan, you’ll want to do a thorough investigation of what’s out there. Who will be the competitors for your product or service? Who is included in the target market? What industry trends are you capitalizing on, or rebuking? You want to figure out where you sit in the market and what your company’s value propositions are. What makes you different—and better?
2. Define your purpose for the business plan
The purpose of your business plan will determine which kind of plan you choose to create. Are you trying to drum up funding, or get the company employees focused on specific goals? (For the former, you’d want a startup business plan, while an internal plan would satisfy the latter.) Also, consider your audience. An investment firm that sees hundreds of potential business plans a day may prefer to see a one-pager upfront and, if they’re interested, a longer plan later.
3. Write your company description
Every business plan needs a company description—aka a summary of the company’s purpose, what they do/offer, and what makes it unique. Company descriptions should be clear and concise, avoiding the use of jargon, Cobello says. Ideally, descriptions should be a few paragraphs at most.
4. Explain and show how the company will make money
A business plan should be centered around the company’s goals, and it should clearly explain how the company will generate revenue. To do this, Cobello recommends using actual numbers and details, as opposed to just projections.
For instance, if the company is already making money, show how much and at what cost (e.g. what was the net profit). If it hasn’t generated revenue yet, outline the plan for how it will—including what the product/service will cost to produce and how much it will cost the consumer.
5. Outline your marketing strategy
How will you promote the business? Through what channels will you be promoting it? How are you going to reach and appeal to your target market? The more specific and thorough you can be with your plans here, the better, Cobello says.
6. Explain how you’ll spend your funding
What will you do with the money you raise? What are the first steps you plan to take? As a founder, you want to instill confidence in your investors and show them that the instant you receive their money, you’ll be taking smart actions that grow the company.
7. Include supporting documents
Creating a business plan is in some ways akin to building a legal case, but for your business. “You want to tell a story, and to be as thorough as possible, while keeping your plan succinct, clear, interesting, and visually appealing,” Cobello says. “Supporting documents could include financial projects, a competitive analysis of the market you’re entering into, and even any licenses, patents, or permits you’ve secured.”
A business plan is an individualized document—it’s ultimately up to you what information to include and what story you tell. But above all, Cobello says, your business plan should have a clear focus and goal in mind, because everything else will build off this cornerstone.
“Many people don’t realize how important business plans are for the health of their company,” she says. “Set aside time to make this a priority for your business, and make sure to keep it updated as you grow.”
How to Write a Business Plan (Plus Examples & Templates)
![salient features of writing business plan salient features of writing business plan](https://www.upflip.com/wp-content/uploads/2024/06/1554309957717-150x150.jpeg)
Have you ever wondered how to write a business plan step by step? Mike Andes, told us:
This guide will help you write a business plan to impress investors.
Throughout this process, we’ll get information from Mike Andes, who started Augusta Lawn Care Services when he was 12 and turned it into a franchise with over 90 locations. He has gone on to help others learn how to write business plans and start businesses. He knows a thing or two about writing business plans!
We’ll start by discussing the definition of a business plan. Then we’ll discuss how to come up with the idea, how to do the market research, and then the important elements in the business plan format. Keep reading to start your journey!
What Is a Business Plan?
A business plan is simply a road map of what you are trying to achieve with your business and how you will go about achieving it. It should cover all elements of your business including:
- Finding customers
- Plans for developing a team
- Competition
- Legal structures
- Key milestones you are pursuing
If you aren’t quite ready to create a business plan, consider starting by reading our business startup guide .
Get a Business Idea
Before you can write a business plan, you have to have a business idea. You may see a problem that needs to be solved and have an idea how to solve it, or you might start by evaluating your interests and skills.
Mike told us, “The three things I suggest asking yourself when thinking about starting a business are:
- What am I good at?
- What would I enjoy doing?
- What can I get paid for?”
![How to Write a Business Plan (Plus Examples & Templates) 1 Three adjoining circles about business opportunity](https://www.upflip.com/wp-content/uploads/2021/05/business-opportunity-for-business-plan-writing.jpg)
If all three of these questions don’t lead to at least one common answer, it will probably be a much harder road to success. Either there is not much market for it, you won’t be good at it, or you won’t enjoy doing it.
As Mike told us, “There’s enough stress starting and running a business that if you don’t like it or aren’t good at it, it’s hard to succeed.”
If you’d like to hear more about Mike’s approach to starting a business, check out our YouTube video
Conduct Market Analysis
Market analysis is focused on establishing if there is a target market for your products and services, how large the target market is, and identifying the demographics of people or businesses that would be interested in the product or service. The goal here is to establish how much money your business concept can make.
Product and Service Demand
![How to Write a Business Plan (Plus Examples & Templates) 2 An image showing product service and demand](https://www.upflip.com/wp-content/uploads/2021/05/product-service-and-demand.jpg)
A search engine is your best friend when trying to figure out if there is demand for your products and services. Personally, I love using presearch.org because it lets you directly search on a ton of different platforms including Google, Youtube, Twitter, and more. Check out the screenshot for the full list of search options.
With quick web searches, you can find out how many competitors you have, look through their reviews, and see if there are common complaints about the competitors. Bad reviews are a great place to find opportunities to offer better products or services.
If there are no similar products or services, you may have stumbled upon something new, or there may just be no demand for it. To find out, go talk to your most honest friend about the idea and see what they think. If they tell you it’s dumb or stare at you vacantly, there’s probably no market for it.
You can also conduct a survey through social media to get public opinion on your idea. Using Facebook Business Manager , you could get a feel for who would be interested in your product or service.
I ran a quick test of how many people between 18-65 you could reach in the U.S. during a week. It returned an estimated 700-2,000 for the total number of leads, which is enough to do a fairly accurate statistical analysis.
Identify Demographics of Target Market
Depending on what type of business you want to run, your target market will be different. The narrower the demographic, the fewer potential customers you’ll have. If you did a survey, you’ll be able to use that data to help define your target audience. Some considerations you’ll want to consider are:
- Other Interests
- Marital Status
- Do they have kids?
Once you have this information, it can help you narrow down your options for location and help define your marketing further. One resource that Mike recommended using is the Census Bureau’s Quick Facts Map . He told us,
“It helps you quickly evaluate what the best areas are for your business to be located.”
How to Write a Business Plan
![How to Write a Business Plan (Plus Examples & Templates) 3 Business plan development](https://www.upflip.com/wp-content/uploads/2021/04/business-plan-development.jpg)
Now that you’ve developed your idea a little and established there is a market for it, you can begin writing a business plan. Getting started is easier with the business plan template we created for you to download. I strongly recommend using it as it is updated to make it easier to create an action plan.
Each of the following should be a section of your business plan:
- Business Plan Cover Page
- Table of Contents
- Executive Summary
- Company Description
- Description of Products and Services
SWOT Analysis
- Competitor Data
- Competitive Analysis
- Marketing Expenses Strategy
Pricing Strategy
- Distribution Channel Assessment
- Operational Plan
- Management and Organizational Strategy
- Financial Statements and/or Financial Projections
We’ll look into each of these. Don’t forget to download our free business plan template (mentioned just above) so you can follow along as we go.
How to Write a Business Plan Step 1. Create a Cover Page
The first thing investors will see is the cover page for your business plan. Make sure it looks professional. A great cover page shows that you think about first impressions.
A good business plan should have the following elements on a cover page:
- Professionally designed logo
- Company name
- Mission or Vision Statement
- Contact Info
Basically, think of a cover page for your business plan like a giant business card. It is meant to capture people’s attention but be quickly processed.
How to Write a Business Plan Step 2. Create a Table of Contents
Most people are busy enough that they don’t have a lot of time. Providing a table of contents makes it easy for them to find the pages of your plan that are meaningful to them.
A table of contents will be immediately after the cover page, but you can include it after the executive summary. Including the table of contents immediately after the executive summary will help investors know what section of your business plan they want to review more thoroughly.
Check out Canva’s article about creating a table of contents . It has a ton of great information about creating easy access to each section of your business plan. Just remember that you’ll want to use different strategies for digital and hard copy business plans.
How to Write a Business Plan Step 3. Write an Executive Summary
![How to Write a Business Plan (Plus Examples & Templates) 4 A notepad with a written executive summary for business plan writing](https://www.upflip.com/wp-content/uploads/2021/05/executive-summary-for-business-plan-writing.jpg)
An executive summary is where your business plan should catch the readers interest. It doesn’t need to be long, but should be quick and easy to read.
Mike told us,
How long should an executive summary bein an informal business plan?
For casual use, an executive summary should be similar to an elevator pitch, no more than 150-160 words, just enough to get them interested and wanting more. Indeed has a great article on elevator pitches . This can also be used for the content of emails to get readers’ attention.
It consists of three basic parts:
- An introduction to you and your business.
- What your business is about.
- A call to action
Example of an informal executive summary
One of the best elevator pitches I’ve used is:
So far that pitch has achieved a 100% success rate in getting partnerships for the business.
What should I include in an executive summary for investors?
Investors are going to need a more detailed executive summary if you want to secure financing or sell equity. The executive summary should be a brief overview of your entire business plan and include:
- Introduction of yourself and company.
- An origin story (Recognition of a problem and how you came to solution)
- An introduction to your products or services.
- Your unique value proposition. Make sure to include intellectual property.
- Where you are in the business life cycle
- Request and why you need it.
Successful business plan examples
The owner of Urbanity told us he spent 2 months writing a 75-page business plan and received a $250,000 loan from the bank when he was 23. Make your business plan as detailed as possible when looking for financing. We’ve provided a template to help you prepare the portions of a business plan that banks expect.
Here’s the interview with the owner of Urbanity:
When to write an executive summary?
Even though the summary is near the beginning of a business plan, you should write it after you complete the rest of a business plan. You can’t talk about revenue, profits, and expected expenditures if you haven’t done the market research and created a financial plan.
What mistakes do people make when writing an executive summary?
Business owners commonly go into too much detail about the following items in an executive summary:
- Marketing and sales processes
- Financial statements
- Organizational structure
- Market analysis
These are things that people will want to know later, but they don’t hook the reader. They won’t spark interest in your small business, but they’ll close the deal.
How to Write a Business Plan Step 4. Company Description
Every business plan should include a company description. A great business plan will include the following elements while describing the company:
- Mission statement
- Philosophy and vision
- Company goals
Target market
- Legal structure
Let’s take a look at what each section includes in a good business plan.
Mission Statement
A mission statement is a brief explanation of why you started the company and what the company’s main focus is. It should be no more than one or two sentences. Check out HubSpot’s article 27 Inspiring Mission Statement for a great read on informative and inspiring mission and vision statements.
Company Philosophy and Vision
![How to Write a Business Plan (Plus Examples & Templates) 5 Writing the company philosophy and vision](https://www.upflip.com/wp-content/uploads/2021/05/company-vision-for-business-plan-writing.jpg)
The company philosophy is what drives your company. You’ll normally hear them called core values. These are the building blocks that make your company different. You want to communicate your values to customers, business owners, and investors as often as possible to build a company culture, but make sure to back them up.
What makes your company different?
Each company is different. Your new business should rise above the standard company lines of honesty, integrity, fun, innovation, and community when communicating your business values. The standard answers are corporate jargon and lack authenticity.
Examples of core values
One of my clients decided to add a core values page to their website. As a tech company they emphasized the values:
- Prioritize communication.
- Never stop learning.
- Be transparent.
- Start small and grow incrementally.
These values communicate how the owner and the rest of the company operate. They also show a value proposition and competitive advantage because they specifically focus on delivering business value from the start. These values also genuinely show what the company is about and customers recognize the sincerity. Indeed has a great blog about how to identify your core values .
What is a vision statement?
A vision statement communicate the long lasting change a business pursues. The vision helps investors and customers understand what your company is trying to accomplish. The vision statement goes beyond a mission statement to provide something meaningful to the community, customer’s lives, or even the world.
Example vision statements
The Alzheimer’s Association is a great example of a vision statement:
A world without Alzheimer’s Disease and other dementia.
It clearly tells how they want to change the world. A world without Alzheimers might be unachievable, but that means they always have room for improvement.
Business Goals
You have to measure success against goals for a business plan to be meaningful. A business plan helps guide a company similar to how your GPS provides a road map to your favorite travel destination. A goal to make as much money as possible is not inspirational and sounds greedy.
Sure, business owners want to increase their profits and improve customer service, but they need to present an overview of what they consider success. The goals should help everyone prioritize their work.
How far in advance should a business plan?
Business planning should be done at least one year in advance, but many banks and investors prefer three to five year business plans. Longer plans show investors that the management team understands the market and knows the business is operating in a constantly shifting market. In addition, a plan helps businesses to adjust to changes because they have already considered how to handle them.
