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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.
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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? "
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How to Write a Business Plan, Step by Step
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What is a business plan?
1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.
A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.
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LLC Formation
A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.
Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .
» Need help writing? Learn about the best business plan software .
This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.
Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.
» MORE: How to write an executive summary in 6 steps
Next up is your company description. This should contain basic information like:
Your business’s registered name.
Address of your business location .
Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.
Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.
Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.
» MORE: How to write a company overview for a business plan
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The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.
If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.
For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.
» MORE: How to write a successful business plan for a loan
In this section, go into detail about the products or services you offer or plan to offer.
You should include the following:
An explanation of how your product or service works.
The pricing model for your product or service.
The typical customers you serve.
Your supply chain and order fulfillment strategy.
You can also discuss current or pending trademarks and patents associated with your product or service.
Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.
Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.
Include details about your sales and distribution strategies, including the costs involved in selling each product .
» MORE: R e a d our complete guide to small business marketing
If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.
Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:
Net profit margin: the percentage of revenue you keep as net income.
Current ratio: the measurement of your liquidity and ability to repay debts.
Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.
This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.
This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.
Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.
Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.
NerdWallet’s picks for setting up your business finances:
The best business checking accounts .
The best business credit cards .
The best accounting software .
Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.
If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.
Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:
Licenses and permits.
Equipment leases.
Bank statements.
Details of your personal and business credit history, if you’re seeking financing.
If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.
How much do you need?
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We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Here are some tips to write a detailed, convincing business plan:
Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.
Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.
Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.
On a similar note...
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How To Write A Business Plan (2024 Guide)
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Updated: Apr 17, 2024, 11:59am
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Table of Contents
Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.
Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.
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Drafting the Summary
An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.
Ask for Help
When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.
After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business.
The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.
Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.
Numbers-based Goals
Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.
Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.
Intangible Goals
Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.
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 in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.
If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.
This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.
You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.
Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.
Business Operations Costs
Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.
Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.
Other Costs
Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.
Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.
How do I write a simple business plan?
When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.
What are some common mistakes in a business plan?
The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.
What basic items should be included in a business plan?
When writing out a business plan, you want to make sure that you cover everything related to your concept for the business, an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.
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What is a Business Plan? Definition and Resources
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If you’ve ever jotted down a business idea on a napkin with a few tasks you need to accomplish, you’ve written a business plan — or at least the very basic components of one.
The origin of formal business plans is murky. But they certainly go back centuries. And when you consider that 20% of new businesses fail in year 1 , and half fail within 5 years, the importance of thorough planning and research should be clear.
But just what is a business plan? And what’s required to move from a series of ideas to a formal plan? Here we’ll answer that question and explain why you need one to be a successful business owner.
- What is a business plan?
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A business plan lays out a strategic roadmap for any new or growing business.
Any entrepreneur with a great idea for a business needs to conduct market research , analyze their competitors , validate their idea by talking to potential customers, and define their unique value proposition .
The business plan captures that opportunity you see for your company: it describes your product or service and business model , and the target market you’ll serve.
It also includes details on how you’ll execute your plan: how you’ll price and market your solution and your financial projections .
Reasons for writing a business plan
If you’re asking yourself, ‘Do I really need to write a business plan?’ consider this fact:
Companies that commit to planning grow 30% faster than those that don’t.
Creating a business plan is crucial for businesses of any size or stage. It helps you develop a working business and avoid consequences that could stop you before you ever start.
If you plan to raise funds for your business through a traditional bank loan or SBA loan , none of them will want to move forward without seeing your business plan. Venture capital firms may or may not ask for one, but you’ll still need to do thorough planning to create a pitch that makes them want to invest.
But it’s more than just a means of getting your business funded . The plan is also your roadmap to identify and address potential risks.
It’s not a one-time document. Your business plan is a living guide to ensure your business stays on course.
Related: 14 of the top reasons why you need a business plan
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What research shows about business plans
Numerous studies have established that planning improves business performance:
- 71% of fast-growing companies have business plans that include budgets, sales goals, and marketing and sales strategies.
- Companies that clearly define their value proposition are more successful than those that can’t.
- Companies or startups with a business plan are more likely to get funding than those without one.
- Starting the business planning process before investing in marketing reduces the likelihood of business failure.
The planning process significantly impacts business growth for existing companies and startups alike.
Read More: Research-backed reasons why writing a business plan matters
When should you write a business plan?
No two business plans are alike.
Yet there are similar questions for anyone considering writing a plan to answer. One basic but important question is when to start writing it.
A Harvard Business Review study found that the ideal time to write a business plan is between 6 and 12 months after deciding to start a business.
But the reality can be more nuanced – it depends on the stage a business is in, or the type of business plan being written.
Ideal times to write a business plan include:
- When you have an idea for a business
- When you’re starting a business
- When you’re preparing to buy (or sell)
- When you’re trying to get funding
- When business conditions change
- When you’re growing or scaling your business
Read More: The best times to write or update your business plan
How often should you update your business plan?
As is often the case, how often a business plan should be updated depends on your circumstances.
A business plan isn’t a homework assignment to complete and forget about. At the same time, no one wants to get so bogged down in the details that they lose sight of day-to-day goals.
But it should cover new opportunities and threats that a business owner surfaces, and incorporate feedback they get from customers. So it can’t be a static document.
Related Reading: 5 fundamental principles of business planning
For an entrepreneur at the ideation stage, writing and checking back on their business plan will help them determine if they can turn that idea into a profitable business .
And for owners of up-and-running businesses, updating the plan (or rewriting it) will help them respond to market shifts they wouldn’t be prepared for otherwise.
It also lets them compare their forecasts and budgets to actual financial results. This invaluable process surfaces where a business might be out-performing expectations and where weak performance may require a prompt strategy change.
The planning process is what uncovers those insights.
Related Reading: 10 prompts to help you write a business plan with AI
- How long should your business plan be?
Thinking about a business plan strictly in terms of page length can risk overlooking more important factors, like the level of detail or clarity in the plan.
Not all of the plan consists of writing – there are also financial tables, graphs, and product illustrations to include.
But there are a few general rules to consider about a plan’s length:
- Your business plan shouldn’t take more than 15 minutes to skim.
- Business plans for internal use (not for a bank loan or outside investment) can be as short as 5 to 10 pages.
A good practice is to write your business plan to match the expectations of your audience.
If you’re walking into a bank looking for a loan, your plan should match the formal, professional style that a loan officer would expect . But if you’re writing it for stakeholders on your own team—shorter and less formal (even just a few pages) could be the better way to go.
The length of your plan may also depend on the stage your business is in.
For instance, a startup plan won’t have nearly as much financial information to include as a plan written for an established company will.
Read More: How long should your business plan be?
What information is included in a business plan?
The contents of a plan business plan will vary depending on the industry the business is in.
After all, someone opening a new restaurant will have different customers, inventory needs, and marketing tactics to consider than someone bringing a new medical device to the market.
But there are some common elements that most business plans include:
- Executive summary: An overview of the business operation, strategy, and goals. The executive summary should be written last, despite being the first thing anyone will read.
- Products and services: A description of the solution that a business is bringing to the market, emphasizing how it solves the problem customers are facing.
- Market analysis: An examination of the demographic and psychographic attributes of likely customers, resulting in the profile of an ideal customer for the business.
- Competitive analysis: Documenting the competitors a business will face in the market, and their strengths and weaknesses relative to those competitors.
- Marketing and sales plan: Summarizing a business’s tactics to position their product or service favorably in the market, attract customers, and generate revenue.
- Operational plan: Detailing the requirements to run the business day-to-day, including staffing, equipment, inventory, and facility needs.
- Organization and management structure: A listing of the departments and position breakdown of the business, as well as descriptions of the backgrounds and qualifications of the leadership team.
- Key milestones: Laying out the key dates that a business is projected to reach certain milestones , such as revenue, break-even, or customer acquisition goals.
- Financial plan: Balance sheets, cash flow forecast , and sales and expense forecasts with forward-looking financial projections, listing assumptions and potential risks that could affect the accuracy of the plan.
- Appendix: All of the supporting information that doesn’t fit into specific sections of the business plan, such as data and charts.
Read More: Use this business plan outline to organize your plan
- Different types of business plans
A business plan isn’t a one-size-fits-all document. There are numerous ways to create an effective business plan that fits entrepreneurs’ or established business owners’ needs.
Here are a few of the most common types of business plans for small businesses:
- One-page plan : Outlining all of the most important information about a business into an adaptable one-page plan.
- Growth plan : An ongoing business management plan that ensures business tactics and strategies are aligned as a business scales up.
- Internal plan : A shorter version of a full business plan to be shared with internal stakeholders – ideal for established companies considering strategic shifts.
Business plan vs. operational plan vs. strategic plan
- What questions are you trying to answer?
- Are you trying to lay out a plan for the actual running of your business?
- Is your focus on how you will meet short or long-term goals?
Since your objective will ultimately inform your plan, you need to know what you’re trying to accomplish before you start writing.
While a business plan provides the foundation for a business, other types of plans support this guiding document.
An operational plan sets short-term goals for the business by laying out where it plans to focus energy and investments and when it plans to hit key milestones.
Then there is the strategic plan , which examines longer-range opportunities for the business, and how to meet those larger goals over time.
Read More: How to use a business plan for strategic development and operations
- Business plan vs. business model
If a business plan describes the tactics an entrepreneur will use to succeed in the market, then the business model represents how they will make money.
The difference may seem subtle, but it’s important.
Think of a business plan as the roadmap for how to exploit market opportunities and reach a state of sustainable growth. By contrast, the business model lays out how a business will operate and what it will look like once it has reached that growth phase.
Learn More: The differences between a business model and business plan
- Moving from idea to business plan
Now that you understand what a business plan is, the next step is to start writing your business plan .
The best way to start is by reviewing examples and downloading a business plan template . These resources will provide you with guidance and inspiration to help you write a plan.
We recommend starting with a simple one-page plan ; it streamlines the planning process and helps you organize your ideas. However, if one page doesn’t fit your needs, there are plenty of other great templates available that will put you well on your way to writing a useful business plan.
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Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.
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Table of Contents
- Reasons to write a business plan
- Business planning research
- When to write a business plan
- When to update a business plan
- Information to include
- Business vs. operational vs. strategic plans
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What Is a Business Plan? Definition and Planning Essentials Explained
Posted august 1, 2024 by kody wirth.
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What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance.
A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner.
Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed.
What is a business plan?
A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.
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Why do you need a business plan?
The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster , and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis.
These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential.
The biggest mistake you can make is not writing a business plan, and the second is never updating it. By regularly reviewing your plan, you can understand what parts of your strategy are working and those that are not.
That just scratches the surface of why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .
What can you do with your plan?
So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.
Test an idea
Writing a plan isn’t just for those who are ready to start a business. It’s just as valuable for those who have an idea and want to determine whether it’s actually possible. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful.
Market and competitive research alone can tell you a lot about your idea.
- Is the marketplace too crowded?
- Is the solution you have in mind not really needed?
Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability, and you can paint a pretty clear picture of your business’s potential.
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Understanding where you’re going and how you’re going to get there is vital for those starting or managing a business. Writing your plan helps you do that. It ensures that you consider all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen.
With a plan in place, you’ll know where you want your business to go and how you’ve performed in the past. This alone prepares you to take on challenges, review what you’ve done before, and make the right adjustments.
Pursue funding
Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors.
So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can keep it up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.
The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but also easily report on how it’s been used.
Better manage your business
A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.
Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.
What should your business plan include?
The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see.
Executive summary
The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover:
- The problem you’re solving
- A description of your product or service
- Your target market
- Organizational structure
- A financial summary
- Necessary funding requirements.
This will be the first part of your plan, but it’s easiest to write it after you’ve created your full plan.
Products & Services
When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table.
Lastly, outline the steps or milestones you’ll need to hit to launch your business successfully. If you’ve already achieved some initial milestones, like taking pre-orders or early funding, be sure to include them here to further prove your business’s validity.
Market analysis
A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the industry’s overall state and potential, who your ideal customers are, the positioning of your competition, and how you intend to position your own business.
This helps you better explore the market’s long-term trends, what challenges to expect, and how you will need to introduce and even price your products or services.
Check out our full guide for how to conduct a market analysis in just four easy steps.
Marketing & sales
Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add them.
Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.
Check out our full write-up to learn how to create a cohesive marketing strategy for your business.
Organization & management
This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history.
Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.
Financial projections
Possibly the most important piece of your plan, your financials section is vital for showcasing your business’s viability. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex, but it can be far easier than you think.
Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate.
Here are the statements you should include in your financial plan:
- Sales and revenue projections
- Profit and loss statement
- Cash flow statement
- Balance sheet
The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first; only add documentation that you think will benefit anyone reading your plan.
Types of business plans explained
While all business plans cover similar categories, the style and function depend on how you intend to use your business plan . So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering.
Traditional business plan
The tried-and-true traditional business plan (sometimes called a detailed business plan ) is a formal document meant for external purposes. It is typically required when applying for a business loan or pitching to investors.
It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual.
A traditional 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. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information.
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.
The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update and much easier for you, your team, and anyone else to visualize your business operations.
The business model canvas is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.
One-page business plan
The true middle ground between the business model canvas and a traditional business plan is the one-page business plan . Sometimes referred to as a lean plan, this format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.
By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan.
A one-page business plan is 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.
Growth plan
Now, the option that we here at LivePlan recommend is a growth plan . However, growth planning 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 holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes .
However, it’s even easier to convert into a more detailed business plan thanks to how heavily it’s tied to your financials. The overall goal of growth planning isn’t to just produce documents that you use once and shelve. Instead, the growth planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.
It’s faster, concise, more focused on financial performance, and ensures that your plan is always up-to-date.
How can you write your own business plan?
Now that you know the definition of a business plan, it’s time to write your own.
Get started by downloading our free business plan template or try a business plan builder like LivePlan for a fully guided experience and an AI-powered Assistant to help you write, generate ideas, and analyze your business performance.
No matter which option you choose, writing a business plan will set you up for success. You can use it to test an idea, figure out how you’ll start, and pursue funding. And if you review and revise your plan regularly, it can turn into your best business management tool.
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How To Write a Business Plan
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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
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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?
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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.
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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.
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Step-by-Step Guide to Writing a Simple Business Plan
By Joe Weller | October 11, 2021
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A business plan is the cornerstone of any successful company, regardless of size or industry. This step-by-step guide provides information on writing a business plan for organizations at any stage, complete with free templates and expert advice.
Included on this page, you’ll find a step-by-step guide to writing a business plan and a chart to identify which type of business plan you should write . Plus, find information on how a business plan can help grow a business and expert tips on writing one .
What Is a Business Plan?
A business plan is a document that communicates a company’s goals and ambitions, along with the timeline, finances, and methods needed to achieve them. Additionally, it may include a mission statement and details about the specific products or services offered.
A business plan can highlight varying time periods, depending on the stage of your company and its goals. That said, a typical business plan will include the following benchmarks:
- Product goals and deadlines for each month
- Monthly financials for the first two years
- Profit and loss statements for the first three to five years
- Balance sheet projections for the first three to five years
Startups, entrepreneurs, and small businesses all create business plans to use as a guide as their new company progresses. Larger organizations may also create (and update) a business plan to keep high-level goals, financials, and timelines in check.
While you certainly need to have a formalized outline of your business’s goals and finances, creating a business plan can also help you determine a company’s viability, its profitability (including when it will first turn a profit), and how much money you will need from investors. In turn, a business plan has functional value as well: Not only does outlining goals help keep you accountable on a timeline, it can also attract investors in and of itself and, therefore, act as an effective strategy for growth.
For more information, visit our comprehensive guide to writing a strategic plan or download free strategic plan templates . This page focuses on for-profit business plans, but you can read our article with nonprofit business plan templates .
Business Plan Steps
The specific information in your business plan will vary, depending on the needs and goals of your venture, but a typical plan includes the following ordered elements:
- Executive summary
- Description of business
- Market analysis
- Competitive analysis
- Description of organizational management
- Description of product or services
- Marketing plan
- Sales strategy
- Funding details (or request for funding)
- Financial projections
If your plan is particularly long or complicated, consider adding a table of contents or an appendix for reference. For an in-depth description of each step listed above, read “ How to Write a Business Plan Step by Step ” below.
