step by step instructions business plan

How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated May 7, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

Free business plan templates and examples

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan
• Templates and examples

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Write your business plan

Business plans help you run your business.

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. Investors want to feel confident they’ll see a return on their investment. Your business plan is the tool you’ll use to convince people that working with you — or investing in your company — is a smart choice.

Pick a business plan format that works for you

There’s no right or wrong way to write a business plan. What’s important is that your plan meets your needs.

Most business plans fall into one of two common categories: traditional or lean startup.

Traditional business plans are more common, use a standard structure, and encourage you to go into detail in each section. They tend to require more work upfront and can be dozens of pages long.

Lean startup business plans are less common but still use a standard structure. They focus on summarizing only the most important points of the key elements of your plan. They can take as little as one hour to make and are typically only one page.

Traditional business plan

Lean startup plan

Traditional business plan format

You might prefer a traditional business plan format if you’re very detail-oriented, want a comprehensive plan, or plan to request financing from traditional sources.

When you write your business plan, you don’t have to stick to the exact business plan outline. Instead, use the sections that make the most sense for your business and your needs. Traditional business plans use some combination of these nine sections.

Executive summary

Briefly tell your reader what your company is and why it will be successful. Include your mission statement, your product or service, and basic information about your company’s leadership team, employees, and location. You should also include financial information and high-level growth plans if you plan to ask for financing.

Company description

Use your company description to provide detailed information about your company. Go into detail about the problems your business solves. Be specific, and list out the consumers, organization, or businesses your company plans to serve.

Explain the competitive advantages that will make your business a success. Are there experts on your team? Have you found the perfect location for your store? Your company description is the place to boast about your strengths.

Market analysis

You'll need a good understanding of your industry outlook and target market. Competitive research will show you what other businesses are doing and what their strengths are. In your market research, look for trends and themes. What do successful competitors do? Why does it work? Can you do it better? Now's the time to answer these questions.

Organization and management

Tell your reader how your company will be structured and who will run it.

Describe the  legal structure  of your business. State whether you have or intend to incorporate your business as a C or an S corporation, form a general or limited partnership, or if you're a sole proprietor or limited liability company (LLC).

Use an organizational chart to lay out who's in charge of what in your company. Show how each person's unique experience will contribute to the success of your venture. Consider including resumes and CVs of key members of your team.

Service or product line

Describe what you sell or what service you offer. Explain how it benefits your customers and what the product lifecycle looks like. Share your plans for intellectual property, like copyright or patent filings. If you're doing  research and development  for your service or product, explain it in detail.

Marketing and sales

There's no single way to approach a marketing strategy. Your strategy should evolve and change to fit your unique needs.

Your goal in this section is to describe how you'll attract and retain customers. You'll also describe how a sale will actually happen. You'll refer to this section later when you make financial projections, so make sure to thoroughly describe your complete marketing and sales strategies.

Funding request

If you're asking for funding, this is where you'll outline your funding requirements. Your goal is to clearly explain how much funding you’ll need over the next five years and what you'll use it for.

Specify whether you want debt or equity, the terms you'd like applied, and the length of time your request will cover. Give a detailed description of how you'll use your funds. Specify if you need funds to buy equipment or materials, pay salaries, or cover specific bills until revenue increases. Always include a description of your future strategic financial plans, like paying off debt or selling your business.

Financial projections

Supplement your funding request with financial projections. Your goal is to convince the reader that your business is stable and will be a financial success.

If your business is already established, include income statements, balance sheets, and cash flow statements for the last three to five years. If you have other collateral you could put against a loan, make sure to list it now.

Provide a prospective financial outlook for the next five years. Include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, be even more specific and use quarterly — or even monthly — projections. Make sure to clearly explain your projections, and match them to your funding requests.

This is a great place to use graphs and charts to tell the financial story of your business.  

Use your appendix to provide supporting documents or other materials were specially requested. Common items to include are credit histories, resumes, product pictures, letters of reference, licenses, permits, patents, legal documents, and other contracts.

Example traditional business plans

Before you write your business plan, read the following example business plans written by fictional business owners. Rebecca owns a consulting firm, and Andrew owns a toy company.

Lean startup format

You might prefer a lean startup format if you want to explain or start your business quickly, your business is relatively simple, or you plan to regularly change and refine your business plan.

Lean startup formats are charts that use only a handful of elements to describe your company’s value proposition, infrastructure, customers, and finances. They’re useful for visualizing tradeoffs and fundamental facts about your company.

There are different ways to develop a lean startup template. You can search the web to find free templates to build your business plan. We discuss nine components of a model business plan here:

Key partnerships

Note the other businesses or services you’ll work with to run your business. Think about suppliers, manufacturers, subcontractors, and similar strategic partners.

Key activities

List the ways your business will gain a competitive advantage. Highlight things like selling direct to consumers, or using technology to tap into the sharing economy.

Key resources

List any resource you’ll leverage to create value for your customer. Your most important assets could include staff, capital, or intellectual property. Don’t forget to leverage business resources that might be available to  women ,  veterans ,  Native Americans , and  HUBZone businesses .

Value proposition

Make a clear and compelling statement about the unique value your company brings to the market.

Customer relationships

Describe how customers will interact with your business. Is it automated or personal? In person or online? Think through the customer experience from start to finish.

Customer segments

Be specific when you name your target market. Your business won’t be for everybody, so it’s important to have a clear sense of whom your business will serve.

List the most important ways you’ll talk to your customers. Most businesses use a mix of channels and optimize them over time.

Cost structure

Will your company focus on reducing cost or maximizing value? Define your strategy, then list the most significant costs you’ll face pursuing it.

Revenue streams

Explain how your company will actually make money. Some examples are direct sales, memberships fees, and selling advertising space. If your company has multiple revenue streams, list them all.

Example lean business plan

Before you write your business plan, read this example business plan written by a fictional business owner, Andrew, who owns a toy company.

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How to Write a Business Plan: A Step-by-Step Guide

A strong, well-thought-out business plan is crucial for a business's success. Without one, it's tough to maintain a vision of the future and what the next steps for your business should be. Think of it as a litmus test to prove that every step taken is part of a larger calculated effort.

Business plans are also crucial for external affairs. If you want to want to take out a loan, bring on a business partner, or more you'll need a solid plan in order. Your plan should be your pitch.

However, writing a business plan isn't easy and not everyone knows exactly what the business plan should outline. What's even more confusing is that no two business plans should look the same. We wrote a complete guide to show what your business plan should detail and how to write it.

• Before You Begin Writing

How to Write a Traditional Business Plan

• How to Write a Lean Startup Plan

Additional Tips

Things to know before you begin writing.

Know your audience. For example, if your business operates in a very niche space, you don't want to use niche and complex language that no one will understand if your plan will be reviewed by lenders or investors who don't have much knowledge of your space.

Also, keep the length of your plan in mind when it comes to your reader. We would always recommend keeping your plan as short as possible, but certain readers might want to see more details while others might want only the high level information. For example, a potential business partner will likely want to see a bit more details than an underwriter evaluating your business. However, don't go overboard with this and write a 50-page plan, as no one will read that.

Pick Your Format (traditional vs. lean startup)

There are now two ways you can write your business plan. The traditional route, and the most common, is likely what you'll be using. The traditional plan contains far more details and should be used for most scenarios. Alternatively, you can explore a lean startup plan , which are onepagers and detail your business only at the highest level. This is most appropriate for businesses that are likely to change quickly or are on a very, very short timeline.

A traditional plan is typically comprised of seven sections that are each crucial for explaining a different angle of your business. The length and detail of your plan will vary with the audience of the plan and how mature your business is. You'll use a business plan to sell your business to investors, qualify your business with for a loan with lenders, and more. Having a solid plan is always useful and can also help keep your actions as a business owner on track.

Step 1: Write an Executive Summary

As with any other piece of writing, this introduction to your plan is the hook. Why should the reader believe in your business? Sell your business and explain why it matters. Additionally, supplement your sell with a high level summary of your plan and operating model. However, don't go over one or two pages.

• Business Name
• Key Employees
• Business Background
• Listing of goods/services offered

Step 2: Write a Business Description

This is your first opportunity to really go into detail about your business. What's the opportunity that your business is capitalizing on? What's the target market? How are you standing out from competitors? Highlight how your business is differentiated.

Step 3: Market and Competitive Analysis

Any good business will have done comprehensive analyses of the market that its entering. This doesn't just apply to large corporations, and your reader will likely want to see evidence of this. Here, you can describe the industry and market your business will operate in and highlight the opportunities your business will take advantage of. Did your market research reveal any unique trends? If so, this is the place to show it.

Illustrate the competitive landscape as well. What are your competitors doing well and not so well? Why are you moving into this space, and what's the weakness to be exploited in the industry? How will competitors logically react? Are you going to take competitors' customers? How?

Step 4: Operational Structure

This now gets into the tangible details of your business. How will your business operate on a day-to-day basis? Your plan should really detail this out.

What's your business's legal structure? Is it a sole proprietorship? Include this as well. We'd recommend putting together an organizational chart if there are multiple stakeholders to not only show who's involved but to also show how everyone brings something to the table.

Step 5: Product Description

Now, you finally get to discuss in detail what you'll be selling or offering. What's your good or service that's for sale? This section will likely be a bit longer than the others because of its importance.

Be sure to describe your product and how it is differentiated from similar ones. How will it be priced, and how does that play in the market compared to competitors?

Also include a marketing or promotions plan here. You could have the best product in the world but it won't matter if no one knows about it. Identify your target market and really detail out how you'll make that market aware of your product. What's the message you want to promote and why does that resonate with your specific product and the target audience? How will you build awareness and retain loyalty?

Step 6: Raise Capital

If you intend for a prospective investor or lender to read this, you'll want to include a section here on your funding request. Be clear with how much you're asking for and why. You don't want to ask for a $100,000 loan or investment without a clear plan as to what exactly that money would be used for. On top of explaining what the funds would be used for, also clearly state the projected ROI.

Step 7: Financial Analysis and Projections

It doesn't matter if you include a request for funding in your plan, you will want to include a financial analysis here. You'll want to do two things here: Paint a picture of your business's performance in the past and show it will grow in the future. Use charts and images to help make the experience easier.

If your business has already been operating for a few years, demonstrate stability through your finances. But if your business is newer and not yet profitable, be clear and realistic with your projections. For example, if your sales have been increasing at a steady 5% every quarter, you don't want to suddenly assume 50% sales growth per quarter for no reason.

Research industry norms and look up how comparable businesses have performed. Include income statements, balance sheets and cash flow statements for multiple years if possible. When showing your financial outlook, project your vision out over at least five years. Clearly state the logic behind your projections, and you can also tie this section back to your previous section on raising capital if applicable.

Step 8: Appendix

If you have any remaining pieces of information such as relevant patents, licenses, charts or anything else that wasn't able to fit in organically in the plan elsewhere, feel free to include those here. Don't use this as a space as a document dump. Instead, be absolutely sure that every piece of information that goes here goes toward supporting your business plan.

How to Write a Lean Startup Business Plan

The logic behind lean startup plans is that every business plan can be divided into nine segments. Without going into detail, you can describe each of those segments at a high enough level where they can be listed out on a single page. Compared to the traditional business plan, this allows for far more flexibility in case your business drastically changes quickly. There are dozens of templates to choose from but the most common is listed here .

Here are the basic components you'll need in a lean startup plan:

Customer Segments. Describe your target audience(s) that your business will appeal to. Most businesses will have multiple segments listed here and it's imperative that you properly identify them.

Value Proposition. Your business will potentially appeal to different customer segments in different ways. If that's the case, you should list out the different value propositions for each segment clearly and succinctly. If that isn't the case, you can list out the single value proposition your company will have. If you can't figure out what your value proposition is, that means you don't know what your business's value add is.

Channels. How is your value proposition going to be communicated to your customers? Detail out brand awareness as well as ongoing communication channels with your customers.

Customer Relationships. After you've explained how you'll be communicating to your customers, think about the kind of relationship you'll want to maintain with them. Will communication be ongoing? Will you personally be contacting them or sending automated emails?

Revenue Streams. How will your business make money? At what point in the relationship with your customers do you start to recognize revenue? Most companies will have multiple streams although if your business is just starting out, you may only have one. That's OK, but just be sure to demonstrate you know exactly where your revenue will come from.

Key Resources. You've described how you'll be capturing revenue from your customers, but what will the infrastructure look like that will support it? Supporting resources may include but aren't limited to staff or capital.

Key Activities. What are the absolute necessary activities in your plan for your business to be successful? Detail them out here and show why they're important.

Key Partnerships. As a new business, you likely won't own all of your key resources and won't be able to do all of the key activities yourself. What other entities are you working with? Consider suppliers, vendors and anyone else you're planning on doing business with.

Cost Structure. Now that you understand your business's infrastructure and needs, you can detail out the total projected costs of your business or at least identify the biggest costs you have in your plan right now. What is your plan to ensure you're maximizing the value out of those costs?

Be efficient with your plan: Be sure every single word and image in your plan serves a purpose. You don't want window dressing for the sake of window dressing here. Being concise and getting straight to the point will help make your plan more digestible and easier to understand.

If your plan starts to exceed 20 pages, really proofread tosee if anything should be cut out. Also, follow the advice we mentioned above and be aware of your audience. Don't write a plan that will confuse or bore the reader.

Keep yourself honest: Don't assume a fantasy world when writing your plan. Be honest and realistic. Use industry or sector benchmarks to determine what those realistic measures are, and be wary of inflating projections. This is a very common problem and it doesn't help anyone out.

Accept help: There are so many free resources both online and in person to help with all small-business affairs. Nonprofit organizations like SCORE offer things like free mentoring and can help you write your business plan. If you're a woman or a minority, there are many government sponsored resources like the National Women's Business Council that also provide free consulting.

What needs to be in a business plan?

The exact contents of a business plan will differ plan by plan, but in general, the typical plan should include an executive summary, a business description, a market or competitive analysis, a description of the proposed operational structure, a product description, and a pitch to raise capital if applicable.

Why is a business plan important?

Business plans are efficient ways to explain your business in a comprehensive and broad manner. Lenders may make decisions to lend to you based on your business plan. Investors may decide whether they want to invest in your business based on your plan.

Not only are plans useful to externally communicate details about your business, they're also useful as an internal reference. Plans will help keep your business on track and help align your strategic goals with actions that you make on a daily basis.

How do I write a business plan for a loan?

Most lenders will require a business plan from applicants. A business plan should always take the audience into account and in this case, you'll want to emphasize how your business stands out in the market, why it's likely to be a success, and how your plan involves paying off your loan quickly and on time. As long as a lender is confident that you'd be able to meet your loan repayments, your business plan did its job.

What's the difference between a traditional and a lean plan?

A traditional plan is far more common and will carry a lot more detail than a lean plan. While the two are relatively similar in content and structure, a lean plan only contains the bare minimum level of detail. A lean plan is usually a one-pager and only has the minimum amount of detail to be able to describe the business at the highest level and should only be used when the company is both very new and time is scarce.

Editorial Note: The content of this article is based on the author's opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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How to make a business plan

Table of Contents

How to make a good business plan: step-by-step guide.

A business plan is a strategic roadmap used to navigate the challenging journey of entrepreneurship. It's the foundation upon which you build a successful business.

A well-crafted business plan can help you define your vision, clarify your goals, and identify potential problems before they arise.

But where do you start? How do you create a business plan that sets you up for success?

This article will explore the step-by-step process of creating a comprehensive business plan.

What is a business plan?

A business plan is a formal document that outlines a business's objectives, strategies, and operational procedures. It typically includes the following information about a company:

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

A business plan serves as a roadmap for a company's success and provides a blueprint for its growth and development. It helps entrepreneurs and business owners organize their ideas, evaluate the feasibility, and identify potential challenges and opportunities.

As well as serving as a guide for business owners, a business plan can attract investors and secure funding. It demonstrates the company's understanding of the market, its ability to generate revenue and profits, and its strategy for managing risks and achieving success.

Business plan vs. business model canvas

A business plan may seem similar to a business model canvas, but each document serves a different purpose.

A business model canvas is a high-level overview that helps entrepreneurs and business owners quickly test and iterate their ideas. It is often a one-page document that briefly outlines the following:

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

On the other hand, a Business Plan Template provides a more in-depth analysis of a company's strategy and operations. It is typically a lengthy document and requires significant time and effort to develop.

A business model shouldn’t replace a business plan, and vice versa. Business owners should lay the foundations and visually capture the most important information with a Business Model Canvas Template . Because this is a fast and efficient way to communicate a business idea, a business model canvas is a good starting point before developing a more comprehensive business plan.

A business plan can aim to secure funding from investors or lenders, while a business model canvas communicates a business idea to potential customers or partners.

Why is a business plan important?

A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success.

Here are some of the many benefits of having a thorough business plan.