Example of great business goals
My all time-favorite long-term company goals are included in Tesla’s Master Plan, Part Deux . These goals were written in 2016 and drive the company’s decisions through 2026. They are the reason that investors are so forgiving when Elon Musk continually fails to meet his quarterly and annual goals.
If the progress aligns with the business plan investors are likely to continue to believe in the company. Just make sure the goals are reasonable or you’ll be discredited (unless you’re Elon Musk).
![How to Write a Business Plan (Plus Examples & Templates) 6 A man holding an iPad with a cup of coffee on his desk](https://www.upflip.com/wp-content/uploads/2021/04/target-market-for-charter-boat-business.jpg)
You did target market research before creating a business plan. Now it’s time to add it to the plan so others understand what your ideal customer looks like. As a new business owner, you may not be considered an expert in your field yet, so document everything. Make sure the references you use are from respectable sources.
Use information from the specific lender when you are applying for lending. Most lenders provide industry research reports and using their data can strengthen the position of your business plan.
A small business plan should include a section on the external environment. Understanding the industry is crucial because we don’t plan a business in a vacuum. Make sure to research the industry trends, competitors, and forecasts. I personally prefer IBIS World for my business research. Make sure to answer questions like:
- What is the industry outlook long-term and short-term?
- How will your business take advantage of projected industry changes and trends?
- What might happen to your competitors and how will your business successfully compete?
Industry resources
Some helpful resources to help you establish more about your industry are:
- Trade Associations
- Federal Reserve
- Bureau of Labor Statistics
Legal Structure
There are five basic types of legal structures that most people will utilize:
- Sole proprietorships
- Limited Liability Companies (LLC)
Partnerships
Corporations.
- Franchises.
Each business structure has their pros and cons. An LLC is the most common legal structure due to its protection of personal assets and ease of setting up. Make sure to specify how ownership is divided and what roles each owner plays when you have more than one business owner.
You’ll have to decide which structure is best for you, but we’ve gathered information on each to make it easier.
Sole Proprietorship
A sole proprietorship is the easiest legal structure to set up but doesn’t protect the owner’s personal assets from legal issues. That means if something goes wrong, you could lose both your company and your home.
To start a sole proprietorship, fill out a special tax form called a Schedule C . Sole proprietors can also join the American Independent Business Alliance .
Limited Liability Company (LLC)
An LLC is the most common business structure used in the United States because an LLC protects the owner’s personal assets. It’s similar to partnerships and corporations, but can be a single-member LLC in most states. An LLC requires a document called an operating agreement.
Each state has different requirements. Here’s a link to find your state’s requirements . Delaware and Nevada are common states to file an LLC because they are really business-friendly. Here’s a blog on the top 10 states to get an LLC.
Partnerships are typically for legal firms. If you choose to use a partnership choose a Limited Liability Partnership. Alternatively, you can just use an LLC.
Corporations are typically for massive organizations. Corporations have taxes on both corporate and income tax so unless you plan on selling stock, you are better off considering an LLC with S-Corp status . Investopedia has good information corporations here .
![How to Write a Business Plan (Plus Examples & Templates) 7 An iPad with colored pens on a desk](https://www.upflip.com/wp-content/uploads/2020/12/franchise-for-car-rental-business.jpg)
There are several opportunities to purchase successful franchises. TopFranchise.com has a list of companies in a variety of industries that offer franchise opportunities. This makes it where an entrepreneur can benefit from the reputation of an established business that has already worked out many of the kinks of starting from scratch.
How to Write a Business Plan Step 5. Products and Services
This section of the business plan should focus on what you sell, how you source it, and how you sell it. You should include:
- Unique features that differentiate your business products from competitors
- Intellectual property
- Your supply chain
- Cost and pricing structure
Questions to answer about your products and services
Mike gave us a list of the most important questions to answer about your product and services:
- How will you be selling the product? (in person, ecommerce, wholesale, direct to consumer)?
- How do you let them know they need a product?
- How do you communicate the message?
- How will you do transactions?
- How much will you be selling it for?
- How many do you think you’ll sell and why?
Make sure to use the worksheet on our business plan template .
How to Write a Business Plan Step 6. Sales and Marketing Plan
The marketing and sales plan is focused on the strategy to bring awareness to your company and guides how you will get the product to the consumer. It should contain the following sections:
SWOT Analysis stands for strengths, weaknesses, opportunities, and threats. Not only do you want to identify them, but you also want to document how the business plans to deal with them.
Business owners need to do a thorough job documenting how their service or product stacks up against the competition.
If proper research isn’t done, investors will be able to tell that the owner hasn’t researched the competition and is less likely to believe that the team can protect its service from threats by the more well-established competition. This is one of the most common parts of a presentation that trips up business owners presenting on Shark Tank .
SWOT Examples
![How to Write a Business Plan (Plus Examples & Templates) 8 Business plan SWOT analysis](https://www.upflip.com/wp-content/uploads/2021/05/SWOT-analysis-for-writing-a-business-plan-1.jpg)
Examples of strengths and weaknesses could be things like the lack of cash flow, intellectual property ownership, high costs of suppliers, and customers’ expectations on shipping times.
Opportunities could be ways to capitalize on your strengths or improve your weaknesses, but may also be gaps in the industry. This includes:
- Adding offerings that fit with your current small business
- Increase sales to current customers
- Reducing costs through bulk ordering
- Finding ways to reduce inventory
- And other areas you can improve
Threats will normally come from outside of the company but could also be things like losing a key member of the team. Threats normally come from competition, regulations, taxes, and unforeseen events.
The management team should use the SWOT analysis to guide other areas of business planning, but it absolutely has to be done before a business owner starts marketing.
Include Competitor Data in Your Business Plan
When you plan a business, taking into consideration the strengths and weaknesses of the competition is key to navigating the field. Providing an overview of your competition and where they are headed shows that you are invested in understanding the industry.
For smaller businesses, you’ll want to search both the company and the owners names to see what they are working on. For publicly held corporations, you can find their quarterly and annual reports on the SEC website .
What another business plans to do can impact your business. Make sure to include things that might make it attractive for bigger companies to outsource to a small business.
Marketing Strategy
The marketing and sales part of business plans should be focused on how you are going to make potential customers aware of your business and then sell to them.
If you haven’t already included it, Mike recommends:
“They’ll want to know about Demographics, ages, and wealth of your target market.”
Make sure to include the Total addressable market . The term refers to the value if you captured 100% of the market.
Advertising Strategy
You’ll explain what formats of advertising you’ll be using. Some possibilities are:
- Online: Facebook and Google are the big names to work with here.
- Print : Print can be used to reach broad groups or targeted markets. Check out this for tips .
- Radio : iHeartMedia is one of the best ways to advertise on the radio
- Cable television : High priced, hard to measure ROI, but here’s an explanation of the process
- Billboards: Attracting customers with billboards can be beneficial in high traffic areas.
You’ll want to define how you’ll be using each including frequency, duration, and cost. If you have the materials already created, including pictures or links to the marketing to show creative assets.
Mike told us “Most businesses are marketing digitally now due to Covid, but that’s not always the right answer.”
Make sure the marketing strategy will help team members or external marketing agencies stay within the brand guidelines .
![How to Write a Business Plan (Plus Examples & Templates) 9 An iPad with graph about pricing strategy](https://www.upflip.com/wp-content/uploads/2021/05/pricing-strategy-for-business-plan-writing-1.jpg)
This section of a business plan should be focused on pricing. There are a ton of pricing strategies that may work for different business plans. Which one will work for you depends on what kind of a business you run.
Some common pricing strategies are:
- Value-based pricing – Commonly used with home buying and selling or other products that are status symbols.
- Skimming pricing – Commonly seen in video game consoles, price starts off high to recoup expenses quickly, then reduces over time.
- Competition-based pricing – Pricing based on competitors’ pricing is commonly seen at gas stations.
- Freemium services – Commonly used for software, where there is a free plan, then purchase options for more functionality.
HubSpot has a great calculator and blog on pricing strategies.
Beyond explaining what strategy your business plans to use, you should include references for how you came to this pricing strategy and how it will impact your cash flow.
Distribution Plan
This part of a business plan is focused on how the product or service is going to go through the supply chain. These may include multiple divisions or multiple companies. Make sure to include any parts of the workflow that are automated so investors can see where cost savings are expected and when.
Supply Chain Examples
For instance, lawn care companies would need to cover aspects such as:
- Suppliers for lawn care equipment and tools
- Any chemicals or treatments needed
- Repair parts for sprinkler systems
- Vehicles to transport equipment and employees
- Insurance to protect the company vehicles and people.
Examples of Supply Chains
These are fairly flat supply chains compared to something like a clothing designer where the clothes would go through multiple vendors. A clothing company might have the following supply chain:
- Raw materials
- Shipping of raw materials
- Converting of raw materials to thread
- Shipping thread to produce garments
- Garment producer
- Shipping to company
- Company storage
- Shipping to retail stores
There have been advances such as print on demand that eliminate many of these steps. If you are designing completely custom clothing, all of this would need to be planned to keep from having business disruptions.
The main thing to include in the business plan is the list of suppliers, the path the supply chain follows, the time from order to the customer’s home, and the costs associated with each step of the process.
According to BizPlanReview , a business plan without this information is likely to get rejected because they have failed to research the key elements necessary to make sales to the customer.
How to Write a Business Plan Step 7. Company Organization and Operational Plan
This part of the business plan is focused on how the business model will function while serving customers. The business plan should provide an overview of how the team will manage the following aspects:
Quality Control
- Legal environment
Let’s look at each for some insight.
Production has already been discussed in previous sections so I won’t go into it much. When writing a business plan for investors, try to avoid repetition as it creates a more simple business plan.
If the organizational plan will be used by the team as an overview of how to perform the best services for the customer, then redundancy makes more sense as it communicates what is important to the business.
![How to Write a Business Plan (Plus Examples & Templates) 10 A wooden stamp with the words "quality control"](https://www.upflip.com/wp-content/uploads/2021/05/quality-control-for-business-plan-writing-1.jpg)
Quality control policies help to keep the team focused on how to verify that the company adheres to the business plan and meets or exceeds customer expectations.
Quality control can be anything from a standard that says “all labels on shirts can be no more than 1/16″ off center” to a defined checklist of steps that should be performed and filled out for every customer.
There are a variety of organizations that help define quality control including:
- International Organization for Standardization – Quality standards for energy, technology, food, production environments, and cybersecurity
- AICPA – Standard defined for accounting.
- The Joint Commission – Healthcare
- ASHRAE – HVAC best practices
You can find lists of the organizations that contribute most to the government regulation of industries on Open Secrets . Research what the leaders in your field are doing. Follow their example and implement it in your quality control plan.
For location, you should use information from the market research to establish where the location will be. Make sure to include the following in the location documentation.
- The size of your location
- The type of building (retail, industrial, commercial, etc.)
- Zoning restrictions – Urban Wire has a good map on how zoning works in each state
- Accessibility – Does it meet ADA requirements?
- Costs including rent, maintenance, utilities, insurance and any buildout or remodeling costs
- Utilities – b.e.f. has a good energy calculator .
Legal Environment
The legal requirement section is focused on defining how to meet the legal requirements for your industry. A good business plan should include all of the following:
- Any licenses and/or permits that are needed and whether you’ve obtained them
- Any trademarks, copyrights, or patents that you have or are in the process of applying for
- The insurance coverage your business requires and how much it costs
- Any environmental, health, or workplace regulations affecting your business
- Any special regulations affecting your industry
- Bonding requirements, if applicable
Your local SBA office can help you establish requirements in your area. I strongly recommend using them. They are a great resource.
Your business plan should include a plan for company organization and hiring. While you may be the only person with the company right now, down the road you’ll need more people. Make sure to consider and document the answers to the following questions:
- What is the current leadership structure and what will it look like in the future?
- What types of employees will you have? Are there any licensing or educational requirements?
- How many employees will you need?
- Will you ever hire freelancers or independent contractors?
- What is each position’s job description?
- What is the pay structure (hourly, salaried, base plus commission, etc.)?
- How do you plan to find qualified employees and contractors?
One of the most crucial parts of a business plan is the organizational chart. This simply shows the positions the company will need, who is in charge of them and the relationship of each of them. It will look similar to this:
![How to Write a Business Plan (Plus Examples & Templates) 11 Organization chart](https://www.upflip.com/wp-content/uploads/2021/05/the-organization-chart.jpg)
Our small business plan template has a much more in-depth organizational chart you can edit to include when you include the organizational chart in your business plan.
How to Write a Business Plan Step 8. Financial Statements
No business plan is complete without financial statements or financial projections. The business plan format will be different based on whether you are writing a business plan to expand a business or a startup business plan. Let’s dig deeper into each.