Broadly speaking, your audience includes anyone with a vested interest in your organization. They can include potential and existing investors, as well as customers, internal team members, suppliers, and vendors.
Do I Need a Simple or Detailed Plan?
Your business’s stage and intended audience dictates the level of detail your plan needs. Corporations require a thorough business plan — up to 100 pages. Small businesses or startups should have a concise plan focusing on financials and strategy.
How to Choose the Right Plan for Your Business
In order to identify which type of business plan you need to create, ask: “What do we want the plan to do?” Identify function first, and form will follow.
Use the chart below as a guide for what type of business plan to create:
Function | Audience | Type of Business Plan |
---|---|---|
Serve as a loose guide of objectives and timeline | Internal | Lean |
Serve as a detailed, brass-tacks blueprint of business goals and timeline | Internal | Traditional |
Serve as a strategic document with a narrative focus on organization-wide goals, priorities, and vision | Internal | Strategic |
Earn a company loan or grant | External | Traditional (with focus on financial documents) |
Attract investors or partners | External | Traditional/strategic (with focus on financials, as well as support departments, such as marketing, sales, product, etc.) |
To test a business or startup idea | Internal | Lean |
Is the Order of Your Business Plan Important?
There is no set order for a business plan, with the exception of the executive summary, which should always come first. Beyond that, simply ensure that you organize the plan in a way that makes sense and flows naturally.
The Difference Between Traditional and Lean Business Plans
A traditional business plan follows the standard structure — because these plans encourage detail, they tend to require more work upfront and can run dozens of pages. A Lean business plan is less common and focuses on summarizing critical points for each section. These plans take much less work and typically run one page in length.
In general, you should use a traditional model for a legacy company, a large company, or any business that does not adhere to Lean (or another Agile method ). Use Lean if you expect the company to pivot quickly or if you already employ a Lean strategy with other business operations. Additionally, a Lean business plan can suffice if the document is for internal use only. Stick to a traditional version for investors, as they may be more sensitive to sudden changes or a high degree of built-in flexibility in the plan.
How to Write a Business Plan Step by Step
Writing a strong business plan requires research and attention to detail for each section. Below, you’ll find a 10-step guide to researching and defining each element in the plan.
Step 1: Executive Summary
The executive summary will always be the first section of your business plan. The goal is to answer the following questions:
- What is the vision and mission of the company?
- What are the company’s short- and long-term goals?
See our roundup of executive summary examples and templates for samples. Read our executive summary guide to learn more about writing one.
Step 2: Description of Business
The goal of this section is to define the realm, scope, and intent of your venture. To do so, answer the following questions as clearly and concisely as possible:
- What business are we in?
- What does our business do?
Step 3: Market Analysis
In this section, provide evidence that you have surveyed and understand the current marketplace, and that your product or service satisfies a niche in the market. To do so, answer these questions:
- Who is our customer?
- What does that customer value?
Step 4: Competitive Analysis
In many cases, a business plan proposes not a brand-new (or even market-disrupting) venture, but a more competitive version — whether via features, pricing, integrations, etc. — than what is currently available. In this section, answer the following questions to show that your product or service stands to outpace competitors:
- Who is the competition?
- What do they do best?
- What is our unique value proposition?
Step 5: Description of Organizational Management
In this section, write an overview of the team members and other key personnel who are integral to success. List roles and responsibilities, and if possible, note the hierarchy or team structure.
Step 6: Description of Products or Services
In this section, clearly define your product or service, as well as all the effort and resources that go into producing it. The strength of your product largely defines the success of your business, so it’s imperative that you take time to test and refine the product before launching into marketing, sales, or funding details.
Questions to answer in this section are as follows:
- What is the product or service?
- How do we produce it, and what resources are necessary for production?
Step 7: Marketing Plan
In this section, define the marketing strategy for your product or service. This doesn’t need to be as fleshed out as a full marketing plan , but it should answer basic questions, such as the following:
- Who is the target market (if different from existing customer base)?
- What channels will you use to reach your target market?
- What resources does your marketing strategy require, and do you have access to them?
- If possible, do you have a rough estimate of timeline and budget?
- How will you measure success?
Step 8: Sales Plan
Write an overview of the sales strategy, including the priorities of each cycle, steps to achieve these goals, and metrics for success. For the purposes of a business plan, this section does not need to be a comprehensive, in-depth sales plan , but can simply outline the high-level objectives and strategies of your sales efforts.
Start by answering the following questions:
- What is the sales strategy?
- What are the tools and tactics you will use to achieve your goals?
- What are the potential obstacles, and how will you overcome them?
- What is the timeline for sales and turning a profit?
- What are the metrics of success?
Step 9: Funding Details (or Request for Funding)
This section is one of the most critical parts of your business plan, particularly if you are sharing it with investors. You do not need to provide a full financial plan, but you should be able to answer the following questions:
- How much capital do you currently have? How much capital do you need?
- How will you grow the team (onboarding, team structure, training and development)?
- What are your physical needs and constraints (space, equipment, etc.)?
Step 10: Financial Projections
Apart from the fundraising analysis, investors like to see thought-out financial projections for the future. As discussed earlier, depending on the scope and stage of your business, this could be anywhere from one to five years.
While these projections won’t be exact — and will need to be somewhat flexible — you should be able to gauge the following:
- How and when will the company first generate a profit?
- How will the company maintain profit thereafter?
Business Plan Template
![what is a business plan com Business Plan Template](https://www.smartsheet.com/sites/default/files/2020-11/IC-Business-Plan-Template.png)
Download Business Plan Template
Microsoft Excel | Smartsheet
This basic business plan template has space for all the traditional elements: an executive summary, product or service details, target audience, marketing and sales strategies, etc. In the finances sections, input your baseline numbers, and the template will automatically calculate projections for sales forecasting, financial statements, and more.
For templates tailored to more specific needs, visit this business plan template roundup or download a fill-in-the-blank business plan template to make things easy.
If you are looking for a particular template by file type, visit our pages dedicated exclusively to Microsoft Excel , Microsoft Word , and Adobe PDF business plan templates.
How to Write a Simple Business Plan
A simple business plan is a streamlined, lightweight version of the large, traditional model. As opposed to a one-page business plan , which communicates high-level information for quick overviews (such as a stakeholder presentation), a simple business plan can exceed one page.
Below are the steps for creating a generic simple business plan, which are reflected in the template below .
- Write the Executive Summary This section is the same as in the traditional business plan — simply offer an overview of what’s in the business plan, the prospect or core offering, and the short- and long-term goals of the company.
- Add a Company Overview Document the larger company mission and vision.
- Provide the Problem and Solution In straightforward terms, define the problem you are attempting to solve with your product or service and how your company will attempt to do it. Think of this section as the gap in the market you are attempting to close.
- Identify the Target Market Who is your company (and its products or services) attempting to reach? If possible, briefly define your buyer personas .
- Write About the Competition In this section, demonstrate your knowledge of the market by listing the current competitors and outlining your competitive advantage.
- Describe Your Product or Service Offerings Get down to brass tacks and define your product or service. What exactly are you selling?
- Outline Your Marketing Tactics Without getting into too much detail, describe your planned marketing initiatives.
- Add a Timeline and the Metrics You Will Use to Measure Success Offer a rough timeline, including milestones and key performance indicators (KPIs) that you will use to measure your progress.
- Include Your Financial Forecasts Write an overview of your financial plan that demonstrates you have done your research and adequate modeling. You can also list key assumptions that go into this forecasting.
- Identify Your Financing Needs This section is where you will make your funding request. Based on everything in the business plan, list your proposed sources of funding, as well as how you will use it.
Simple Business Plan Template
![what is a business plan com Simple Business Plan Template](https://www.smartsheet.com/sites/default/files/2020-04/IC-Simple-Business-Plan-Template_WORD.png)
Download Simple Business Plan Template
Microsoft Excel | Microsoft Word | Adobe PDF | Smartsheet
Use this simple business plan template to outline each aspect of your organization, including information about financing and opportunities to seek out further funding. This template is completely customizable to fit the needs of any business, whether it’s a startup or large company.
Read our article offering free simple business plan templates or free 30-60-90-day business plan templates to find more tailored options. You can also explore our collection of one page business templates .
How to Write a Business Plan for a Lean Startup
A Lean startup business plan is a more Agile approach to a traditional version. The plan focuses more on activities, processes, and relationships (and maintains flexibility in all aspects), rather than on concrete deliverables and timelines.
While there is some overlap between a traditional and a Lean business plan, you can write a Lean plan by following the steps below:
- Add Your Value Proposition Take a streamlined approach to describing your product or service. What is the unique value your startup aims to deliver to customers? Make sure the team is aligned on the core offering and that you can state it in clear, simple language.
- List Your Key Partners List any other businesses you will work with to realize your vision, including external vendors, suppliers, and partners. This section demonstrates that you have thoughtfully considered the resources you can provide internally, identified areas for external assistance, and conducted research to find alternatives.
- Note the Key Activities Describe the key activities of your business, including sourcing, production, marketing, distribution channels, and customer relationships.
- Include Your Key Resources List the critical resources — including personnel, equipment, space, and intellectual property — that will enable you to deliver your unique value.
- Identify Your Customer Relationships and Channels In this section, document how you will reach and build relationships with customers. Provide a high-level map of the customer experience from start to finish, including the spaces in which you will interact with the customer (online, retail, etc.).
- Detail Your Marketing Channels Describe the marketing methods and communication platforms you will use to identify and nurture your relationships with customers. These could be email, advertising, social media, etc.
- Explain the Cost Structure This section is especially necessary in the early stages of a business. Will you prioritize maximizing value or keeping costs low? List the foundational startup costs and how you will move toward profit over time.
- Share Your Revenue Streams Over time, how will the company make money? Include both the direct product or service purchase, as well as secondary sources of revenue, such as subscriptions, selling advertising space, fundraising, etc.
Lean Business Plan Template for Startups
![what is a business plan com Lean Business Plan Templates for Startups](https://www.smartsheet.com/sites/default/files/2020-05/IC-Lean-Business-Plan-Template-for-Startups-Template_PDF.png)
Download Lean Business Plan Template for Startups
Microsoft Word | Adobe PDF
Startup leaders can use this Lean business plan template to relay the most critical information from a traditional plan. You’ll find all the sections listed above, including spaces for industry and product overviews, cost structure and sources of revenue, and key metrics, and a timeline. The template is completely customizable, so you can edit it to suit the objectives of your Lean startups.
See our wide variety of startup business plan templates for more options.
How to Write a Business Plan for a Loan
A business plan for a loan, often called a loan proposal , includes many of the same aspects of a traditional business plan, as well as additional financial documents, such as a credit history, a loan request, and a loan repayment plan.
In addition, you may be asked to include personal and business financial statements, a form of collateral, and equity investment information.
Download free financial templates to support your business plan.
Tips for Writing a Business Plan
Outside of including all the key details in your business plan, you have several options to elevate the document for the highest chance of winning funding and other resources. Follow these tips from experts:.
- Keep It Simple: Avner Brodsky , the Co-Founder and CEO of Lezgo Limited, an online marketing company, uses the acronym KISS (keep it short and simple) as a variation on this idea. “The business plan is not a college thesis,” he says. “Just focus on providing the essential information.”
- Do Adequate Research: Michael Dean, the Co-Founder of Pool Research , encourages business leaders to “invest time in research, both internal and external (market, finance, legal etc.). Avoid being overly ambitious or presumptive. Instead, keep everything objective, balanced, and accurate.” Your plan needs to stand on its own, and you must have the data to back up any claims or forecasting you make. As Brodsky explains, “Your business needs to be grounded on the realities of the market in your chosen location. Get the most recent data from authoritative sources so that the figures are vetted by experts and are reliable.”
- Set Clear Goals: Make sure your plan includes clear, time-based goals. “Short-term goals are key to momentum growth and are especially important to identify for new businesses,” advises Dean.
- Know (and Address) Your Weaknesses: “This awareness sets you up to overcome your weak points much quicker than waiting for them to arise,” shares Dean. Brodsky recommends performing a full SWOT analysis to identify your weaknesses, too. “Your business will fare better with self-knowledge, which will help you better define the mission of your business, as well as the strategies you will choose to achieve your objectives,” he adds.
- Seek Peer or Mentor Review: “Ask for feedback on your drafts and for areas to improve,” advises Brodsky. “When your mind is filled with dreams for your business, sometimes it is an outsider who can tell you what you’re missing and will save your business from being a product of whimsy.”
Outside of these more practical tips, the language you use is also important and may make or break your business plan.
Shaun Heng, VP of Operations at Coin Market Cap , gives the following advice on the writing, “Your business plan is your sales pitch to an investor. And as with any sales pitch, you need to strike the right tone and hit a few emotional chords. This is a little tricky in a business plan, because you also need to be formal and matter-of-fact. But you can still impress by weaving in descriptive language and saying things in a more elegant way.
“A great way to do this is by expanding your vocabulary, avoiding word repetition, and using business language. Instead of saying that something ‘will bring in as many customers as possible,’ try saying ‘will garner the largest possible market segment.’ Elevate your writing with precise descriptive words and you'll impress even the busiest investor.”
Additionally, Dean recommends that you “stay consistent and concise by keeping your tone and style steady throughout, and your language clear and precise. Include only what is 100 percent necessary.”
Resources for Writing a Business Plan
While a template provides a great outline of what to include in a business plan, a live document or more robust program can provide additional functionality, visibility, and real-time updates. The U.S. Small Business Association also curates resources for writing a business plan.
Additionally, you can use business plan software to house data, attach documentation, and share information with stakeholders. Popular options include LivePlan, Enloop, BizPlanner, PlanGuru, and iPlanner.
How a Business Plan Helps to Grow Your Business
A business plan — both the exercise of creating one and the document — can grow your business by helping you to refine your product, target audience, sales plan, identify opportunities, secure funding, and build new partnerships.
Outside of these immediate returns, writing a business plan is a useful exercise in that it forces you to research the market, which prompts you to forge your unique value proposition and identify ways to beat the competition. Doing so will also help you build (and keep you accountable to) attainable financial and product milestones. And down the line, it will serve as a welcome guide as hurdles inevitably arise.
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What Is a Business Plan: An Introductory Guide
The Startups Team
Introduction
It’s been said that a goal without a plan is just a wish.
In the same way, a startup idea without a business plan is little more than just that: an idea — no matter how earth-shatteringly innovative that idea might be.
Whether you’ve committed to starting a business for the first time or you’re still tiptoeing around the idea , chances are you’ve described your startup concept to your friends or family. And chances are you’ve been told by someone that having a well-thought-out business plan in place is absolutely vital for every entrepreneur.
But what you might not have been told was why having a business plan is so important, what critical elements to include, how much of it to include, and how to put it all together in a way that gets potential investors fired up about your idea and eager to get involved.
If that’s the case, then you’re in luck — we’re about to break all of this down for you step by step.
If you'd like to see some samples - we've got 4 awesome business plans for you here.
Business Plan, Defined
First things first. What is a business plan, exactly?
![what is a business plan com What Is a Business Plan?](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/05/15110941/what-is-a-business-plan-1a-min.jpg)
Quite simply, a business plan is a detailed roadmap of your business — a written document that communicates to readers and potential investors what your business goals are and the steps that you plan on taking to achieve them.
You’ll often hear startup origin stories that begin with Founders sitting at a bar or in a restaurant when suddenly they’re struck by that “aha!” moment of inspiration and begin furiously scribbling down their concept on a cocktail napkin.
This has become something of a romanticized idea in the startup world. But if you’ve had an experience similar to this, then you’ve got the makings of a business plan in its most basic, stripped-down form. And while the shorter, one-page business plan can be ideal in certain situations (more on that later), fleshing out a hastily-scrawled cocktail napkin blueprint into a comprehensive, actionable business plan requires a bit more work (and fewer drinks).
We say “actionable” because the very best business plans do more than just inform readers about what your company does — they excite and persuade them about jumping on the opportunity to get involved (and mutually benefit) in helping your company succeed.