Helps to define the business goals and objectives

A business plan encourages you to think critically about your goals and objectives. Doing so lets you clearly understand what you want to achieve and how you plan to get there.

A well-defined set of goals, objectives, and key results also provides a sense of direction and purpose, which helps keep business owners focused and motivated.

Guides decision-making

A business plan requires you to consider different scenarios and potential problems that may arise in your business. This awareness allows you to devise strategies to deal with these issues and avoid pitfalls.

With a clear plan, entrepreneurs can make informed decisions aligning with their overall business goals and objectives. This helps reduce the risk of making costly mistakes and ensures they make decisions with long-term success in mind.

Attracts investors and secures funding

Investors and lenders often require a business plan before considering investing in your business. A document that outlines the company's goals, objectives, and financial forecasts can help instill confidence in potential investors and lenders.

A well-written business plan demonstrates that you have thoroughly thought through your business idea and have a solid plan for success.

Identifies potential challenges and risks

A business plan requires entrepreneurs to consider potential challenges and risks that could impact their business. For example:

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

By identifying these potential challenges, entrepreneurs can develop strategies to mitigate risks and overcome challenges. This can reduce the likelihood of costly mistakes and ensure the business is well-positioned to take on any challenges.

Provides a basis for measuring success

A business plan serves as a framework for measuring success by providing clear goals and financial projections . Entrepreneurs can regularly refer to the original business plan as a benchmark to measure progress. By comparing the current business position to initial forecasts, business owners can answer questions such as:

Are we where we want to be at this point?

Did we achieve our goals?

If not, why not, and what do we need to do?

After assessing whether the business is meeting its objectives or falling short, business owners can adjust their strategies as needed.

How to make a business plan step by step

The steps below will guide you through the process of creating a business plan and what key components you need to include.

1. Create an executive summary

Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.

Keep your executive summary concise and clear with the Executive Summary Template . The simple design helps readers understand the crux of your business plan without reading the entire document.

2. Write your company description

Provide a detailed explanation of your company. Include information on what your company does, the mission statement, and your vision for the future.

Provide additional background information on the history of your company, the founders, and any notable achievements or milestones.

3. Conduct a market analysis

Conduct an in-depth analysis of your industry, competitors, and target market. This is best done with a SWOT analysis to identify your strengths, weaknesses, opportunities, and threats. Next, identify your target market's needs, demographics, and behaviors.

Use the Competitive Analysis Template to brainstorm answers to simple questions like:

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

These questions should give you valuable insights into the current market and where your business stands.

4. Describe your products and services

Provide detailed information about your products and services. This includes pricing information, product features, and any unique selling points.

Use the Product/Market Fit Template to explain how your products meet the needs of your target market. Describe what sets them apart from the competition.

5. Design a marketing and sales strategy

Outline how you plan to promote and sell your products. Your marketing strategy and sales strategy should include information about your:

Pricing strategy

Advertising and promotional tactics

Sales channels

The Go to Market Strategy Template is a great way to visually map how you plan to launch your product or service in a new or existing market.

6. Determine budget and financial projections

Document detailed information on your business’ finances. Describe the current financial position of the company and how you expect the finances to play out.

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

Define how your company is structured and who will be responsible for each aspect of the business. Use the Business Organizational Chart Template to visually map the company’s teams, roles, and hierarchy.

As well as the organization and management structure, discuss the legal structure of your business. Clarify whether your business is a corporation, partnership, sole proprietorship, or LLC.

8. Make an action plan

At this point in your business plan, you’ve described what you’re aiming for. But how are you going to get there? The Action Plan Template describes the following steps to move your business plan forward. Outline the next steps you plan to take to bring your business plan to fruition.

Types of business plans

Several types of business plans cater to different purposes and stages of a company's lifecycle. Here are some of the most common types of business plans.

Startup business plan

A startup business plan is typically an entrepreneur's first business plan. This document helps entrepreneurs articulate their business idea when starting a new business.

Not sure how to make a business plan for a startup? It’s pretty similar to a regular business plan, except the primary purpose of a startup business plan is to convince investors to provide funding for the business. A startup business plan also outlines the potential target market, product/service offering, marketing plan, and financial projections.

Strategic business plan

A strategic business plan is a long-term plan that outlines a company's overall strategy, objectives, and tactics. This type of strategic plan focuses on the big picture and helps business owners set goals and priorities and measure progress.

The primary purpose of a strategic business plan is to provide direction and guidance to the company's management team and stakeholders. The plan typically covers a period of three to five years.

Operational business plan

An operational business plan is a detailed document that outlines the day-to-day operations of a business. It focuses on the specific activities and processes required to run the business, such as:

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

The primary purpose of an operational business plan is to ensure that the business runs efficiently and effectively. It helps business owners manage their resources, track their performance, and identify areas for improvement.

Growth-business plan

A growth-business plan is a strategic plan that outlines how a company plans to expand its business. It helps business owners identify new market opportunities and increase revenue and profitability. The primary purpose of a growth-business plan is to provide a roadmap for the company's expansion and growth.

The 3 Horizons of Growth Template is a great tool to identify new areas of growth. This framework categorizes growth opportunities into three categories: Horizon 1 (core business), Horizon 2 (emerging business), and Horizon 3 (potential business).

One-page business plan

A one-page business plan is a condensed version of a full business plan that focuses on the most critical aspects of a business. It’s a great tool for entrepreneurs who want to quickly communicate their business idea to potential investors, partners, or employees.

A one-page business plan typically includes sections such as business concept, value proposition, revenue streams, and cost structure.

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

A template can help you organize your thoughts and effectively communicate your business ideas and strategies. Starting with a template can also save you time and effort when formatting your plan.

Miro’s extensive library of customizable templates includes all the necessary sections for a comprehensive business plan. With our templates, you can confidently present your business plans to stakeholders and investors.

Be practical

Avoid overestimating revenue projections or underestimating expenses. Your business plan should be grounded in practical realities like your budget, resources, and capabilities.

Be specific

Provide as much detail as possible in your business plan. A specific plan is easier to execute because it provides clear guidance on what needs to be done and how. Without specific details, your plan may be too broad or vague, making it difficult to know where to start or how to measure success.

Be thorough with your research

Conduct thorough research to fully understand the market, your competitors, and your target audience . By conducting thorough research, you can identify potential risks and challenges your business may face and develop strategies to mitigate them.

Get input from others

It can be easy to become overly focused on your vision and ideas, leading to tunnel vision and a lack of objectivity. By seeking input from others, you can identify potential opportunities you may have overlooked.

Review and revise regularly

A business plan is a living document. You should update it regularly to reflect market, industry, and business changes. Set aside time for regular reviews and revisions to ensure your plan remains relevant and effective.

Create a winning business plan to chart your path to success

Starting or growing a business can be challenging, but it doesn't have to be. Whether you're a seasoned entrepreneur or just starting, a well-written business plan can make or break your business’ success.

The purpose of a business plan is more than just to secure funding and attract investors. It also serves as a roadmap for achieving your business goals and realizing your vision. With the right mindset, tools, and strategies, you can develop a visually appealing, persuasive business plan.

Ready to make an effective business plan that works for you? Check out our library of ready-made strategy and planning templates and chart your path to success.

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How to Write a Detailed Business Plan Step-by-Step [Free Template]

Posted july 17, 2024 by noah parsons.

Writing a business plan is one of the most valuable things you can do for your business. 

Study after study proves that business planning significantly improves your chances of success by up to 30 percent 1 . That’s because the planning process helps you think about all aspects of your business and how it will operate and grow.

Ready to write your own detailed business plan? Here’s everything you need ( along with a free template ) to create your plan.

Before you write a detailed business plan, start with a one-page business plan

Despite the benefits of business planning , it’s easy to procrastinate writing a business plan. 

Most people would prefer to work hands-on in their business rather than think about business strategy . That’s why, if you’re writing a business plan for the first time, we recommend you start with a simpler and shorter one-page business plan.

With a one-page plan, there’s no need to go into a lot of details or dive deep into financial projections—you just write down the fundamentals of your business and how it works. 

A one-page plan should cover:

• Value proposition
• Market need
• Your solution

Competition

Target market.

• Sales and marketing
• Budget and sales goals
• Team summary
• Key partners
• Funding needs

A one-page business plan is a great jumping-off point in the planning process. It’ll give you an overview of your business and help you quickly refine your ideas.

Check out our guide to writing a simple one-page business plan for detailed instructions, examples, and a free downloadable template .

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When do you need a more detailed business plan?

While I will always recommend starting with the one-page plan format, there are times when a more detailed plan is necessary:

• Flesh out sections of your plan: You need to better understand how your marketing, operations, or other business functions will operate.
• Build a more detailed financial forecast: A one-page plan only includes a summary of your financial projections. A detailed plan includes a full financial forecast, including a profit and loss statement, balance sheet, and cash flow forecast to better measure performance.
• Prepare for lenders and investors: While they may not read the full plan, any investor will ask in-depth questions that you can only answer by spending time writing a detailed business plan.
• Sell your business: Use your business plan as part of your sales pitch, and show potential buyers all the details of how your business works.

How to write a detailed business plan

Let’s walk through writing a detailed business plan step-by-step and explore an example of what a finished business plan (for a local swim club Pools & Laps) built with LivePlan looks like.

1. Executive summary

Yes, the executive summary comes first in your plan, but you should write it last—once you know all the details of your business plan. 

It is just a summary of your full plan, so be careful not to be too repetitive—keep it between one or two pages and highlight: 

• Your opportunity: This summarizes what your business does, what problem it solves, and who your customers are. This is where you want readers to get excited about your business
• Your team: For investors, your business’s team is often even more important than what the business is. Briefly highlight why your team is uniquely qualified to build the business and make it successful.
• Financials: What are the highlights of your financial forecast ? Summarize your sales goals, when you plan to be profitable, and how much money you need to get your business off the ground.

For existing businesses, write the executive summary for your audience—whether it’s investors, business partners, or employees. Think about what your audience will want to know, and just hit the highlights.

2. Opportunity

The “opportunity” section of your business plan is all about the products and services that you are creating. The goal is to explain why your business is exciting and the problems that it solves for people. You’ll want to cover:

Problem & solution

Every successful business solves a problem for its customers. Their products and services make people’s lives easier or fill an unmet need in the marketplace. 

In this section, you’ll want to explain the problem that you solve, whom you solve it for, and what your solution is. This is where you go in-depth to describe what you do and how you improve the lives of your customers.

In the previous section, you summarized your target customer. Now you’ll want to describe them in much greater detail. You’ll want to cover things like your target market’s demographics (age, gender, location, etc.) and psychographics (hobbies and other behaviors). 

Ideally, you can also estimate the size of your target market so you know how many potential customers you might have.

Every business has competition , so don’t leave this section out. You’ll need to explain what other companies are doing to serve your customers or if your customers have other options for solving the problem you are solving. 

Explain how your approach is different and better than your competitors, whether it’s better features, pricing, or location. Explain why a customer would come to you instead of going to another company. 

3. Execution

This section of your business plan dives into how you will accomplish your goals. While the Opportunity section discussed what you’re doing, you now need to explain the specifics of how you will do it.

Marketing & sales

What marketing tactics will you use to get the word out about your business? You’ll want to explain how you get customers to your door and what the sales process looks like. For businesses with a sales force, explain how the sales team gets leads and what the process is like for closing a sale.

Depending on the type of business that you are starting, the operations section needs to be customized to meet your needs. If you are building a mail-order business, you’ll want to cover how you source your products and how fulfillment will work.

If you’re building a manufacturing business, explain the manufacturing process and the necessary facilities. This is where you’ll talk about how your business “works,” meaning you should explain what day-to-day functions and processes are needed to make your business successful.

Milestones & metrics

So far, your business plan has mostly discussed what you’re doing and how you will do it. 

The milestones and metrics section is all about timing. Your plan should highlight key dates and goals that you intend to hit. You don’t need extensive project planning in this section, just key milestones that you want to hit and when you plan to hit them. 

You should also discuss key metrics : the numbers you will track to determine your success.

The Company section of your business plan should explain your business’s overall structure and the team behind it.

Organizational structure

Describe your location, facilities, and anything else about your physical location relevant to your business. You’ll also want to explain the legal structure of your business—are you an S-corp, C-corp, or an LLC? What does company ownership look like?

Arguably one of the most important parts of your plan when seeking investment is the “Team” section. This should explain who you are and who else is helping you run the business. Focus on experience and qualifications for building the type of business that you want to build. 

It’s OK if you don’t have a complete team yet. Just highlight the key roles that you need to fill and the type of person you hope to hire for each role.

5. Financial plan and forecasts

Your business plan now covers the “what,” the “how,” and the “when” for your business. Now it’s time to talk about money. 

Financial forecasts

What revenue do you plan on bringing in, and when? What kind of expenses will you have? How much cash will you need?

These are the types of questions you’ll answer by creating detailed forecasts. Don’t worry about getting it perfect, these are just educated guesses. Your goal is to get numbers down that seem reasonable so you can review and revise financial expectations as you run your business. 

You’ll want to cover sales , expenses , personnel costs , asset purchases, cash , etc, for at least the first 12 months of your business. If you can, also create educated guesses for the following two years in annual totals. 

If you intend to pursue funding, it’s worth noting that some investors and lenders might want to see a five-year forecast. For most other cases, three years is usually enough.

If you’re raising money for your business, the Financing section is where you describe how much you need. Whether you’re getting loans or investments, you should highlight what and when you need it. 

Ideally, you’ll also want to summarize the specific ways you’ll use the funding once you have it. 

For more specifics, check out our write-up explaining what to include in your business plan for a bank loan .

Historical Financial statements

If your business is up and running, you should also include your profit and loss statement , balance sheet , and cash flow statement . These are the historical record of your business performance and will be required by lenders, investors, and anyone considering buying your business. 

If you don’t want lengthy financial statements overwhelming this section of your business plan, you can just include the most recent statements and include the rest within your appendix.

6. Appendix 

The final section of your business plan is the appendix . Include detailed financial forecasts here and any other key documentation for your business. 

If you have product schematics, patent information, or any other details that aren’t appropriate for the main body of the plan but need to be included for reference.

Tips to write a detailed business plan

Keep it brief.

You may not be limited to one page, but that doesn’t mean you need to write a novel. Keep your business plan focused using clear, plain language and avoiding jargon. Make your plan easier to skim by using short sentences, bulleted lists, and visuals. Remember, you can always come back and add more details.

Related Reading: 7 tips to make a high-quality business plan  

Start with what you know

Don’t worry about following a strict top-to-bottom approach. Instead, build momentum by starting with sections you know well. This will help you get information down and ultimately make you more likely to complete your business plan. 

Set time limits

You don’t have to write your business plan in one sitting. It may be more valuable to set a time limit, see how much you get done, and return to it again in another session. This will keep you focused and productive and help you fit plan writing into your other responsibilities.

Reference business plan examples

Real-world business plan examples from your industry can provide valuable insights into how others have successfully presented their ideas, strategies, and financials. Exploring these examples can inspire your own approach and offer practical guidance on what to include and how to tailor it to your specific needs.

Just be sure not to copy and paste anything.

Prioritize sections that really matter

When writing a detailed business plan, focus on the parts most important to you and your business. 

If you plan on distributing your plan to outsiders, you should complete every section. But, if your plan is just for internal use, focus on the areas that will help you right now.

Download a free business plan template

Are you ready to write your detailed business plan? Get started by downloading our free business plan template . With that, you will be well on your way to a better business strategy, with all of the necessary information expected in a more detailed plan.

If you want to improve your ability to build a healthy, growing business, consider LivePlan.

It’s a product that makes planning easy and features a guided business plan creator , drag-and-drop financial forecasting tools , and an AI-powered LivePlan Assistant to help you write, generate ideas, and analyze your business performance. 

Use your detailed business plan to grow your business

Your business plan isn’t just a document to attract investors or close a bank loan. It’s a tool that helps you better manage and grow your business. And you’ll get the most value from your business plan if you use it as part of a growth planning process . 

With growth planning, you’ll easily create and execute your plan, track performance, identify opportunities and issues, and consistently revise your strategy. It’s a flexible process that encourages you to build a plan that fits your needs.  

So, whether you stick with a one-page plan or expand into a more detailed business plan—you’ll be ready to start growth planning.

Sources in this article

• Parsons, Noah. “Do You Need a Business Plan? This Study Says Yes” Bplans: Free Business Planning Resources and Templates , 10 May 2024, www.bplans.com/business-planning/basics/research .

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Home > Business > Business Startup

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?

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.

Related content

• 5 Best Business Plan Software and Tools in 2023 for Your Small Business
• How to Get a Business License: What You Need to Know
• What Is a Cash Flow Statement?