Provide All Financial Income from an Existing Business
An existing business should use their past financial documents including the income statement, balance sheet, and cash flow statement to find trends to estimate the next 3-5 years.
You can create easy trendlines in excel to predict future revenue, profit and loss, cash flow, and other changes in year-over-year performance. This will show your expected performance assuming business continues as normal.
If you are seeking an investment, then the business is probably not going to continue as normal. Depending on the financial plan and the purpose of getting financing, adjustments may be needed to the following:
- Higher Revenue if expanding business
- Lower Cost of Goods Sold if purchasing inventory with bulk discounts
- Adding interest if utilizing financing (not equity deal)
- Changes in expenses
- Addition of financing information to the cash flow statement
- Changes in Earnings per Share on the balance sheet
Financial modeling is a challenging subject, but there are plenty of low-cost courses on the subject. If you need help planning your business financial documentation take some time to watch some of them.
Make it a point to document how you calculated all the changes to the income statement, balance sheet, and cash flow statement in your business plan so that key team members or investors can verify your research.
Financial Projections For A Startup Business Plan
Unlike an existing business, a startup doesn’t have previous success to model its future performance. In this scenario, you need to focus on how to make a business plan realistic through the use of industry research and averages.
Mike gave the following advice in his interview:
Financial Forecasting Mistakes
One of the things a lot of inexperienced people use is the argument, “If I get one percent of the market, it is worth $100 million.” If you use this, investors are likely to file the document under bad business plan examples.
Let’s use custom t-shirts as an example.
Credence Research estimated in 2018 there were 11,334,800,000 custom t-shirts sold for a total of $206.12 Billion, with a 6% compound annual growth rate.
With that data, you can calculate that the industry will grow to $270 Billion in 2023 and that the average shirt sold creates $18.18 in revenue.
Combine that with an IBIS World estimate of 11,094 custom screen printers and that means even if you become an average seller, you’ll get .009% of the market.
Here’s a table for easier viewing of that information.
![How to Write a Business Plan (Plus Examples & Templates) 12 A table showing yearly revenue of a business](https://www.upflip.com/wp-content/uploads/2021/05/projection-of-revenue-for-business-plan-writing.jpg)
The point here is to make sure your business proposal examples make sense.
You’ll need to know industry averages such as cost of customer acquisition, revenue per customer, the average cost of goods sold, and admin costs to be able to create accurate estimates.
Our simple business plan templates walk you through most of these processes. If you follow them you’ll have a good idea of how to write a business proposal.
How to Write a Business Plan Step 9. Business Plan Example of Funding Requests
What is a business plan without a plan on how to obtain funding?
The Small Business Administration has an example for a pizza restaurant that theoretically needed nearly $20k to make it through their first month.
In our video, How to Start a $500K/Year T-Shirt Business (Pt. 1 ), Sanford Booth told us he needed about $200,000 to start his franchise and broke even after 4 months.
Freshbooks estimates it takes on average 2-3 years for a business to be profitable, which means the fictitious pizza company from the SBA could need up to $330k to make it through that time and still pay their bills for their home and pizza shop.
Not every business needs that much to start, but realistically it’s a good idea to assume that you need a fairly large cushion.
Ways to get funding for a small business
There are a variety of ways to cover this. the most common are:
- Bootstrapping – Using your savings without external funding.
- Taking out debt – loans, credit cards
- Equity, Seed Funding – Ownership of a percentage of the company in exchange for current funds
- Crowdsourcing – Promising a good for funding to create the product
Keep reading for more tips on how to write a business plan.
How funding will be used
When asking for business financing make sure to include:
- How much to get started?
- What is the minimum viable product and how soon can you make money?
- How will the money be spent?
Mike emphasized two aspects that should be included in every plan,
How to Write a Business Plan Resources
Here are some links to a business plan sample and business plan outline.
- Sample plan
It’s also helpful to follow some of the leading influencers in the business plan writing community. Here’s a list:
- Wise Plans – Shares a lot of information on starting businesses and is a business plan writing company.
- Optimus Business Plans – Another business plan writing company.
- Venture Capital – A venture capital thread that can help give you ideas.
How to Write a Business Plan: What’s Next?
We hope this guide about how to write a simple business plan step by step has been helpful. We’ve covered:
- The definition of a business plan
- Coming up with a business idea
- Performing market research
- The critical components of a business plan
- An example business plan
In addition, we provided you with a simple business plan template to assist you in the process of writing your startup business plan. The startup business plan template also includes a business model template that will be the key to your success.
Don’t forget to check out the rest of our business hub .
Have you written a business plan before? How did it impact your ability to achieve your goals?
80% of businesses fail... Learn how not to.
Learn from business failures and successes in 5 min or less. The stories, frameworks, and tactics that will make you a 10x better founder.
![salient features of writing business plan salient features of writing business plan](https://www.upflip.com/wp-content/cache/flying-press/gravatar-e98317643f06.png)
Brandon Boushy
Related articles
How to Start a $3M/Year eCommerce Business (2024)
How to Start a $15M/Year ATM Business
Monday.com Review: Pros & Cons, Ratings & More
![salient features of writing business plan salient features of writing business plan](https://www.upflip.com/wp-content/cache/flying-press/gravatar-9de9f9e3fbe0.png)
nice work https://binarychemist.com/
![salient features of writing business plan salient features of writing business plan](https://www.upflip.com/wp-content/cache/flying-press/gravatar-bfa871d377d8.png)
My Name is PRETTY NGOMANE. A south African female. Aspiring to do farming. And finding a home away from home for the differently abled persons in their daily needs.
Become a business owner in less than 90 days
Start your 10-day free trial of the UpFlip Academy and learn how to start your own business from scratch.
Get business advice straight to your Inbox
- Starting a Business
- Growing a Business
- Small Business Guide
- Business News
- Science & Technology
- Money & Finance
- For Subscribers
- Write for Entrepreneur
- Tips White Papers
- Entrepreneur Store
- United States
- Asia Pacific
- Middle East
- United Kingdom
- South Africa
Copyright © 2024 Entrepreneur Media, LLC All rights reserved. Entrepreneur® and its related marks are registered trademarks of Entrepreneur Media LLC
Elements of a Business Plan There are seven major sections of a business plan, and each one is a complex document. Read this selection from our business plan tutorial to fully understand these components.
Now that you understand why you need a business plan and you've spent some time doing your homework gathering the information you need to create one, it's time to roll up your sleeves and get everything down on paper. The following pages will describe in detail the seven essential sections of a business plan: what you should include, what you shouldn't include, how to work the numbers and additional resources you can turn to for help. With that in mind, jump right in.
Executive Summary
Within the overall outline of the business plan, the executive summary will follow the title page. The summary should tell the reader what you want. This is very important. All too often, what the business owner desires is buried on page eight. Clearly state what you're asking for in the summary.
The statement should be kept short and businesslike, probably no more than half a page. It could be longer, depending on how complicated the use of funds may be, but the summary of a business plan, like the summary of a loan application, is generally no longer than one page. Within that space, you'll need to provide a synopsis of your entire business plan. Key elements that should be included are:
- Business concept. Describes the business, its product and the market it will serve. It should point out just exactly what will be sold, to whom and why the business will hold a competitive advantage.
- Financial features. Highlights the important financial points of the business including sales, profits, cash flows and return on investment.
- Financial requirements. Clearly states the capital needed to start the business and to expand. It should detail how the capital will be used, and the equity, if any, that will be provided for funding. If the loan for initial capital will be based on security instead of equity, you should also specify the source of collateral.
- Current business position. Furnishes relevant information about the company, its legal form of operation, when it was formed, the principal owners and key personnel.
- Major achievements. Details any developments within the company that are essential to the success of the business. Major achievements include items like patents, prototypes, location of a facility, any crucial contracts that need to be in place for product development, or results from any test marketing that has been conducted.
When writing your statement of purpose, don't waste words. If the statement of purpose is eight pages, nobody's going to read it because it'll be very clear that the business, no matter what its merits, won't be a good investment because the principals are indecisive and don't really know what they want. Make it easy for the reader to realize at first glance both your needs and capabilities.
Business Description
Tell them all about it.
The business description usually begins with a short description of the industry. When describing the industry, discuss the present outlook as well as future possibilities. You should also provide information on all the various markets within the industry, including any new products or developments that will benefit or adversely affect your business. Base all of your observations on reliable data and be sure to footnote sources of information as appropriate. This is important if you're seeking funding; the investor will want to know just how dependable your information is, and won't risk money on assumptions or conjecture.
When describing your business, the first thing you need to concentrate on is its structure. By structure we mean the type of operation, i.e. wholesale, retail, food service, manufacturing or service-oriented. Also state whether the business is new or already established.
In addition to structure, legal form should be reiterated once again. Detail whether the business is a sole proprietorship, partnership or corporation, who its principals are, and what they will bring to the business.
You should also mention who you will sell to, how the product will be distributed, and the business's support systems. Support may come in the form of advertising, promotions and customer service.
Once you've described the business, you need to describe the products or services you intend to market. The product description statement should be complete enough to give the reader a clear idea of your intentions. You may want to emphasize any unique features or variations from concepts that can typically be found in the industry.
Be specific in showing how you will give your business a competitive edge. For example, your business will be better because you will supply a full line of products; competitor A doesn't have a full line. You're going to provide service after the sale; competitor B doesn't support anything he sells. Your merchandise will be of higher quality. You'll give a money-back guarantee. Competitor C has the reputation for selling the best French fries in town; you're going to sell the best Thousand Island dressing.
How Will I Profit?
Now you must be a classic capitalist and ask yourself, "How can I turn a buck? And why do I think I can make a profit that way?" Answer that question for yourself, and then convey that answer to others in the business concept section. You don't have to write 25 pages on why your business will be profitable. Just explain the factors you think will make it successful, like the following: it's a well-organized business, it will have state-of-the-art equipment, its location is exceptional, the market is ready for it, and it's a dynamite product at a fair price.
If you're using your business plan as a document for financial purposes, explain why the added equity or debt money is going to make your business more profitable.
Show how you will expand your business or be able to create something by using that money.
Show why your business is going to be profitable. A potential lender is going to want to know how successful you're going to be in this particular business. Factors that support your claims for success can be mentioned briefly; they will be detailed later. Give the reader an idea of the experience of the other key people in the business. They'll want to know what suppliers or experts you've spoken to about your business and their response to your idea. They may even ask you to clarify your choice of location or reasons for selling this particular product.
The business description can be a few paragraphs in length to a few pages, depending on the complexity of your plan. If your plan isn't too complicated, keep your business description short, describing the industry in one paragraph, the product in another, and the business and its success factors in three or four paragraphs that will end the statement.
While you may need to have a lengthy business description in some cases, it's our opinion that a short statement conveys the required information in a much more effective manner. It doesn't attempt to hold the reader's attention for an extended period of time, and this is important if you're presenting to a potential investor who will have other plans he or she will need to read as well. If the business description is long and drawn-out, you'll lose the reader's attention, and possibly any chance of receiving the necessary funding for the project.
Market Strategies
Define your market.
Market strategies are the result of a meticulous market analysis. A market analysis forces the entrepreneur to become familiar with all aspects of the market so that the target market can be defined and the company can be positioned in order to garner its share of sales. A market analysis also enables the entrepreneur to establish pricing, distribution and promotional strategies that will allow the company to become profitable within a competitive environment. In addition, it provides an indication of the growth potential within the industry, and this will allow you to develop your own estimates for the future of your business.
Begin your market analysis by defining the market in terms of size, structure, growth prospects, trends and sales potential.
The total aggregate sales of your competitors will provide you with a fairly accurate estimate of the total potential market. Once the size of the market has been determined, the next step is to define the target market. The target market narrows down the total market by concentrating on segmentation factors that will determine the total addressable market--the total number of users within the sphere of the business's influence. The segmentation factors can be geographic, customer attributes or product-oriented.
For instance, if the distribution of your product is confined to a specific geographic area, then you want to further define the target market to reflect the number of users or sales of that product within that geographic segment.
Once the target market has been detailed, it needs to be further defined to determine the total feasible market. This can be done in several ways, but most professional planners will delineate the feasible market by concentrating on product segmentation factors that may produce gaps within the market. In the case of a microbrewery that plans to brew a premium lager beer, the total feasible market could be defined by determining how many drinkers of premium pilsner beers there are in the target market.
It's important to understand that the total feasible market is the portion of the market that can be captured provided every condition within the environment is perfect and there is very little competition. In most industries this is simply not the case. There are other factors that will affect the share of the feasible market a business can reasonably obtain. These factors are usually tied to the structure of the industry, the impact of competition, strategies for market penetration and continued growth, and the amount of capital the business is willing to spend in order to increase its market share.