How do you do this?
By answering at a very high level the big, fundamental questions your readers will have about your business going in. These questions fall into two key categories: the WHY questions and the HOW questions.
The WHY Questions:
The HOW Questions:
- How will you make money?
- How will you get customers?
- How will you grow your business?
In the process of answering these questions, your business plan should illustrate that your company has:
- The right product/service
- The right market (at the right time)
- The right team
- The right strategy
Why You Need a Business Plan (And How it Can Help You)
Making sure that you have a polished business plan at the ready might seem like one of those things that you’re just kind of expected to do as a Founder. But it really is about more than just going through the motions. You’ve been beaten over the head with the assertion that you need one of these things.
Now here’s a few reasons why.
A. To Optimize Your Strategies
Laying out your objectives and researching your market helps you uncover trends that could help or harm your forward progress and allow you to tailor your growth strategies accordingly.
B. To Give You Direction
A business plan can help you organize your ideas so you can figure out which goals to set, which to prioritize, and how to reach them without spreading yourself too thin.
C. To Convince Investors To Fund Your Business
Investors want to see evidence for why they should risk their time and money in your business and how they’ll recoup their investment. Your business plan helps you make that case.
D. To Secure A Business Loan
If you’re trying to secure a business loan from the bank, if the lender doesn’t already request it (which they probably will), you can bolster your loan application using your business plan.
E. To Forge Strategic Alliances
Your plan can be used to communicate specific parts of your business to lock down potential partnerships.
F. To Sell Your Business
In the event that you find yourself in acquisition discussions, your business plan can be instrumental in helping the buyer better understand the best possible price for the sale of your business .
Who Needs a Business Plan?
![what is a business plan com Who Needs a Business Plan?](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/05/15111335/what-is-a-business-plan-2-min.jpg)
A lot of people assume that the only businesses that need business plans are startups seeking funding, and that once they’ve secured said funding their business plan gets stuffed into a filing cabinet where it lives out the rest of its days collecting dust.
Not entirely. So who needs a business plan?
A. Startups Seeking Funding
If you’re a startup with the chief goal of raising capital to fund your growth, then yes, as previously mentioned, a business plan is a must. Simply having one doesn’t necessarily mean you’ll get funding. But not having one reduces the likelihood precipitously.
B. Established Companies Managing Their Business
Unlike startups, existing businesses use business plans more with an eye toward guiding the business and accelerating and tracking growth. Established businesses also use business plans to convince buyers to acquire the company or to bring potential partners or employees into the fold.
How to Choose the Right Kind of Business Plan
Depending on your growth stage and what you intend on using it for, business plans can come in a few different form factors.
If you’re a startup looking to raise investment capital, for example, your business plan is going to look a bit different than that of an established company more concerned with internal strategic planning and actually running the business.
Let’s take a quick look at a handful of the most common examples.
A. Standard Business Plan
If your goal is to convince investors to financially back your business, the standard business plan — or “external business plan”, as it’s sometimes called — is the most commonly-requested iteration you’ll need.
Standard business plans are much more fine-tuned and focused on showing investors how your vision translates into big returns versus an internal business. For our purposes, we’ll be focusing our discussion strictly on the standard business plan for this article.
B. One-Page Business Plan
The one-page business plan is essentially an executive summary — in other words, the TL;DR version of your business plan where you distill down each of the core sections of your business plan to a paragraph or two, giving investors an at-at-glance look at the key takeaways.
The one-pager is a great asset to break out when you establish early discussions with a potential investor. Investors are incredibly busy, so the one-pager is a perfect go-to when you’re trying to spark interest and set the stage for more in depth discussions about your business after you’ve made first contact.
C. Internal Business Plan
As its name implies, internal business plans generally stay within the confines of the office and are meant to act essentially as a management tool to help business owners set and meet goals.
Internal business plans are less concerned with covering things like team overview or outlining the problem you’re solving and more geared toward business strategy, which milestones to reach next, budgeting, and forecasting. This kind of business plan tends to be used more frequently by more established companies than startups.
The Key Components of a Business Plan
![what is a business plan com Key Components of a Business Plan](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/05/15111534/what-is-a-business-plan-3-min.jpg)
Whether you’re starting a brewery, launching a cryptocurrency business, or setting up a subscription box service for your homemade cupcake operation, there are several common elements that are absolute musts to include in virtually every business plan — regardless of your industry.
These include:
- Executive Summary
- Company Description
- Problem, Solution & Market Size
- Product (How it Works)
- Revenue Model
- Operating Model
- Competitive Analysis
- Customer Definition
- Management Team
A. Executive Summary
Your Executive Summary is essentially a brief overview of your business plan as a whole. The goal is to break down each key section into a sentence or two to convey a birds-eye view of your business and prepare the reader for the content to come.
B. Company Description
The Company Description will serve as a “big idea” statement that introduces your company, what it does, and why it matters. It conveys to your readers the direction your company is going, and the scope of the business you’re building.
Every great product or service starts with a clear and specific problem that it’s setting out to solve. What problems do your target customers face that your product/service solves for them?
If you don’t articulate the problem you’re solving really well, then the solution (and rest of your plan) falls by the wayside.
D. Solution
Once you’ve explained the painful problem you’re setting out to solve, highlight how your product/service connects back directly to that problem and solves it beautifully.
E. Market Size
- How big is your total addressable market?
- Is it growing? By how much?
- Is the market big enough for potential investors to get excited about?
- Have there been any notable exits from similar companies in your space?
F. Product (How it Works)
Give readers an overview of your company’s products and services, their key features, with a special emphasis on what makes them unique from existing solutions in the market.
G. Revenue Model
- How does (or will) your company make money?
- How are you pricing your product/service?
- How does your pricing compare with similar products in the market?
- What are your revenue projections for the next 5 years?
H. Operating Model
While your Revenue Model explains the ways you’re going to make money, your Operating Model is all about the clever ways you’re going to manage costs and efficiencies to earn it.
I. Competitive Analysis
Identify other similar companies working in your same space:
- What are your their strengths and how do you plan to neutralize those strengths?
- What are their weaknesses and how do they translate into an advantage for your company?
J. Customer Definition
Define your customer to help readers get a crystal clear understanding of who is most likely to use and buy your product:
- What are their personas?
- What are their demographics?
- What motivates them to take action (make a purchase)?
K. Customer Acquisition
- What strategies will you implement to actually acquire your customers?
- What acquisition channels will you explore ( direct sales , paid ads , SEO , social media , etc.)?
- What are the cost assumptions for each channel?
L. Traction
List any accomplishments that signal to readers that your company is making moves:
- Where are you in the product development process?
- Have you established a production or manufacturing partner?
- Have you secured any notable partnerships?
- Do you have any patents for the technology or ideas behind your company?
M. Management Team
Introduce your team and how you’ll work together to bring the business to life. Each team member bio should include:
- The team member’s name
- Their title and position at the company
- Their professional background
- Any special skills they’ve developed as a result of their prior experience
- What makes them uniquely qualified to drive success at your company
- How much money do you need to meet your next milestone?
- What are your terms (in other words, what will investors get in exchange for their investment)?
- How will you use the funding that you secure?
O. Financials
Determine what assumptions you need to target in order to make the business viable. Typical assumptions include:
- Sale Price per Product
- Cost of Goods Sold
- Customer Acquisition Costs
- Staff Costs
How Long Should Your Business Plan Be?
To get a better sense of what a 21st century business plan is, it’s best to look at what it’s not. Or, more specifically, what it’s not anymore.
When most people think about a business plan, the first thing that usually comes to mind is an incredibly dense, 50-plus-page manifesto that’s as hard to write as it is to read.
There’s a reason why people think this. It’s because for a long time, that’s pretty much what a business plan was. Thankfully for the writer and the reader, that’s no longer the case.
At a certain point, it became clear that the number of investors who actually took the time (let alone had the time) to read these glassy eye-inducing paperweights front to back was approximately 0.
Which is why the modern business plan as we know it today is far more concise — a mere fraction of the length of its long-winded predecessor.
A good rule of thumb is shooting for around 15 pages.
This should give you more than enough room to provide color to each of the required sections of your business plan while also leaving some room for visual elements to break up the copy and make your business plan much more digestible (and aesthetically engaging) for readers.
If you find yourself exceeding 20 pages, there’s probably opportunities where you can go back through your plan and eliminate redundant or superfluous information.
How to Approach Writing a Business Plan
![what is a business plan com Writing a Business Plan](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/05/15111804/what-is-a-business-plan-4-min.jpg)
Remember sitting at your computer back in college, opening up a blank word document, and staring at the blinking cursor as you tried mustering the courage and motivation to dive into your final essay?
For a lot of Founders, that’s kind of what it feels like getting ready to commit their business plan to paper, but even more daunting.
The thing is, if you approach this with a solid understanding of what information you need to cover, how to cover it, and how to make everything flow properly, it doesn’t have to be .
Here are some useful tips to help you get organized and give you the confidence to tackle this head on .
A. Nail The Research First
Going into this knowing everything there possibly is to know about the market you will be competing in, who your audience is, and how you will make money will always be the first step in the business planning process.
Conducting the necessary fact gathering will also help you prove or disprove any assumptions you have about your market fit — either validating what you initially thought, or telling you it’s time to go back to the drawing board.
B. Create a Business Plan Outline
We talked before about the key components that you’ll want to include in your business plan. Instead of jumping in willy-nilly, draft a very basic outline of each of the sections that you will touch on in your business plan.
Not only will this make it significantly easier to stay laser focused on only detailing the relevant information you need for each specific section, but it will help the writing process feel much more manageable by breaking it up into bite-sized pieces.
C. Organize Your Goals and Objectives
Start dividing up all of the information that you need to include in your business plan by section.
The best way to do this is by thinking about each section as if it were comprised of a series of questions that your readers will want answered.
For example, in the Customer Acquisition section, some of the key questions you want to address are:
- How will you reach your target customers?
- What marketing strategies will you use?
- What will it cost to acquire customers?
Once you’ve laid this out for each section, you now have a good jumping-off point to go in and start shedding light on each of these key questions .
Business Planning Tools
Whether you’re doing this for the first time or the tenth time, building a plan from scratch is time and energy-consuming.
Luckily, there are some great business planning software tools available online designed to make this whole business planning process a whole lot easier for you.
In fact, we’ve got one of them!
Our business planning software lets you break down this big undertaking into bite-sized pieces that you can complete in any order you like and in collaboration with your team.
All of the most important sections of a business plan are conveniently built into drag-and-drop templates. Plus, you get everything you need to generate investor-ready financial reports — balance sheets, income statements, break even analysis, you name it.
You can even share your finished product with investors online. You should check it out if you need a leg up with this.
Who Needs to See Your Business Plan (and When)?
![what is a business plan com Who Needs to See Your Business Plan](https://d3o1wlpkmt4nt9.cloudfront.net/wp-content/uploads/2018/05/15112032/what-is-a-business-plan-5-min.jpg)
Congratulations!
You’ve overcome the odds and succeeded in what frequently proves to be an insurmountable task for many startups: you’ve reached out to a prospective investor and they actually got back to you saying that they’re interested in learning more about your project.
If you find yourself in the fortunate position of pitching an investor, this is precisely the right time to have your business plan on hand.
Most of the time, you’ll start by providing a pitch deck — a presentation (PowerPoint, Keynote) version of your business plan highlighting the most basic elements of your plan in a handful of highly visual slides.
Most investors will want to start here because it’s much quicker to read up front than poring over your business plan.
Assuming that you’ve blown your pitch out of the water and have the investor(s) on the edge of their seat, they may ask for the longer-form narrative to start getting into the nitty-gritty of your plan — which you will be able to easily provide courtesy of your finely-tuned business plan.
The Dos and Don’ts of Writing a Business Plan
If you’re learning this stuff for the first time, it might feel a bit overwhelming being asked to remember which specific pitfalls to avoid here and which strategies to follow there.
To make this all a bit more digestible and help you stay on the right track, we’ve compiled a list of some of the top dos and don’ts to keep in mind when you launch into writing your business plan.
- Do your research before you start writing to demonstrate that you have a firm understanding of your market, competitors, and audience.
- Do update your plan as you go to keep information relevant and up to date.
- Do write in clear, plain language that anyone can easily understand, whether it’s an investor or your elderly neighbor.
- Do cite your sources where necessary.
- Do create an engaging narrative around the problem your customers face and why your product or service is the perfect solution to that problem.
- Do explain how you arrived at your financial assumptions.
- Do keep your business plan concise, compelling, and persuasive.
- Do make it more personal and immediate by writing in the 1st person grammatical point of view (write as if it were your team having a conversation about the company to the reader in person “Our team is on the forefront of innovation…”).
- Don’t assume that your reader is already familiar with your industry.
- Don’t overload your plan with industry-specific jargon.
- Don’t exceed 20 pages (or 15 if possible).
- Don’t write lengthy walls of copy.
- Don’t repeat the same information ad nauseum throughout your plan.
- Don’t refer to yourself as “The Company” or use 3rd person grammatical point of view (this is a bit of an outdated approach).
- Don’t claim you have “no competitors” (#1: your investors won’t buy it, and #2: no matter how unique your solution, there’s almost always someone competing with you either directly or indirectly. Really dig in and do your homework on this).
- Don’t forget to proofread (make sure you’ve gone back and corrected any spelling or grammatical errors and that your formatting remains consistent throughout).
We’ve thrown a ton of information at you in this crash course introduction to the business plan. You should now have a fairly good grasp of what a business plan is, what goes into it, and how to use it to maximum effect.
The key thing to take away here is to remain calm and not rush this. Business planning isn’t something that you just casually knock out in a day and walk away with the perfect finished product your first time around.
Founders can spend numerous cycles repositioning their strategies based on discoveries made during research, rethinking how to best boil down their vision and value proposition, and refining their overall story. Such is the nature of the ever-evolving business plan.
As you dive into crafting your own business plan, remember that you’re not alone in this. We’ve got a boatload of other great resources created specifically to help you conquer this every step of the way!
Sharen Rose Lumogdang
The several components shared for creating the business plan would be very helpful especially for startups business owners like me. Thank you!
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Small Business Trends
How to create a business plan: examples & free template.
Whether you’re a seasoned entrepreneur or launching your very first startup, the guide will give you the insights, tools, and confidence you need to create a solid foundation for your business.
Table of Contents
How to Write a Business Plan
Executive summary.
It’s crucial to include a clear mission statement, a brief description of your primary products or services, an overview of your target market, and key financial projections or achievements.
Our target market includes environmentally conscious consumers and businesses seeking to reduce their carbon footprint. We project a 200% increase in revenue within the first three years of operation.
Overview and Business Objectives
Example: EcoTech’s primary objective is to become a market leader in sustainable technology products within the next five years. Our key objectives include:
Company Description
Example: EcoTech is committed to developing cutting-edge sustainable technology products that benefit both the environment and our customers. Our unique combination of innovative solutions and eco-friendly design sets us apart from the competition. We envision a future where technology and sustainability go hand in hand, leading to a greener planet.
Define Your Target Market
Market analysis.
The Market Analysis section requires thorough research and a keen understanding of the industry. It involves examining the current trends within your industry, understanding the needs and preferences of your customers, and analyzing the strengths and weaknesses of your competitors.
Our research indicates a gap in the market for high-quality, innovative eco-friendly technology products that cater to both individual and business clients.
SWOT Analysis
Including a SWOT analysis demonstrates to stakeholders that you have a balanced and realistic understanding of your business in its operational context.
Competitive Analysis
Organization and management team.
Provide an overview of your company’s organizational structure, including key roles and responsibilities. Introduce your management team, highlighting their expertise and experience to demonstrate that your team is capable of executing the business plan successfully.
Products and Services Offered
This section should emphasize the value you provide to customers, demonstrating that your business has a deep understanding of customer needs and is well-positioned to deliver innovative solutions that address those needs and set your company apart from competitors.
Marketing and Sales Strategy
Discuss how these marketing and sales efforts will work together to attract and retain customers, generate leads, and ultimately contribute to achieving your business’s revenue goals.