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How to Write a Business Plan: Your Step-by-Step Guide

So, you’ve got an idea and you want to start a business —great! Before you do anything else, like seek funding or build out a team, you'll need to know how to write a business plan. This plan will serve as the foundation of your company while also giving investors and future employees a clear idea of your purpose.

Below, Lauren Cobello, Founder and CEO of Leverage with Media PR , gives her best advice on how to make a business plan for your company.

Build your dream business with the help of a high-paying job—browse open jobs on The Muse »

What is a business plan, and when do you need one?

According to Cobello, a business plan is a document that contains the mission of the business and a brief overview of it, as well as the objectives, strategies, and financial plans of the founder. A business plan comes into play very early on in the process of starting a company—more or less before you do anything else.

“You should start a company with a business plan in mind—especially if you plan to get funding for the company,” Cobello says. “You’re going to need it.”

Whether that funding comes from a loan, an investor, or crowdsourcing, a business plan is imperative to secure the capital, says the U.S. Small Business Administration . Anyone who’s considering giving you money is going to want to review your business plan before doing so. That means before you head into any meeting, make sure you have physical copies of your business plan to share.

Different types of business plans

The four main types of business plans are:

Startup Business Plans

Internal business plans, strategic business plans, one-page business plans.

Let's break down each one:

If you're wondering how to write a business plan for a startup, Cobello has advice for you. Startup business plans are the most common type, she says, and they are a critical tool for new business ventures that want funding. A startup is defined as a company that’s in its first stages of operations, founded by an entrepreneur who has a product or service idea.

Most startups begin with very little money, so they need a strong business plan to convince family, friends, banks, and/or venture capitalists to invest in the new company.

Internal business plans “are for internal use only,” says Cobello. This kind of document is not public-facing, only company-facing, and it contains an outline of the company’s business strategy, financial goals and budgets, and performance data.

Internal business plans aren’t used to secure funding, but rather to set goals and get everyone working there tracking towards them.

As the name implies, strategic business plans are geared more towards strategy and they include an assessment of the current business landscape, notes Jérôme Côté, a Business Advisor at BDC Advisory Services .

Unlike a traditional business plan, Cobello adds, strategic plans include a SWOT analysis (which stands for strengths, weaknesses, opportunities, and threats) and an in-depth action plan for the next six to 12 months. Strategic plans are action-based and take into account the state of the company and the industry in which it exists.

Although a typical business plan falls between 15 to 30 pages, some companies opt for the much shorter One-Page Business Plan. A one-page business plan is a simplified version of the larger business plan, and it focuses on the problem your product or service is solving, the solution (your product), and your business model (how you’ll make money).

A one-page plan is hyper-direct and easy to read, making it an effective tool for businesses of all sizes, at any stage.

How to create a business plan in 7 steps

Every business plan is different, and the steps you take to complete yours will depend on what type and format you choose. That said, if you need a place to start and appreciate a roadmap, here’s what Cobello recommends:

1. Conduct your research

Before writing your business plan, you’ll want to do a thorough investigation of what’s out there. Who will be the competitors for your product or service? Who is included in the target market? What industry trends are you capitalizing on, or rebuking? You want to figure out where you sit in the market and what your company’s value propositions are. What makes you different—and better?

2. Define your purpose for the business plan

The purpose of your business plan will determine which kind of plan you choose to create. Are you trying to drum up funding, or get the company employees focused on specific goals? (For the former, you’d want a startup business plan, while an internal plan would satisfy the latter.) Also, consider your audience. An investment firm that sees hundreds of potential business plans a day may prefer to see a one-pager upfront and, if they’re interested, a longer plan later.

3. Write your company description

Every business plan needs a company description—aka a summary of the company’s purpose, what they do/offer, and what makes it unique. Company descriptions should be clear and concise, avoiding the use of jargon, Cobello says. Ideally, descriptions should be a few paragraphs at most.

4. Explain and show how the company will make money

A business plan should be centered around the company’s goals, and it should clearly explain how the company will generate revenue. To do this, Cobello recommends using actual numbers and details, as opposed to just projections.

For instance, if the company is already making money, show how much and at what cost (e.g. what was the net profit). If it hasn’t generated revenue yet, outline the plan for how it will—including what the product/service will cost to produce and how much it will cost the consumer.

5. Outline your marketing strategy

How will you promote the business? Through what channels will you be promoting it? How are you going to reach and appeal to your target market? The more specific and thorough you can be with your plans here, the better, Cobello says.

6. Explain how you’ll spend your funding

What will you do with the money you raise? What are the first steps you plan to take? As a founder, you want to instill confidence in your investors and show them that the instant you receive their money, you’ll be taking smart actions that grow the company.

7. Include supporting documents

Creating a business plan is in some ways akin to building a legal case, but for your business. “You want to tell a story, and to be as thorough as possible, while keeping your plan succinct, clear, interesting, and visually appealing,” Cobello says. “Supporting documents could include financial projects, a competitive analysis of the market you’re entering into, and even any licenses, patents, or permits you’ve secured.”

A business plan is an individualized document—it’s ultimately up to you what information to include and what story you tell. But above all, Cobello says, your business plan should have a clear focus and goal in mind, because everything else will build off this cornerstone.

“Many people don’t realize how important business plans are for the health of their company,” she says. “Set aside time to make this a priority for your business, and make sure to keep it updated as you grow.”

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How to Write a Business Plan: Beginner’s Guide (& Templates)

Written by: Chloe West

Thinking about starting a business? One of the first steps you’ll need to take is to write a business plan. A business plan can help guide you through your financial planning, marketing strategy, unique selling point and more.

Making sure you start your new business off on the right foot is key, and we’re here to help. We’ve put together this guide to help you write your first business plan. Or, you can skip the guide and dive right into a business plan template .

Ready to get started?

Here’s a short selection of 8 easy-to-edit business plan templates you can edit, share and download with Visme. View more templates below:

8-Step Process for Writing a Business Plan

What is a business plan, why is a business plan important, step #1: write your executive summary, step #2: put together your company description, step #3: conduct your market analysis, step #4: research your competition, step #5: outline your products or services, step #6: summarize your financial plan, step #7: determine your marketing strategy, step #8: showcase your organizational chart, 14 business plan templates to help you get started.

A business plan is a document that helps potential new business owners flesh out their business idea and put together a bird’s eye view of their business. Writing a business plan is an essential step in any startup’s ideation process.

Business plans help determine demographics, market analysis, competitive analysis, financial projections, new products or services, and so much more.

Each of these bits of information are important to have on hand when you’re trying to start a business or pitching investors for funds.

Here’s an example of a business plan that you can customize to incorporate your own business information.

We’re going to walk you through some of the most important parts of your business plan as well as how to write your own business plan in 8 easy steps.

If you’re in the beginning stages of starting a business , you might be wondering if it’s really worth your time to write out your business plan. 

We’re here to tell you that it is.

A business plan is important for a number of reasons, but mostly because it helps to set you up for success right from the start.

Here are four reasons to prove to you why you need to start your business off on the right foot with a plan.

Reason #1: Set Realistic Goals and Milestones

Putting together a business plan helps you to set your objectives for growth and make realistic goals while you begin your business. 

By laying out each of the steps you need to take in order to build a successful business, you’re able to be more reasonable about what your timeline is for achieving everything as well as what your financial projections are.

The best way to set goals is using the SMART goals guidelines, outlined below.

Reason #2: Grow Your Business Faster

Having a business plan helps you be more organized and strategic, improving the overall performance of your business as you start out. In fact, one study found that businesses with a plan grow 30% faster than businesses that don’t.

Doesn’t that sound reason enough alone to start out your business venture with a solidified plan? We thought so too, but we’ve still got two more reasons.

Reason #3: Minimize Risk

Starting a new business is uncharted territory. However, when you start with a roadmap for your journey, it makes it easier to see success and minimize the risks that come with startups.

Minimize risk and maximize profitability by documenting the most important parts of your business planning.

Reason #4: Secure Funding

And finally, our last reason that business plans are so important is that if you plan to pitch investors for funding for your new venture, they’re almost always going to want to see a detailed business plan before deciding whether or not to invest.

You can easily create your business plan and investor pitch deck right here with Visme. Just sign up for a free account below to get started. 

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The executive summary is a brief overview of your entire business plan, giving anyone who reads through your document a quick understanding of what they’re going to learn about your business idea.

However, you need to remember that some of the people who are going to read your business plan don’t want to or have time to read the entire thing. So your executive summary needs to incorporate all of the most important aspects of your plan.

Here’s an example of an executive summary from a business plan template you can customize and turn into your own.

Your executive summary should include:

• Key objective(s)
• Market research
• Competitor information
• Products/services
• Value proposition
• Overview of your financial plan
• How you’re going to actually start your business

One thing to note is that you should actually write your executive summary after the rest of your business plan so that you can properly summarize everything you’ve already created.

So at this point, simply leave a page blank for your executive summary so you can come back to it at the end of your business plan.

The next step is to write out a full description of your business and its core offerings. This section of your business plan should include your mission statement and objectives, along with your company history or overview.

In this section, you may also briefly describe your business formation details from a legal perspective.

Mission Statement

Don’t spend too much time trying to craft this. Your mission statement is a simple “why” you started this business. What are you trying to achieve? Or what does your business solve?

This can be anything from one single quote or a paragraph, but it doesn’t need to be much longer than that. In fact, this could be very similar to your value proposition.

What are your goals? What do you plan to achieve in the first 90 days or one year of your business? What kind of impact do you hope to make on the market?

These are all good points to include in your objectives section so anyone reading your business plan knows upfront what you hope to achieve.

History or Overview

If you’re not launching a brand new business or if you’ve previously worked on another iteration of this business, let potential investors know the history of your company.

If not, simply provide an overview of your business, sharing what it does or what it will do.

Your third step is to conduct a market analysis so you know how your business will fit into its target market. This page in your business plan is simply meant to summarize your findings. Most of your time should be spent actually doing the research.

Your market analysis needs to look at things like:

• Market size, and if it’s grown in recent years or shrinking
• The segment of the market you plan to target
• Demographics and behavior of your target audience
• The demand for your product or service
• Your competitive advantage or differentiation strategy
• The average price of your product or service

Put together a summary of your market analysis and industry research in a 1-2 page format, like we see below.

Your next step is to conduct a competitive analysis. While you likely touched on this briefly during your market analysis, now is the time to do a deep dive so that you have a good grasp on what your competitors are doing and how they are generating customers.

Start by creating a profile of all your existing competitors, or at the very least, your closest competitors – the ones who are offering very similar products or services to you, or are in a similar vicinity (if you’re opening a brick and mortar store).

Focus on their strengths and what they’re doing really well so that you can emulate their best qualities in your own way. Then, look at their weaknesses and what your business can do better.

Take note of their current marketing strategy, including the outlets you see a presence, whether it’s on social media, you hear a radio ad, you see a TV ad, etc. You won’t always find all of their marketing channels, but see what you can find online and on their website.

After this, take a minute to identify potential competitors based on markets you might try out in the future, products or services you plan to add to your offerings, and more.

Then put together a page or two in your business plan that highlights your competitive advantage and how you’ll be successful breaking into the market.

Step five is to dedicate a page to the products or services that your business plans to offer.

Put together a quick list and explanation of what each of the initial product or service offerings will be, but steer clear of industry jargon or buzzwords. This should be written in plain language so anyone reading has a full understanding of what your business will do.

You can have a simple list like we see in the sample page above, or you can dive a little deeper. Depending on your type of business, it might be a good idea to provide additional information about what each product or service entails.

The next step is to work on the financial data of your new business. What will your overhead be? How will your business make money? What are your estimated expenses and profits over the first few months to a year? The expenses should cover all the spending whether they are recurring costs or just one-time LLC filing fees .

There is so much that goes into your financial plan for a new business, so this is going to take some time to compile. Especially because this section of your business plan helps potential cofounders or investors understand if the idea is even viable.

Your financial plan should include at least five major sections:

• Sales Forecast: The first thing you want to include is a forecast or financial projection of how much you think your business can sell over the next year or so. Break this down into the different products, services or facets of your business.
• Balance Sheet: This section is essentially a statement of your company’s financial position. It includes existing assets, liabilities and equity to demonstrate the company’s overall financial health.
• Income Statement: Also known as a profit and loss statement (P&L), this covers your projected expenses and revenue, showcasing whether your business will be profitable or not.
• Operating Budget: A detailed outline of your business’s income and expenses. This should showcase that your business is bringing in more than it’s spending.
• Cash Flow Statements: This tracks how much cash your business has at any given point, regardless of whether customers or clients have paid their bills or have 30-60+ days to do so.

While these are the most common financial statements, you may discover that there are other sections that you want to include or that lenders may want to see from you.

You can automate the process of looking through your documents with an OCR API , which will collect the data from all your financial statements and invoices.

The next step is coming up with a successful marketing plan so that you can actually get the word out about your business. 

Throughout your business plan, you’ve already researched your competitors and your target market, both of which are major components of a good marketing strategy. You need to know who you’re marketing to, and you want to do it better than your competition.

On this page or throughout this section of your business plan, you need to focus on your chosen marketing channels and the types of marketing content you plan to create.

Start by taking a look at the channels that your competitors are on and make sure you have a good understanding of the demographics of each channel as well. You don’t want to waste time on a marketing channel that your target audience doesn’t use.

Then, create a list of each of your planned marketing avenues. It might look something like:

• Social media ( Facebook, Instagram, Pinterest)
• Email newsletter
• Digital ads

Depending on the type of business you’re starting, this list could change quite a bit — and that’s okay. There is no one-size-fits-all marketing strategy, and you need to find the one that brings in the highest number of potential customers.

Your last section will be all about your leadership and management team members. Showcasing that you have a solid team right from the start can make potential investors feel better about funding your venture.

You can easily put together an organizational chart like the one below, with the founder/CEO at the top and each of your team leaders underneath alongside the department they’re in charge of.

Simply add an organizational chart like this as a page into your overall business plan and make sure it matches the rest of your design to create a cohesive document.

If you want to create a good business plan that sets your new business up for success and attracts new investors, it’s a good idea to start with a template. 

We’ve got 14 options below from a variety of different industries for you to choose from. You can customize every aspect of each template to fit your business branding and design preferences.

If you're pressed for time, Visme's AI business plan generator can churn out compelling business plans in minutes. Just input a detailed prompt, choose the design, and watch the tool generate your plan in a few seconds.

Template #1: Photography Business Plan Template

This feminine and minimalistic business plan template is perfect for getting started with any kind of creative business. Utilize this template to help outline the step-by-step process of getting your new business idea up and running.

Template #2: Real Estate Business Plan Template

Looking for a more modern business plan design? This template is perfect for plainly laying out each of your business plans in an easy-to-understand format. Adjust the red accents with your business’s colors to personalize this template.

Template #3: Nonprofit Business Plan Template

Creating a business and marketing plan for your nonprofit is still an essential step when you’re just starting out. You need to get the word out to increase donations and awareness for your cause.

Template #4: Restaurant Business Plan Template

If your business plan needs to rely heavily on showcasing photos of your products (like food), this template is perfect for you. Get potential investors salivating at the sight of your business plan, and they’re sure to provide the capital you need.

Template #5: Fashion Business Plan Template

Serifs are in. Utilize this template with stunning serif as all the headers to create a contemporary and trendy business plan design that fits your business. Adjust the colors to match your brand and easily input your own content.

Template #6: Daycare Business Plan Template

Creating a more kid-friendly or playful business? This business plan template has bold colors and design elements that will perfectly represent your business and its mission. 

Use the pages you need, and remove any that you don’t. You can also duplicate pages and move the elements around to add even more content to your business plan.

Template #7: Consulting Business Plan Template

This classic business plan template is perfect for a consulting business that wants to use a stunning visual design to talk about its services.

Template #8: Coffee Shop Business Plan Template

Customize this coffee shop business plan template to match your own business idea. Adjust the colors to fit your brand or industry, replace photos with your own photography or stock photos that represent your business, and insert your own logo, fonts and colors throughout.

Template #9: SaaS Business Plan Template

A SaaS or service-based company also needs a solid business plan that lays out its financials, list of services, target market and more. This template is the perfect starting point.

Template #10: Small Business Plan Template

Every startup or small business needs to start out with a strong business plan in order to start off on the right foot and set yourself up for success. This template is an excellent starting point for any small business.

Template #11: Ecommerce Business Plan Template

An ecommerce business plan is ideal for planning out your pricing strategy of all of your online products, as well as the site you plan to use for setting up your store, whether WordPress, Shopify, Wix or something else.

Template #12: Startup Business Plan Template

Customize this template and make it your own! Edit and Download  

This is another generic business plan template for any type of startup to customize. Switch out the content, fonts and colors to match your startup branding and increase brand equity.

Template #13: One-Page Business Plan Template

Want just a quick business plan to get your idea going before you bite the bullet and map out your entire plan? This one-page template is perfect for those just starting to flesh out a new business idea.