Projecting Market Share
Arriving at a projection of the market share for a business plan is very much a subjective estimate. It's based on not only an analysis of the market but on highly targeted and competitive distribution, pricing and promotional strategies. For instance, even though there may be a sizable number of premium pilsner drinkers to form the total feasible market, you need to be able to reach them through your distribution network at a price point that's competitive, and then you have to let them know it's available and where they can buy it. How effectively you can achieve your distribution, pricing and promotional goals determines the extent to which you will be able to garner market share.
For a business plan, you must be able to estimate market share for the time period the plan will cover. In order to project market share over the time frame of the business plan, you'll need to consider two factors:
- Industry growth which will increase the total number of users. Most projections utilize a minimum of two growth models by defining different industry sales scenarios. The industry sales scenarios should be based on leading indicators of industry sales, which will most likely include industry sales, industry segment sales, demographic data and historical precedence.
- Conversion of users from the total feasible market. This is based on a sales cycle similar to a product life cycle where you have five distinct stages: early pioneer users, early users, early majority users, late majority users and late users. Using conversion rates, market growth will continue to increase your market share during the period from early pioneers to early majority users, level off through late majority users, and decline with late users.
Defining the market is but one step in your analysis. With the information you've gained through market research, you need to develop strategies that will allow you to fulfill your objectives.
Positioning Your Business
When discussing market strategy, it's inevitable that positioning will be brought up. A company's positioning strategy is affected by a number of variables that are closely tied to the motivations and requirements of target customers within as well as the actions of primary competitors.
Before a product can be positioned, you need to answer several strategic questions such as:
- How are your competitors positioning themselves?
- What specific attributes does your product have that your competitors' don't?
- What customer needs does your product fulfill?
Once you've answered your strategic questions based on research of the market, you can then begin to develop your positioning strategy and illustrate that in your business plan. A positioning statement for a business plan doesn't have to be long or elaborate. It should merely point out exactly how you want your product perceived by both customers and the competition.
How you price your product is important because it will have a direct effect on the success of your business. Though pricing strategy and computations can be complex, the basic rules of pricing are straightforward:
- All prices must cover costs.
- The best and most effective way of lowering your sales prices is to lower costs.
- Your prices must reflect the dynamics of cost, demand, changes in the market and response to your competition.
- Prices must be established to assure sales. Don't price against a competitive operation alone. Rather, price to sell.
- Product utility, longevity, maintenance and end use must be judged continually, and target prices adjusted accordingly.
- Prices must be set to preserve order in the marketplace.
There are many methods of establishing prices available to you:
- Cost-plus pricing. Used mainly by manufacturers, cost-plus pricing assures that all costs, both fixed and variable, are covered and the desired profit percentage is attained.
- Demand pricing. Used by companies that sell their product through a variety of sources at differing prices based on demand.
- Competitive pricing. Used by companies that are entering a market where there is already an established price and it is difficult to differentiate one product from another.
- Markup pricing. Used mainly by retailers, markup pricing is calculated by adding your desired profit to the cost of the product. Each method listed above has its strengths and weaknesses.
- Distribution
Distribution includes the entire process of moving the product from the factory to the end user. The type of distribution network you choose will depend upon the industry and the size of the market. A good way to make your decision is to analyze your competitors to determine the channels they are using, then decide whether to use the same type of channel or an alternative that may provide you with a strategic advantage.
Some of the more common distribution channels include:
- Direct sales. The most effective distribution channel is to sell directly to the end-user.
- OEM (original equipment manufacturer) sales. When your product is sold to the OEM, it is incorporated into their finished product and it is distributed to the end user.
- Manufacturer's representatives. One of the best ways to distribute a product, manufacturer's reps, as they are known, are salespeople who operate out of agencies that handle an assortment of complementary products and divide their selling time among them.
- Wholesale distributors. Using this channel, a manufacturer sells to a wholesaler, who in turn sells it to a retailer or other agent for further distribution through the channel until it reaches the end user.
- Brokers. Third-party distributors who often buy directly from the distributor or wholesaler and sell to retailers or end users.
- Retail distributors. Distributing a product through this channel is important if the end user of your product is the general consuming public.
- Direct Mail. Selling to the end user using a direct mail campaign.
As we've mentioned already, the distribution strategy you choose for your product will be based on several factors that include the channels being used by your competition, your pricing strategy and your own internal resources.
Promotion Plan
With a distribution strategy formed, you must develop a promotion plan. The promotion strategy in its most basic form is the controlled distribution of communication designed to sell your product or service. In order to accomplish this, the promotion strategy encompasses every marketing tool utilized in the communication effort. This includes:
- Advertising. Includes the advertising budget, creative message(s), and at least the first quarter's media schedule.
- Packaging. Provides a description of the packaging strategy. If available, mockups of any labels, trademarks or service marks should be included.
- Public relations. A complete account of the publicity strategy including a list of media that will be approached as well as a schedule of planned events.
- Sales promotions. Establishes the strategies used to support the sales message. This includes a description of collateral marketing material as well as a schedule of planned promotional activities such as special sales, coupons, contests and premium awards.
- Personal sales. An outline of the sales strategy including pricing procedures, returns and adjustment rules, sales presentation methods, lead generation, customer service policies, salesperson compensation, and salesperson market responsibilities.
Sales Potential
Once the market has been researched and analyzed, conclusions need to be developed that will supply a quantitative outlook concerning the potential of the business. The first financial projection within the business plan must be formed utilizing the information drawn from defining the market, positioning the product, pricing, distribution, and strategies for sales. The sales or revenue model charts the potential for the product, as well as the business, over a set period of time. Most business plans will project revenue for up to three years, although five-year projections are becoming increasingly popular among lenders.
When developing the revenue model for the business plan, the equation used to project sales is fairly simple. It consists of the total number of customers and the average revenue from each customer. In the equation, "T" represents the total number of people, "A" represents the average revenue per customer, and "S" represents the sales projection. The equation for projecting sales is: (T)(A) = S
Using this equation, the annual sales for each year projected within the business plan can be developed. Of course, there are other factors that you'll need to evaluate from the revenue model. Since the revenue model is a table illustrating the source for all income, every segment of the target market that is treated differently must be accounted for. In order to determine any differences, the various strategies utilized in order to sell the product have to be considered. As we've already mentioned, those strategies include distribution, pricing and promotion.
Competitive Analysis
Identify and analyze your competition.
The competitive analysis is a statement of the business strategy and how it relates to the competition. The purpose of the competitive analysis is to determine the strengths and weaknesses of the competitors within your market, strategies that will provide you with a distinct advantage, the barriers that can be developed in order to prevent competition from entering your market, and any weaknesses that can be exploited within the product development cycle.
The first step in a competitor analysis is to identify the current and potential competition. There are essentially two ways you can identify competitors. The first is to look at the market from the customer's viewpoint and group all your competitors by the degree to which they contend for the buyer's dollar. The second method is to group competitors according to their various competitive strategies so you understand what motivates them.
Once you've grouped your competitors, you can start to analyze their strategies and identify the areas where they're most vulnerable. This can be done through an examination of your competitors' weaknesses and strengths. A competitor's strengths and weaknesses are usually based on the presence and absence of key assets and skills needed to compete in the market.
To determine just what constitutes a key asset or skill within an industry, David A. Aaker in his book, Developing Business Strategies , suggests concentrating your efforts in four areas:
- The reasons behind successful as well as unsuccessful firms
- Prime customer motivators
- Major component costs
- Industry mobility barriers
According to theory, the performance of a company within a market is directly related to the possession of key assets and skills. Therefore, an analysis of strong performers should reveal the causes behind such a successful track record. This analysis, in conjunction with an examination of unsuccessful companies and the reasons behind their failure, should provide a good idea of just what key assets and skills are needed to be successful within a given industry and market segment.
Through your competitor analysis, you will also have to create a marketing strategy that will generate an asset or skill competitors don't have, which will provide you with a distinct and enduring competitive advantage. Since competitive advantages are developed from key assets and skills, you should sit down and put together a competitive strength grid. This is a scale that lists all your major competitors or strategic groups based upon their applicable assets and skills and how your own company fits on this scale.
Create a Competitive Strength Grid
To put together a competitive strength grid, list all the key assets and skills down the left margin of a piece of paper. Along the top, write down two column headers: "weakness" and "strength." In each asset or skill category, place all the competitors that have weaknesses in that particular category under the weakness column, and all those that have strengths in that specific category in the strength column. After you've finished, you'll be able to determine just where you stand in relation to the other firms competing in your industry.
Once you've established the key assets and skills necessary to succeed in this business and have defined your distinct competitive advantage, you need to communicate them in a strategic form that will attract market share as well as defend it. Competitive strategies usually fall into these five areas:
- Advertising
Many of the factors leading to the formation of a strategy should already have been highlighted in previous sections, specifically in marketing strategies. Strategies primarily revolve around establishing the point of entry in the product life cycle and an endurable competitive advantage. As we've already discussed, this involves defining the elements that will set your product or service apart from your competitors or strategic groups. You need to establish this competitive advantage clearly so the reader understands not only how you will accomplish your goals, but also why your strategy will work.
Design and Development Plan
What you'll cover in this section.
The purpose of the design and development plan section is to provide investors with a description of the product's design, chart its development within the context of production, marketing and the company itself, and create a development budget that will enable the company to reach its goals.
There are generally three areas you'll cover in the development plan section:
- Product development
- Market development
- Organizational development
Each of these elements needs to be examined from the funding of the plan to the point where the business begins to experience a continuous income. Although these elements will differ in nature concerning their content, each will be based on structure and goals.
The first step in the development process is setting goals for the overall development plan. From your analysis of the market and competition, most of the product, market and organizational development goals will be readily apparent. Each goal you define should have certain characteristics. Your goals should be quantifiable in order to set up time lines, directed so they relate to the success of the business, consequential so they have impact upon the company, and feasible so that they aren't beyond the bounds of actual completion.
Goals For Product Development
Goals for product development should center on the technical as well as the marketing aspects of the product so that you have a focused outline from which the development team can work. For example, a goal for product development of a microbrewed beer might be "Produce recipe for premium lager beer" or "Create packaging for premium lager beer." In terms of market development, a goal might be, "Develop collateral marketing material." Organizational goals would center on the acquisition of expertise in order to attain your product and market-development goals. This expertise usually needs to be present in areas of key assets that provide a competitive advantage. Without the necessary expertise, the chances of bringing a product successfully to market diminish.
With your goals set and expertise in place, you need to form a set of procedural tasks or work assignments for each area of the development plan. Procedures will have to be developed for product development, market development, and organization development. In some cases, product and organization can be combined if the list of procedures is short enough.
Procedures should include how resources will be allocated, who is in charge of accomplishing each goal, and how everything will interact. For example, to produce a recipe for a premium lager beer, you would need to do the following:
- Gather ingredients.
- Determine optimum malting process.
- Gauge mashing temperature.
- Boil wort and evaluate which hops provide the best flavor.
- Determine yeast amounts and fermentation period.
- Determine aging period.
- Carbonate the beer.
- Decide whether or not to pasteurize the beer.
The development of procedures provides a list of work assignments that need to be accomplished, but one thing it doesn't provide are the stages of development that coordinate the work assignments within the overall development plan. To do this, you first need to amend the work assignments created in the procedures section so that all the individual work elements are accounted for in the development plan. The next stage involves setting deliverable dates for components as well as the finished product for testing purposes. There are primarily three steps you need to go through before the product is ready for final delivery:
- Preliminary product review . All the product's features and specifications are checked.
- Critical product review . All the key elements of the product are checked and gauged against the development schedule to make sure everything is going according to plan.
- Final product review . All elements of the product are checked against goals to assure the integrity of the prototype.
Scheduling and Costs
This is one of the most important elements in the development plan. Scheduling includes all of the key work elements as well as the stages the product must pass through before customer delivery. It should also be tied to the development budget so that expenses can be tracked. But its main purpose is to establish time frames for completion of all work assignments and juxtapose them within the stages through which the product must pass. When producing the schedule, provide a column for each procedural task, how long it takes, start date and stop date. If you want to provide a number for each task, include a column in the schedule for the task number.
Development Budget
That leads us into a discussion of the development budget. When forming your development budget, you need to take into account all the expenses required to design the product and to take it from prototype to production.
Costs that should be included in the development budget include:
- Material . All raw materials used in the development of the product.
- Direct labor . All labor costs associated with the development of the product.
- Overhead . All overhead expenses required to operate the business during the development phase such as taxes, rent, phone, utilities, office supplies, etc.
- G&A costs . The salaries of executive and administrative personnel along with any other office support functions.
- Marketing & sales . The salaries of marketing personnel required to develop pre-promotional materials and plan the marketing campaign that should begin prior to delivery of the product.