Logistics and Operations Plan
Inventory control is another crucial aspect, where you explain strategies for inventory management to ensure efficiency and reduce wastage. The section should also describe your production processes, emphasizing scalability and adaptability to meet changing market demands.
We also prioritize efficient distribution through various channels, including online platforms and retail partners, to deliver products to our customers in a timely manner.
Financial Projections Plan
This forward-looking financial plan is crucial for demonstrating that you have a firm grasp of the financial nuances of your business and are prepared to manage its financial health effectively.
Income Statement
Cash flow statement.
A cash flow statement is a crucial part of a financial business plan that shows the inflows and outflows of cash within your business. It helps you monitor your company’s liquidity, ensuring you have enough cash on hand to cover operating expenses, pay debts, and invest in growth opportunities.
Section | Description | Example |
---|---|---|
Executive Summary | Brief overview of the business plan | Overview of EcoTech and its mission |
Overview & Objectives | Outline of company's goals and strategies | Market leadership in sustainable technology |
Company Description | Detailed explanation of the company and its unique selling proposition | EcoTech's history, mission, and vision |
Target Market | Description of ideal customers and their needs | Environmentally conscious consumers and businesses |
Market Analysis | Examination of industry trends, customer needs, and competitors | Trends in eco-friendly technology market |
SWOT Analysis | Evaluation of Strengths, Weaknesses, Opportunities, and Threats | Strengths and weaknesses of EcoTech |
Competitive Analysis | In-depth analysis of competitors and their strategies | Analysis of GreenTech and EarthSolutions |
Organization & Management | Overview of the company's structure and management team | Key roles and team members at EcoTech |
Products & Services | Description of offerings and their unique features | Energy-efficient lighting solutions, solar chargers |
Marketing & Sales | Outline of marketing channels and sales strategies | Digital advertising, content marketing, influencer partnerships |
Logistics & Operations | Details about daily operations, supply chain, inventory, and quality control | Partnerships with manufacturers, quality control |
Financial Projections | Forecast of revenue, expenses, and profit for the next 3-5 years | Projected growth in revenue and net profit |
Income Statement | Summary of company's revenues and expenses over a specified period | Revenue, Cost of Goods Sold, Gross Profit, Net Income |
Cash Flow Statement | Overview of cash inflows and outflows within the business | Net Cash from Operating Activities, Investing Activities, Financing Activities |
Tips on Writing a Business Plan
4. Focus on your unique selling proposition (USP): Clearly articulate what sets your business apart from the competition. Emphasize your USP throughout your business plan to showcase your company’s value and potential for success.
FREE Business Plan Template
To help you get started on your business plan, we have created a template that includes all the essential components discussed in the “How to Write a Business Plan” section. This easy-to-use template will guide you through each step of the process, ensuring you don’t miss any critical details.
What is a Business Plan?
Why you should write a business plan.
Understanding the importance of a business plan in today’s competitive environment is crucial for entrepreneurs and business owners. Here are five compelling reasons to write a business plan:
What are the Different Types of Business Plans?
Type of Business Plan | Purpose | Key Components | Target Audience |
---|---|---|---|
Startup Business Plan | Outlines the company's mission, objectives, target market, competition, marketing strategies, and financial projections. | Mission Statement, Company Description, Market Analysis, Competitive Analysis, Organizational Structure, Marketing and Sales Strategy, Financial Projections. | Entrepreneurs, Investors |
Internal Business Plan | Serves as a management tool for guiding the company's growth, evaluating its progress, and ensuring that all departments are aligned with the overall vision. | Strategies, Milestones, Deadlines, Resource Allocation. | Internal Team Members |
Strategic Business Plan | Outlines long-term goals and the steps to achieve them. | SWOT Analysis, Market Research, Competitive Analysis, Long-Term Goals. | Executives, Managers, Investors |
Feasibility Business Plan | Assesses the viability of a business idea. | Market Demand, Competition, Financial Projections, Potential Obstacles. | Entrepreneurs, Investors |
Growth Business Plan | Focuses on strategies for scaling up an existing business. | Market Analysis, New Product/Service Offerings, Financial Projections. | Business Owners, Investors |
Operational Business Plan | Outlines the company's day-to-day operations. | Processes, Procedures, Organizational Structure. | Managers, Employees |
Lean Business Plan | A simplified, agile version of a traditional plan, focusing on key elements. | Value Proposition, Customer Segments, Revenue Streams, Cost Structure. | Entrepreneurs, Startups |
One-Page Business Plan | A concise summary of your company's key objectives, strategies, and milestones. | Key Objectives, Strategies, Milestones. | Entrepreneurs, Investors, Partners |
Nonprofit Business Plan | Outlines the mission, goals, target audience, fundraising strategies, and budget allocation for nonprofit organizations. | Mission Statement, Goals, Target Audience, Fundraising Strategies, Budget. | Nonprofit Leaders, Board Members, Donors |
Franchise Business Plan | Focuses on the franchisor's requirements, as well as the franchisee's goals, strategies, and financial projections. | Franchise Agreement, Brand Standards, Marketing Efforts, Operational Procedures, Financial Projections. | Franchisors, Franchisees, Investors |
Using Business Plan Software
Upmetrics provides a simple and intuitive platform for creating a well-structured business plan. It features customizable templates, financial forecasting tools, and collaboration capabilities, allowing you to work with team members and advisors. Upmetrics also offers a library of resources to guide you through the business planning process.
Software | Key Features | User Interface | Additional Features |
---|---|---|---|
LivePlan | Over 500 sample plans, financial forecasting tools, progress tracking against KPIs | User-friendly, visually appealing | Allows creation of professional-looking business plans |
Upmetrics | Customizable templates, financial forecasting tools, collaboration capabilities | Simple and intuitive | Provides a resource library for business planning |
Bizplan | Drag-and-drop builder, modular sections, financial forecasting tools, progress tracking | Simple, visually engaging | Designed to simplify the business planning process |
Enloop | Industry-specific templates, financial forecasting tools, automatic business plan generation, unique performance score | Robust, user-friendly | Offers a free version, making it accessible for businesses on a budget |
Tarkenton GoSmallBiz | Guided business plan builder, customizable templates, financial projection tools | User-friendly | Offers CRM tools, legal document templates, and additional resources for small businesses |
Business Plan FAQs
What is a good business plan.
A good business plan is a well-researched, clear, and concise document that outlines a company’s goals, strategies, target market, competitive advantages, and financial projections. It should be adaptable to change and provide a roadmap for achieving success.
What are the 3 main purposes of a business plan?
Can i write a business plan by myself, is it possible to create a one-page business plan.
Yes, a one-page business plan is a condensed version that highlights the most essential elements, including the company’s mission, target market, unique selling proposition, and financial goals.
How long should a business plan be?
What is a business plan outline, what are the 5 most common business plan mistakes, what questions should be asked in a business plan.
A business plan should address questions such as: What problem does the business solve? Who is the specific target market ? What is the unique selling proposition? What are the company’s objectives? How will it achieve those objectives?
What’s the difference between a business plan and a strategic plan?
How is business planning for a nonprofit different.
Business Plan Example and Template
Learn how to create a business plan
What is a Business Plan?
A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing .
![what is a business plan com Business Plan - Document with the words Business Plan on the title](https://cdn.corporatefinanceinstitute.com/assets/business-plan1-1024x682.jpeg)
A business plan should follow a standard format and contain all the important business plan elements. Typically, it should present whatever information an investor or financial institution expects to see before providing financing to a business.
Contents of a Business Plan
A business plan should be structured in a way that it contains all the important information that investors are looking for. Here are the main sections of a business plan:
1. Title Page
The title page captures the legal information of the business, which includes the registered business name, physical address, phone number, email address, date, and the company logo.
2. Executive Summary
The executive summary is the most important section because it is the first section that investors and bankers see when they open the business plan. It provides a summary of the entire business plan. It should be written last to ensure that you don’t leave any details out. It must be short and to the point, and it should capture the reader’s attention. The executive summary should not exceed two pages.
3. Industry Overview
The industry overview section provides information about the specific industry that the business operates in. Some of the information provided in this section includes major competitors, industry trends, and estimated revenues. It also shows the company’s position in the industry and how it will compete in the market against other major players.
4. Market Analysis and Competition
The market analysis section details the target market for the company’s product offerings. This section confirms that the company understands the market and that it has already analyzed the existing market to determine that there is adequate demand to support its proposed business model.
Market analysis includes information about the target market’s demographics , geographical location, consumer behavior, and market needs. The company can present numbers and sources to give an overview of the target market size.
A business can choose to consolidate the market analysis and competition analysis into one section or present them as two separate sections.
5. Sales and Marketing Plan
The sales and marketing plan details how the company plans to sell its products to the target market. It attempts to present the business’s unique selling proposition and the channels it will use to sell its goods and services. It details the company’s advertising and promotion activities, pricing strategy, sales and distribution methods, and after-sales support.
6. Management Plan
The management plan provides an outline of the company’s legal structure, its management team, and internal and external human resource requirements. It should list the number of employees that will be needed and the remuneration to be paid to each of the employees.
Any external professionals, such as lawyers, valuers, architects, and consultants, that the company will need should also be included. If the company intends to use the business plan to source funding from investors, it should list the members of the executive team, as well as the members of the advisory board.
7. Operating Plan
The operating plan provides an overview of the company’s physical requirements, such as office space, machinery, labor, supplies, and inventory . For a business that requires custom warehouses and specialized equipment, the operating plan will be more detailed, as compared to, say, a home-based consulting business. If the business plan is for a manufacturing company, it will include information on raw material requirements and the supply chain.
8. Financial Plan
The financial plan is an important section that will often determine whether the business will obtain required financing from financial institutions, investors, or venture capitalists. It should demonstrate that the proposed business is viable and will return enough revenues to be able to meet its financial obligations. Some of the information contained in the financial plan includes a projected income statement , balance sheet, and cash flow.
9. Appendices and Exhibits
The appendices and exhibits part is the last section of a business plan. It includes any additional information that banks and investors may be interested in or that adds credibility to the business. Some of the information that may be included in the appendices section includes office/building plans, detailed market research , products/services offering information, marketing brochures, and credit histories of the promoters.
![what is a business plan com Business Plan Template - Components](https://cdn.corporatefinanceinstitute.com/assets/business-plan.png)
Business Plan Template
Here is a basic template that any business can use when developing its business plan:
Section 1: Executive Summary
- Present the company’s mission.
- Describe the company’s product and/or service offerings.
- Give a summary of the target market and its demographics.
- Summarize the industry competition and how the company will capture a share of the available market.
- Give a summary of the operational plan, such as inventory, office and labor, and equipment requirements.
Section 2: Industry Overview
- Describe the company’s position in the industry.
- Describe the existing competition and the major players in the industry.
- Provide information about the industry that the business will operate in, estimated revenues, industry trends, government influences, as well as the demographics of the target market.
Section 3: Market Analysis and Competition
- Define your target market, their needs, and their geographical location.
- Describe the size of the market, the units of the company’s products that potential customers may buy, and the market changes that may occur due to overall economic changes.
- Give an overview of the estimated sales volume vis-à-vis what competitors sell.
- Give a plan on how the company plans to combat the existing competition to gain and retain market share.
Section 4: Sales and Marketing Plan
- Describe the products that the company will offer for sale and its unique selling proposition.
- List the different advertising platforms that the business will use to get its message to customers.
- Describe how the business plans to price its products in a way that allows it to make a profit.
- Give details on how the company’s products will be distributed to the target market and the shipping method.
Section 5: Management Plan
- Describe the organizational structure of the company.
- List the owners of the company and their ownership percentages.
- List the key executives, their roles, and remuneration.
- List any internal and external professionals that the company plans to hire, and how they will be compensated.
- Include a list of the members of the advisory board, if available.
Section 6: Operating Plan
- Describe the location of the business, including office and warehouse requirements.
- Describe the labor requirement of the company. Outline the number of staff that the company needs, their roles, skills training needed, and employee tenures (full-time or part-time).
- Describe the manufacturing process, and the time it will take to produce one unit of a product.
- Describe the equipment and machinery requirements, and if the company will lease or purchase equipment and machinery, and the related costs that the company estimates it will incur.
- Provide a list of raw material requirements, how they will be sourced, and the main suppliers that will supply the required inputs.
Section 7: Financial Plan
- Describe the financial projections of the company, by including the projected income statement, projected cash flow statement, and the balance sheet projection.
Section 8: Appendices and Exhibits
- Quotes of building and machinery leases
- Proposed office and warehouse plan
- Market research and a summary of the target market
- Credit information of the owners
- List of product and/or services
Related Readings
Thank you for reading CFI’s guide to Business Plans. To keep learning and advancing your career, the following CFI resources will be helpful:
- Corporate Structure
- Three Financial Statements
- Business Model Canvas Examples
- See all management & strategy resources
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7 Business Plan Examples to Inspire Your Own (2024)
Need support creating your business plan? Check out these business plan examples for inspiration.
![what is a business plan com business plan examples](https://cdn.shopify.com/s/files/1/0070/7032/files/business_20plan_20examples.jpg?v=1685397795)
Any aspiring entrepreneur researching how to start a business will likely be advised to write a business plan. But few resources provide business plan examples to really guide you through writing one of your own.
Here are some real-world and illustrative business plan examples to help you craft your business plan .
7 business plan examples: section by section
The business plan examples in this article follow this template:
- Executive summary. An introductory overview of your business.
- Company description. A more in-depth and detailed description of your business and why it exists.
- Market analysis. Research-based information about the industry and your target market.
- Products and services. What you plan to offer in exchange for money.
- Marketing plan. The promotional strategy to introduce your business to the world and drive sales.
- Logistics and operations plan. Everything that happens in the background to make your business function properly.
- Financial plan. A breakdown of your numbers to show what you need to get started as well as to prove viability of profitability.
- Executive summary
Your executive summary is a page that gives a high-level overview of the rest of your business plan. It’s easiest to save this section for last.
In this free business plan template , the executive summary is four paragraphs and takes a little over half a page:
![what is a business plan com A four-paragraph long executive summary for a business.](https://cdn.shopify.com/s/files/1/0070/7032/files/executive_summary_2b780640-bba6-4fa9-979f-f4b7a7baec6d.png?v=1685052930)
- Company description
You might repurpose your company description elsewhere, like on your About page, social media profile pages, or other properties that require a boilerplate description of your small business.
Soap brand ORRIS has a blurb on its About page that could easily be repurposed for the company description section of its business plan.
![what is a business plan com A company description from the website of soap brand Orris](https://cdn.shopify.com/s/files/1/0070/7032/files/orris.png?v=1685053110)
You can also go more in-depth with your company overview and include the following sections, like in the example for Paw Print Post:
- Business structure. This section outlines how you registered your business —as an LLC , sole proprietorship, corporation, or other business type . “Paw Print Post will operate as a sole proprietorship run by the owner, Jane Matthews.”
- Nature of the business. “Paw Print Post sells unique, one-of-a-kind digitally printed cards that are customized with a pet’s unique paw prints.”
- Industry. “Paw Print Post operates primarily in the pet industry and sells goods that could also be categorized as part of the greeting card industry.”
- Background information. “Jane Matthews, the founder of Paw Print Post, has a long history in the pet industry and working with animals, and was recently trained as a graphic designer. She’s combining those two loves to capture a niche in the market: unique greeting cards customized with a pet’s paw prints, without needing to resort to the traditional (and messy) options of casting your pet’s prints in plaster or using pet-safe ink to have them stamp their ‘signature.’”
- Business objectives. “Jane will have Paw Print Post ready to launch at the Big Important Pet Expo in Toronto to get the word out among industry players and consumers alike. After two years in business, Jane aims to drive $150,000 in annual revenue from the sale of Paw Print Post’s signature greeting cards and have expanded into two new product categories.”
- Team. “Jane Matthews is the sole full-time employee of Paw Print Post but hires contractors as needed to support her workflow and fill gaps in her skill set. Notably, Paw Print Post has a standing contract for five hours a week of virtual assistant support with Virtual Assistants Pro.”
Your mission statement may also make an appearance here. Passionfruit shares its mission statement on its company website, and it would also work well in its example business plan.