Template #14: Salon Business Plan Template

This salon business plan template is easy on the design and utilizes a light color scheme to put more focus on the actual content. You can use the design as is or keep it as a basis for your own design elements.

Create Your Own Business Plan Today

Ready to write your business plan? Once you’ve created all of the most important sections, get started with a business plan template to really wow your investors and organize your startup 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.

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

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?

with Fundera by NerdWallet

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.

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How to Write a Business Plan: A Step-by-Step Guide

Creating a business plan is essential for any entrepreneur looking to succeed. This step-by-step guide will help you craft a comprehensive business plan that outlines your business goals, strategies, and financial forecasts. Plus, see how Plannit AI can streamline this process for you.

1. Draft Your Executive Summary

The executive summary serves as the cornerstone of your business plan, offering a concise overview of your company's essence and strategic direction. It encapsulates vital aspects of your plan, providing a snapshot of your business's vision, objectives, and value proposition. Given its pivotal role as the first point of contact for potential investors and stakeholders, crafting a compelling and succinct summary is essential to garnering interest and support for your venture.

How to Write It:

Clarity and Conciseness: Strive for clarity and brevity in articulating your business's core elements. Begin with a clear and compelling mission statement that succinctly defines your business's purpose and values.

Key Components: Summarize essential aspects of your business, including its unique solution to a problem, target market demographics, competitive advantages, and future growth prospects. Highlight key financial metrics, such as projected revenue and funding requirements, to provide investors with a snapshot of your business's financial viability.

Compelling Narrative: Craft a narrative that captivates readers and compels them to delve deeper into your business plan. Emphasize the market opportunity your business addresses, its competitive positioning, and the value it delivers to customers.

Importance:

The executive summary serves as a vital tool for engaging investors, lenders, and other stakeholders, offering a concise yet comprehensive overview of your business's potential and value proposition. It sets the stage for the rest of your business plan, providing readers with a roadmap to navigate the detailed insights and analyses presented in subsequent sections. A well-crafted executive summary not only captures attention but also instills confidence in your business's ability to succeed, laying the foundation for fruitful partnerships and investments.

2. Detail Your Company Overview

In the Company Overview section, delve into the core of your business, offering a comprehensive understanding of its essence. This foundational segment sets the stage for your entire plan, elucidating the "who," "what," and "why" of your enterprise.

Essential Details: Begin with fundamental information such as your business name, location, the problem it addresses, and your innovative solution.

Historical Context: Narrate the inception of your business, sharing pivotal moments and milestones that shaped its journey.

Mission and Vision: Articulate your business’s mission and vision statements with clarity and conviction. These statements encapsulate your company's values and long-term aspirations.

Legal Framework: Define your business’s legal structure, whether it's an Sole Proprietorship, LLC, C Corp, or another entity, and elucidate ownership particulars.

The Company Overview serves as the cornerstone of your business plan, providing readers with crucial insights into your business's identity and purpose. By clearly articulating your mission, vision, and legal structure, this section sets the foundation for understanding your business's trajectory and strategic objectives.

3. Outline Your Products and Services

This section details the offerings of your business, focusing on the products or services you provide. It's where you explain what you sell or the service you offer, how it works, and why it's necessary.

Describe Your Offerings: Start with a straightforward description of your products or services. Be clear about what they are and how they function.

Benefit-Oriented: Shift the focus from features to benefits. Explain how your offerings improve your customers' lives or businesses.

Differentiation: Emphasize what makes your products or services unique. Highlight the distinctive value they offer compared to existing market options.

Articulating the specifics of your products or services is crucial for potential investors, partners, and customers to understand the value you bring. It differentiates your offerings from the competition and showcases how they meet a specific market need or solve a problem.

4. Conduct Market Analysis

This step involves a deep dive into your industry, target market, and competition. A thorough market analysis demonstrates your knowledge of the industry, proves there's a demand for your product or service, and shows you understand your competition.

Industry Description: Provide an overview of your industry, including size, growth rate, and trends.

Target Market: Detail your target market, including demographic, geographic, and psychographic characteristics. Explain the size of your target market and its purchasing power.

Market Need: Describe the need for your product or service in the market.

Competition: Analyze your main competitors. What are their strengths and weaknesses? How does your business compare?

The market analysis section validates the demand for your product or service, showcasing your understanding of where your business fits within the broader industry landscape. It helps potential investors see that you've done your homework and that your business has a clear place in the market.

5. Develop Your Marketing and Sales Plan

Your marketing and sales plan outlines how you'll attract customers and generate revenue. It's essential for showcasing your strategies to reach your target audience effectively and convert them into paying customers.

Target Audience: Define your target audience in detail, including demographics, preferences, and behaviors.

Marketing Strategies: Outline the tactics you'll use to reach your target audience, such as digital marketing, content marketing, social media, advertising, etc.

Sales Strategy: Describe how you'll sell your products or services, including your sales channels, pricing strategy, and sales process.

Budget and Timeline: Specify your marketing and sales budget, along with the timeline for implementation.

A strong marketing and sales plan demonstrates how you'll acquire customers and drive revenue. It shows potential investors that you have a clear strategy for growth and customer acquisition.

6. Outline Your Operational Plan

The operational plan outlines how your business will function on a day-to-day basis. It covers various aspects such as production processes, supply chain management, facilities, and staffing.

Production Process: Describe how your products or services will be produced or delivered. Outline the steps involved in the production process and any equipment or technology required.

Supply Chain Management: Detail your supply chain, including sourcing raw materials, manufacturing processes, and distribution channels. Discuss any partnerships or suppliers involved.

Facilities and Equipment: Specify your physical location, facilities, and equipment needed to operate your business effectively.

Staffing Plan: Outline your staffing needs, including roles, responsibilities, and hiring plans. Discuss any training or development programs for employees.

The operational plan ensures that your business can execute its strategies effectively and efficiently. It provides clarity on how resources will be utilized, how tasks will be completed, and how potential challenges will be addressed.

7. Make Financial Projections

Financial projections forecast your business's future financial performance based on your current and anticipated operations. This step is crucial for demonstrating the potential profitability and sustainability of your business to investors and stakeholders.

Revenue Forecast: Estimate your future revenue based on sales projections, market trends, and growth strategies.

Expense Projections: Project your operating expenses, including costs for production, marketing, payroll, rent, utilities, and administrative expenses.

Profit and Loss Statement: Create a projected profit and loss statement that summarizes your expected revenue, expenses, and net income over a specific period.

Cash Flow Forecast: Develop a cash flow forecast to track the inflow and outflow of cash in your business.

Break-Even Analysis: Conduct a break-even analysis to determine the level of sales needed to cover your expenses and reach profitability.

Financial projections provide a roadmap for your business's financial future, helping you make informed decisions and secure funding. They demonstrate the potential return on investment for investors and lenders.

8. Identify Risks and Create Mitigation Tactics

Assessing potential risks and developing strategies to mitigate them is crucial for safeguarding your business's success. This step involves identifying various threats, vulnerabilities, and uncertainties that could impact your business operations or objectives.

How to Address It:

Risk Identification: Conduct a comprehensive risk assessment to identify potential threats to your business.

Risk Analysis: Once identified, analyze each risk to understand its likelihood of occurrence and potential impact on your business.

Risk Mitigation Strategies: Develop proactive strategies to mitigate identified risks and minimize their impact on your business.

Monitoring and Adaptation: Continuously monitor the business environment for emerging risks and adapt your mitigation strategies accordingly.

Identifying and mitigating risks is essential for protecting your business from potential disruptions and preserving its long-term viability.

Include Additional Information in an Appendix

The appendix is where you can attach any supporting documents, data, or supplementary materials that provide further context or detail to your business plan.

Supporting Documents: Attach any relevant documents such as licenses, permits, patents, contracts, or legal agreements.

Financial Reports: Include detailed financial reports, such as profit and loss statements, balance sheets, and cash flow statements.

Market Research Data: Attach any market research data, surveys, or analyses that informed your business strategy.

Resumes: Include resumes or biographies of key team members.

Additional Charts or Graphs: Supplement your business plan with additional charts, graphs, or visual aids.

The appendix allows you to provide supplemental information that enhances the understanding and credibility of your business plan.

Explore Sample Business Plans

Browse through our collection of sample business plans covering various industries. These real-world examples can provide valuable insights and ideas as you refine your strategy.

Why Settle for Generic Templates?

While sample plans offer a starting point, they may not fully address your business's unique needs. Avoid settling for generic business plan templates and embrace a more personalized approach with Plannit AI.

Craft Your Unique Business Plan with Plannit AI

With Plannit AI, you can bypass standard templates and create a plan that truly reflects your business idea. Our platform guides you through a simple questionnaire, ensuring your plan is tailored to your vision and objectives.

Why Plannit AI?

Personalized Guidance: Our user-friendly questionnaire guides you through each step of the process, ensuring your plan is customized to your business.

Efficiency: Get your comprehensive business plan in minutes, not days, with our fast, AI-powered process.

Tailored Solutions: Your answers inform a plan that targets your specific objectives and challenges, offering a personalized roadmap for success.

Ready to Elevate Your Business Plan?

Experience the difference personalization makes with Plannit AI. Say goodbye to generic templates and hello to a plan that truly stands out. Start now and unlock the full potential of your business idea.

Create your Business Plan Today

Embark on the journey to business success with Plannit AI, where your vision is translated into a strategic and actionable business plan.

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How To Write A Business Plan: A Comprehensive Guide

A step-by-step guide on writing a business plan to catch an investor's attention & serve as a guiding star for your business..

July 13th, 2022    |    By: The Startups Team     |    Tags: Planning , Model , Pitch Deck

A comprehensive, step-by-step guide - complete with real examples - on writing business plans with just the right amount of panache to catch an investor's attention and serve as a guiding star for your business.

Introduction to Business Plans

So you've got a killer startup idea. Now you need to write a business plan that is equally killer.

You fire up your computer, open a Google doc, and stare at the blank page for several minutes before it suddenly dawns on you that,  Hm…maybe I have no idea how to write a business plan from scratch after all.

Don't let it get you down. After all, why would you know anything about business planning? For that very reason we have  4 amazing business plan samples  to share with you as inspiration.

For most founders,  writing a business plan  feels like the startup equivalent of homework. It's the thing you know you have to do, but nobody actually wants to do.

Here's the good news: writing a business plan doesn't have to be this daunting, cumbersome chore.

Once you understand the fundamental questions that your business plan should answer for your readers and how to position everything in a way that compels your them to take action, writing a business plan becomes way more approachable.

Before you set fingers to the keyboard to turn your business idea into written documentation of your organizational structure and business goals, we're going to walk you through the most important things to keep in mind (like company description, financials, and market analysis, etc.) and to help you tackle the writing process confidently — with plenty of real life business plan examples along the way to get you writing a business plan to be proud of!

Keep It Short and Simple.

There's this old-school idea that business plans need to be ultra-dense, complex documents the size of a doorstop because that's how you convey how serious you are about your company.

Not so much.

Complexity and length for complexity and length's sake is almost never a good idea, especially when it comes to writing a business plan. There are a couple of reasons for this.

1. Investors Are Short On Time

If your chief goal is using your business plan to secure funding, then it means you intend on getting it in front of an investor. And if there's one thing investors are, it's busy. So keep this in mind throughout writing a business plan.

Investors wade through hundreds of business plans a year. There's no version of you presenting an 80-page business plan to an investor and they enthusiastically dive in and take hours out of their day to pour over the thing front to back.

Instead, they're looking for you to get your point across as quickly and clearly as possible so they can skim your business plan and get to the most salient parts to determine whether or not they think your opportunity is worth pursuing (or at the very least initiating further discussions).

You should be able to refine all of the key value points that investors look for to 15-20 pages (not including appendices where you will detail your financials). If you find yourself writing beyond that, then it's probably a case of either over explaining, repeating information, or including irrelevant details in your business plan (you don't need to devote 10 pages to how you're going to set up your website, for example).

Bottom line: always be on the lookout for opportunities to “trim the fat" while writing a business plan (and pay special attention to the executive summary section below), and you'll be more likely to secure funding.

2. Know Your Audience

If you fill your business plan with buzzwords, industry-specific jargon or acronyms, and long complicated sentences, it might make sense to a handful of people familiar with your niche and those with superhuman attention spans (not many), but it alienates the vast majority of readers who aren't experts in your particular industry. And if no one can understand so much as your company overview, they won't make it through the rest of your business plan.

Your best bet here is to use simple, straightforward language that's easily understood by anyone — from the most savvy of investor to your Great Aunt Bertha who still uses a landline.

How To Format Your Business Plan

You might be a prodigy in quantum mechanics, but if you show up to your interview rocking cargo shorts and lime green Crocs, you can probably guess what the hiring manager is going to notice first.

In the same way,  how  you present your business plan to your readers equally as important as what you present to them. So don't go over the top with an extensive executive summary, or get lazy with endless bullet points on your marketing strategy.

If your business plan is laden with inconsistent margins, multiple font types and sizes, missing headings and page numbers, and lacks a table of contents, it's going to create a far less digestible reading experience (and totally take away from your amazing idea and hours of work writing a business plan!)

While there's no one  right  way to format your business plan, the idea here is to ensure that it presents professionally. Here's some easy formatting tips to help you do just that.

If your margins are too narrow, it makes the page look super cluttered and more difficult to read.

A good rule of thumb is sticking to standard one-inch margins all around.

Your business plan is made up of several key sections, like chapters in a book.

Whenever you begin a section (“Traction” for example) you'll want to signify it using a header so that your reader immediately knows what to expect from the content that follows.

This also helps break up your content and keep everything nice and organized in your business plan.

Subheadings

Subheadings are mini versions of headings meant to break up content within each individual section and capture the attention of your readers to keep them moving down the page.

In fact, we're using sub-headers right now in this section for that very purpose!

Limit your business plan to two typefaces (one for headings and one for body copy and subheadings, for example) that you can find in a standard text editor like Microsoft Word or Google Docs.

Only pick fonts that are easy to read and contain both capital and lowercase letters.

Avoid script-style or jarring fonts that distract from the actual content. Modern, sans-serif fonts like Helvetica, Arial, and Proxima Nova are a good way to go.

Keep your body copy between 11 and 12-point font size to ensure readability (some fonts are more squint-inducing than others).

You can offset your headings from your body copy by simply upping the font size and by bolding your subheadings.

Sometimes it's better to show instead of just tell.

Assume that your readers are going to skim your plan rather than read it word-for-word and treat it as an opportunity to grab their attention with color graphics, tables, and charts (especially with financial forecasts), as well as product images, if applicable.

This will also help your reader better visualize what your business model is all about.

Need some help with this?

Our  business planning wizard  comes pre-loaded with a modular business plan template that you can complete in any order and makes it ridiculously easy to generate everything you need from your value proposition, mission statement, financial projections, competitive advantage, sales strategy, market research, target market, financial statements, marketing strategy, in a way that clearly communicates your business idea.

Refine Your Business Plans. Then Refine Them Some More.

Your business isn't static, so why should your business plan be?

Your business strategy is always evolving, and so are good business plans. This means that the early versions of your business plans probably won't (and shouldn't be) your last. The details of even even the best business plans are only as good as their last update.

As your business progresses and your ideas about it shift, it's important revisit your business plan from time to time to make sure it reflects those changes, keeping everything as accurate and up-to-date as possible. What good is market analysis if the market has shifted and you have an entirely different set of potential customers? And what good would the business model be if you've recently pivoted? A revised business plan is a solid business plan. It doesn't ensure business success, but it certainly helps to support it.

This rule especially holds true when you go about your market research and learn something that goes against your initial assumptions, impacting everything from your sales strategy to your financial projections.

At the same time, before you begin shopping your business plan around to potential investors or bankers, it's imperative to get a second pair of eyes on it after you've put the final period on your first draft.

After you run your spell check, have someone with strong “English teacher skills” run a fine-tooth comb over your plan for any spelling, punctuation, and grammatical errors you may have glossed over. An updated, detailed business plan (without errors!) should be constantly in your business goals.

More than that, your trusty business plan critic can also give you valuable feedback on how it reads from a stylistic perspective. While different investors prefer different styles, the key here is to remain consistent with your audience and business.

Writing Your Business Plan: A Section-By-Section Breakdown

We devoted an entire article carefully breaking down the  key components of a business plan  which takes a comprehensive look of what each section entails and why.

If you haven't already, you should check that out, as it will act as the perfect companion piece to what we're about to dive into in a moment.

For our purposes here, we're going to look at a few real world business plan examples (as well as one of our own self-penned “dummy” plans) to give you an inside look at how to position key information on a section-by-section basis.

1. Executive Summary

Quick overview.

After your Title Page — which includes your company name, slogan (if applicable), and contact information — and your Table of Contents, the Executive Summary will be the first section of actual content about your business.