- Professional services . Those costs associated with the consultation of outside experts such as accountants, lawyers, and business consultants.
- Miscellaneous Costs . Costs that are related to product development.
- Capital equipment . To determine the capital requirements for the development budget, you first have to establish what type of equipment you will need, whether you will acquire the equipment or use outside contractors, and finally, if you decide to acquire the equipment, whether you will lease or purchase it.
As we mentioned already, the company has to have the proper expertise in key areas to succeed; however, not every company will start a business with the expertise required in every key area. Therefore, the proper personnel have to be recruited, integrated into the development process, and managed so that everyone forms a team focused on the achievement of the development goals.
Before you begin recruiting, however, you should determine which areas within the development process will require the addition of personnel. This can be done by reviewing the goals of your development plan to establish key areas that need attention. After you have an idea of the positions that need to be filled, you should produce a job description and job specification.
Once you've hired the proper personnel, you need to integrate them into the development process by assigning tasks from the work assignments you've developed. Finally, the whole team needs to know what their role is within the company and how each interrelates with every position within the development team. In order to do this, you should develop an organizational chart for your development team.
Assessing Risks
Finally, the risks involved in developing the product should be assessed and a plan developed to address each one. The risks during the development stage will usually center on technical development of the product, marketing, personnel requirements, and financial problems. By identifying and addressing each of the perceived risks during the development period, you will allay some of your major fears concerning the project and those of investors as well.
Operations & Management
The operations and management plan is designed to describe just how the business functions on a continuing basis. The operations plan will highlight the logistics of the organization such as the various responsibilities of the management team, the tasks assigned to each division within the company, and capital and expense requirements related to the operations of the business. In fact, within the operations plan you'll develop the next set of financial tables that will supply the foundation for the "Financial Components" section.
The financial tables that you'll develop within the operations plan include:
- The operating expense table
- The capital requirements table
- The cost of goods table
There are two areas that need to be accounted for when planning the operations of your company. The first area is the organizational structure of the company, and the second is the expense and capital requirements associated with its operation.
Organizational Structure
The organizational structure of the company is an essential element within a business plan because it provides a basis from which to project operating expenses. This is critical to the formation of financial statements, which are heavily scrutinized by investors; therefore, the organizational structure has to be well-defined and based within a realistic framework given the parameters of the business.
Although every company will differ in its organizational structure, most can be divided into several broad areas that include:
- Marketing and sales (includes customer relations and service)
- Production (including quality assurance)
- Research and development
- Administration
These are very broad classifications and it's important to keep in mind that not every business can be divided in this manner. In fact, every business is different, and each one must be structured according to its own requirements and goals.
The four stages for organizing a business are:
Calculate Your Personnel Numbers
Once you've structured your business, however, you need to consider your overall goals and the number of personnel required to reach those goals. In order to determine the number of employees you'll need to meet the goals you've set for your business, you'll need to apply the following equation to each department listed in your organizational structure: C / S = P
In this equation, C represents the total number of customers, S represents the total number of customers that can be served by each employee, and P represents the personnel requirements. For instance, if the number of customers for first year sales is projected at 10,110 and one marketing employee is required for every 200 customers, you would need 51 employees within the marketing department: 10,110 / 200 = 51
Once you calculate the number of employees that you'll need for your organization, you'll need to determine the labor expense. The factors that need to be considered when calculating labor expense (LE) are the personnel requirements (P) for each department multiplied by the employee salary level (SL). Therefore, the equation would be: P * SL = LE
Using the marketing example from above, the labor expense for that department would be: 51 * $40,000 = $2,040,000
Calculate Overhead Expenses
Once the organization's operations have been planned, the expenses associated with the operation of the business can be developed. These are usually referred to as overhead expenses. Overhead expenses refer to all non-labor expenses required to operate the business. Expenses can be divided into fixed (those that must be paid, usually at the same rate, regardless of the volume of business) and variable or semivariable (those which change according to the amount of business).
Overhead expenses usually include the following:
- Maintenance and repair
- Equipment leases
- Advertising & promotion
- Packaging & shipping
- Payroll taxes and benefits
- Uncollectible receivables
- Professional services
- Loan payments
- Depreciation
In order to develop the overhead expenses for the expense table used in this portion of the business plan, you need to multiply the number of employees by the expenses associated with each employee. Therefore, if NE represents the number of employees and EE is the expense per employee, the following equation can be used to calculate the sum of each overhead (OH) expense: OH = NE * EE
Develop a Capital Requirements Table
In addition to the expense table, you'll also need to develop a capital requirements table that depicts the amount of money necessary to purchase the equipment you'll use to establish and continue operations. It also illustrates the amount of depreciation your company will incur based on all equipment elements purchased with a lifetime of more than one year.
In order to generate the capital requirements table, you first have to establish the various elements within the business that will require capital investment. For service businesses, capital is usually tied to the various pieces of equipment used to service customers.
Capital for manufacturing companies, on the other hand, is based on the equipment required in order to produce the product. Manufacturing equipment usually falls into three categories: testing equipment, assembly equipment and packaging equipment.
With these capital elements in mind, you need to determine the number of units or customers, in terms of sales, that each equipment item can adequately handle. This is important because capital requirements are a product of income, which is produced through unit sales. In order to meet sales projections, a business usually has to invest money to increase production or supply better service. In the business plan, capital requirements are tied to projected sales as illustrated in the revenue model shown earlier in this chapter.
For instance, if the capital equipment required is capable of handling the needs of 10,000 customers at an average sale of $10 each, that would be $100,000 in sales, at which point additional capital will be required in order to purchase more equipment should the company grow beyond this point. This leads us to another factor within the capital requirements equation, and that is equipment cost.
If you multiply the cost of equipment by the number of customers it can support in terms of sales, it would result in the capital requirements for that particular equipment element. Therefore, you can use an equation in which capital requirements (CR) equals sales (S) divided by number of customers (NC) supported by each equipment element, multiplied by the average sale (AS), which is then multiplied by the capital cost (CC) of the equipment element. Given these parameters, your equation would look like the following: CR = [(S / NC) * AS] * CC
The capital requirements table is formed by adding all your equipment elements to generate the total new capital for that year. During the first year, total new capital is also the total capital required. For each successive year thereafter, total capital (TC) required is the sum of total new capital (NC) plus total capital (PC) from the previous year, less depreciation (D), once again, from the previous year. Therefore, your equation to arrive at total capital for each year portrayed in the capital requirements model would be: TC = NC + PC - D
Keep in mind that depreciation is an expense that shows the decrease in value of the equipment throughout its effective lifetime. For many businesses, depreciation is based upon schedules that are tied to the lifetime of the equipment. Be careful when choosing the schedule that best fits your business. Depreciation is also the basis for a tax deduction as well as the flow of money for new capital. You may need to seek consultation from an expert in this area.
Create a Cost of Goods Table
The last table that needs to be generated in the operations and management section of your business plan is the cost of goods table. This table is used only for businesses where the product is placed into inventory. For a retail or wholesale business, cost of goods sold --or cost of sales --refers to the purchase of products for resale, i.e. the inventory. The products that are sold are logged into cost of goods as an expense of the sale, while those that aren't sold remain in inventory.
For a manufacturing firm, cost of goods is the cost incurred by the company to manufacture its product. This usually consists of three elements:
As in retail, the merchandise that is sold is expensed as a cost of goods , while merchandise that isn't sold is placed in inventory. Cost of goods has to be accounted for in the operations of a business. It is an important yardstick for measuring the firm's profitability for the cash-flow statement and income statement.
In the income statement, the last stage of the manufacturing process is the item expensed as cost of goods, but it is important to document the inventory still in various stages of the manufacturing process because it represents assets to the company. This is important to determining cash flow and to generating the balance sheet.
That is what the cost of goods table does. It's one of the most complicated tables you'll have to develop for your business plan, but it's an integral part of portraying the flow of inventory through your operations, the placement of assets within the company, and the rate at which your inventory turns.
In order to generate the cost of goods table, you need a little more information in addition to what your labor and material cost is per unit. You also need to know the total number of units sold for the year, the percentage of units which will be fully assembled, the percentage which will be partially assembled, and the percentage which will be in unassembled inventory. Much of these figures will depend on the capacity of your equipment as well as on the inventory control system you develop. Along with these factors, you also need to know at what stage the majority of the labor is performed.
Financial Components
Financial statements to include.
Financial data is always at the back of the business plan, but that doesn't mean it's any less important than up-front material such as the business concept and the management team. Astute investors look carefully at the charts, tables, formulas and spreadsheets in the financial section, because they know that this information is like the pulse, respiration rate and blood pressure in a human--it shows whether the patient is alive and what the odds are for continued survival.
Financial statements, like bad news, come in threes. The news in financial statements isn't always bad, of course, but taken together it provides an accurate picture of a company's current value, plus its ability to pay its bills today and earn a profit going forward.
The three common statements are a cash flow statement, an income statement and a balance sheet. Most entrepreneurs should provide them and leave it at that. But not all do. But this is a case of the more, the less merry. As a rule, stick with the big three: income, balance sheet and cash flow statements.
These three statements are interlinked, with changes in one necessarily altering the others, but they measure quite different aspects of a company's financial health. It's hard to say that one of these is more important than another. But of the three, the income statement may be the best place to start.
Income Statement
The income statement is a simple and straightforward report on the proposed business's cash-generating ability. It's a score card on the financial performance of your business that reflects when sales are made and when expenses are incurred. It draws information from the various financial models developed earlier such as revenue, expenses, capital (in the form of depreciation), and cost of goods. By combining these elements, the income statement illustrates just how much your company makes or loses during the year by subtracting cost of goods and expenses from revenue to arrive at a net result--which is either a profit or a loss.
For a business plan, the income statement should be generated on a monthly basis during the first year, quarterly for the second, and annually for each year thereafter. It's formed by listing your financial projections in the following manner:
- Income . Includes all the income generated by the business and its sources.
- Cost of goods . Includes all the costs related to the sale of products in inventory.
- Gross profit margin . The difference between revenue and cost of goods. Gross profit margin can be expressed in dollars, as a percentage, or both. As a percentage, the GP margin is always stated as a percentage of revenue.
- Operating expenses . Includes all overhead and labor expenses associated with the operations of the business.
- Total expenses . The sum of all overhead and labor expenses required to operate the business.
- Net profit . The difference between gross profit margin and total expenses, the net income depicts the business's debt and capital capabilities.
- Depreciation . Reflects the decrease in value of capital assets used to generate income. Also used as the basis for a tax deduction and an indicator of the flow of money into new capital.
- Net profit before interest . The difference between net profit and depreciation.
- Interest . Includes all interest derived from debts, both short-term and long-term. Interest is determined by the amount of investment within the company.
- Net profit before taxes . The difference between net profit before interest and interest.
- Taxes . Includes all taxes on the business.
- Profit after taxes . The difference between net profit before taxes and the taxes accrued. Profit after taxes is the bottom line for any company.
Following the income statement is a short note analyzing the statement. The analysis statement should be very short, emphasizing key points within the income statement.
Cash Flow Statement
The cash-flow statement is one of the most critical information tools for your business, showing how much cash will be needed to meet obligations, when it is going to be required, and from where it will come. It shows a schedule of the money coming into the business and expenses that need to be paid. The result is the profit or loss at the end of the month or year. In a cash-flow statement, both profits and losses are carried over to the next column to show the cumulative amount. Keep in mind that if you run a loss on your cash-flow statement, it is a strong indicator that you will need additional cash in order to meet expenses.
Like the income statement, the cash-flow statement takes advantage of previous financial tables developed during the course of the business plan. The cash-flow statement begins with cash on hand and the revenue sources. The next item it lists is expenses, including those accumulated during the manufacture of a product. The capital requirements are then logged as a negative after expenses. The cash-flow statement ends with the net cash flow.
The cash-flow statement should be prepared on a monthly basis during the first year, on a quarterly basis during the second year, and on an annual basis thereafter. Items that you'll need to include in the cash-flow statement and the order in which they should appear are as follows:
- Cash sales . Income derived from sales paid for by cash.
- Receivables . Income derived from the collection of receivables.
- Other income . Income derived from investments, interest on loans that have been extended, and the liquidation of any assets.
- Total income . The sum of total cash, cash sales, receivables, and other income.
- Material/merchandise . The raw material used in the manufacture of a product (for manufacturing operations only), the cash outlay for merchandise inventory (for merchandisers such as wholesalers and retailers), or the supplies used in the performance of a service.
- Production labor . The labor required to manufacture a product (for manufacturing operations only) or to perform a service.
- Overhead . All fixed and variable expenses required for the production of the product and the operations of the business.
- Marketing/sales . All salaries, commissions, and other direct costs associated with the marketing and sales departments.
- R&D . All the labor expenses required to support the research and development operations of the business.