![what is a business plan com A mission statement example on the website of apparel brand Passionfruit, alongside a picture of woman](https://cdn.shopify.com/s/files/1/0070/7032/files/mission_statement.png?v=1685053205)
- Market analysis
The market analysis consists of research about supply and demand, your target demographics, industry trends, and the competitive landscape. You might run a SWOT analysis and include that in your business plan.
Here’s an example SWOT analysis for an online tailored-shirt business:
![what is a business plan com A SWOT analysis table showing strengths, weaknesses, opportunities and threats](https://cdn.shopify.com/s/files/1/0070/7032/files/swot-example.png?v=1685053230)
You’ll also want to do a competitive analysis as part of the market research component of your business plan. This will tell you who you’re up against and give you ideas on how to differentiate your brand. A broad competitive analysis might include:
- Target customers
- Unique value add or what sets their products apart
- Sales pitch
- Price points for products
- Shipping policy
- Products and services
This section of your business plan describes your offerings—which products and services do you sell to your customers? Here’s an example for Paw Print Post:
![what is a business plan com An example products and services section from a business plan](https://cdn.shopify.com/s/files/1/0070/7032/files/products_0d941ab8-5039-424b-8f0e-abd0716b9918.png?v=1685053278)
- Marketing plan
It’s always a good idea to develop a marketing plan before you launch your business. Your marketing plan shows how you’ll get the word out about your business, and it’s an essential component of your business plan as well.
The Paw Print Post focuses on four Ps: price, product, promotion, and place. However, you can take a different approach with your marketing plan. Maybe you can pull from your existing marketing strategy , or maybe you break it down by the different marketing channels. Whatever approach you take, your marketing plan should describe how you intend to promote your business and offerings to potential customers.
- Logistics and operations plan
The Paw Print Post example considered suppliers, production, facilities, equipment, shipping and fulfillment, and inventory.
Financial plan
The financial plan provides a breakdown of sales, revenue, profit, expenses, and other relevant financial metrics related to funding and profiting from your business.
Ecommerce brand Nature’s Candy’s financial plan breaks down predicted revenue, expenses, and net profit in graphs.
![what is a business plan com A sample bar chart showing business expenses by month](https://cdn.shopify.com/s/files/1/0070/7032/files/financial-metrics_example.png?v=1685053351)
It then dives deeper into the financials to include:
- Funding needs
- Projected profit-and-loss statement
- Projected balance sheet
- Projected cash-flow statement
You can use this financial plan spreadsheet to build your own financial statements, including income statement, balance sheet, and cash-flow statement.
![what is a business plan com A sample financial plan spreadsheet](https://cdn.shopify.com/s/files/1/0070/7032/files/financial-plan-spreadsheet.png?v=1685053380)
Types of business plans, and what to include for each
A one-page business plan is meant to be high level and easy to understand at a glance. You’ll want to include all of the sections, but make sure they’re truncated and summarized:
- Executive summary: truncated
- Market analysis: summarized
- Products and services: summarized
- Marketing plan: summarized
- Logistics and operations plan: summarized
- Financials: summarized
A startup business plan is for a new business. Typically, these plans are developed and shared to secure outside funding . As such, there’s a bigger focus on the financials, as well as on other sections that determine viability of your business idea—market research, for example.
- Market analysis: in-depth
- Financials: in-depth
Your internal business plan is meant to keep your team on the same page and aligned toward the same goal.
A strategic, or growth, business plan is a bigger picture, more-long-term look at your business. As such, the forecasts tend to look further into the future, and growth and revenue goals may be higher. Essentially, you want to use all the sections you would in a normal business plan and build upon each.
- Market analysis: comprehensive outlook
- Products and services: for launch and expansion
- Marketing plan: comprehensive outlook
- Logistics and operations plan: comprehensive outlook
- Financials: comprehensive outlook
Feasibility
Your feasibility business plan is sort of a pre-business plan—many refer to it as simply a feasibility study. This plan essentially lays the groundwork and validates that it’s worth the effort to make a full business plan for your idea. As such, it’s mostly centered around research.
Set yourself up for success as a business owner
Building a good business plan serves as a roadmap you can use for your ecommerce business at launch and as you reach each of your business goals. Business plans create accountability for entrepreneurs and synergy among teams, regardless of your business model .
Kickstart your ecommerce business and set yourself up for success with an intentional business planning process—and with the sample business plans above to guide your own path.
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Business plan examples FAQ
How do i write a simple business plan, what is the best format to write a business plan, what are the 4 key elements of a business plan.
- Executive summary: A concise overview of the company's mission, goals, target audience, and financial objectives.
- Business description: A description of the company's purpose, operations, products and services, target markets, and competitive landscape.
- Market analysis: An analysis of the industry, market trends, potential customers, and competitors.
- Financial plan: A detailed description of the company's financial forecasts and strategies.
What are the 3 main points of a business plan?
- Concept: Your concept should explain the purpose of your business and provide an overall summary of what you intend to accomplish.
- Contents: Your content should include details about the products and services you provide, your target market, and your competition.
- Cashflow: Your cash flow section should include information about your expected cash inflows and outflows, such as capital investments, operating costs, and revenue projections.
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Blog Business What is A Business Plan & How To Design It?
What is A Business Plan & How To Design It?
Written by: Midori Nediger Jul 11, 2023
![what is a business plan com Business Plan Blog Header](https://venngage-wordpress.s3.amazonaws.com/uploads/2020/09/Business-Plan-Blog-Header.png)
A business plan outlines the goals of your business and how it plans to achieve them.
Real important – because without it, it’s like running a business in the dark. It’s like a roadmap that guides your company’s direction and helps everyone stay on track.
Gone are the days when designing a business plan from scratch was a time-consuming and challenging task. Today, business plan templates offer a convenient solution by providing pre-designed layouts that simplify the process.
In this blog, I’m going to break it down for you. I’ll share the six things you need to know to put together a compelling, engaging business plan. Ready to get started now? Venngage’s online Business Plan Maker lets anyone create a winning business plan quickly and easily.
Click to jump ahead:
- How to format your business plan
Startup business plan templates
Simple business plan templates.
- How to write your business plan
- How to design an engaging executive summary
- How to use charts and graphs to present data
- How to communicate growth strategies in your business plan
How to present financial data in your business plan
How to format your business plan.
To format your business plan:
- Start with a clear title page.
- Include an executive summary.
- Provide a company description.
- Conduct a market analysis.
- Describe your product or service offering.
- Outline your marketing and sales strategy.
- Include organizational or business structure and management information.
A typical business plan is an in-depth document and covers every facet of your business (present and future). Creating a traditional business plan makes sense when you have a clear growth plan for the next three to five years, are in need of major funding, or want to attract long-term partners.
A professional business plan typically has the following sections:
- Table of Contents
- Executive summary
- Company description
- Market analysis
- Organization and management
- Service or product line
- Marketing and sales
- Funding request
- Financial projections
- An appendix
A business plan can span a dozen or more pages because it presents the big picture, as complete as possible, to reassure others to invest in you. Investment can mean a few different things – usually financial, but also as partners or employees.
The sections that can take a lot of research and add to the bulk of your business plan are your market analysis, marketing and sales plans, and financial projections.
These are the sections that demonstrate your business acumen, your long-term vision, and your accountability. Whereas, sections like the executive summary are meant to grab attention, inspire and get people excited about your business.
Start with a business plan template
To get started on your business plan, save yourself some time and use a template.
Most business plan templates will include things like a cover page, table of contents and the main sections you need. It will also have pre-formatted pages with placeholder text and charts that you can swap out.
![what is a business plan com Green Simple Business Plan Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2021/04/Green-Simple-Business-Plan-Template.png)
It takes time to do market research, present growth plans, put together financial projections, analyze your customer base, create competitor breakdowns…the list goes on.
The last thing you want to do is spend precious time formatting the resulting document.
Save time by building your business plan from an existing business plan template, and customize it with your own content.
With a clean, consistent structure and clear headings, this template is the perfect starting point:
![what is a business plan com business plan template](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/template_green.png)
Then you’re free to customize the template with helpful visual elements like charts, tables, and diagrams, that will make your business pitch impossible to resist.
A Venngage business plan template is designed to help you communicate visually and explain complex ideas easily. The right business plan template for you depends on the length and detail of your business plan, your brand and style, and the different sections you want to cover.
If your small business doesn’t have a dedicated design team, but you still need to learn how to write a business plan to present to investors–build off of a pre-designed business plan template:
![what is a business plan com Simple Business Plan TemplateSimple Business Plan Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2021/04/Simple-Business-Plan-Template.png)
There are just a handful of our business plan templates that can be customized in the Venngage editor. Browse more business plan templates, choose one that’s best for you and start editing right away.
Structuring your startup business plan involves organizing it into sections such as executive summary, company description, market analysis, product/service offering, marketing and sales strategy, financial projections, and operational plan.
Here are some business plan template examples:
![what is a business plan com startup business plan template](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/business-plan-template-2.png)
Short Business Plan Template
![what is a business plan com short business plan template](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/basic-business-plan-.png)
Number your pages and include a table of contents
A table of contents is crucial to help readers navigate your document and quickly find specific sections that are of interest to them.
It’s a good idea to include page numbers, main section headings, and section subheadings here for easy reference.
![what is a business plan com business plan template](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/1b_tableOfContents.png)
Keeping these tips in mind will ensure that your business plan design feels clean and professional and doesn’t distract from your content. You want your information, not your formatting, to be the focus!
How to write your business plan
Here are three tips for writing your business plan to ensure it’s easy to read, appears professional and is memorable.
Use bulleted lists, bold text, and a clear type hierarchy for ‘skimmability’
Business plans need to be understandable at a glance to attract funding . Investors are looking for information that will help them understand your business quickly and without much effort.
Take a look at this snippet of the business plan template from above:
![what is a business plan com business plan](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/1_bullet_list.png)
What stands out to you?
To me, the large green headers pop out first, making it easy to scan through the sections to find what I want to focus on.
This is because there’s a defined type hierarchy, giving more visual weight to the headers over the body text.
![what is a business plan com business plan](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/1_typeHierarchy.png)
Next, the unique selling points of this business–superior quality products, unique glass carving and brass inlays, and excellent service–jump out. Because they’re presented in an indented list , they’re easier to see at a glance, which will likely make them more memorable.
Finally, I’m drawn to the bolded stats–“top 30% of the industry” and “4 out of 5 households spent money on renovation”.
Key statistics like these can go a long way towards convincing your investors that you’re worth their time and money. If you’re going to include them within larger paragraphs, make sure they stand out by increasing their font weight.
To sum up: make your report skimmable. Draw attention to important takeaways with indented lists, bolded text, and a clear type hierarchy.
Consider using a one-column or two-column grid
![what is a business plan com business plan](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/1b_1vs2column-01-min.png)
If your business plan contains only text, stick with a single-column layout that reinforces the linear flow of the document. If your business plan includes some supporting data in the form of charts and tables, use a two-column layout to juxtapose text with its corresponding data.
Maintain page margins that set text at a readable line length
When we read long passages of text, the ease at which we read depends on how the text flows on the page. Something called line length (the number of characters in a horizontal line of text) plays a huge role in readability, and is something you should consider when formatting your business plan.
To dictate line length, designers and typesetters play with the width of page margins (the edges of a document that don’t contain any text or images) with the aim of maximizing readability.
It’s generally accepted that the ideal line length sits somewhere between 40 and 90 characters per line. Any longer or shorter and you’ll find that something feels “off” about your document.
![what is a business plan com business plan](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/1b_line_length.png)
How do you achieve this in your business plan?
If you use a single-column layout, use nice wide margins (1 ½ to 2 inches) to limit your text to less than 90 characters per line.
![what is a business plan com business plan template](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/1b_line_length_1column.png)
With a two-column layout, you might need to use narrower margins (possibly as little as ½ an inch on either side) to make sure there’s enough space for at least 40 characters per line of text.
![what is a business plan com business plan template](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/1b_line_length_2column.png)
The last thing to remember about margins and line length–don’t play around with them from page to page. Use consistent margins across your whole document.
How to design an executive summary
An executive summary is a snapshot of your business plan. It should be concise and hook your readers. It should reassure stakeholders that your business plan will be a worthwhile read.
How you choose to structure your executive summary is key. You can deliver a lot of excellent information that simply gets lost in a sea of text and paragraphs. Even if someone reads through it entirely, they may have missed something.
To make key information stand out, use vibrant headings, incorporate visuals throughout, and break up the layout of your text.
![what is a business plan com Executive Summary Business Plan Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2020/09/Exec-Summ-Example-1.jpeg)
Not every investor looks for the same thing. Some will care more about who you or your executive team are, while another is interested solely in the financials of the business. Identifying each section makes it easy for readers to find exactly what they’re looking for.
You can also list out the key takeaways, briefly explaining them in the executive summary. If your reader finds everything they needed to know in the executive summary, they’ll happily move onto the rest of the business plan.
![what is a business plan com Executive Summary Blue Business Plan Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2020/09/Exec-Summ-Example-2.jpg)
Use one feature color to tie your business plan together
Color should be used with restraint in professional documents like business plans. Instead of adding color solely for aesthetic purposes, think of color selection as another tool to highlight information you want your reader to focus on and to tie the document together.
You shouldn’t need more than a single color (ideally one of your brand colors ) to achieve this in a business plan.
In business plan charts, color should be used only to clarify trends and relationships. Use color to emphasize single important data points, differentiate between real and projected values, or group related data:
![what is a business plan com business plan template](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/1d_angrySeas.png)
In the rest of your business plan, keep color to a minimum. At most, use it to make headers stand out or to highlight key points in long-form text, diagrams, or tables.
The nice thing about keeping document colors this simple? It’s hard to mess up, and without any complex design work, it creates a sense of cohesion and unity within a document.
How to use charts and graphs to present your data
Since your business plan should be backed by solid data, you might want to include some of that data as evidence, in the form of charts, tables or diagrams . Even simple visuals can communicate better than long paragraphs of text.
I’ll touch on some specific types of charts commonly used in business plans next, but first let’s review a few general chart design tactics.
Use descriptive titles and annotations to spell out chart takeaways
Avoid generic headers whenever possible. Maximize your chart’s value and impact by providing takeaway messages right in the title.
![what is a business plan com business plan](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/1_strong_titles.png)
In the same vein, add direct annotations to data points or trends that support your case.
![what is a business plan com business plan](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/1c_annotation.png)
Repeating key messages within a chart, in the title, annotations, and captions, may improve viewers understanding and recall of those messages .
Aid understanding of market size and market share with area charts and pie charts
A market potential analysis is a fundamental pillar of your business plan. Market size and market share are two major components of a market potential analysis.
These numbers are typically in the millions and billions (the bigger the better, really), but most people have trouble grasping the meaning of such big numbers . At a surface level we can understand that one billion is one thousand times larger than one million, but we often struggle to comprehend what that really means.
This is the perfect opportunity to add some visual aids to your business plan.
Use bubble charts to represent market size
Bubble charts are useful for showing general proportions among numbers. Check out this one from our redesigned version of AirBnb’s first pitch deck :
![what is a business plan com business plan](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/2_bubbles_original.png)
Without having to think about the absolute values of these very large numbers, we can quickly see how they relate to one another.
While bubble charts are good for making quick, general comparisons, they’re less useful when it comes to precise measurements. To help readers make slightly more accurate judgements of proportion:
Use pie or donut charts to represent market share and market composition
Pie and donut charts are the industry standard for showing market share and market composition, since they’re the most widely understood method for representing part-to-whole relationships.
The way Uber breaks down their market with a simple donut chart makes their biggest segment (a key takeaway) really stand out, while the subtler differences between the smaller segments are still evident.
![what is a business plan com business plan](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/2_pie.png)
When you present a market analysis, use pie charts, donut charts, or bubble charts to aid the reader understanding proportions and part-to-whole relationships.
Use histograms and bar charts to represent demographic distributions in market segmentation summaries
Another part of analyzing market potential is about identifying and understanding target customers. This means segmenting customers by geography, interests, demographics…really anything that might affect purchasing behaviour.
Two standard metrics that most businesses include in a market segmentation summary are customer age and gender. These data are easily summarized in a histogram, with bars that represent age group distribution.