The primary goal of your Executive Summary is to provide your readers with a high level overview of your business plan as a whole by summarizing the most important aspects in a few short sentences. Think of your Executive Summary as a kind of “teaser” for your business concept and the information to follow — information which you will explain in greater detail throughout your plan. This isn't the place for your a deep dive on your competitive advantages, or cash flow statement. It is an appropriate place to share your mission statement and value proposition.

Executive Summary Example

Here's an example of an Executive Summary taken from a sample business plan written by the Startups.com team for a fictional company called Culina. Here, we'll see how the Executive Summary offers brief overviews of the  Product ,  Market Opportunity ,  Traction , and  Next Steps .

Culina Tech specializes in home automation and IoT technology products designed to create the ultimate smart kitchen for modern homeowners.

Our flagship product, the Culina Smart Plug, enables users to make any kitchen appliance or cooking device intelligent. Compatible with all existing brands that plug into standard two or three-prong wall outlets, Culina creates an entire network of Wi-Fi-connected kitchen devices that can be controlled and monitored remotely right from your smartphone.

The majority of US households now spend roughly 35% of their energy consumption on appliances, electronics, and lighting.  With the ability to set energy usage caps on a daily, weekly or monthly basis, Culina helps homeowners stay within their monthly utility budget through more efficient use of the dishwasher, refrigerator, freezer, stove, and other common kitchen appliances.

Additionally, 50.8% of house fires are caused in the kitchen — more than any other room in the home — translating to over $5 billion in property damage costs per year.  Culina provides the preventative intelligence necessary to dramatically reduce kitchen-related disasters and their associated costs and risk of personal harm.

Our team has already completed the product development and design phase, and we are now ready to begin mass manufacturing. We've also gained a major foothold among consumers and investors alike, with 10,000 pre-ordered units sold and $5 million in investment capital secured to date.

We're currently seeking a $15M Series B capital investment that will give us the financial flexibility to ramp up hardware manufacturing, improve software UX and UI, expand our sales and marketing efforts, and fulfill pre-orders in time for the 2018 holiday season.

2. Company Synopsis

Your Company Synopsis section answers two critically important questions for your readers: What painful  PROBLEM  are you solving for your customers? And what is your elegant  SOLUTION  to that problem? The combination of these two components form your value proposition.

Company Synopsis Example

Let's look at a real-life company description example from  HolliBlu * — a mobile app that connects healthcare facilities with local skilled nurses — to see how they successfully address both of these key aspects.  *Note: Full disclosure; Our team worked directly with this company on their business plan via Fundable.

Notice how we get a crystal clear understanding of why the company exists to begin with when they set up the  problem  — that traditional nurse recruitment methods are costly, inconvenient, and time-consuming, creating significant barriers to providing quality nursing to patients in need.

Once we understand the painful problem that HolliBlu's customers face, we're then directly told how their  solution  links back directly to that problem — by creating an entire community of qualified nurses and directly connecting them with local employers more cost-effectively and more efficiently than traditional methods.

3. Market Overview

Your Market Overview provides color around the industry that you will be competing in as it relates to your product/service.

This will include statistics about industry size, [growth](https://www.startups.com/library/expert-advice/the-case-for-growing-slowly) rate, trends, and overall outlook. If this part of your business plan can be summed up in one word, it's  research .

The idea is to gather as much raw data as you can to make the case for your readers that:

This is a market big enough to get excited about.

You can capture a big enough share of this market to get excited about.

Target Market Overview Example

Here's an example from HolliBlu's business plan:

HolliBlu's Market Overview hits all of the marks — clearly laying out the industry size ($74.8 billion), the Total Addressable Market or TAM (3 million registered nurses), industry growth rate (581,500 new RN jobs through 2018; $355 billion by 2020), and industry trends (movement toward federally-mandated compliance with nurse/patient ratios, companies offering sign-on bonuses to secure qualified nurses, increasing popularity of home-based healthcare).

4. Product (How it Works)

Where your Company Synopsis is meant to shed light on why the company exists by demonstrating the problem you're setting out to solve and then bolstering that with an impactful solution, your Product or How it Works section allows you to get into the nitty gritty of how it actually delivers that value, and any competitive advantage it provides you.

Product (How it Works) Example

In the below example from our team's Culina sample plan, we've divided the section up using subheadings to call attention to product's  key features  and how it actually works from a user perspective.

This approach is particularly effective if your product or service has several unique features that you want to highlight.

5. Revenue Model

Quite simply, your Revenue Model gives your readers a framework for how you plan on making money. It identifies which revenue channels you're leveraging, how you're pricing your product or service, and why.

Revenue Model Example

Let's take a look at another real world business plan example with brewpub startup  Magic Waters Brewpub .*

It can be easy to get hung up on the financial aspect here, especially if you haven't fully developed your product yet. And that's okay. *Note: Full disclosure; Our team worked directly with this company on their business plan via Fundable.

The thing to remember is that investors will want to see that you've at least made some basic assumptions about your monetization strategy.

6. Operating Model

Your Operating Model quite simply refers to how your company actually runs itself. It's the detailed breakdown of the processes, technologies, and physical requirements (assets) that allow you to deliver the value to your customers that your product or service promises.

Operating Model Example

Let's say you were opening up a local coffee shop, for example. Your Operating Model might detail the following:

Information about your facility (location, indoor and outdoor space features, lease amount, utility costs, etc.)

The equipment you need to purchase (coffee and espresso machines, appliances, shelving and storage, etc.) and their respective costs.

The inventory you plan to order regularly (product, supplies, etc.), how you plan to order it (an online supplier) and how often it gets delivered (Mon-Fri).

Your staffing requirements (including how many part or full time employees you'll need, at what wages, their job descriptions, etc.)

In addition, you can also use your Operating Model to lay out the ways you intend to manage the costs and efficiencies associated with your business, including:

The  Critical Costs  that make or break your business. In the case of our coffee shop example, you might say something like,

“We're estimating the marketing cost to acquire a customer is going to be $25.  Our average sale is $45.  So long as we can keep our customer acquisition costs below $25 we will have enough margin to grow with.”

Cost Maturation & Milestones  that show how your Critical Costs might fluctuate over time.

“If we sell 50 coffees a day, our average unit cost will be $8 on a sale of $10.  At that point we're barely breaking even. However as we scale up to 200 coffees a day, our unit costs drop significantly to $4, creating a 100% increase in net income.”

Investment Costs  that highlight strategic uses of capital that will have a big Return on Investment (ROI) later.

“We're investing $100,000 into a revolutionary new coffee brewing system that will allow us to brew twice the amount our current output with the same amount of space and staff.”

Operating Efficiencies  explaining your capability of delivering your product or service in the most cost effective manner possible while maintaining the highest standards of quality.

“By using energy efficient Ecoboilers, we're able to keep our water hot while minimizing the amount of energy required. Our machines also feature an energy saving mode. Both of these allow us to dramatically cut energy costs.”

7. Competitive Analysis

Like the Market Overview section, you want to show your readers that you've done your homework and have a crazy high level of awareness about your current competitors or any potential competitors that may crop up down the line for your given business model.

When writing your Competitive Analysis, your overview should cover  who  your closest competitors are, the chief  strengths  they bring to the table, and their biggest  weaknesses .

You'll want to identify at least 3 competitors — either direct, indirect, or a combination of the two. It's an extremely important aspect of the business planning process.

Competition Analysis Example

Here's an example of how HolliBlu lays out their Competitive Analysis section for just one of their competitors, implementing each of the criteria noted above:

8. Customer Definition

Your Customer Definition section allows you to note which customer segment(s) you're going after, what characteristics and habits each customer segment embodies, how each segment uniquely benefits from your product or service, and how all of this ties together to create the ideal portrait of an actual paying customer, and how you'll cultivate and manage customer relationships.

Customer Definition Example

HolliBlu's Customer Definition section is effective for several reasons. Let's deconstruct their first target market segment, hospitals.

What's particularly successful here is that we are explained why hospitals are optimal buyers.

They accomplish this by harkening back to the central problem at the core of the opportunity (when hospitals can't supply enough staff to meet patient demands, they have to resort on costly staffing agencies).

On top of that, we are also told how  big  of an opportunity going after this customer segment represents (5,534 hospitals in the US).

This template is followed for each of the company's 3 core customer segments. This provides consistency, but more than that, it emphasizes how diligent research reinforces their assumptions about who their customers are and why they'd open their wallets. Keep all of this in mind when you are write your own business plan.

9. Customer Acquisition

Now that you've defined who your customers are for your readers, your Customer Acquisition section will tell them what marketing and sales strategy and tactics you plan to leverage to actually reach the target market (or target markets) and ultimately convert them into paying customers.

marketing Strategy Example

Similar to the exercise you will go through with your Revenue Model, in addition to identifying  which  channels you're pursuing, you'll also want to detail all of relevant costs associated with your customer acquisition channels.

Let's say you spent $100 on your marketing plan to acquire 100 customers during 2018. To get your CAC, you simply divide the number of customers acquired by your spend, giving you a $1.00 CAC.

10. Traction

This one's huge. Traction tells investors one important thing: that you're business has momentum. It's evidence that you're making forward progress and hitting milestones. That things are happening. It's one of the most critical components of a successful business plan.

Why is this so important? Financial projections are great and all, but if you can prove to investors that your company's got legs before they've even put a dime into it, then it will get them thinking about all the great things you'll be able to accomplish when they do bankroll you.

Traction Example

In our Culina Traction section, we've called attention to several forms of traction, touching on some of the biggest ones that you'll want to consider when writing your own plan.

Have I built or launched my product or service yet?

Have I reached any customers yet?

Have I generated any revenue yet?

Have I forged any strategic industry relationships that will be instrumental in driving growth?

The key takeaway here: the more traction you can show, the more credibility you build with investors. After all, you can't leave it all on market analysis alone.

11. Management Team

Here's what your Management Team section isn't: it's not an exhaustive rundown of each and every position your team members have held over the course of their lives.

Instead, you should tell investors which aspects of your team's experience and expertise directly translates to the success of  this  company and  this  industry.

In other words, what applicable, relevant background do they bring to the table?

Management Team Example

Let's be real. The vast majority of startup teams probably aren't stacked with Harvard and Stanford grads. But the thing to home in on is how the prior experience listed speaks directly to how it qualifies that team member's current position.

The word of the day here is relevancy. If it's not relevant, you probably don't need to include it in your typical business plan.

12. Funding

Funding overview.

The ask! This is where you come out and, you guessed it,  ask  your investors point blank how much money you need to move your business forward, what specific milestones their investment will allow you to reach, how you'll allocate the capital you secure, and what the investor will get in exchange for their investment.

You can also include information about your  exit strategy  (IPO, acquisition, merger?).

Funding Example

While we've preached against redundancy in your business plan, an exception to the rule is using the Funding section to offer up a very brief recap that essentially says, “here are the biggest reasons you should invest in my company and why it will ultimately benefit you.”

13. Financials

Spreadsheets and numbers and charts, oh my! Yes, it's everybody's “favorite” business plan section: Financials.

Your Financials section will come last and contain all of the forecasted numbers that say to investors that this is a sound investment. This will include things like your sales forecast, expense budget, and break-even analysis. A lot of this will be assumptions, or estimates.

The key here is keeping those estimates as realistic as humanly possible by breaking your figures into components and looking at each one individually.

Financials Example

The balance sheet above illustrates the business' estimated net worth over a three-year period by summarizing its assets (tangible objects owned by the company), liabilities (debt owed to a creditor of the company), and shareholders' equity (source of financing used to fund the assets).

In plain words, the balance sheet is basically a snapshot of your business' financial status by laying out what you own and owe, helping investors determine the level of risk involved and giving them a good understanding of the financial health of the business.

If you're looking to up your game from those outdated Excel-style spreadsheets,  our business planning software  will help you create clean, sleek, modern financial reports the modern way. Plus, it's as easy to use as it is attractive to look at. You might even find yourself enjoying financial projections, building a cash flow statement, and business planning overall.

You've Got This!

You've committed to writing your business plan and now you've got some tricks of the trade to help you out along the way. Whether you're applying for a business loan or seeking investors, your well-crafted business plan will act as your Holy Grail in helping take your business goals to the next plateau.

This is a ton of work. It's not a few hours and a free business plan template. It's not just a business plan software. We've been there before. Writing your [business plan](https://www.startups.com/library/expert-advice/top-4-business-plan-examples) is just one small step in startup journey. There's a whole long road ahead of you filled with a marketing plan, investor outreach, chasing venture capitalists, actually getting funded, and growing your business into a successful company.

And guess what? We've got helpful information on all of it — and all at your disposal! We hope this guides you confidently on how to write a business plan worth bragging about.

About the Author

The startups team.

Startups is the world's largest startup platform, helping over 1 million startup companies find customers , funding , mentors , and world-class education .

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Start » startup, writing a business plan here’s how to do it, step by step.

At the foundation of every strong business is a solid business plan. Looking to develop a business plan for your new venture? Here’s what to include in each step.

In our Startup2021 series, we're helping aspiring entrepreneurs navigate the new business climate of the COVID-19 era. Each week, we'll share an in-depth look at one step you can to take toward launching your business in 2021.

At the foundation of every strong business is a solid business plan. A business plan outlines important information regarding a company’s operations and goals, and serves as a blueprint for how to achieve those goals. This document not only helps entrepreneurs think through and research their venture thoroughly, it also demonstrates to investors the viability of the business idea.

If you’re looking to develop a business plan for your new venture, it’s important to include all the necessary information. Here are the nine sections to include in a strong business plan, step by step.

1. Executive summary.

Your business plan should begin with an executive summary, which outlines what your company is about and why it will succeed. This section includes your mission statement, a brief description of the product or service you are offering, a summary of your plans and basic logistical details about your team.

2. Company description.

Your company description should further detail the logistics of your business, such as its registered name, address and key people involved. Here, you should also provide specific information about your product or service, including who your business serves and what problem you solve for that population.

3. Market analysis.

Conducting thorough market research can help you understand the nature of your industry, as well as how to stand out from competitors. Include a summary of your research findings in this section. Consider any trends or themes that emerge, what other successful businesses in the field are doing (or failing to do) and how your business can do better.

[Read: How to Conduct a Market Analysis ]

4. Organization and management.

This section should include your business’s legal structure — for example, whether you are incorporating as an S or C corporation, forming a partnership or operating as an LLC or sole proprietor. Provide pertinent information on your leadership team and other key employees, including each relevant individual’s percent of ownership and extent of involvement.

Describe how you will attract and retain your customer base, including what makes you stand out from competitors, and detail the actual sales process.

5. Products/services.

Your product or service is the crux of your business idea, so you’ll want to ensure you make a strong case for it being on the market. Use this section to elaborate on your product or service throughout its life cycle, including how it works, who it serves, what it costs and why it is better than the competition. If you have any pending or current intellectual property, include this information here. You can also detail any research and development for your product or service in this section.

6. Marketing and sales.

In this section, you should explain what your marketing and sales strategies are, and how you will execute them. (Note that these strategies will likely evolve over time, and you can always make adjustments as needed.) Describe how you will attract and retain your customer base, including what makes you stand out from competitors, and detail the actual sales process.

[Read: 5 KPIs to Measure Your Business’s Marketing Success ]

7. Funding request.

If you’re seeking funding, this section is critical for investors to understand the level of funding you need. Specify what type of funding you need (debt or equity) and how much, as well as how that capital will be used. You should also include information on any future financial plans, such as selling your business or paying off debts.

8. Financial projections.

The goal of your financial projections section is to show that your business is viable and worth the investment. Offer a financial forecast for the next five years, using information from current or projected income statements, balance sheets and cash flow statements to support it. Graphs and charts can be an especially helpful tool in visualizing your business’s finances.

9. Appendix.

Finally, use the appendix for any information that could not fit or did not apply to other sections of the document. Information such as employee resumes, permits, credit history and receipts are often included in this section. If you have a long appendix, consider adding a table of contents to make it easier for the reader.

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How to Write a Killer Business Plan: A Step-by-Step Guide

If you want to attract investors or top-level talent to your business, you won't get far without a business plan. And if you're launching as a one-person operation, learning how to write a business plan will ensure that you don't neglect anything as you grow.

But what does developing a business plan look like? The following steps outline the basics of how to create a business plan, as defined by the U.S. Small Business Administration :

Company Description – An overview of your company’s history, leadership, locations, and team. 

Market Analysis – A look at your industry and how your company sets itself apart. 

Business Organization – Your legal structure and key executives. 

Products and Services – A showcase for your product or service and pricing. 

Marketing and Sales – Your company’s plan to attract and keep customers. 

Funding Request – How much financial support you'll need for the next three to five years.

Financial Plan and Projections – A comprehensive financial plan and at least three years of projections.

Appendix – A spot for additional information, like your curriculum vitae. 