- G&A . All the labor expenses required to support the administrative functions of the business.
- Taxes . All taxes, except payroll, paid to the appropriate government institutions.
- Capital . The capital required to obtain any equipment elements that are needed for the generation of income.
- Loan payment . The total of all payments made to reduce any long-term debts.
- Total expenses . The sum of material, direct labor, overhead expenses, marketing, sales, G&A, taxes, capital and loan payments.
- Cash flow . The difference between total income and total expenses. This amount is carried over to the next period as beginning cash.
- Cumulative cash flow . The difference between current cash flow and cash flow from the previous period.
As with the income statement, you will need to analyze the cash-flow statement in a short summary in the business plan. Once again, the analysis statement doesn't have to be long and should cover only key points derived from the cash-flow statement.
The Balance Sheet
The last financial statement you'll need to develop is the balance sheet. Like the income and cash-flow statements, the balance sheet uses information from all of the financial models developed in earlier sections of the business plan; however, unlike the previous statements, the balance sheet is generated solely on an annual basis for the business plan and is, more or less, a summary of all the preceding financial information broken down into three areas:
To obtain financing for a new business, you may need to provide a projection of the balance sheet over the period of time the business plan covers. More importantly, you'll need to include a personal financial statement or balance sheet instead of one that describes the business. A personal balance sheet is generated in the same manner as one for a business.
As mentioned, the balance sheet is divided into three sections. The top portion of the balance sheet lists your company's assets. Assets are classified as current assets and long-term or fixed assets. Current assets are assets that will be converted to cash or will be used by the business in a year or less. Current assets include:
- Cash . The cash on hand at the time books are closed at the end of the fiscal year.
- Accounts receivable . The income derived from credit accounts. For the balance sheet, it's the total amount of income to be received that is logged into the books at the close of the fiscal year.
- Inventory . This is derived from the cost of goods table. It's the inventory of material used to manufacture a product not yet sold.
- Total current assets . The sum of cash, accounts receivable, inventory, and supplies.
Other assets that appear in the balance sheet are called long-term or fixed assets. They are called long-term because they are durable and will last more than one year. Examples of this type of asset include:
- Capital and plant . The book value of all capital equipment and property (if you own the land and building), less depreciation.
- Investment . All investments by the company that cannot be converted to cash in less than one year. For the most part, companies just starting out have not accumulated long-term investments.
- Miscellaneous assets . All other long-term assets that are not "capital and plant" or "investments."
- Total long-term assets . The sum of capital and plant, investments, and miscellaneous assets.
- Total assets . The sum of total current assets and total long-term assets.
After the assets are listed, you need to account for the liabilities of your business. Like assets, liabilities are classified as current or long-term. If the debts are due in one year or less, they are classified as a current liabilities. If they are due in more than one year, they are long-term liabilities. Examples of current liabilities are as follows:
- Accounts payable . All expenses derived from purchasing items from regular creditors on an open account, which are due and payable.
- Accrued liabilities . All expenses incurred by the business which are required for operation but have not been paid at the time the books are closed. These expenses are usually the company's overhead and salaries.
- Taxes . These are taxes that are still due and payable at the time the books are closed.
- Total current liabilities . The sum of accounts payable, accrued liabilities, and taxes.
Long-term liabilities include:
- Bonds payable . The total of all bonds at the end of the year that are due and payable over a period exceeding one year.
- Mortgage payable . Loans taken out for the purchase of real property that are repaid over a long-term period. The mortgage payable is that amount still due at the close of books for the year.
- Notes payable . The amount still owed on any long-term debts that will not be repaid during the current fiscal year.
- Total long-term liabilities . The sum of bonds payable, mortgage payable, and notes payable.
- Total liabilities . The sum of total current and long-term liabilities.
Once the liabilities have been listed, the final portion of the balance sheet-owner's equity-needs to be calculated. The amount attributed to owner's equity is the difference between total assets and total liabilities. The amount of equity the owner has in the business is an important yardstick used by investors when evaluating the company. Many times it determines the amount of capital they feel they can safely invest in the business.
In the business plan, you'll need to create an analysis statement for the balance sheet just as you need to do for the income and cash flow statements. The analysis of the balance sheet should be kept short and cover key points about the company.
Source: The Small Business Encyclopedia , Business Plans Made Easy, Start Your Own Business and Entrepreneur magazine.
Business Plan Guide
Want to be an Entrepreneur Leadership Network contributor? Apply now to join.
Editor's Pick Red Arrow
- Lock 'Finances Fuel Life Goals.' These Top Money Secrets Can Make You Happier and More Successful, According to an Expert.
- The Reddit Co-Founders Faced a Transformative Rejection in College — Here's How They Bounced Back to Start a $6.5 Billion Business
- Lock 5 Successful Podcasters Share the 'Golden Advice' That's Making Them Money in a Crowded Industry
- Jersey Mike's Has Opened Over 1,000 New Stores in the Past 5 Years and Is Planning 300 International Outposts – Find Out Where
- Lock All Entrepreneurs Think About Writing a Book — Here's How to Know If You're Ready for Your Own
- They Started a Home-Based Side Hustle Earning Up to $20,000 a Month — and It's Still Growing: 'Will Never Get Old'
Most Popular Red Arrow
They started a home-based side hustle earning up to $20,000 a month — and it's still growing: 'will never get old'.
TALEA Beer Co. co-founders LeAnn Darland and Tara Hankinson wanted to replicate the experiential appeal of a winery with their own brewery.
Nvidia CEO Jensen Huang Lost $10 Billion in 1 Day
Nvidia's stock faced an unprecedented drop on Tuesday.
Young People Earning More Than $200,000 a Year Are Fleeing 1 U.S. State — and Flocking to 2 Others
They have significantly higher salaries than many of their peers — and they want their money to go further.
Document Circulating on the Internet Claims Taylor Swift and Travis Kelce Have a Breakup PR Plan. Here's Why That's Smart Business.
Does the superstar couple have a crisis management plan in place?
I Feed First Responders and Restore Tech Networks in the Middle of 150-MPH Hurricanes. Here's How I Do My Job.
Tech recovery expert and chef Brian Evans explains how to keep calm in a crisis and stay ready for anything.
Your Business Faces More Risks Than Ever — Here's How to Ensure You're Prepared For Any Disaster
As the business landscape evolves at breakneck speed, is your risk management strategy keeping pace? Learn how to tackle emerging challenges — from data privacy to environmental risks — and transform uncertainty into a competitive edge.
Successfully copied link
![salient features of writing business plan Cart](https://hbr.org/resources/css/images/cart-icon.png)
- SUGGESTED TOPICS
- The Magazine
- Newsletters
- Managing Yourself
- Managing Teams
- Work-life Balance
- The Big Idea
- Data & Visuals
- Reading Lists
- Case Selections
- HBR Learning
- Topic Feeds
- Account Settings
- Email Preferences
The Science of Strong Business Writing
- Bill Birchard
![salient features of writing business plan salient features of writing business plan](https://hbr.org/resources/images/article_assets/2021/05/R2104L_PAUKOVA.png)
Lessons from neurobiology
Brain scans are showing us in new detail exactly what entices readers. Scientists can see a group of midbrain neurons—the “reward circuit”—light up as people respond to everything from a simple metaphor to an unexpected story twist. The big takeaway? Whether you’re crafting an email to a colleague or an important report for the board, you can write in a way that delights readers on a primal level, releasing pleasure chemicals in their brains.
Bill Birchard is an author and writing coach who’s worked with many successful businesspeople. He’s drawn on that experience and his review of the scientific literature to identify eight features of satisfying writing: simplicity, specificity, surprise, stirring language, seductiveness, smart ideas, social content, and storytelling. In this article, he shares tips for using those eight S’s to captivate readers and help your message stick.
Strong writing skills are essential for anyone in business. You need them to effectively communicate with colleagues, employees, and bosses and to sell any ideas, products, or services you’re offering.
![salient features of writing business plan salient features of writing business plan](https://hbr.org/resources/css/images/hmm/HBR-learning-icon.png)
- Bill Birchard is a business author and book-writing coach. His Writing for Impact: 8 Secrets from Science That Will Fire Up Your Reader’s Brain will be published by HarperCollins Leadership in April 2023. His previous books include Merchants of Virtue, Stairway to Earth, Nature’s Keepers, Counting What Counts, and others. For more writing tactics, see his website .
Partner Center
10 Characteristics Of A Business Plan, its Functions, Features and Benefits
We explain what a business plan is, its functions, and the benefits it provides. Also, what are its features and methods it uses?
What is a business plan?
A business plan is a written document that expresses a formal declaration of the objectives of the initiatives that a company has in the projection and evaluation phase.
These initiatives can be new projects within the company's activities or the start of the company itself. Therefore, a business plan describes a series of interrelated activities aimed at achieving certain goals.
This allows a planning of the tasks and the evaluation of the resources that will be necessary to achieve those goals (for example, resorting to banks or investors for financing).
In addition, its function is to transmit to current or potential investors (investors, shareholders, financiers, etc.) how the investment will be recovered and the guarantees they have. It differs from an investment project in that a business plan is more focused on the strategies that will be carried out.
Characteristics of a business plan :
Flexibility.
![Function Function](https://crgsoft.com/uploads/2022/01/Function-1.jpg)
- It allows errors to be detected and difficulties to be anticipated before the start of the investment . In this way solutions can be planned.
- By including the economic and financial forecast of the business, it facilitates access to bank financing, as well as attracting new partners and collaborators.
- It allows the measurement of results of each stage, through short and medium-term goals that allow establishing measurement criteria.
- It allows detecting the most promising business opportunities in terms of markets of interest, products and services.
- It allows an evaluation of the company's situation in the context of its competitors, and the identification of tasks and areas that need improvement.
- It facilitates the rational use of resources, including personnel, since planning facilitates the assignment of responsibilities and coordinated work .
- Once the goals of the company have been established, it allows evaluating various strategies according to their effectiveness .
- Establishes the financial framework.
Executive Summary
![Executive Summary Executive Summary](https://crgsoft.com/uploads/2022/01/Executive-Summary.jpg)
After the cover and table of contents, the executive summary gives an overall impression of the project . For that, you must highlight the key data of the same and include all the relevant information .
Among this information should not be missing the needs and objectives of the business , the advantages offered by the product or service and the opportunity offered by the market, as well as the history of the company and its management team.
Most of this information will be expanded upon in the rest of the document.
Insertion in the market
The projected product or service must be described in detail and its possible insertion in the market explained. For that, it is necessary to make a comparison with similar products or services that already exist in the market.
The project arises to cover an existing need in the market, which is why potential consumers must be identified and what advantages or weak points they will find in the proposed product or service.
The relationship between the product and the market must include a SWOT analysis (strengths, opportunities, weaknesses, threats).
Market Characteristics
![Market Characteristics Market Characteristics](https://crgsoft.com/uploads/2022/01/Market-Characteristics.jpg)
Once the market that will be the context of the business has been identified, said market is described in depth. This includes:
- Size, rate of growth and potential benefits offered.
- What segments does it include?
- Locate it geographically.
- Identify possible competitors, substitutes and complements.
- Define means of audience research.
It details who makes up the management team , but also the characteristics of the work team: how the company will be managed, the history of the personnel involved, the general experience of the company, the various areas of management, sales, stock control and quality.
Marketing plan
Promotional strategies are described, taking into account "the four P's" : product , price, advertising , points of sale.
Business system and schedule
![Business system and schedule Business system and schedule](https://crgsoft.com/uploads/2022/01/Business-system-and-schedule.jpg)
All the necessary steps are described from the manufacture of the product to the moment of purchase or completion of the service. It includes the areas of human resources , sales, commercial, management and organizational culture .
The schedule must specify when each of the necessary steps will be activated (hiring or relocation of personnel, start of production, purchase of raw material , etc.).
![Financing Financing](https://crgsoft.com/uploads/2022/01/Financing.jpg)
The accounting-financial area allows detailing the structure and composition of social capital , as well as calculating capital flows and valuing the investment.
Sources of income are analyzed and a plan is created that determines how profits and losses will be managed . If it is a search for risk capital, what are exit alternatives for investors should be included?
The above content published at Collaborative Research Group is for informational and educational purposes only and has been developed by referring to reliable sources and recommendations from technology experts. We do not have any contact with official entities nor do we intend to replace the information that they emit.
![salient features of writing business plan avatar](https://crgsoft.com/public/uploads/eb023221ce2f708c864f5d4e62a958eb_avatar_user_34_1677497328-250x250.jpeg)
Luke Wigman
Luke is passionate about fostering student involvement and connection. He studied psychology for his major and likes learning about the past. Luke aims to specialize in artificial intelligence and cybersecurity. .