![what is a business plan com business plan template](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/3_histogram.png)
Bar charts can then be used to contrast the key behaviors and lifestyle choices of the top consumer segments.
![what is a business plan com business plan template](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/3_bar.png)
Histograms and bar charts are standard features of a market segmentation summary. Use them together to identify and present information about top customer segments.
Outline major milestones with a Gantt chart
Stakeholders will want to see that you have a concrete plan in place to help you reach your revenue goals. When formulating your goals, use the SMART principle to provide your stakeholders with a very clear vision of how you intend to achieve them.
Use a Gantt chart (a sort of modified bar chart) to outline the major milestones and phases of your business strategy. Try to include a multi-year plan, broken down by quarter and by project or department.
![what is a business plan com business plan](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/5_gantt.png)
You can create your own Gantt chart with Venngage.
How to communicate growth strategies in your business plan
No matter how impressive your product line or services, your business won’t just magically grow. You concrete marketing and sales plans in place, and effectively communicate strategies to your stakeholders.
Start by acknowledging your target market – who are you going after? This is what your marketing and sales efforts will revolve around after all.
Demonstrate an understanding of the competitor landscape. You will always have direct or indirect competition, and showing how your planning accounts for it is key. Then you can talk about actual plans and strategies you wish to implement.
Present your target audience with persona guides
A product may great on its own. But its value is determined when there is a clear and obvious market for it. You can point out shortcomings of your competition, but you also need to show that your target audience exists and how you’re serving them.
A persona guide provides a great deal of context to readers of your business plan. It’s the best way for them to understand who cares about your product or service, how it aligns with their lifestyle and needs, and why your marketing and sales tactics will work.
![what is a business plan com Business Plan Persona Guide Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2020/09/persona-guide-1.png)
A persona guide needs to be detailed, and share an intimate understanding of your target audience. The more you can divulge, the more reassuring your research and overall business plan will be.
![what is a business plan com Business Plan Detailed Persona Guide Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2020/09/persona-guide-2.png)
Even if you don’t have a substantial customer base, you can still create an ideal persona guide to show who you’re pursuing.
![what is a business plan com Business Plan Ideal Persona Guide Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2020/09/persona-guide-3.png)
Highlight competitors and differentiate yourself with a SWOT analysis
Every business plan should include an analysis of the competitive landscape–an assessment of the strengths and weaknesses of competitive businesses.
In terms of visuals, this competitive analysis is typically summarized in a SWOT analysis matrix .
![what is a business plan com Business Plan SWOT Analysis Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2020/09/Company-swot-analysis-template.png)
You can also present the SWOT analysis as a table or a list. The layout is up to you, but you want to focus on strengths, weaknesses, opportunities and threats in relation to your competition.
![what is a business plan com Business Plan SWOT analysis Table Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2020/09/competitor-SWOT-analysis-template.png)
While the SWOT analysis framework provides valuable insights, it’s not the entire reflection of your competitive landscape. For example, it doesn’t make it easy to see at a glance the qualities that differentiate your business from your competitors.
To highlight those offerings that set you apart from your competitors, a comparison matrix is more effective. Take a look at these two templates:
![what is a business plan com Business Plan Competitor Comparison Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2020/09/Competitor-Comparison.png)
With a direct competitor comparison, it’s easy to present the key differentiators between the existing options for a product or service, and your business.
Alternatively, a “ Magic Quadrant ” can be useful when you’re focused on comparing across two main metrics ( key differentiators ):
![what is a business plan com business plan](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/6_magicQuadrant.png)
Finally, in a competitive market, there are going to be a lot of players who compete directly or indirectly with you. A breakdown of them all may not be necessary. Instead, you can point visually to the space that you will address, that has been so far ignored up to now.
To do that, a prioritization chart can be used. By plotting competing businesses on a prioritization chart, you highlight experiences existing competitors focus on, and where your business falls.
![what is a business plan com business plan](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/6_magic-1.png)
Use roadmaps to present your marketing and sales plans
To explain any long-term marketing or sales plan, you want visuals. It’s easier to break down strategies you’ll be deploying every month or each quarter, when you can actually show what you’re talking about.
Keep in mind, those reading your business plan may not be marketers or sales executives. Being able to lay out your approach in a way that’s organized, shows how much thought you’ve given to your growth strategies.
You can design a simple roadmap that points to what you’ll be doing throughout the year. The more detailed you can get, the better.
![what is a business plan com Business Plan Marketing roadmap Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2020/09/marketing-roadmap-template.png)
You can also present your product roadmap , with your marketing roadmap how the business will be growing overall.
![what is a business plan com Business Plan Product Roadmap Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2020/09/Product-Roadmap-Template-1.png)
You don’t need to use a traditional roadmap layout, either. Experiment with different formats as you may find one easier to work with than another. As long as the time period for different strategies is clear, your roadmap will be easy to understand.
![what is a business plan com Business Plan Marketing Roadmap Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2020/09/marketing-roadmap-template-2.png)
Presenting financial data isn’t easy. You have to crunch a lot of numbers before you can share projections with confidence. You’ll also need to explain how you arrived at the numbers and prepare for your answers.
Understanding how to organize your information is key to walking potential investors and other stakeholders through your projections.
Use organizational flow charts and summary tables for budget breakdowns and financial summaries
The financials section of your business plan will get a lot of attention from stakeholders. Simple bar charts and pie charts won’t suffice, as they can’t present financial data in very much detail.
If your business has already been operating for some time, stakeholders will expect a detailed report of revenues and expenses. Tables are usually the best choice for this kind of financial summary, as they provide an unbiased view of the numbers and allow stakeholders to look up specific values.
![what is a business plan com business plan templates](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/4_quarterly.png)
If you’re interested in highlighting a particular trend, however, you may want to include a line chart featuring a smaller snapshot of your financial data:
![what is a business plan com business plan templates](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/4_yoy.png)
If you’re just starting your business and you don’t have any detailed revenue data, you can still provide useful information about your budget. Outline higher-level budget allocation with an organizational flow chart .
![what is a business plan com business plan](https://venngage-wordpress.s3.amazonaws.com/uploads/2018/04/4_flow_chart.png)
Use line or bar graphs to visualize financial trends
You can use different types of graphs to also show how your business has performed thus far.
You can share results over the course of a year with a line graph. This is effective to show an overall set of trends and growth rates.
![what is a business plan com Business Plan Sales Chart Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2020/09/Product-sales-chart.png)
You can also compare previous years to highlight how your business has grown.
Your audience should be able to draw conclusions from your data within seconds. If there is simply too much information, or it’s hard to find important information, they will lose interest.
![what is a business plan com Business Plan Revenue Projection Template](https://venngage-wordpress.s3.amazonaws.com/uploads/2020/09/sales-bar-graph-template.png)
Looking for a business plan software to help save time and reduce errors? Pick from one of these 7 best business plan software to get started.
A quick summary
A business plan is the one key document that every young business needs to present their vision to potential investors and other stakeholders.
The quality of a business plan can make or break a young business Here’s a quick recap of what we covered for you to keep in mind:
- Get started with a template
- Use a table of contents and numbered pages
- Use lists, bold headings and aim for skimmability
- Consider using a one-column or two-column
- Maintain page margins
- Use headings to identify the most important information
- Use one thematic color palette for your design
- Use descriptive titles and annotations
- Use area and pie charts to explain market size and market share
- Use pie/donut charts to visualize marketing share and market composition
- Use bar charts and histograms to capture demographics data
- Highlight major milestones with a gantt chart
- Identify your target audience using persona guides
- Differentiate yourself with a SWOT analysis/competitor chart
- Use roadmaps to visualize your marketing and sales plans
- Use flow charts and summary tables for financial breakdowns
- Use line or bar graphs for financial trends and projection
You can always reference this post as you work on your business plan. I’ve also included additional blog posts you can reference for specific areas of your business plan.
More Resources for business planning and growth:
- Growth Strategy Checklist: Plan Your Business Goals With These 5 Templates
- What is a Marketing Plan & How to Create One [with Examples]
- How to Communicate Strategy To Your Team Effectively
- 50+ Essential Business Report Examples with Templates
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What Is a Business Plan?
Business Plan Explained in Less Than 5 Minutes
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Definition and Examples of a Business Plan
How a business plan works, types of business plans, business plan vs. business model.
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A business plan is a detailed written document that describes your business’s activities, goals, and strategy. A strong plan outlines everything from the products a company sells to the executive summary to the overall management. In essence, a business plan should guide a founder’s actions through each stage of growth
Think of your business plan as a road map. It documents the various stages of starting and running your business, including business activities and objectives. Business plans create the structure you need to make decisions by outlining the financial and operational goals you’re striving toward.
One of the most common reasons for crafting a business plan is to attract investors—and, in return, receive funding. As an early stage company, for example, you may leverage your business plan to convince investors or banks that your entity is credible and worthy of funding. The business plan should prove that their money will be returned .
A business plan can also be useful for when a well-developed company goes through a merger or acquisition . As outlined by the U.S. Small Business Administration (SBA), a merger creates a new entity via the combination of two businesses. An acquisition, on the other hand, is when a company is purchased and absorbed into an existing business. In either case, a business plan helps establish relationships between business entities, making a merger or acquisition more likely.
- Alternate name : Strategic plan
A business plan is a formalized outline of the business operations, finances, and goals you aim to achieve to be a successful company. When designing a business plan, companies have leeway for how long, short, or detailed it can be. So long as it outlines the foundational aspects of the business, in most cases, it will be effective.
The most common type of business plan is a traditional business plan. This style tends to have the following common elements, generally in this order.
- Executive summary : Tells your reader why your company will be successful. Includes the company’s mission statement , product information, and basics regarding the business structure.
- Company description : Where you brag about your entity’s strengths. Answer the question, what problem is your team solving?
- Market analysis : A deep dive into your industry and the competition. Consider why competitors are successful. How can your offering do it better? If applicable, how can you enhance the experience for the consumer?
- Management plan : Outlines leadership structure of the company and may be best detailed as a chart. This way, readers can see exactly who is planning to run the company and how they will impact growth.
- Marketing and sales plan : Details how you’ll attract consumers with your product or service, and how you will retain those customers. All strategies outlined in this section, such as the use of digital marketing , will be referenced in your financial plan.
- Funding request : For those companies asking for funding, this is where you’ll detail the amount of funding you’ll need to achieve your goals. Clearly explain how much you need and what it will be used for.
- Financial plan : Convinces the reader that your company is financially stable and can turn a profit . You will need to include a balance sheet , an income statement, and the cash flow statement (or cash flow projection, in the case of a new venture).
- Appendix : Where any supporting documents, such as legal documents, licenses of employees, and pictures of the product will be included.
Your company’s business plan should fit your needs, which will often depend on what stage of growth you are in. If you are considering starting a new venture, for example, writing a detailed business plan can help prove if your concept is viable or not.
If your business is seeking financial capital, though, you will want your business plan to be investor-ready. This will require you to have a funding request section, which would be placed right above your financial plan.
You should avoid using lofty terms or technical jargon that those outside your team won’t understand. A business plan is meant to be shared with those inside and outside your organization. Simple and effective language is best.
Your business’s stage impacts the length and detail of a business plan. As discussed, a traditional plan follows a detailed structure, from the executive summary to the appendix. It is a lengthier document, often amounting to dozens of pages, and is often used when seeking funding to prove business viability. In most cases, crafting a traditional plan will take lots of due diligence work.
The other main type of business plan is a lean startup plan. A lean startup plan is much more high-level and shorter than the traditional version. Companies just starting development will often create a lean startup plan to help them navigate where they should start. These can be as short as one or two pages.
A lean plan will include the following elements.
- Key partnerships : Notes other services or businesses you will work with, such as manufacturers and suppliers.
- Key activities and resources : Outlines how your company will gain a competitive advantage and create value for your consumers. Resources you may leverage include capital, staff, or intellectual property.
- Value proposition : Clearly defines the unique value your company offers.
- Customer relationships : Details the customer experience from start to finish.
- Channels : How will you stay connected with your customers? Detail those methods here.
- Cost structure and revenue streams : Details the most significant costs you will face as well as how your business will actually make money.
Remember that business plans are meant to change as your company grows or pivots. You should actively review and edit your business plan to keep it up to date with business activities. For example, you may start with a lean plan and move to a traditional plan when you hit the fundraising stage.
Describes a business’s operations and objectives, including financial goals | Describes the method by which a company generates profits |
Is the structure of the business | Is the foundation of the business |
Sections include mission statement, market analysis, and financial plan | Examples include retailer, franchise, and distributor |
Needs review and revisions over time | Needs review and revisions over time |
A business plan may often be confused with a business model, and it is easy to understand why. Simply put, a business plan is the holistic overview of the business, while a business model is a skeleton for how money will be made.
Key Takeaways
- A business plan is a comprehensive document that outlines a business’s operations, finances, and goals. It guides the business’s day-to-day decisions.
- A business plan is necessary for your company’s success, as it creates a path to scalability.
- There are two main types of business plans: a traditional business plan and a lean startup plan.
- A traditional business plan will be essential when you begin to seek debt or equity capital for your company.
U.S. Small Business Administration. “ Merge and Acquire Businesses .” Accessed June 8, 2021.
U.S. Small Business Administration. " Write Your Business Plan ." Accessed June 8, 2021.
How to Build a Detailed Business Plan That Stands Out [Free Template]
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Updated: March 29, 2022
Published: March 11, 2022
While starting a company may seem easier now than ever before, entrepreneurs have an uphill battle from the moment they start a business. And without a clear, actionable business plan for selling, marketing, finances, and operations, you're almost destined to face significant challenges.
![what is a business plan com Entrepreneur builds his business plan template](https://www.hubspot.com/hs-fs/hubfs/business-plan-template_3.webp?width=595&height=400&name=business-plan-template_3.webp)
This is why crafting a business plan is an essential step in the entrepreneurial process.
In this post, we'll walk you through the process of filling out your business plan template, like this free, editable version :
![what is a business plan com free editable One-Page Business Plan PDF Template](https://www.hubspot.com/hs-fs/hubfs/business-plan-template_5.webp?width=600&height=776&name=business-plan-template_5.webp)
Download a free, editable one-page business plan template.
We know that when looking at a blank page on a laptop screen, the idea of writing your business plan can seem impossible. However, it's a mandatory step to take if you want to turn your business dreams into a reality.
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That's why we've crafted a business plan template for you to download and use to build your new company. You can download it here for free . It contains prompts for all of the essential parts of a business plan, all of which are elaborated on, below.
This way, you'll be able to show them how organized and well-thought-out your business idea is, and provide them with answers to whatever questions they may have.
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Free Business Plan Template
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Building a Successful Business Plan
In the next section, we'll cover the components of a business plan , such as an executive summary and company description. But before we get to that, let's talk about key elements that should serve as building blocks for your plan.
For some entrepreneurs, the thought of writing a business plan sounds like a chore — a necessary means to an end. But that's a bad take.
A solid business plan is a blueprint for success . It's key to securing financing, presenting your business, outlining your financial projections, and turning that nugget of a business idea into a reality.
At the core, your business plan should answer two questions: why your business and why now?
Investors want to know why your business is entering the market, i.e. what problem it's solving and how it's different from what's currently out there. They also want to know why now is the right time for your type of product or service.
At a minimum, your plan should:
- Be more realistic than idealistic: Too often, business plans focus too much on how things could be instead of how they are. While having a vision is important, your plan needs to be rooted in research and data.
- Legitimize your business idea : If an idea fails on paper, it's a signal to go back to the drawing board. In doing so, you avoid losing precious time or money chasing an unrealistic idea.
- Position your business for funding: To get your business off the ground, chances are you'll need financial backing. Even with a solid business idea, investors, lenders, and banks still need convincing. An effective business plan will outline how much money you need, where it's going, what targets you will hit, and how you plan to repay any debts.
- Lay the foundation: Investors focus on risk – if anything looks shaky, it could be a dealbreaker. Ideally, your business plan will lay down the foundation for how you'll operate your business — from operational needs to financial projections and goals.
- Communicate your needs: It's nearly impossible to communicate your needs if you don't know what they are first. Of course, a business’ needs are always changing — but your plan should give you a well-rounded view of how your business will work in the short and long term.