.css-190muv{position:absolute;top:calc(-64px - 12px);}@media (min-width: 900px){.css-190muv{top:calc(-72px - 8px);}} What is a Business Plan?

Essentially, your business plan is a map that anyone (not just you) can use to understand where your business is going and why it'll succeed. It's as fundamental as researching the current state of small businesses or registering your business . 

As you draw the map that is your business plan, you'll face several questions, such as:

Where are you getting funding from?

How will you handle growth?

What makes your business unique in your market?

How will you handle credit card processing ? 

Will you need a mobile POS (point of sale)? What about a virtual terminal ?

If this seems like a lot of information and research, you’re right. It’s not like drafting a quick business outline on a napkin. Save that for your next genius business idea. You'll want to follow a proven business plan format to make sure you include all the vital information you need to succeed.

Why is Developing a Business Plan Important?

If you were about to go on an adventure into dangerous lands, you'd want a map with you, right? Even if it meant doing some research to draw the map yourself.

The thing is, something most people don’t think of making a business plan when they decide to start a business. And that's okay! You've been too busy thinking about branding, how to set yourself apart, what product or service you'll offer, and the adventure that you're about to go on.

Developing a business plan will tell you if your company is viable, which is the first reason you should make one. Viability is precisely why investors don't put a dime into a company without a plan.

Once you're confident your endeavor is viable, your business plan will act as a step-by-step guide to accomplishing your goals and making a profit. Even if profit isn't your goal, all businesses need to focus on their bottom line.

How to Write a Business Plan Step-by-Step

Let’s take a closer look at the business plan outline from earlier. 

Step 1: Executive Summary

Your executive summary is the first chapter of your business plan. It should be between one and two pages in length, and it's one of the most crucial parts of learning how to write a business plan. A basic executive summary format includes: 

Mission Statement

Basic Company Information 

Products and Services

Financial Information 

Future Plans

Keep it short and sweet. You'll get into plenty of details later.

PRO TIP: If you struggle with this at first, come back to it after everything else. It'll make it easier.

Step 2: Company Description 

Your company description might feel similar to your executive summary, but it’s more of a top-level inspection of what your business does and how it’s structured. Keep it short. There's no need to dive deep here, it's just another quick pitch to investors before they get into the rest of your plan. A basic company description might include: 

Company Overview 

Industry and Marketplace Snapshot 

Elevator Pitch

Legal Structure (i.e., LLC, C-Corp, etc.) 

The point of this section is to tell potential investors what they’re looking at.

Step 3: Market Analysis 

Your market analysis is the first detailed section of your business plan. It needs to make readers feel confident that you understand your competitors, market, and industry, and where your business fits in. A basic market analysis includes: 

Industry Description 

Target Market Description 

Target Market Characteristics 

Target Market Size

Target Market Growth 

Market Share Potential 

Market Pricing 

Market Entry Barriers 

Competitor Research 

This section can take longer than almost any other part of your business plan. 

Step 4: Business Organization 

The business organization section is all about your organizational and executive structure. It needs to tell the reader who does what in your management, what experience everyone has, and what their backgrounds are. It’s a who’s who of your company. A basic business organization section might include: 

Legal and Organizational Structure

Ownership Structure 

Background of the Board of Directors and Owners

Necessary Hiring for Three to Five Years 

This section shows your reader that you have a reliable organizational structure. 

Step 5: Products and Services 

As you dive into products and services, you'll be planning for positioning and explaining what your business offers. If an investor isn't impressed by your products and services, the rest of the business plan loses weight. Your products and services section might contain:

Description of Product or Service 

Current Product Status 

Research and Development Goals and Accomplishments 

Intellectual Property 

Product Sourcing

Product Fulfillment 

Make sure your business’s products and services shine. Now’s the time to toot your own horn a bit. 

Step 6: Marketing and Sales 

The marketing and sales section shows that you know what you're doing. Without reliable marketing and sales strategy, even the best products can fail. Your marketing and sales section might contain information about: 

Brand Positioning  

Brand Promotion

Sales Force

Sales Strategy  

You're not expected to predict how it will all or what will be successful. You do need to provide a clear overview of how you plan to sell your products and services, though. 

Step 7: Funding Request 

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If you’re looking for investors, your funding request section is where your requirements will go. You want your funding request section to cover how much money you’ll need for the next three to five years to operate your business. It might include: 

Current Funding Requirements 

Future Funding Requirements 

Purpose of Funds

Impact of Funds 

Debt vs. Equity Preference 

Future Strategic Financial Plans 

Step 8: Financial Plan and Projections 

The financial plan and projections come at the end of your business plan. This section is more important than almost any other part of the business plan. Businesses run on finances, and if your investors don’t trust you with money, they’re not going to put anything into your endeavor. No matter how promising everything else is. Basic information might include existing and projected: 

Income Statements 

Cash Flow Statements 

Balance Sheets 

Accounts Receivable/Payable 

Debt Documentation 

You’ll need to show that you have a solid plan and at least three years of projections. 

Step 9: Appendix 

Your appendix is attached at the end of your business plan. It’s for all the additional information that didn't make the cut for the rest of your document. You might include: 

Business Plan Table of Contents 

Your Curriculum Vitae

Curriculum Vitae for Members of Management 

Charts and Statistics 

Anything that you want to show investors but can’t fit into the basic business plan belongs in your appendix. 

In Conclusion 

As you go through the process of writing a business plan, you'll likely hit points that require additional research and planning. These points allow you to shape your small business plan into something that will engage and excite your readers. 

Consider implementing SumUp in your plan as an affordable, reliable way to accept credit card payments . With an easy-to-use mPOS and transparent pricing, SumUp could make your financial sections much more enticing. 

Want to keep learning how to make sure your business succeeds? Check out these articles:

9 Retail Metrics You Should Be Tracking for Store Performance

How to set up shop: As told by The Barbery

How to Start a Subscription Box - 7 Steps for Business Owners

Lindsey McGee

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How to Write a Business Plan: 10 Easy Steps + Examples

Free Business Plan Template

• Vinay Kevadia
• June 13, 2024

22 Min Read

Is it possible to finish writing a detailed business plan in a day or two? (research included)

I don’t want to come off as some Messiah blabbering stuff, but it can be easily done with ChatGPT and many similar tools at your disposal.

I remember talking to a friend who spent almost a week outlining his plan.

As I spoke to him, I got to the bottom of why it is so tough for entrepreneurs.

You start working on a business plan with 100% motivation, but the anxiety—fear of accuracy, poor writing skills, complexity and length of your plan, and not having enough time—comes in and forces you to rethink.

Is it really something I should do?

I can help, just as I did to my friend.

Here’s a step-by-step business planning guide with necessary tips, tool recommendations, and mistakes to avoid to help you draft your business plan in less than a week.

It’s going to be a while, so buckle up. Let’s dive right in.

What is a Business Plan?

A business plan, in simple words, is a document that highlights a company’s goals and its plan to achieve them. A well-prepared business plan outlines the company’s mission statement, purpose, future goals, market research, go-to marketing plan, and financial projections.

It may also highlight your operational plan and introduce key staff responsible for managing day-to-day operations.

A well-versed business plan is undoubtedly critical in getting any business up, running, and successful.

Likewise, It’s your business’s key to documenting business models, project financials, and securing investor funding. In short, it is your business plan that turns your business idea into reality.

However, not all business plans are the same; it all depends on the purpose of your plan. Let’s understand it before we head to our how-to guide.

Knowing the purpose of your business plan

The following are mostly the reasons why people write business plans .

Let’s understand these and what could be done differently to make business plans more relevant to serve that purpose.

1. Securing financing from Investors/lenders

Starting with the most popular one—entrepreneurs usually write a business plan because they need funds. They use it to pitch to investors or lenders seeking financing, be it investor funding, government grants, or bank loans.

To make your business plan more appealing and relevant to investors, understand what they look for before investing in a business—clarity, potential return on investment, and risk mitigation.

So, emphasizing market analysis, providing accurate and realistic financial projections, and showcasing the expertise of your management could be a few things you could do differently in your plan to appeal to your investors.

2. Attracting partners and stakeholders

Starting up and growing an entire business all by yourself, it’s a huge task! You’re just starting, you don’t know everything, funds are limited, and so are the hours in a day. That’s why you need partners.

Partners and stakeholders play a crucial role in the success and sustainability of a business. To attract partners for your business, understand why they would be interested in working with you; it could be a shared value proposition, growth opportunities, and more.

Outlining shared values and vision, demonstrating competitive advantage, and detailing partnership opportunities are some of the things you should consider focusing on while seeking a co-founder for your business.

3. Setting and documenting business goals

It’s important for a founder to set realistic business goals to provide them with direction and a benchmark for success.

So, if your primary goal of writing a business plan is setting business goals, emphasize including KPIs, setting SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals, and establishing milestones for realistic deadlines.

4. Business growth & operations planning roadmap

This one is mostly required by well-established entrepreneurs planning to grow, expand, or optimize their business operations.

If you need help optimizing operations planning or planning to grow your business, focus on outlining your growth strategies, like how you plan to grow or scale, and detail operational processes, including supply chain management, quality control measures, and production processes.

Furthermore, do your research and identify potential risks or unforeseen threats involved and counter-measures to mitigate them.

Now that we have discussed knowing the purpose of your plan, let’s discuss the steps to write one.

How to write a business plan (10 easy steps)

Creating the first draft of your traditional business plan may seem like a time-consuming process, but it’s not.

(Of course, only with the right steps and correct approach)

Not really sure about it? Check out the quick steps to write a comprehensive business plan in a few hours.

1. Prepare an executive summary

As the name suggests, an executive summary is a concise overview of your entire business plan. While it’s the first chapter of your plan, it is usually written at the end as a summary of all the sections.

Since your executive summary holds the weight of your 40-page plan in just a page or two, it should be written in a way that makes readers want to know more about your business and read further.

So the question here is— why would an investor want to know more?

For instance,

• Are you indicating a significant market opportunity?
• Is there a clear and exciting value proposition?
• Do you have a sound business model and promising numbers?

These are just the examples. However, you should focus on clearly providing the information investors usually seek while reviewing a formal business plan.

Your executive summary should include the following info:

• A clear description of your business concept.
• Your mission statement, long-term vision, and business goals
• Products or services you offer as well as your differentiator.
• An overview of your target market
• Your go-to-market strategy
• An overview of your management team
• Summary of your business financials
• Your funding requirements (only if raising funds)

2. Provide a company overview

Next up—it’s your company overview. If you’ve ever been to an interview, you’d know the first question an interviewer asks.

Tell me something about yourself.

The company overview is just like that question. It provides your readers with basic background information about your business, such as what you do, your business model, your value proposition, and more.

I recently had a chat with Logan Mallory , VP of marketing at Motivosity , on the importance of value propositions, and he says,

“Don’t underestimate the power of a strong value proposition. Initially, we concentrated too much on product features rather than how they solved specific problems for our customers. This error diluted our message and made it difficult to stand out.”

He further added, “We pivoted by stressing our distinct approach to employee engagement, highlighting real-world success stories and tangible results. For example, we demonstrated how our platform reduced employee turnover at a mid-sized technology company by 20% in six months.”

Logan says this adjustment was more appealing to their target audience and investors. It clearly communicated the value they provided, which eventually helped.

While you can talk about your business all day, it’s wise to know what they want to learn and emphasize simply that.

Investors are generally looking for answers to these two fundamental questions: who are you, and what do you plan to do? Besides, your company description section should also include the necessary details like:

• Your business structure (e.g. LLC, sole proprietorship, etc.)
• Your business model
• Vision, mission, and value proposition
• Your industry
• Business history and future goals

As mentioned before, with a boatload of information to tell about your business, it’s easier to distract and go sideways.

So make sure your company overview section is concise and to the point. And, of course, language to be easy to understand.

3. Perform market and industry analysis

You already knew your business inside-out when it came to writing the company description; this time, it is different. Now, you need to understand your market yourself before you go explaining it to others.

A market analysis is simply a part of your plan where you bring together all the information you have about your customers—who they are, where they live, why they will buy what you’re selling, and more.

A group of these customers is called your target market, they are the people you will sell your product or service to.

Your business can have multiple target markets, depending on your offerings.

For example: A bakery with a product line of various baked goods may target families, young professionals, as well as health-conscious consumers for their different sets of products.

Besides a specific and clear description of your target market, your market analysis should also include:

• Market size and growth potential
• Key market trends
• List of regulations and licensing requirements

Make sure you present your numbers in a way that demonstrates how your market has grown over time and how you can take advantage of it.

4. Conduct competitive analysis

Similar to how market analysis is about knowing your target market, competitive analysis is about knowing your competitors. Knowing and understanding your competitors is an aspect when it comes to defining your business opportunity.

Every business on the planet Earth has some type of competition.

(Must be from Mars if they don’t!)

If you’re seriously unable to spot any competitors, try looking for the indirect ones—indirect competitors are other alternatives available in the market for your product or service.

For instance , If you are a coffee shop owner and there isn’t any coffee shop nearby, you may consider the restaurant across the road as your indirect competitor.

Once you’ve figured out your direct and indirect competitors, research their business, product or service offerings, marketing strategies, and more.

Conduct a SWOT analysis to understand how your strengths, weaknesses, opportunities, and threats are compared with them. It’s an easy way to determine your competitive edge in the market.

After you’ve done all this, you will have a much better understanding of your business as well as your competitors, which will eventually help in developing a clear differentiator. It can be anything from competitive pricing to improved offerings.

5. List your product and service offerings

This section is at the center of your plan, and the rest revolves around it. After all, your product and service are what brings in money for your business.

Your product and services section is a clear description of the product and/or service you are selling to your customers and how it solves their problems.

You may start by describing the customer pain points and problems that exist in the market. Followed by how you plan to solve that problem with your offerings.

The structure of your products and services sections may heavily vary depending on your business model.

For example: If you have a range of products, you may not require a detailed description and a long list of features. However, if you’re writing a traditional business plan for SaaS software, you need to make it as detailed as possible.

Your product or service description may include the following:

• A detailed description of how your product or service works
• Your product or service pricing model
• Details on product development or procurement
• How do you maintain quality standards

Besides the must-add info, focus on developing a compelling narrative around your product/service offerings. How will the users use your product, and how will it make an impact in their day-to-day lives?

Have you heard the old saying, “Facts tell, but stories sell?” This is something that draws in potential investors.

6. Develop a sales and marketing plan

Your sales and marketing plan explains how you will spread the word to your potential customers to sell your products.

However, the first thing your marketing plan should do is to position your product or service in the market appropriately.

How exactly should you position yourself? It depends. You can position yourself as a premium brand with the highest pricing but top-quality service. Or focus on competitive solutions.

Market positioning varies from business type to business model, so the information you gather during your competitive analysis will be useful. Refer to how your competitors are positioned and plan accordingly.

Once you’re done positioning yourself, bring in the information you have on your target customer to develop a winning marketing strategy.

Reasons? Depending on who your customers are, do they make online purchases, and how they buy products like you, you might need to plan different strategies to target your customers. It could be promoting your business on Instagram and TikTok to affiliate marketing, anything.

While your marketing strategy includes reaching potentially interested customers, the sales process starts once a customer has already shown interest in what you have to offer.

Getting the right mix of sales and marketing strategy is crucial for acquiring more customers.

7. Introduce your management team

Of course, the first thing investors look at is a great business idea and the product. However, they also look at the founder as well as the team behind the scenes they’re taking a bet on.

And this particular chapter helps them understand who’s running the show.

You should provide a brief introduction of each management team member, their qualifications, area of expertise, and the tasks they perform at the organization.

Make sure your management and organization section answers a few questions for investors: Do you have the key people for efficient operations? Do they have relevant industry experience? What are the roles you are actively seeking (if any)? And more.

Consider including an organizational chart to show your organization’s internal structure, including employee roles, responsibilities, and hierarchy. Explain how each individual contributes to the company’s success. This will make your investors feel confident about your core team.

8. Create a logistics and operations plan

Your operations plan is where you will talk about how your day-to-day business operations will look like.

Unlike some other chapters of your plan, an operations plan is an essential one for both investors as well as your internal team. Of course, you don’t need to be super specific or detailed when writing for yourself.

The basic components to include your operational plan are:

• Vendors or suppliers
• Manufacturing process
• Supply chain management
• Equipment and machinery
• Inventory management
• Facilities, and more.

The contents of your operations plan totally depend on your industry, product/services, how your business is structured, and who it is written for—internal team or lenders.

Let’s take it from an example:

Suppose you are a candle-making company (manufacturing business).

In this case, your operations plan may include raw-material requirements, machinery requirements, production process, quality control, distribution, and more. It will require a detailed description.

On the other hand, if you own a scented candle retail shop, the processes to include in your plan would be much less.

So, there cannot be a perfect template or structure to follow. Just understand your business and try to explain best how you manage your day-to-day operations.