Leave a reply
Social media, entertainment, recent post.
![salient features of writing business plan salient features of writing business plan](https://crgsoft.com/uploads/2021/09/sports-information-and-characteristics.jpeg)
Sport: What Is It, Types, Risks, Features, Characteristics and Examples
![salient features of writing business plan salient features of writing business plan](https://crgsoft.com/uploads/2021/09/what-is-a-dog.jpeg)
Dogs: Emergence, Features, Characteristics, Feeding and Breeds
![salient features of writing business plan salient features of writing business plan](https://crgsoft.com/uploads/2021/09/what-is-a-story.jpeg)
Story: Definition, Elements, Structure, Features and Characteristics
![salient features of writing business plan salient features of writing business plan](https://crgsoft.com/uploads/2021/09/what-is-an-essay.jpeg)
Essay: Definition, Structure, Features, Characteristics, How to Do It
![salient features of writing business plan salient features of writing business plan](https://crgsoft.com/uploads/2021/09/narrative-text.jpeg)
Narrative Text: What It Is, Structure, Features, Characteristics and Examples
More From Forbes
Why you need a written business plan.
![salient features of writing business plan Forbes Finance Council](https://blogs-images.forbes.com/assets/images/avatars/blog-4409_400_7bca6d487f6cc72cdf2f893001e4a3c2.jpg)
- Share to Facebook
- Share to Twitter
- Share to Linkedin
CFP®, CEPA®, CVGA®, at Heritage Investors, LLC, is a financial educator, wealth manager, author, and speaker. More at FinanciallySimple.com.
Imagine setting out on a road trip without knowing where you wanted to go. There are immediate and inherent problems with this idea. First, without knowing where you’re going, you can’t possibly chart a course to arrive there. Likewise, without defining a clear destination, you would have no idea of how long your trip will be, how much fuel is required, or even what your necessary budget for food and lodging should be. With so many problems being raised by failing to clearly define your destination, why would you ever take such a trip? You wouldn’t. Yet, an alarming number of small-business owners are doing just that.
Many entrepreneurs are operating businesses with no formal business plan in place. Although you may know how to “run” a business, a fully developed and well-written business plan is an absolute necessity. But why? I mean, couldn’t the time spent developing a business plan be used to grow your business? Technically, yes. However, there are many reasons why taking the time to flesh out one of your organization’s most salient documents is helpful.
At some point, you’re probably going to need funding for your business. Whether this comes in the form of investors or securing a business loan from your bank, you likely won’t see a penny without showing a well-thought-out business plan. Bankers and investors alike need answers to questions surrounding profitability and revenue generation. But even before requesting funds from lenders and investors, a carefully crafted business plan will inform you of just how much capital you’ll need to raise for long-term viability.
Additionally, your business plan can assist with making sound business decisions. Ideally, you will have thought of every aspect of your business — including growth and upgrade scenarios — when writing out your business plan. If you did, your business plan can provide a step-by-step approach to all your major business decisions. However, even if you didn’t think of everything, you still have a basic guide to help you determine if and when you should expand to a new location or upgrade processes, systems and software, and whether it makes more sense to buy or lease. This also applies to handling management issues, human resources and creating value for your clients.
2024 Forbes Sustainability Leaders Summit
5 ways to unlock innovation through empathy and emotional check-ins, the proven process for getting the best linkedin recommendations.
Next, working through the process of drafting a fully developed business plan forces you to take an objective look at your business. As business owners, we’re often too emotionally invested in our businesses to truly see them as they are. Your business is your baby, and your baby is often ugly. As you write your business plan, you’ll begin to notice all of the weaknesses that exist in your company. I even encourage my clients to let others look at their business plans just so they can poke holes in them. The more clearly you see your business, the better equipped you are to improve it.
Finally, a written business plan is an excellent communication device. With this one document, you can effectively communicate exactly what your business is and how it functions to anyone. As I mentioned earlier, your plan tells financiers how much capital you need and how it can be repaid. But your business plan can also help you acquire new talent, gain inroads with vendors and suppliers, and even attract potential clients.
Whether you’re just starting your business or if you’ve been operating for years, a business plan is your road map. A written business plan takes your vision and creates a clear path for making it a reality. If you’re thinking, “Well, I’ve made it this long without it,” you may be surprised to learn that a meta-analysis of studies on the growth of more than 11,000 companies found that planning actually improved company performance. In fact, it benefited businesses that were already on their feet even more so than it did startups.
One likely reason for this finding is that established companies have the benefit of knowing exactly who their customers are and what they need or want. On the other hand, startups are often making educated guesses. This is also the reason that business owners need to review and update their business plans from time to time.
If you don’t have a written business plan, now is the time to remedy that. Consider who will read your business plan and how you want them to respond, and write your plan accordingly. Let trusted friends and family review your plan throughout the process, looking for areas that can be improved upon. Once you’re able to effectively answer all questions about your business, then your business plan should be ready.
Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
![salient features of writing business plan Justin Goodbread](https://specials-images.forbesimg.com/imageserve/63a0aef4c894b4f0c7e8213b/400x0.jpg?cropX1=0&cropX2=1000&cropY1=0&cropY2=1000)
- Editorial Standards
- Reprints & Permissions
- Market Research and Opportunity Analysis Report (MROAR)
- Project Profile (PP)
- Business Feasibility Study Report (BFSR)
- Business Modelling (BM)
- Business Plans (BP)
- Detailed Project Report
- Visa Business Plan
- Franchise Business Plan
- Non Profit Business Plan
- Sales & Marketing
- Departmental Business Plan
- Investment Pitch
- Automotive & Transport
- Financial Technology
- Health Technology
- Food Technology
- Agricultural Technology
- Energy & Clean Technology
- Consumer Goods & Services
- Real Estate
- Educational Technology
- Entertainment
- Hospitality
- Fashion & Retail
- Registration
- Search for:
![salient features of writing business plan Meticulous BPlans](https://meticulousbplans.com/wp-content/uploads/2020/01/cropped-MBP-T-04-1-e1579153685875.png)
- 10 Do’s and Don’ts of Writing a Business Plan: Top 10 tips
What is the first thing you need to start a business?
A list of probable business ideas. The next step would be a screening of those ideas to narrow down the funnel and obtain the most potential business ideas from many. Now you need a written description of your business for how it will evolve and accomplish its goals from start to finish. A business plan acts as a step-by-step guide for your business and is needed to seek investors or obtain loans for the business. Here are few of the do’s and don’ts of writing a business plan:
Do’s of business plan:
- Understand your audience as to their needs and demands.
- Try to fill the gap in the market by offering your product and services.
- Stick to your storyline that explains why someone should back your business plan.
- Be realistic in presenting and convincing of a financial forecast of your business which would back the investor to your business plan.
- Perform market research for understanding and analyzing the competitors present in the market.
- Always make clear how your business is unique from other service providers in the prevailing market.
- Address the key points of interest that investors may want like how the business will generate favorable returns for the entrepreneur and investor as well in a business plan in a satisfactory manner.
- Keep the risk mitigation plan ready for the risks that are associated with the business and present them in a business plan.
- Highlight the problems and opportunities identified in the areas and refine the product constantly.
- Make use of charts and graphical representations for an easy understanding of the business plan.
Don’ts of Business Plan:
- Don’t be too slow when you have got a great idea, as time is most important for any entrepreneur and start working immediately on the business plan.
- Don’t ignore your competitors , as they can teach most of the things and also help in heading you in the right direction.
- Never lose focus from your customers, include the content in the business plan geared towards the target audiences and voice that they will understand.
- Don’t represent any false evidences in the business regarding market potential, financial projections, product, etc.
- Don’t make your business plan too long and focus on the goals and reasons for which you are writing a business plan.
- Don’t depend only on quantitative research for a business plan, and perform qualitative research as well.
- Don’t underestimate the resources with you.
- Lack of detailed and specific strategies in the business plan may lose the interest of investors.
Why Prefer Meticulous Business Plans?
The world is becoming highly digitalized and reports play a crucial role in especially setting a vibrant, innovative and potential business unit. Our reports are designed in the most efficient way that suits the work style of all range of Enterprises and Entrepreneurs. Our well-planned resources and strategies are solely responsible for the success we had for the past few years.
We have developed the Report formats And Reports with the help of a knowledgeable and experienced team. We ease the clients by offering syndicate & customizable reports as per the requirement.
If you are seeking help to understand how the business runs, we are just a mail or call away.
Leave a Reply Cancel reply
Your email address will not be published. Required fields are marked *
![salient features of writing business plan TechBullion](https://techbullion.com/wp-content/uploads/2016/09/TechBullionLogo-3.png)
TechBullion
7 tips to make writing a business plan easier.
![salient features of writing business plan salient features of writing business plan](https://techbullion.com/wp-content/uploads/2023/08/Author-Pic-Ahmed-Raza-e1693248754315-80x80.jpeg)
Writing a business plan is one of the most valuable things you can do as a business owner. But it can also be one of the most challenging if you’re doing it for the first time.
To help you get right to the value of having a complete business plan, here are seven simple tips that will make business plan writing easier.
1. Understand What to Include in Your Business Plan
Take the time to understand the broad structure of a business plan and what information should be included in each section. This helps you avoid writing aimlessly and gives you a checklist to mark off as you go.
To get started, here is a brief overview of the most common sections of a business plan :
- Executive Summary : Summary of the full business plan, typically covering the problem, solution, target market, team, and financial highlights.
- Products and Services : Description of what you offer, the problem it solves, and any progress or traction.
- Market Analysis : Research on your target market, its size, segments, and trends.
- Competition : Analysis of competitors and how your business compares.
- Marketing and Sales : Strategies for reaching and selling to customers.
- Operations : Overview of your operations including technology, equipment, and facilities.
- Milestones and Metrics : Key goals and performance indicators.
- Company Overview and Team : Organizational structure, company history, and team bios.
- Financial Plan : Sales, expense, and cash flow forecasts along with standard financial statements like your profit and loss, cash flow statement, and balance sheet.
- Appendix : Additional information, such as detailed financial statements, resumes, and other supporting documents.
This list is not exhaustive, so, if you need additional details, look into lengthier business plan outlines or just go on to step two and three in this guide.
2. Consider Starting With a One-Page Business Plan
You don’t necessarily need to write a traditional business plan. If you’re exploring an idea or planning to use it as an internal tool—then a one-page business plan may be a better option.
A one-page business plan is basically a condensed version of a traditional business plan that outlines your business’s key points in a single page. It’s faster and easier to create, simpler to edit and adjust as your business evolves, and it can always be expanded into a more detailed plan later on.
And even though it’s on one page, it still works as a fully functioning business plan. You just get the benefit of starting small, focusing on the essentials.
3. Download a Business Plan Template
Using a business plan template can provide additional guidance and structure to the planning process. With the right template, you’ll get step-by-step instruction, simple fill-in-the-blank sections, and potentially even tips from entrepreneurs or planning experts.
There are plenty of free business plan templates out there, but the best will be written by experts, recently updated, and available in a format that will meet the expectations of lenders and investors. Additionally, just be sure it’s available on software like Microsoft Word or Google Docs so you can get right into using it.
4. Review Business Plan Examples
Sometimes the best thing you can do is to see what the end result can look like. So, when writing a business plan you should explore and review a handful of business plans examples. Ideally, business plan examples are created by professionals or are real-world samples from existing businesses like yoga studios .
If you can, find a sample business plan that’s from the same industry as your own business. Pay attention to the structure, how the plan is written, and what information is unique to your specific industry. You should also take time to flag anything that you don’t think is done well as something to avoid in your own plan.
Keep in mind, you should not copy and paste these examples. Use them to inspire your plan and don’t replicate it.
5. Prioritize the Sections You Already Know
There may be a preferred order for structuring your business plan, but that doesn’t mean you have to write it that way. Instead of going from beginning to end, start with the sections that you already have ideas for and know best.
This will help you avoid just staring at a blank page and actually get information down. You may even find that it makes writing other sections easier as you start thinking more and more specifically about your business.
6. Set a Time Limit
Do not spend hours at a time writing your business plan. You’ll get burnt out, make mistakes, and likely end up seriously disliking the whole process.
To avoid this, set a time limit for your writing to be between 30-minutes and an hour. This is just enough time to actually write and work through sections while making it an easy time investment to fit around your busy schedule.
Keep in mind, this may mean you don’t finish your business plan. That’s totally fine and potentially beneficial. Step away, schedule a follow up writing session, and get back to it. It may end up taking two, three, maybe even four times but you’ll still end up with a complete business plan.
7. Have Someone Review Your Business Plan
Lastly, don’t do this writing process solo. Get someone you trust, like a friend, family member, or mentor, to review your plan as you go. Have them read it and provide feedback like:
- Do you understand how my business works?