So back to the question of why and why now – consider three things:
- Your industry – How does your product or service fit within your industry? Are you targeting a specific niche? Where do you see the industry going in the next five to 10 years?
- Your target audience – Who are you targeting? What challenges are they facing? How will your product or service help them in their daily lives?
- Your unique selling proposition (USP) – What sets you apart from your competitors? Is it your product/service features? Your company values? Price?
Once you know the answers to these questions, you'll be equipped to answer the question: why your business and why now.
How to Build a Business Plan
- Executive Summary
- Company and Business Description
- Product and Services Line
- Market Analysis
- Marketing Plan
- Legal Notes
- Financial Considerations
Featured Resource: Free Business Plan Template
1. cover page.
Your business plan should be prefaced with an eye-catching cover page. This means including a high-resolution image of your company logo, followed by your company's name, address, and phone number.
Since this business plan will likely change hands and be seen by multiple investors, you should also provide your own name, role in the business, and email address on the cover page.
At the bottom of this page, you can also add a confidentiality statement to protect against the disclosure of your business details.
The statement can read as follows: " This document contains confidential and proprietary information created by [your company name]. When receiving this document, you agree to keep its content confidential and may only reproduce and/or share it with express written permission of [your company name] ."
Remember to keep your cover page simple and concise — and save the important details for other sections.
Why it matters: First impressions are everything, and a clean cover page is the first step in the right direction.
Example of a Cover Page
![what is a business plan com Business Plan Template: Cover Page](https://www.hubspot.com/hs-fs/hubfs/business-plan-template_4.webp?width=550&height=687&name=business-plan-template_4.webp)
2. Executive Summary
The executive summary of your business plan provides a one- to two-page overview of your business and highlights the most crucial pieces of your plan, such as your short-term and long-term goals.
The executive summary is essentially a boiled-down version of your entire business plan, so remember to keep this section to the point and filled only with essential information.
Typically, this brief section includes:
- A mission statement.
- The company's history and leadership model.
- An overview of competitive advantage(s).
- Financial projections.
- Company goals.
- An ask from potential investors.
Why it matters: The executive summary is known as the make-or-break section of a business plan. It influences whether investors turn the page or not — so effectively summarizing your business and the problem it hopes to solve is a must.
Think of the Summary as a written elevator pitch (with more detail). While your business plan provides the nitty-gritty details, your Summary describes — in a compelling but matter-of-fact language — the highlights of your plan. If it's too vague, complicated, or fuzzy, you may need to scrap it and start again.
Example of an Executive Summary Introduction
"The future looks bright for North Side Chicago, particularly the Rock Hill Neighborhood. A number of high-end commercial and residential developments are well on their way, along with two new condo developments in nearby neighborhoods.
While the completion of these developments will increase the population within the neighborhood and stimulate the economy, the area lacks an upscale restaurant where residents and visitors can enjoy fine food and drink. Jay Street Lounge and Restaurant will provide such a place."
3. Company & Business Description
In this section, provide a more thorough description of what your company is and why it exists.
![what is a business plan com Business Plan Template: Business Description](https://www.hubspot.com/hs-fs/hubfs/business-plan-template_0.webp?width=450&height=562&name=business-plan-template_0.webp)
The bulk of the writing in this section should be about your company's purpose – covering what the business will be selling, identifying the target market, and laying out a path to success.
In this portion of your business plan, you can also elaborate on your company's:
- Mission statement
- Core values
- Team and organizational structure
Why it matters: Investors look for great structures and teams in addition to great ideas. This section gives an overview of your businesses' ethos. It's the perfect opportunity to set your business apart from the competition — such as your team's expertise, your unique work culture, and your competitive advantage.
Example of a Values/Mission Statement
"Jay Street Lounge and Restaurant will be the go-to place for people to get a drink or bite in an elegant, upscale atmosphere. The mission is to be North Side's leading restaurant, with the best tasting food and the highest quality service."
3. Product & Services Line
Here's where you'll cover the makeup of your business's product and/or services line. You should provide each product or service's name, its purpose, and a description of how it works (if appropriate). If you own any patents, copyrights, or trademarks, it's essential to include this info too.
Next, add some color to your sales strategy by outlining your pricing model and mark-up amounts.
If you're selling tangible products, you should also explain production and costs, and how you expect these factors to change as you scale.
Why it matters: This section contains the real meat of your business plan. It sets the stage for the problem you hope to solve, your solution, and how your said solution fits in the market.
There's no one-size-fits-all formula for this section. For instance, one plan may delve into its ability to market in a more cost-effective way than the competition, whereas another plan focuses on its key products and their unique features and benefits.
Regardless of your angle, it's critical to convey how your offerings will differ from the competition.
Example of a Product/Service Offering
"The menu at Jay Street Lounge and Restaurant will focus on Moroccan cuisine. The stars of the menu (our specialties) are the Moroccan dishes, such as eggplant zaalouk, seafood bastilla, tagine, and chickpea stew. For those who enjoy American dishes, there will also be a variety of options, from burger sliders and flatbread pizza to grilled steak and salads.
The food at Jay Street will have premium pricing to match its upscale atmosphere. During the summer months, the restaurant will have extra seating on the patio where clients can enjoy a special summer menu. We will be open on all days of the week."
4. Market Analysis
![what is a business plan com Business Plan Template: Market Analysis](https://www.hubspot.com/hs-fs/hubfs/business-plan-template_2.webp?width=450&height=562&name=business-plan-template_2.webp)
It helps to reference your market research documentation in this section, like a Porter's Five Forces Analysis or a SWOT Analysis ( templates for those are available here ). You can also include them in your appendix.
If your company already has buyer personas, you should include them here as well. If not, you can create them right now using the Make My Persona Tool .
Why it matters: Having an awesome product is, well, awesome — but it isn't enough. Just as important, there must be a market for it.
This section allows you to dig deeper into your market, which segments you want to target, and why. The "why" here is important, since targeting the right segment is critical for the success and growth of your business.
It's easy to get lost (or overwhelmed) in a sea of endless data. For your business plan, narrow your focus by answering the following questions:
- What is my market? In other words, who are my customers?
- What segments of the market do I want to target?
- What's the size of my target market?
- Is my market likely to grow?
- How can I increase my market share over time?
Example of a Market Analysis
"Jay Street Lounge and Restaurant will target locals who live and work within the Rock Hill Neighborhood and the greater North Side Chicago area. We will also target the tourists who flock to the many tourist attractions and colleges on the North Side.
We will specifically focus on young to middle-aged adults with an income of $40,000 to $80,000 who are looking for an upscale experience. The general demographics of our target market are women between 20 to 50 years old.
A unique and varied Moroccan-American menu, along with our unique upscale atmosphere, differentiates us from competitors in the area. Jay Street will also set itself apart through its commitment to high-quality food, service, design, and atmosphere."
5. Marketing Plan
Unlike the market analysis section, your marketing plan section should be an explanation of the tactical approach to reaching your aforementioned target audience. List your advertising channels, organic marketing methods, messaging, budget, and any relevant promotional tactics.
If your company has a fully fleshed-out marketing plan, you can attach it in the appendix of your business plan. If not, download this free marketing plan template to outline your strategy.
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Free Marketing Plan Template
Outline your company's marketing strategy in one simple, coherent plan.
- Pre-Sectioned Template
- Completely Customizable
- Example Prompts
- Professionally Designed
Why it matters: Marketing is what puts your product in front of your customers. It's not just advertising — it's an investment in your business.
Throwing money into random marketing channels is a haphazard approach, which is why it's essential to do the legwork to create a solid marketing plan.
Here's some good news — by this point, you should have a solid understanding of your target market. Now, it's time to determine how you'll reach them.
Example of a Marketing Plan Overview
"Our marketing strategy will focus on three main initiatives:
- Social media marketing. We will grow and expand our Facebook and Instagram following through targeted social media ads.
- Website initiatives. Our website will attract potential visitors by offering updated menus and a calendar of events.
- Promotional events. Jay Street will have one special theme night per week to attract new clients."
6. Sales Plan
It doesn't matter if your sales department is an office full of business development representatives (BDR) or a dozen stores with your products on their shelves.
The point is: All sales plans are different, so you should clearly outline yours here. Common talking points include your:
- Sales team structure, and why this structure was chosen.
- Sales channels.
- Sales tools, software, and resources.
- Prospecting strategy.
- Sales goals and budget.
Like with your marketing plan, it might make sense to attach your completed sales plan to the appendix of your business plan. You can download a template for building your sales plan here .
Why it matters: Among other things, investors are interested in the scalability of your business — which is why growth strategies are a critical part of your business plan.
Your sales plan should describe your plan to attract customers, retain them (if applicable), and, ultimately, grow your business. Be sure to outline what you plan to do given your existing resources and what results you expect from your work.
Example of a Sales Plan Overview
"The most important goal is to ensure financial success for Jay Street Lounge and Restaurant. We believe we can achieve this by offering excellent food, entertainment, and service to our clients.
We are not a low-cost dining option in the area. Instead, the food will have premium pricing to match its upscale feel. The strategy is to give Jay Street a perception of elegance through its food, entertainment, and excellent service."
7. Legal Notes
Your investors may want to know the legal structure of your business, as that could directly impact the risk of their investments. For example, if you're looking for business partners to engage in a non-corporation or LLC partnership, this means they could be on the line for more than their actual investment.
Because this clarification is often needed, explain if you are and/or plan to become a sole proprietor, partnership, corporation, LLC, or other.
You should also outline the steps you have taken (or will need to take) to operate legally. This includes licenses, permits, registrations, and insurance.
The last thing your investor wants to hear after they've sent you a big chunk of change is that you're operating without proper approval from the local, state, or federal government.
Why it matters: The last thing your investor wants to hear after they've sent you a big chunk of change is that you're operating without proper approval from the local, state, or federal government.
Example of Legal Notes
"Jay Street Lounge and Restaurant is up-to-date on all restaurant licenses and health permits. Our business name and logo are registered trademarks, presenting the possibility of expanding locally."
8. Financial Considerations
Ultimately, investors want to know two things:
- When they will earn their money back.
- When they will start seeing returns on their initial investment.
That said, be clear, calculated, and convincing in this section. It should cover:
- Startup costs.
- Sales forecasts for the next several months/quarters.
- Break-even analysis for time and dollars.
- Projected profit and loss (P&L) statement.
Facts and figures are key here, so be as specific as possible with each line item and projection. In addition, explain the "why" behind each of these sections.
However, keep in mind that information overload is a risk, especially when it comes to data. So, if you have pages upon pages of charts and spreadsheets for this section, distill them into a page or two and include the rest of the sheets in the appendix. This section should only focus on key data points.
Why it matters: One of the most important aspects of becoming "investor ready" is knowing your numbers. More importantly, you need to understand how those numbers will enhance your business.
While it's easy to write a number down on paper, it's more important to understand (and communicate) why you need capital, where it's going, and that your evaluation makes sense.
Example of Financial Projections
"Based on our knowledge and experience in the restaurant industry, we have come up with projections for the business.
Starting with an expenditure of $400,000 in year 1, we forecast sales of $1,500,000 and $2,800,000 for years two and three. We expect to achieve a net profit of 15% by year three."
9. Appendix
A detailed and well-developed business plan can range anywhere from 20 to 50 pages, with some even reaching upward of 80.
In many cases, the appendix is the longest section. Why? Because it includes the supportive materials mentioned in previous sections. To avoid disrupting the flow of the business plan with visuals, charts, and spreadsheets, business owners usually add them in the last section, i.e. the appendix.
Aside from what we've already mentioned – marketing plan, sales plan, department budgets, financial documents – you may also want to attach the following in the appendix:
- Marketing materials
- Market research data
- Licensing documentation
- Branding assets
- Floor plans for your location
- Mockups of your product
- Renderings of your office space or location design
Adding these pieces to the appendix enriches the reader's understanding of your business and proves you've put the work into your business plan without distracting from the main points throughout the plan.
Why it matters: An appendix helps the reader do their due diligence. It contains everything they need to support your business plan.
Keep in mind, however, that an appendix is typically necessary only if you're seeking financing or looking to attract business partners.
Use a Business Plan Template to Get Started
Writing a business plan shouldn't be an insurmountable roadblock to starting a business. Unfortunately, for all too many, it is.
That's why we recommend using our free business plan template. Pre-filled with detailed section prompts for all of the topics in this blog post, we're confident this template will get your business plan started in the right direction.
Editor's note: This post was originally published in June 2017 and has been updated for comprehensiveness.
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How to Write a Business Plan in 2023: The Ultimate Guide for Every Entrepreneur
Are you starting a new business or trying to get a loan for your existing venture? If so, you’re going to need to know how to write a business plan. Business plans give entrepreneurs the opportunity to formally analyze and define every aspect of their business idea .
In this post, you’ll learn how to put together a business plan and find the best resources to help you along the way.
What is a Business Plan?
A business plan is a formal document that outlines your business’s goals and how you will achieve those goals. Entrepreneurs who start out with business plans are 16 percent more likely to build successful companies , according to the Harvard Business Review. Developing a business plan ensures sustainable success, guiding you as you grow your business, legitimizing your venture, and helping you secure funding (among countless other benefits).
What Are the Main Purposes of a Business Plan?
Most financial institutions and service providers require you to submit a detailed business plan to obtain funding for your business. Online businesses will likely have a low overhead to start, so they may not need funding and therefore may not feel the need to write a business plan. That said, writing a business plan is still a good idea as it can help you secure a drastic increase limit on your credit card as your business grows or open a business account. This varies per bank.
If you’re growing your business, use it to help you raise expansion capital, create a growth strategy, find opportunities, and mitigate risks.Palo Alto software found that companies who make business plans are twice as likely to secure funding . .
If you’re just starting your business, making a business plan can help you identify your strengths and weaknesses, communicate your vision to others, and develop accurate forecasts.
![what is a business plan com business plan format](https://cdn.shopify.com/s/files/1/0840/8370/3830/files/1603969145-business-plan-2.jpg)
How to Make a Business Plan: The Prerequisites
Here are the prerequisites to creating a solid business plan:
- Establish goals
- Understand your audience
- Determine your business plan format
- Get to writing!
Establish Goals
There are two key questions to ask here:
- What are you hoping to accomplish with your business?
- What are you hoping to accomplish with your business plan?
Approaching your business plan through that lens will help you focus on the end goal throughout the writing process. These also provide metrics to measure success against.
Before writing your business plan, gather the content and data needed to inform what goes in it. This includes researching your market and industry – spanning everything from customer research to legalities you’ll need to consider. It’s a lot easier to start with the information already in front of you instead of researching each section individually as you go.
Turn to guides, samples, and small business plan templates to help. Many countries have an official administration or service dedicated to providing information, resources, and tools to help entrepreneurs and store owners plan, launch, manage, and grow their businesses.
The following will take you to online business plan guides and templates for specific countries.
- United States Small Business Administration (SBA) – The “write your business plan page” includes traditional and lean startup business plan formats, three downloadable sample business plans, a template, and a step-by-step build a business plan tool.
- Australian Government – The “business plan template” page includes a downloadable template, guide, and business plan creation app.
- UK Government Business and Self-Employed – The “write a business plan” page includes links to a downloadable business plan template and resources from trusted UK businesses. .
- Canada Business Network – The “writing your business plan” page includes a detailed guide to writing your business plan and links to business plan templates from Canadian business development organizations and banks.
These business resource sites also offer a wealth of valuable information for entrepreneurs including local and regional regulations, structuring, tax obligations, funding programs, market research data, and much more. Visit the sites above or do the following Google searches to find official local business resources in your area:
- your country government business services
- your state/province government business services
- your city government business services
Some Chamber of Commerce websites offer resources for business owners, including business plan guides and templates. Check your local chapter to see if they have any.
Banks that offer business funding also often have a resource section for entrepreneurs. Do a Google search to find banks that offer business funding as well as business plan advice to see the business plans that get funding. If your bank doesn’t offer any advice, search for the largest banks in your area:
- business plan guide bank name
- business plan samples bank name
- business plan template bank name
If you’re looking for more sample business plans, Bplans has over 500 free business plan samples organized by business type as well as a business plan template. Their collection includes 116 business plans for retail and online stores. Shopify also offers business plan templates intended to help small business owners and aspiring entrepreneurs identify functional areas of a business they may not have considered.