9. Make accurate financial projections

Here comes the elephant in the room. Most entrepreneurs consider a financial plan as the most challenging one to mark as done. While it indeed is an important one for investors to consider, it isn’t as complicated as people think.

Similar to the previous section, the level of detail here also depends on your audience and the purpose of your plan. However, a typical startup financial plan includes the following financial statements and forecasts:

• Profit and loss statement
• Balance sheet
• Cash flow statement
• Sales forecast
• Projected expenses

But how do you project financials and make these statements? Start by determining your financial requirements, followed by setting financial goals, analyzing current financials, and making future assumptions.

Preparing detailed forecasts simply using generic Excel templates can be challenging and time-consuming. You should consider using a financial forecasting tool for accurate and timely results.

10. Assemble a well-organized appendix

While the appendix cannot be considered a primary section of a business plan, this is the place for you to add additional data, charts, support documents, and other necessary information.

Although it is an optional chapter of your plan, having a well-organized appendix helps you add credibility to your plan with the necessary information and documentation backing your business idea.

Here’s a list of information or documents you should consider including:

• Legal documents—Incorporation docs, licenses, and permits, etc.
• Personnel details—organizational charts, personnel certifications, and degrees, etc.
• Additional financial documents—Credit history, past and current financial statements, business assets, etc.
• Supplementary information—sales and marketing materials, product blueprints and designs, etc.

11. Business plan cover page (optional)

Don’t judge a book by its cover.

The popularity of this metaphor doesn’t make it very accurate since most people form their perception just by looking at the “cover”.  I may sound like a philosopher speaking, but that’s true.

A compelling and well-designed cover page that reflects your brand and vision is essential to form a good first impression for potential investors and stakeholders.

Besides having a good design and using brand colors, make sure you include the following information on your cover:

• Business name
• Company logo
• Tagline or motto
• Business plan title and year
• Prepared by
• Contact information
• Confidentiality statement

Remember, it’s optional to have a business plan cover page . While it is an excellent addition to your plan, don’t put extra effort into the design part; keep it simple.

Common business planning mistakes to avoid

As you’re reading this article, I suppose you’re creating a business plan for the very first time. A traditional business plan is generally a 30-40 page long document, and you’re bound to make mistakes, but we’ll help you skip the most common ones.

Here are the business planning mistakes entrepreneurs make that you should avoid:

1. Insufficient market research

Conducting thorough market research is a must before you write your business plan. Insufficient market research can result in inaccurate market understanding, wrongly defined target markets, irrelevant marketing strategies, and unrealistic financial projections.

In short, this is one mistake that can cost you your business.

2. Lack of focus on the customer

Your ultimate goal as a business owner must be to provide the best solution and meet customer needs. Lack of focus on customer requirements may result in dropped sales numbers and limited market penetration.

Keep checking on your customers, asking for their feedback, and improving your offerings to align with their requirements.

3. Overly optimistic financial projections

It’s your business, and it’s natural for you to imagine good things about it. This often leads to making unrealistic financial projections. Having overly optimistic financials can result in poor decision-making, losing investor trust, overspending cash in hand, and more.

4. Spending too much time planning

Planning is essential, but execution is where theory meets reality. Spending too much time planning can prevent you from taking timely action, resulting in several missed opportunities.

An effective plan should lead to actionable steps implemented within a reasonable timeframe.

5. Inconsistent monitoring and updating

A business plan isn’t a one-off document you create and forget about. Inconsistent monitoring and updating your business plan can lead to strategic inconsistencies and operational inefficiencies.

On the other hand, regularly updating your business plan helps you keep up with competitors, manage customer demands, address recent market trends, and efficiently track progress.

Tips for writing a compelling business plan

While a step-by-step guide helps you stick to the process and finish the task, tips are like best practices some field experts have used to make things easier.

Here are some tips on writing a business plan that can help you save a lot of time.

1. Determine the purpose of your business plan

As I mentioned up front in the article, this feels like an extra addition to the list. Anyways, knowing the purpose of your plan beforehand is super important.

The sole factor decides the text’s tone, what sections would be there, and what parts would be emphasized more than the others. If you fail here, I am not sure how your plan will turn out.

2. Know your audience

Knowing your audience, and the people reading your plan is essential to make your business plan specific to them. If you’re writing a business plan for your internal team, it would emphasize operations and marketing strategies more and less on the company description.

Likewise, it would point up financials if it were written for venture capitalists. The dynamics of a plan change as the audience reads it; that’s why it’s crucial to know your audience.

3. Get inspiration from sample business plans

You cannot draft the whole thing from scratch without a basic blueprint. Referring to sample business plans helps you have a basic understanding of the requirements of a business plan, and it can massively help in developing one.

Upmetrics has a library of 400+ sample business plans you can refer to. Select a business plan template and start planning.

4. Have someone review it for you

It’s common for us humans to overlook our mistakes. Having someone else review your plan would help you get a different perspective and may help you highlight a few aspects of your plan that you may have overlooked or missed.

Besides having someone else review your plan, you may also seek help from AI. AI tools like ChatGPT and Upmetrics can review your plan and give human-like feedback.

Reviewing and updating your business plan

Reality check: finishing the first draft of your business plan isn’t the end.

A business plan isn’t something you create once to keep it as it is forever. It is a dynamic document that requires timely revisions and updates to keep it relevant to the changing market trends.

Your first review will be just after you complete your first draft. Since you have just finished it, it may not require any significant changes. However, conducting a thorough review is crucial before you send it to investors.

The last thing you want is for them to reject your proposal because of a bunch of typos that could have easily been avoided.

Besides the first review, it’s suggested to follow a review cycle of 45 days to 6 months to stay relevant to the market and consumer shifts. It’s okay if you cannot have regular review meetings, but consider reassessing and updating your business plan and processes when there is a signifi cant market shift.

How to use AI to write your business plan

The rise of generative AI tools has changed the entire business planning process. AI tools like ChatGPT and Upmetrics can help simplify business planning concepts like competitor analysis, market segmentation, and target market.

Not just simplify, but they can help reduce time spent on activities like market research, competitor analysis, and financial planning by a huge margin.

The easiest way to plan today would be to collaborate with an AI business plan generator . We are not totally relying on AI to do it for you, but handing over the manual, complex, and boring tasks to be more productive.

Talking about the planning process—AI can help you brainstorm ideas, suggest marketing strategies, write sections of your plan, help in industry and market research, develop realistic financial projections, and more.

While AI has pros and cons for business planning, understanding all the things you can outsource to AI will help you get the most out of it.

Spend more time researching, less writing

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Start writing your business plan

Let’s face it—preparing a business plan that lures investors requires putting in some serious work; there’s no secret sauce. But you must take the first step to stay ahead in the cut-throat competition; there is no way around it.

So, what are you waiting for? You have the steps to get started right here. It’s time to get into details—better understand your business and the value it offers to its consumers, get the right business planning tool , and start planning.

Free business plan templates and examples

Need help getting started writing a business plan? Here are business plan templates and examples to help you get started.

Sample Business Plan Library

Explore over 400 real-world business plan examples from a wide variety of industries.

One Page Business Plan Template

Use this simple one-page business plan template to immediately get started on your plan.

Free Startup Business Plan Template

Use this simple startup business plan template to immediately get started on your plan.

Frequently Asked Questions

How long should a business plan be.

The ideal length of a business plan depends on the purpose of your business plan. However, a typical business plan can range from 15 to 35 pages and beyond, depending on what it is written for.

Can I use business plan software or templates?

Indeed. Using business plan software or templates is considered the most efficient and reliable method for creating a business plan. A business planning tool like Upmetrics allows you to import a template and start editing to help you create a business plan in no time.

How do I start writing a business plan?

Business planning is a thorough process divided into multiple steps. Starting with market and industry research to writing the executive summary, outlining the business idea, value proposition, and mission to company overview, products and services, and followed by the rest of the chapters, including financial projections.

Can I write a business plan myself?

Of course, you can. With many AI business plan generators and business plan templates available online, creating a business plan is easier than ever before. So, you can easily write a business plan yourself.

What are the types of business plans?

There are various types of business plans entrepreneurs create considering their different requirements. These include:

• Traditional business plan
• One page business plan
• Lean business plan
• Internal business plan

About the Author

Vinay Kevadiya

Vinay Kevadiya is the founder and CEO of Upmetrics, the #1 business planning software. His ultimate goal with Upmetrics is to revolutionize how entrepreneurs create, manage, and execute their business plans. He enjoys sharing his insights on business planning and other relevant topics through his articles and blog posts. Read more

Reach Your Goals with Accurate Planning

How to Write the Perfect Business Plan: 10 Essential Steps

Whether you’re starting a new small business or are already years into operating one, a business plan is one of the best ways to clarify your long-term vision. Follow our step-by-step guide to writing a highly effective business plan.

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hether you’re starting a new small business or are already years into operating one, a business plan is one of the best ways to clarify your long-term vision. While every business plan is different, there are several key elements to consider that will benefit you in the long run. 

Follow our step-by-step guide to writing a highly effective business plan. 

What is a business plan?

A business plan is a document that outlines your business goals and how you plan to achieve them. Ideally, this will become your roadmap for marketing, sales, finance, and growth. 

In other words, a business plan is...

• An explanation of your overall vision.
• A valuable tool to plan and track your business fundamentals.
• An overview of your path to profitability, which can help get funding for your company.

Do You Need A Business Plan?

While it’s not a requirement, having a business plan is strongly recommended. In a recent QuickBooks survey , nearly 70% of current business owners recommended writing a business plan.

Creating a business plan is especially useful in the following scenarios:

• Applying for business loans
• Seeking additional rounds of funding or investors 
• Growing your employee headcount  
• Attracting top-level management candidates 
• Looking for opportunities to scale your business

10 Steps To Creating A Comprehensive Business Plan

While not every business plan is the same, there are a few key steps you should take to create an effective and comprehensive document:

1. Create an executive summary

Think of an executive summary as your company's elevator pitch in written form. It should be 1 to 2 pages in length and summarize important information about your company and goals. If you are pitching your business plan to get funding, you should ensure your executive summary appeals to investors.

What should you include in an executive summary?

• An overview of your business
• Your company mission statement
• A concise description of products or services offered
• A description of your target market and customer demographics
• A brief analysis of your competition
• Financial projections and funding requirements
• Information about your management team
• Future plans and growth opportunities
• An overall summary of your business plan

2. Write your company description

Your company description is a more detailed and comprehensive explanation of your business. It should provide a thorough overview of your company, including your company history, your mission, your objectives, and your vision. A company description should help the reader understand the context and background of the business, as well as the key factors that contribute to its success.

What should you include in your company description?

• Official company name 
• Type of business structure
• Physical address(es)
• Company history and background information
• Mission statement and core values
• Management team members and their qualifications
• Products and services offered
• Target market and customer segmentation
• Marketing and sales strategy
• Goals (both short- and long-term)
• Vision statement

Novo Note : The company description is your chance to expound on the pain points your company solves. It should also give a reader an accurate impression of who you are. 

3. Conduct and outline market analysis

This is one of the most important steps in building a business plan. Here, you will assess the size and dynamics of the market your business operates in.

How to conduct a market analysis

Market analyses include both quantitative and qualitative data. You may want to conduct surveys or lean on existing industry research to gather this information. You’ll want to answer:

• What is the size of the market?
• How much revenue does your industry generate?
• What trends are impacting this industry?
• Where are opportunities for innovation?
• What are the most well-known companies in the industry? What tactics do they use to sell to customers? How do they price their offering?
• Where are there gaps in the market? 
• What are your customer demographics? What problems do they have that need solving? What are their values, desires, and purchasing habits?
• What barriers to entry, if any, exist? These could include startup costs, legal requirements, environmental conditions that impact consumer behavior, and market saturation.

What is your target market?

In this section, you will specify the customer segment(s) you’re targeting . You can divide customers into small segments organized by age, location, income, and lifestyle. The goal is to describe what type of consumer will be most interested in your offering.

Novo Note : Regardless of your company’s size, understanding the trends and opportunities within your target market enables you to build a more effective marketing plan to distinguish yourself from the marketplace and grow your business. This analysis might also help you find potential customers or new products you could offer. 

4. Analyze your competitors

After conducting a market analysis, you need to do a deep dive into your competitors. Look at how the competition is succeeding or failing and how each competitor has positioned itself. For example, you might want to evaluate your competitors’ brand, pricing, and distribution strategies. 

How to conduct a competitive analysis

You’ll want to research your competitors and ask the following questions:

• What are their strengths?
• What are their weaknesses?
• What are their customer reviews like?
• How do they price their offering(s)?
• What are their value propositions?
• What marketing and sales channels do they leverage?
• How are they growing and evolving?

Novo Note : After you develop a strong understanding of the competitive landscape, consider how your business is unique. Solidifying your competitive advantage can help you appeal to your target audience.  

5. Describe your products or services

This is your chance to go into more detail about the products and services you offer! Use this opportunity to note where your offering or service differs from others in the industry. Highlight the standout features of your product, your company’s unique ability to solve customer problems, and your product roadmap.

What to include:

• Your product catalog
• Key differentiating features
• Information about the production process
• The resources required for production
• Plans for future product releases

6. Define your marketing and sales strategy

Your marketing plan describes your strategy for connecting with your target market and generating leads. It doesn't need to be full-fledged at this point, but it should answer who you're trying to sell to and how you plan to target them. Investors also want to know how you plan on selling your brand and breaking into the market, so make sure to consider their perspective as you develop your marketing strategy.

• Your sales and marketing budget
• Your key sales and marketing objectives
• Details about your sales process and sales goals
• Platforms or strategies you’ll employ to reach your target audience
• PR initiatives, content ideas, and social media strategies

7. Gather your business financials and outline financial projections

Your financials section lays out your company's past and current performance. You can also include a roadmap that dives into financial projections for your business. Aim to include projections for the next five years at a minimum.

• Income statements
• Cash flow statements
• Balance sheets
• Explanation of any significant changes

Novo Note : Novo offers integrations with accounting software like Quickbooks and Xero , allowing you to seamlessly access all your financial information within your business checking account .

8. Describe your organization

Your business plan should also include an organizational chart that maps your company’s structure. 

What to include :

• Company’s management structure
• Other key personnel, along with their roles and responsibilities
• Expertise of your team (feature any specialists or experts)

Novo Note : This is also a good place to explain the legal structure of your company — for example, if you are an LLC , a corporation, or a sole proprietorship . 

9. Outline your funding requests

If you’re looking for business funding, include an outline of any funding requests and requirements.

• Why you are requesting funding
• What the funding will be used for specifically
• Desired terms and conditions of funding
• The length of time over which the funding will be used
• Type of funding required (for example, debt or equity)

Novo Note : Propose a five-year funding plan, and aim to be as detailed as possible about how you will utilize the funds to grow your business. 

10. Create an appendix

The last section, the appendix, includes supporting documents and additional information not listed elsewhere in your business plan. Not all of these items are necessary to include, so you’ll need to evaluate which are most relevant to your business. You might also want to include a table of contents to help keep the appendix organized.

Items to consider including:

• Bank statements
• Business credit history
• Legal documents
• Letters of reference

Sample Business Plans

Need an example to help you through the process? Check out the Small Business Administration’s downloadable examples or this even more in-depth one from Harvard Business School.

Tips For Creating A Great Business Plan

Here are some of our favorite tips for creating the most effective and efficient business plan:

• Keep it short and sweet : You want to be sure people will actually read your business plan, so stay on topic and to the point.
• Make it digestible : No need to use the fanciest terminology or draft up the most complex graphs. Keep wording and ideas simple and straightforward — it’s the most impactful way to get your information across.
• Triple-check your work : There’s nothing worse than noticing a grammar, spelling, or mathematical error when you’re presenting your vision. So proofread… and then proofread again!
• Start early : It’s never too late to write a business plan, but the earlier you do it, the stronger your strategy for growth and expansion will be from the start.
• Reference credible sources : If you are going to reference third-party research in your business plan, lean on sources that are widely recognized as authorities. Try tapping into trade associations and government resources, like U.S. Census data or data from the Bureau of Labor Statistics.
• Set yourself apart : Wherever you can, explain why your product or service stands out and how it can solve a problem.
• Be objective : Avoid the instinct to only showcase the good. Stakeholders and investors want to know that you are realistic and have a contingency plan if you hit a bump in the road.

Updating Your Business Plan

As with most situations in business (and life), things change! So don’t think that your business plan has to be set in stone after you create it. Instead, you should plan to return to it once a year and make updates.

Be sure to do the following when you review and update your business plan:

• Analyze your progress: Review your original business plan and compare it to your actual financial data. Are you moving in the right direction, or do you need to reevaluate your strategy?
• Consider whether your product offerings need to be adjusted: For example, decide if you want to diversify your product offerings or scale back and focus on a singular product. 
• Reassess your overall goals: Perhaps your sales goals have changed with your new marketing strategy. Or maybe your customer’s needs have changed. In any case, be flexible where needed. 