- Is the business plan clear and easy to read?
- Are there areas that are confusing, make jumps in logic, or need more explanation?
Take their feedback and apply it to your plan. If you do this before completing the plan, you may end up saving time and catch any issues before they’re prevalent throughout the entire document. If you’re concerned about the quality or not getting enough feedback, consider hiring a professional plan writer or reviewer to take a look instead.
Writing a Business Plan Doesn’t Have to Be Difficult
The hardest part about writing a business plan is getting started. But by developing a framework, knowing what you’re getting into, and finding the right support it can be a lean and effective process.
So, take one or all of these tips and start writing your business plan. You’ll be happy you did.
![salient features of writing business plan salient features of writing business plan](https://techbullion.com/wp-content/uploads/2016/09/TechBullionLogo-3.png)
Trending Stories
![salient features of writing business plan Insights on Trends, Technology, and Strategic Collaborations with Dipak Kumar Banerjee](https://techbullion.com/wp-content/uploads/2024/09/Steel-Industry-300x180.jpg)
Navigating the Future of Global Steel: Insights on Trends, Technology, and Strategic Collaborations with Dipak Kumar Banerjee
In this interview, Dipak Kumar Banerjee, an experienced professional in the steel and pipe...
![salient features of writing business plan Grasshopper Bank](https://techbullion.com/wp-content/uploads/2024/09/Grasshopper-Bank-Small-Business-Loan-300x180.jpg)
Grasshopper Bank Promises US Customers SBA 7(a) Loan Approval in less than 10 minutes
Small businesses play a crucial role in the U.S. economy, contributing to job creation,...
![salient features of writing business plan Fox Renderfarm](https://techbullion.com/wp-content/uploads/2024/09/Fox-Renderfarm-cloud-rendering-farm-300x180.jpg)
Unleash Creative Power with Fox Renderfarm: Industry-Leading Cloud Rendering Solutions
As the digital content creation landscape evolves, animation, visual effects (VFX), gaming, and architecture...
![salient features of writing business plan Sustainable Charging Solution Showcasing](https://techbullion.com/wp-content/uploads/2024/09/ELECQ-Showcases-Sustainable-Smart-Charging-Solutions-300x180.jpg)
Elecq Showcases Sustainable Smart Charging Solutions at RE+ 2024
Sustainable Charging Solution Showcasing at Booth N83029, North Hall 100, September 10-12, 2024 ANAHEIM,...
![salient features of writing business plan Open A Business Bank Account Online](https://techbullion.com/wp-content/uploads/2024/09/Grasshopper-Bank-300x180.png)
Grasshopper Bank: Open A Business Bank Account Online in Less than 10 Minutes, With Powerful Digital Banking Tools at Your Fingertips
Grasshopper Bank has emerged as a trailblazer in redefining how business banking should operate...
![salient features of writing business plan 1680% Price Increase! Whales Flock to BlockDAG After Team Video Drop; BNB Coin Price & Solana News Fade](https://techbullion.com/wp-content/uploads/2024/09/unnamed-7-300x180.png)
1680% Price Increase! Whales Flock to BlockDAG After Team Video Drop; BNB Coin Price & Solana News Fade
Recent movements in the crypto market have shown notable shifts in the attention of...
![salient features of writing business plan](https://techbullion.com/wp-content/uploads/2024/09/CRM-300x180.jpg)
Ravi Teja Potla: Driving Innovation in AI-Enhanced CRM and Cloud Solutions Across Multiple Industries
Ravi Teja Potla, a visionary leader in cloud computing and AI, is making significant...
![salient features of writing business plan](https://techbullion.com/wp-content/uploads/2024/09/Google-Analytics-GA4-Alternative-300x180.webp)
Usermaven: The best alternative to Google Analytics 4 (GA4)
As digital analytics continues to evolve, businesses and website owners are searching for solutions...
![salient features of writing business plan BlockDAG’s Team Video Reveals the Expertise Behind Its $69.4M Presale Success While Toncoin Price Dips & Ripple Targets $0.68](https://techbullion.com/wp-content/uploads/2024/09/unnamed-11-300x180.png)
BlockDAG’s Team Video Reveals the Expertise Behind Its $69.4M Presale Success While Toncoin Price Dips & Ripple Targets $0.68
The crypto market is known for its ups and downs, with some coins experiencing...
![salient features of writing business plan](https://techbullion.com/wp-content/uploads/2024/09/Screenshot-2024-09-04-231437-300x180.png)
XRP Price Adjusts, Qubetics Whitelist Offers Benefits and LTC Eyes Growth
Ripple’s Escrow Release Triggers Price Movement as Qubetics Whitelist Presents Opportunities and Litecoin Targets...
![salient features of writing business plan Written By Cornell Anthony For TechBullion](https://techbullion.com/wp-content/uploads/2024/09/123RF-159699405-CornellAnthony-300x180.jpg)
Collaboration Is Key to Reducing Security Breaches When Using AI In Healthcare
Integrating artificial intelligence (AI) into healthcare promises immense benefits, such as enhanced diagnostics, treatment...
![salient features of writing business plan MyCondoPro Achieves Top Ranking in Unit Production Globally and Establishes Itself as Canada’s Premier International Real Estate Brokerage](https://techbullion.com/wp-content/uploads/2024/09/TeamMCP-300x180.jpg)
MyCondoPro Achieves Top Ranking in Unit Production Globally and Establishes Itself as Canada’s Premier International Real Estate Brokerage
Toronto, ON – September 4, 2024 – MyCondoPro, a leading real estate team based...
![salient features of writing business plan](https://techbullion.com/wp-content/uploads/2024/09/WhatsApp-Image-2024-09-04-at-11.22.12-PM-300x180.jpeg)
MoonBag’s Liquidity Master Plan, PawFury’s Surge and Crypto All Stars’ $900K Milestone Taking the Lead in Cryptoverse
Navigating the world of meme coins can be both exciting and rewarding, especially when...
![salient features of writing business plan](https://techbullion.com/wp-content/uploads/2024/09/WhatsApp-Image-2024-09-04-at-11.08.24-PM-300x180.jpeg)
Ripple’s Escrow Release Triggers Price Movement as Qubetics Whitelist Presents Opportunities and Litecoin Targets Growth
Feeling overwhelmed by the constant ups and downs of the crypto market? Consider investing...
![salient features of writing business plan](https://techbullion.com/wp-content/uploads/2024/09/unnamed-2024-09-05T021020.585-253x180.png)
5 Ways to Unlock iPhone without Apple ID in 2024
Sometimes, you have to face a situation where you can’t remember your Apple ID...
Like Us On Facebook
Latest interview.
![salient features of writing business plan Pioneering Software Development](https://techbullion.com/wp-content/uploads/2024/08/Sergey-O-for-TechBullion-1000x504.jpg)
Pioneering Software Development: Interview with Sergei Orlov, co-founder of Timspark
In this exclusive TechBullion interview, Sergei Orlov, co-founder of Timspark, sheds light on the dynamic world of software development and how his...
![salient features of writing business plan First Founder-Driven, Comprehensive, Shareable Diligence Software](https://techbullion.com/wp-content/uploads/2024/08/Nicole-Loftus-Founder-of-The-Locker-1000x504.png)
First Founder-Driven, Comprehensive, Shareable Diligence Software; Interview With Nicole Loftus, Founder of The Locker
In this exclusive TechBullion interview, Nicole Loftus, the dynamic founder of The Locker, shares her journey from disrupting a $20 billion industry...
Press Release
![salient features of writing business plan NFT Lending](https://techbullion.com/wp-content/uploads/2024/09/GONDI-V3-Reimagines-NFT-Lending-1000x600.jpg)
GONDI V3 Reimagines NFT Lending, Delivering Unmatched Flexibility and Precision
Introducing GONDI V3, an upgrade to the leading NFT lending protocol that takes the NFT lending space to a new level, empowering...
![salient features of writing business plan Sustainable Charging Solution Showcasing](https://techbullion.com/wp-content/uploads/2024/09/ELECQ-Showcases-Sustainable-Smart-Charging-Solutions-1000x600.jpg)
Sustainable Charging Solution Showcasing at Booth N83029, North Hall 100, September 10-12, 2024 ANAHEIM, Calif.— Elecq, a leading developer of smart charging...
Pin It on Pinterest
![](http://writinghelp.online/777/templates/cheerup/res/banner1.gif)
IMAGES
VIDEO
COMMENTS
1. Investors Are Short On Time. If your chief goal is using your business plan to secure funding, then it means you intend on getting it in front of an investor. And if there's one thing investors are, it's busy. So keep this in mind throughout writing a business plan.
4. Raising capital. A business plan is an effective way of communicating with potential investors, and the level of expertise and time used in preparing a business plan also gives professional credibility to entrepreneurs. It analyzes and predicts the chances of success for the investor and helps to raise capital.
Describe Your Services or Products. The business plan should have a section that explains the services or products that you're offering. This is the part where you can also describe how they fit ...
Step 2: Do your market research homework. The next step in writing a business plan is to conduct market research. This involves gathering information about your target market (or customer persona), your competition, and the industry as a whole. You can use a variety of research methods such as surveys, focus groups, and online research to ...
Here are some of the components of an effective business plan. 1. Executive Summary. One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.
1. Create Your Executive Summary. The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans. Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.
Key Takeaways. A business plan is a document detailing a company's business activities and strategies for achieving its goals. Startup companies use business plans to launch their venture and to ...
10 Steps To Creating A Comprehensive Business Plan. While not every business plan is the same, there are a few key steps you should take to create an effective and comprehensive document: . 1. Create an executive summary. Think of an executive summary as your company's elevator pitch in written form.
Products and services description. When writing a business plan, the produces and services section is where you describe exactly what you're selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers.
Finally, make sure your plan document flows well and doesn't have any "widows" or "orphans" when it prints out. A "widow" is when the last line of a paragraph appears alone at the top of a page, and an "orphan" is a single word that gets left behind at the bottom of a paragraph. 7. Get a Second Pair of Eyes.
Include a SWOT analysis in the market research section of the business plan by creating a section for each letter in a 2×2 grid. Under strengths, list your business characteristics that offer you a competitive edge. Under weaknesses, include the areas where you know you are not as developed as your competitors.
3. Write your company description. Every business plan needs a company description—aka a summary of the company's purpose, what they do/offer, and what makes it unique. Company descriptions should be clear and concise, avoiding the use of jargon, Cobello says. Ideally, descriptions should be a few paragraphs at most.
How to Write a Business Plan Step 1. Create a Cover Page. The first thing investors will see is the cover page for your business plan. Make sure it looks professional. A great cover page shows that you think about first impressions. A good business plan should have the following elements on a cover page:
The sum of capital and plant, investments, and miscellaneous assets. Total assets. The sum of total current assets and total long-term assets. After the assets are listed, you need to account for ...
A business plan is a formal document (about 15-25 pages in length) that precisely defines a company's objectives in fine detail. It also describes how the company plans to achieve its goals. All companies — including startups and established institutions — create and use business plans.
7. Finance. Your financial section must display the financial viability of the business. Show your business can make a healthy profit and can afford to pay interest or profits to investors or lenders. Most business plans should include a full pro forma balance sheet, income statement, and statement of cash flows.
Bill Birchard is an author and writing coach who's worked with many successful businesspeople. He's drawn on that experience and his review of the scientific literature to identify eight ...
5. Cash Requirements. Sales and marketing investment will drive revenues. Revenues will have a cost of sales. And the business will have overhead and other employee costs. That will determine how ...
Function. The main function of a business plan is to define the model and the strategic actions to achieve the goals. Once defined, you must establish the economic viability of the project. This requires analyzing the different areas involved , which allows supporting the project conceptually and observing it from all dimensions.
A written business plan takes your vision and creates a clear path for making it a reality. If you're thinking, "Well, I've made it this long without it," you may be surprised to learn ...
Highlight the problems and opportunities identified in the areas and refine the product constantly. Make use of charts and graphical representations for an easy understanding of the business plan. Don'ts of Business Plan: Don't be too slow when you have got a great idea, as time is most important for any entrepreneur and start working ...
4 Maintain consistency. To establish and maintain trust with your audience, you've got to communicate your clear, tailored messages consistently. A brand or team style guide can be a powerful tool for keeping your team—and the company as a whole—on the same page.
Clear, effective communication: Accessible, concise writing is critical for business because it minimizes misunderstandings and confusion, helps set expectations, and promotes shared understanding. Efficiency and productivity: Clear communication saves time by ensuring that messages are understood accurately the first time they are communicated ...
Writing a business plan is one of the most valuable things you can do as a business owner. But it can also be one of the most challenging if you're doing it for the first time. To help you get right to the value of having a complete business plan, here are seven simple tips that will make business plan writing easier. 1.