![what is a business plan com](https://cdn.shopify.com/s/files/1/0840/8370/3830/files/1603954350-pasted-image-0.png)
Understand Your Audience
Because business plans serve different purposes, you’re not always presenting it to the same audience. It’s important to understand who’s going to be reading your business plan, what you’re trying to convince them to do, and what hesitations they might have.
That way, you can adapt your business plan accordingly. As such, your audience also determines which type of business plan format you use. Which brings us to our next point…
Which Business Plan Format Should You Use?
The United States Small Business Administration (SBA) presents two business plan formats:
- The traditional business plan format is for entrepreneurs who want to create a detailed plan for themselves or for business funding.
- The lean startup business plan format, on the other hand, is for business owners that want to create a condensed, single-page business plan.
If the business plan is just for you and internal folks, draft a lean startup business plan or a customized version of the traditional business plan with only the sections you need. If you need it for business funding or other official purposes, choose the formal business plan and thoroughly complete the required sections while paying extra attention to financial projections.
If your business operates outside the U.S., clarify the preferred format with your bank.
How to Create a Business Plan: Questions to Ask Yourself
As you write a business plan, take time to not only analyze your business idea, but yourself as well. Ask the following questions to help you analyze your business idea along the way:
- Why do I want to start or expand my business?
- Do my goals (personal and professional) and values align with my business idea?
- What income do I need to generate for myself?
- What education, experience, and skills do I bring to my business?
![what is a business plan com](https://cdn.shopify.com/s/files/1/0840/8370/3830/files/1603954350-unnamed.png)
How to Write a Business Plan Step by Step
According to the business plan template created by SCORE, Deluxe, and the SBA , a traditional business plan encompasses the following sections.
- Executive summary
- Company description
- Products & services
- Market analysis
- Marketing & sales
- Management & organization
- Funding request
- Financial projections
- SWOT analysis
Since not everyone is aware of the key details to include in each section, we’ve listed information you can copy to fill in your business plan outline. Here’s how to build a business plan step by step.
Executive Summary
The Executive Summary is the first part of your business plan, so this is where you need to hook readers in. Every business plan starts this way — even a simple business plan template should kick off with the Executive Summary. Summarize your entire business plan in a single page, highlighting details about your business that will excite potential investors and lenders.
Explain what your business has to offer, your target market , what separates you from the competition, a little bit about yourself and the core people behind your business, and realistic projections about your business’ success.
While this is the first section of your business plan, write it after you’ve completed the rest of your business plan. It’s a lot easier because you can pull from the sections you’ve already written, and it’s easier to identify the best parts of your business plan to include on the first page.
Company Description
In the Company Description, share 411 about your business. Include basic details like:
- Legal structure (sole proprietor, partnership, corporation, etc.)
- Business and tax ID numbers
- When the business started
- Ownership information
- Number of employees
Your mission statement , philosophy and values, vision, short- and long-term goals, and milestones along with a brief overview of your industry, market, outlook, and competitors should also be in the Company Description.
Pro tip: These are the details you’ll use each time you create a business profile, whether that's on social media, business directories, or other networks. Keep your information consistent to reduce confusion and instill more confidence in potential customers.
Products & Services
The Products & Services section details what you plan to sell to customers. For a dropshipping business , this section should explain which trending products you’re going to sell, the pain points your products solve for customers, how you’ll price your products compared to your competitors, expected profit margin, and production and delivery details.
Remember to include any unique selling points for specific products or product groupings, such as low overhead, exclusive agreements with vendors, the ability to obtain products that are in short supply / high demand based on your connections, personalized customer service, or other advantages.
For dropshipping businesses selling hundreds or even thousands of products, detail the main categories of products and the number of products you plan to offer within each category. By doing this, it’s easier to visualize your business offerings as a whole to determine if you need more products in one category to fully flesh out your online store.
Market Analysis
The Market Analysis section of your business plan allows you to share the research you have done to learn about your target audience — the potential buyers of your products. People requesting a business plan will want to know that you have a solid understanding of your industry, the competitive landscape, who’s most likely to become your customers. It’s important to demonstrate that there’s a large enough market for your product to make it profitable and/or to make a strong return on investment .
To complete the Market Analysis component of your business plan, check out the following resources for industry, market, and local economic research:
- U.S. Embassy websites in most countries have a business section with information for people who want to sell abroad. Business sections include a basic “getting started” guide, links to economic and data reports, trade events, and additional useful business links for a particular region.
- IBISWorld is a provider of free and paid industry research and procurement research reports for the United States , United Kingdom , Australia , and New Zealand .
- Statista offers free and paid statistics and studies from over 18,000 sources including industry reports, country reports, market studies, outlook reports, and consumer market reports.
Use these websites and others to learn about the projected growth of your industry and your potential profitability. You can also use social media tools like Facebook Audience Insights to estimate the size of your target market on the largest social network
Another way to research your market and products is through Google Trends . This free tool will allow you to see how often people search for the products your business offers over time. Be sure to explain how your business plans to capitalize on increasing and decreasing search trends accordingly.
Marketing & Sales
Knowing your target market is half the battle. In the Marketing & Sales section, share how you plan to reach and sell products to your target market. Outline the marketing and advertising strategies you intend to use to market your product to potential customers – search marketing , social media marketing , email marketing , and influencer marketing methods .
If you’re unsure how to market your business’ products, analyze your competitors for some inspiration. Discovering your competition’s marketing tactics will help you customize your own strategy for building a customer base and ultimately taking your business to the next level.
Do a Google search for your competitor’s business name to find the websites, social accounts, and content they’ve created to market their products. Look at the ways your competitor uses each online entity to drive new customers to their website and product pages.
Then come up with a plan to convert a similar audience with your marketing and advertising messages. For dropshipping businesses, conversions will typically take place on your website as people purchase your products and/or by phone if you take orders over the phone.
Management & Organization
In the Management & Organization piece of your business plan, describe the structure of your business. In terms of legal structure and incorporation, most businesses are classified as sole proprietorships (one owner), partnerships (two or more owners), corporations, or S corporations.
Draft a condensed resume for each of the key members of your business. If you’re a solopreneur , include how your past education and work experience will help you run each aspect of your business. If you have one or more partner(s) and employee(s), include their relevant education and experience as well.
Think of this as a great way to evaluate the strengths of each individual running your business. When self-evaluating, you’ll be able to identify the aspects of your business that’ll be easier to manage and which ones to delegate to freelancers, contractors, employees, and third-party services. This also makes it easier to find the best way to utilize their strengths for business growth.
Funding Request
Chances are, you don’t have a funding request for a startup dropshipping business since the appeal to dropshipping is the low upfront investment . If you’re looking for a loan, however, this would be the section where you outline the dollar amount you need, what you plan to invest in, and how you see the return on your investment.
Another way to use this section is to analyze the investment you have or plan to make when starting or growing your business. This should include everything from the computer you use to run your website to the monthly fee for business services.
Financial Projections
In Financial Projections, share your projected revenue and expenses for the first or next five years of your business. The idea here is to demonstrate that the revenue you’re anticipating will easily lead to a return on any investment, whether from your personal finances or a capital lending service.
![what is a business plan com](https://cdn.shopify.com/s/files/1/0840/8370/3830/files/1603954350-pasted-image-0-1.png)
If you’re looking for funding, you’ll need to go into detail with projected income statements, balance sheets, cash flow statements, and capital expenditure budgets. If you aren’t looking for funding, it won’t hurt to create these types of financial projections so you can realistically plan for the future of your business.
The Appendix of your business plan includes any supplemental documents needed throughout the sections of your business plan. These may include, but are not limited to:
- Credit histories
- Product brochures
- Legal forms
- Supplier contracts
If you’re submitting your business plan for funding, contact the lender to see what documentation they want included with your funding request.
SWOT Analysis
In addition to the above sections, some business plans also include a SWOT Analysis. This is a one-page summary of your business’s strengths, weaknesses, opportunities, and threats. The strengths and weaknesses you include will be internal, whereas opportunities and threats you include will be external.
Depending on the revelations of this section, you may or may not want to make a SWOT analysis when submitting your business plan formally unless it is requested.
![what is a business plan com](https://cdn.shopify.com/s/files/1/0840/8370/3830/files/1603954349-unnamed-2.png)
Summary: How to Create a Business Plan
As you can see, creating a business plan for your dropshipping business is a great way to validate your business idea , discover your business’s strengths and weaknesses, and make a blueprint for your business's future.
In summary, here are the sections you will need to write for your business plan, step by step:
- SWOT analysis (Optional)
If you haven’t already, take the time to create a business plan to launch or grow your business in 2023!
Want to Learn More?
- How to Start a Dropshipping Business
- How to Register a Business in the USA
- How to Launch Your Ecommerce Store in Less Than 30 Minutes Flat
- 30+ Amazing Startup Business Ideas That’ll Make You Money
- 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
12 Key Elements of a Business Plan (Top Components Explained)
Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .
You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.
When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.
Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.
This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.
Let’s get started.
Why Are Business Plans Important?
Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .
1. Proves Your Business Viability
A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.
2. Guides You Throughout the Business Cycle
A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .
During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.
After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.
Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.
3. Helps You Make Better Business Decisions
As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.
A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.
4. Eliminates Big Mistakes
Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.
Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.
5. Secures Financing and Attracts Top Talents
Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.
A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).
You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.
Key Elements of Business Plan
Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.
A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.
With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.
Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.
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.
In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.
A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.
The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.
A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.
![what is a business plan com Executive Summary of the Business Plan](https://www.founderjar.com/wp-content/uploads/2022/10/Executive-Summary-of-the-Business-Plan.jpeg)
An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.
Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.
Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.
Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.
Components of an Executive Summary
Here are some of the information that makes up an executive summary:
- The name and location of your company
- Products and services offered by your company
- Mission and vision statements
- Success factors of your business plan
2. Business Description
Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.
What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.
A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.
Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.
Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.
In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.
Components of a Business Description
Your business description needs to contain these categories of information.
- Business location
- The legal structure of your business
- Summary of your business’s short and long-term goals
3. Market Analysis
The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.
Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.
All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.
In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.
The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.
![what is a business plan com Components of Market Analysis](https://www.founderjar.com/wp-content/uploads/2022/10/Components-of-Market-Analysis.jpeg)
Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.
Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.
Market Analysis Factors
Here are some of the factors to be included in your market analysis.
- The geographical location of your target market
- Needs of your target market and how your products and services can meet those needs
- Demographics of your target audience
Components of the Market Analysis Section
Here is some of the information to be included in your market analysis.
- Industry description and statistics
- Demographics and profile of target customers
- Marketing data for your products and services
- Detailed evaluation of your competitors
4. Marketing Plan
A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.
Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.
Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.
The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.
![what is a business plan com Marketing Strategy vs Marketing Plan](https://www.founderjar.com/wp-content/uploads/2022/10/Marketing-Strategy-vs-Marketing-Plan.jpeg)
5. Sales Strategy
Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.
Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.
Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.
Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.
![what is a business plan com Sales Strategy](https://www.founderjar.com/wp-content/uploads/2022/10/Sales-Strategy.jpeg)
6. Competitive Analysis
Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.
Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.
![what is a business plan com Competitive Analysis Framework](https://www.founderjar.com/wp-content/uploads/2022/10/Competitive-Analysis-Framework.jpeg)
The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.
This section should define the following:
- Your competitors' identified advantages in the market
- How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
- The standout qualities that distinguish you from other companies
- Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks
In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.
7. Management and Organization
Management and organization are key components of a business plan. They define its structure and how it is positioned to run.
Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.
Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.
The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.
Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.
Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.
This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.
8. Products and Services
This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.
Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.
At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.
The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.
Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.
You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.
Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.
This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.
9. Operating Plan
An operations plan describes how you plan to carry out your business operations and processes.
The operating plan for your business should include:
- Information about how your company plans to carry out its operations.
- The base location from which your company intends to operate.
- The number of employees to be utilized and other information about your company's operations.
- Key business processes.
This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.
The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.
What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.
10. Financial Projections and Assumptions
Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.
The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.
All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.
The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.
Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.
Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:
- Projected income statements
- Cash flow statements
- Balance sheets
- Income statements
Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.
11. Request For Funding
The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.
When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.
If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.
When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.
Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.
12. Exhibits and Appendices
Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.
Some of the documents that comprise the exhibits and appendices section includes:
- Legal documents
- Licenses and permits
- Credit histories
- Customer lists
The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.
Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.
There are key points to include in the appendix and exhibits section of your business plan.
- The management team and other stakeholders resume
- Marketing research
- Permits and relevant legal documents
- Financial documents
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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.
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IMAGES
COMMENTS
Business Plan: A business plan is a written document that describes in detail how a business, usually a new one, is going to achieve its goals. A business plan lays out a written plan from a ...
A good business plan guides you through each stage of starting and managing your business. You'll use your business plan as a roadmap for how to structure, run, and grow your new business. It's a way to think through the key elements of your business. Business plans can help you get funding or bring on new business partners.
Learn about the best business plan software. 1. Write an executive summary. This is your elevator pitch. It should include a mission statement, a brief description of the products or services your ...
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 ...
A business plan provides a detailed roadmap for your company's future. It outlines your objectives, strategies, and the specific actions you need to achieve your goals. When you define your path forward, a business plan helps you stay focused and on track, even when you face challenges or distractions.
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 completing your plan, you can ...
What is a business plan? A business plan lays out a strategic roadmap for any new or growing business. Any entrepreneur with a great idea for a business needs to conduct market research, analyze their competitors, validate their idea by talking to potential customers, and define their unique value proposition.
2. Have a clear goal. When creating a business plan, you'll need to put in more work and deliver a more thorough plan if your goal is to secure funding for your business versus working through a plan for yourself or even your team. 3. Invest time in research.
The outline of your goals, objectives, and the steps you'll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance. A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth.
A business plan is a written document that defines your business goals and the tactics to achieve those goals. A business plan typically explores the competitive landscape of an industry, analyzes a market and different customer segments within it, describes the products and services, lists business strategies for success, and outlines ...
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.
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 ...
Write the Executive Summary. This section is the same as in the traditional business plan — simply offer an overview of what's in the business plan, the prospect or core offering, and the short- and long-term goals of the company. Add a Company Overview. Document the larger company mission and vision.
Quite simply, a business plan is a detailed roadmap of your business — a written document that communicates to readers and potential investors what your business goals are and the steps that you plan on taking to achieve them.
Tips on Writing a Business Plan. 1. Be clear and concise: Keep your language simple and straightforward. Avoid jargon and overly technical terms. A clear and concise business plan is easier for investors and stakeholders to understand and demonstrates your ability to communicate effectively. 2.
A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing. A business plan should follow a standard format and contain all ...
7 business plan examples: section by section. The business plan examples in this article follow this template: Executive summary. An introductory overview of your business. Company description. A more in-depth and detailed description of your business and why it exists. Market analysis.
A business plan outlines the goals of your business and how it plans to achieve them. Real important - because without it, it's like running a business in the dark. It's like a roadmap that guides your company's direction and helps everyone stay on track. Gone are the days when designing a business plan from scratch was a time-consuming ...
A business plan is a detailed written document that describes your business's activities, goals, and strategy. A strong plan outlines everything from the products a company sells to the executive summary to the overall management. In essence, a business plan should guide a founder's actions through each stage of growth
This is why crafting a business plan is an essential step in the entrepreneurial process. In this post, we'll walk you through the process of filling out your business plan template, like this free, editable version: Download a free, editable one-page business plan template. We know that when looking at a blank page on a laptop screen, the idea ...
Business plans help new businesses formalize their goals to internal staff and potential investors, as well as allow the business founders to keep track of their company's progress as it grows. Read on to learn the value of both small business plans and large corporate plans.
The following will take you to online business plan guides and templates for specific countries. United States Small Business Administration (SBA) - The "write your business plan page" includes traditional and lean startup business plan formats, three downloadable sample business plans, a template, and a step-by-step build a business plan ...
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.