We know there’s a lot that goes into creating a business plan, but it’s worth it. There’s no one-size-fits-all formula for developing a business plan, but our steps outlined above will put you on the right track for developing a comprehensive, investor-friendly document.

Take time to review your business plan annually and make changes as your needs and goals change.

Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.

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How to Write a Perfect Business Plan: Step-By-Step Guide

Whether you’re just starting out or have been running your business for years, a business plan is one of the best ways to clarify the long-term goals you have for your business. By developing a plan for a business, you can put all of your business goals, objectives, structures, and marketing ideas in one central place.

Not every plan looks the same, but there are vital things to consider when making yours. These will help you and your business in the long run. 

Use this step-by-step guide to write a good business plan for your business.

What is a business plan?

A business plan is a strategy map. It shows where you and your business are, including your resources, skills, and goals. It also shows where you will be in the future and how you will get there. It’s just a plan for how your business will work and how you will make it succeed.

It is a written description or blueprint of your business’s future. All you need is a document that says what you want to do and how you want to do it.

LEARN ABOUT: Service Blueprint

Entrepreneurs who want to get money from investors use the business plan to explain their vision to potential investors. Second, they can be used by companies that want to attract key employees, look for new business, deal with suppliers, or figure out how to run their companies better.

A step-by-step guide

Start creating an executive summary.

The first step in making a good business plan is writing an executive summary. Think of an executive summary as your company’s elevator pitch in writing. You’ll want to keep it short but still get across the important parts of your business. 

It should have your mission statement, a short description of your business’s products or services, a breakdown of who owns the business, and an overall business plan summary.

Create a company description

You also need to write a description of your business, which is just what it sounds like. This document will have important information about your business, such as its name, physical address(es), key employees, and important facts about its history.

In the company description, you can talk more about your business, its goals, its ideal customers, the problems it solves, and what makes it different from its competitors.

Conduct a market analysis

Market analysis is one of the most important parts of a business plan. With a market analysis, it will be easier to understand your industry, your target market, and how to stand out from your competition.

Start by doing comprehensive research on the market your business is entering. No matter how big or small your business is, if you know the trends and opportunities in your market, you can make a better marketing plan to grow your business. 

Market research looks at everything from demographics to how people act as customers. When you do a market analysis, you can also learn about your competitors and determine their strengths and weaknesses. This analysis might also help you find potential customers or new products you could sell. 

For a competitive information analysis, look at how they are growing, what changes they are making, and where they are having trouble in the market that you can take advantage of. You can conduct your market analysis with QuestionPro survey software.

Define your business structure

Your business structure needs to be mapped out in your business plan. Making an organizational chart allows you to see how your business is set up. Write down the roles and responsibilities of your company’s leaders and other key employees. Remember to include the company’s structure in your organizational chart.

Describe your products and services

This step gives you more information about the products and services you offer. When you list your products and services, include details about how they are made, what materials are needed, how you pay for them, how much they cost, and any other relevant information.

Write a plan for marketing and selling

It’s not enough to sell products or provide services. Your marketing and sales plan can be a partially-fledged marketing strategy, but it should clarify who you’re targeting and how. Include which platforms or marketing methods you will use to reach your target audience. Also, mention your marketing budget.

You should also include a high-level summary of your company’s sales strategy. A sales plan should include details about your sales process, your sales goals, and the steps you’ll take to reach those goals.

Think about what marketing and selling success looks like for your business. Include details about how you plan to succeed with your marketing and sales efforts.

Get your business’s financials together

Your business plan should also include information about how your company makes money. The following details should be included in this section:

• Statements of cash flow
• Statements of profits and losses
• Balance sheets
• Business expenses
• Income statements

Most of these documents can be made with spreadsheets, although accounting software can also help organize financial data. Your small business checking account should be able to work with the accounting software you use.

Describe your financial projections

The financials section of your business plan reflects previous and present company performance. It is especially important if you want investors to give you money. You can also include a roadmap that goes into detail about your business’s financial plans.

Include charts and other visuals in your financial projections to show how your company wants to grow. Try to see at least five years into the future to get a clear picture of where your business is going. Also, be realistic about what you think will happen. Give your financial plan some background and materials to back it up.

Write out your funding request

If you want to get funds for your business, you should include a list of any requests and requirements. Explain why you want to fund it and what it will be used for. Clearly state the terms and conditions of the funding and the type of funding that is needed.

Make an appendix

The last step of your business plan is the appendix. The appendix has documents that back up your business plans and extra information that isn’t found anywhere else in your plan. You can add the following documents to your appendix:

• Bank statements
• History of a business’s credit
• Legal document
• Reference letters

Consider adding a table of contents to help keep the appendix organized.

Whether you write the plan yourself or hire someone else to do it, it is well worth your time to take the time to write a strong and detailed business plan that can guide your business and convince outside team members to join.

Business plans are key to connecting with investors, lenders, partners, and vendors. They can help you explain why your business will be successful and why it’s a great investment for everyone involved. They’re also helpful in guiding your internal staff during the early years of managing the business.

Market research is essential for developing a business plan. To create a business plan, you need to know the current and past market details, audience, and customer’s point of view. QuestionPro will assist you in analyzing your market and audience to provide insight into your business.

QuestionPro is a survey software that lets you create and design a survey to meet your goals and analyze the data for your business. QuestionPro can help you with your business plans by analyzing your customers’ experiences. Contact us for further details.

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Blog / Small business tips / How to create a business plan: A complete guide to writing your company roadmap

How to create a business plan: A complete guide to writing your company roadmap

A business plan is a roadmap that outlines what your business does, how it’s going to work and how you’re going to achieve your goals. 

According to Bplans , who worked with the University of Oregon to analyse academic research around planning, entrepreneurs who take the time to create a plan for their business idea are 152% more likely to start that business.

Further, 129% are more likely to push forward with it beyond the start-up phase. And companies that strategically plan grow 30% faster than those that don’t. 

In this guide, we’re going to walk you through how to write a business plan that helps your company start, build and achieve success.   

Table of contents

What is a business plan and why do you need one, the nine key components of a business plan and how to write them.

• Five top tips for writing a compelling business plan

📹 Masterclass video: How to write the perfect business plan

Wrapping up.

A business plan is a document that guides you through the various stages of building, launching and running your business. Essentially, it helps you put the building blocks in place to make your company a success.

If you’re bringing a new small business to market, a business plan will be crucial in:

• Securing funding or loans
• Achieving investment or raising venture capital
• Attracting talent or business partners
• Guiding your go-to-market strategy

All banks and most investors and venture capitalists will only invest in a business if they can see that they’ll get their money back. They want to know that you have the business idea, team, scalability and planned sales growth to succeed. A business plan gives financiers the details they need to make informed decisions. 

Similarly, for talent or prospective partners, a business plan is your assurance to them that your business matches their short and long-term career ambitions. 

A business plan also keeps you focused on what you need to do to accomplish your goals. If you’re not meeting your targets, you can turn to your business plan to help guide you on changes that need to be made. It’s the drawing board you can always go back to. 

Because of this, having a business plan is as important for existing businesses as it is for start-ups. 

Top Tip: Business plans also apply to side hustles. Even if you have a full-time job or already run a small business, a side hustle can be a great way to pull in extra income or capitalise on a hobby. But just because it doesn’t take up all of your time doesn’t mean it should lack structure. To learn more about how to effectively run a side business, read our guide to 5 side businesses you can start quickly and affordably 💡

How long should a business plan be?

According to Growthink surveys, 15 to 25 pages is the optimum business plan length. But the number of pages isn’t the ideal way to measure length. 

As Bplans points out: “A 20-page business plan with dense text and no graphics is much longer than a 35-page plan broken up into readable bullet points, useful illustrations of locations or products, and business charts to illustrate important projections.”

Instead, Bplans says that your business plan should: 

• Take no longer than 15 minutes to skim read . Make sure that key information in each section is easy for readers to find.
• Mirror the length of its audience . The length is directly tied to the intent. If the purpose is for outsiders who know nothing about your business to gain a deeper understanding, it must include detailed executive summaries and team descriptions. If the intent is to procure investment, it must be built to withstand legal scrutiny and include any information a bank would look for in a business loan application. Know your audience, and work backwards to create the ideal business plan to match that scenario (we’ll dive into exactly how to do this in a later section).

How to present your business plan?

Your business plan is designed to evolve as your business grows. It’s a living document that should be consistently tweaked to match the health and goals of your company. Because of this, it’s best to keep your plan as a digital document that can be easily updated and sent to third parties as a PDF. 

That said, there may be times when your plan needs to be presented to investors or bank managers in person, so it should always be print-ready with a front cover that includes your:

• Company name
• Company logo and colour scheme
• Business name and date
• Contact information

It should also have a contents page, with numbered pages and sections so that readers can easily find what they’re looking for.

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A business plan features nine main sections related to your business operations, structure and finances: 

• Executive summary
• Company description

Market analysis

• Management and company structure
• Service or product information
• Marketing and sales strategy
• Funding information
• Financial projections

Let’s take a closer look at each. 

1. Executive summary

The executive summary is a top-level look at your business that summarises the detailed information found in the rest of the sections.

It’s also your elevator pitch—a chance for you to immediately captivate the reader by portraying your mission, vision, goals, product, leadership, finance information and growth plans.

Picture yourself in a lift for 45 seconds with a potential investor. How would you sell your business? Think about that when writing this section. Be concise and compelling with your words.

Because it is a summary, it’s often easier to write this section last after you’ve fleshed out the finer details of your business plan .

Writing your executive summary

Start with the basic information:

• Your company name
• Company address
• Names of all owners and partners

Then, get into the business information. 

• Value proposition . Describe in one sentence what your company does and why it’s great. This is your value proposition. For example, Uber’s value proposition is “The smartest way to get around”. For email marketing platform MailChimp it’s “Send Better Email”. For Dollar Shave Club it’s “A great shave for a few bucks a month”.
• Problem and solution . In a paragraph, briefly explain the problem customers are facing and how your product or service solves it.
• Target customers. Who is your ideal customer? Be extremely specific. For example, if you’re selling men’s suits, your audience won’t simply be every man because every man wears suits. That doesn’t hold true. It’s more likely to be targeted towards ‘fashion-conscious men’ or ‘businessmen’.
• Competitors . List other companies that are solving the same problems you are and how they’re solving them.
• Team . A sentence or two on why your team is the best team to bring your product or service to market.
• Finances . Focus on the key aspects of your financial plan–your planned costs and how you will make money.
• Funding . Details of your start-up costs and how much you need to raise to get your business off the ground. 
• Milestones . Briefly mention what you’ve achieved so far and what goals you plan to achieve. This lets potential investors, talent or partners know how serious you are in building a successful business. 

As mentioned above, before you can write this section you have to flesh out all of your company details, including who you are, who you’re selling to, how you’re going to sell your product or service, what your financial goals are, how you will reach those financial goals, and so on. 

The rest of this article will inform you on how to do just that. 

2. Company description

The company description is your story. It digs deeper into your value proposition, looking at how you came to be and what you intend to achieve.

Break your description down into three sections: 

Mission statement

Company profile, business objectives.

Your mission statement is a sentence or short paragraph that describes why your business exists.

To create your mission statement, answer the following questions:

• What does my business do?
• How do we do it?
• Who do we do it for?
• What value are we bringing to customers?

For example, Patagonia’s mission statement is “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”

In a single sentence, they get across their aims and ambitions, their value to the market (safe, quality products) and their value to people and the world (helping the environment). 

Use this as inspiration to come up with a statement that captures the heart and soul of your business.

Top Tip: Your company description will also help to inform your business culture. You will carry these core values throughout all of your business behaviours and they will also influence how you make future business decisions. Because of this, it’s crucial to devote the necessary time and energy to get this right. To learn exactly how to do that, read our guide on why business culture matters & how to get it right from the start ☀️

In a paragraph or two, your company profile should detail your: 

• Founding date
• Company location
• Products or services
• Number of employees
• Details of company leaders and their roles
• Company milestones

The information is the most important thing here, so approach it like a business profile and stick to the facts and figures.

In a paragraph or two explain what you want to achieve as a business. This needs to be a realistic aim that investors can get behind and your team members can work towards. 

The SMART goals method can help you to ensure your goals are practical.

SMART stands for: Specific, Measurable, Attainable, Relevant, and Timely. 

Use graphs to add weight to your objectives. For example, if you aim to increase revenue from £100,000 in year one to £500,000 by year five, create a chart that plots your growth. The visual aspect helps to grab attention whilst providing readers with key information they may miss if skim reading. 

This chart from an example business plan does just that:

You’re immediately drawn to the planned-growth projections and want to learn about how they’ll reach such high goals. We will get into the specifics of how to create accurate sales and revenue forecasts in a later section.

Top Tip: To learn more about how to establish practical SMART goals that will inform your business strategy and help you effectively market your brand, read our beginners guide to digital marketing strategy . 

3. Market analysis

Marketing analysis focuses on three areas:

• Your target market (the industry your selling in)
• Your customers (who you’re selling to)
• Your competitors (who you’re selling against)

By detailing information about the themes and trends within your industry, you’ll be able to show that the appetite for your product or service exists. Outlining information about your ideal customer helps you to identify the marketing and sales tactics you can use to attract them. And highlighting your competitor’s strengths and weaknesses gives you a chance to showcase what you do better than the rest. 

Market analysis should identify the market as a whole, as well as your addressable market and your share of the market. From this information, you can begin to get an idea of your target market, which informs your messaging, positioning and unique selling point (USP).

Start by researching the current state of your industry and where the market is heading in terms of size, trends and projected growth.

Your approach here will depend on your business. For example, if you’re opening a small local shop, you should assess the market around your shop. If you’re starting an ecommerce business and selling UK-wide, you’ll need to analyse the market at a national level. 

When estimating market size, look at:

• Volume . The number of potential customers
• Value . The value of the market

You can find this information by searching for publicly available data or by commissioning a market research report. If you’re searching on a national level, you may find figures published online. On a local level, data might not be as easy to come by, which is where you’ll need to carry out your own research. 

Top Tip: Conducting market research takes time, but it’s important that you get a full picture of your audience to ensure your message and USP resonates. To learn more, read our detailed guide on how to conduct market research for your business idea ⚡️

Once you have the information, you can use TAM SAM SOM to work out your business’ relationship to the market size.

• TAM stands for Total Addressable Market
• SAM stands for Serviceable Addressable Market
• SOM stands for Serviceable Obtainable Market

• To calculate your TAM, work out how many people have a need for your business. For example, let’s say you’re opening a shop selling custom-designed women’s clothes in a town of 100,000 people. Market research shows that 50% (50,000) of residents are women. Your total addressable market would be 50,000 people. 
• To calculate your SAM, take your TAM and discount all the people that fall outside of your target market. Let’s say your target market is women between 18 and 35, with disposable income. This discounts 30,000 people, which means your serviceable addressable market is 40% (20,000) of your total addressable market. 
• To calculate your SOM, work out how many of your SAM you can realistically serve. Your shop offers a measuring service and design consultation but only to people in a five-mile radius, which means you can serve 200 people a month. That would mean serving 2,400 people a year, which makes your SOM around 12% of your SAM.

Ideal customer

Your ideal customer is the person your product or service is aimed at. In the above example of the women’s clothes shop, the ideal customer is between 18 and 35, with disposable income. 

Customer analysis digs deeper than this, looking at your target customers’ education, income, job, relationship, buying concerns, interests and more.

You’ll find methods to help you discover your ideal customer and create customer personas in our guide on how to create a go-to-market strategy . 

Competitors

Competitive analysis is the process of identifying gaps in the market that your product or service can fill. It’s about finding out what the competition does so you gain a competitive advantage. 

In our guide on how to run a competitive analysis , we walk you through the process of analysing the finer details of your rivals in five steps:

Step 1: Identify & segment your competitors

Step 2: Analyse their market positioning

Step 3: Review their content & social media

Step 4: Check out what their customers are saying

Step 5: Walk through their customer journey

Use this information to show potential investors and talent that your business is going places. Our competitive analysis matrix template is a great starting point.

Once complete, take it a step further and create a simple visual that clearly shows where your company outperforms the competition. Here is a basic example of how to build out this visual.

It’s hard to ignore a chart that checks all of the boxes. 

4. Management and company structure

This section goes into detail on how your company is structured and who is running it. 

The structure here means two different things:

Team structure

Company structure.

First, you need to show your management structure: what each leader’s role is within the company. 

The simplest way to show your company hierarchy is with an organisational chart like this example:

For each member of your team, give details on their background and credentials with a bio that includes their:

• Professional background
• Achievements

Including this information gives readers assurances that the team you have in place is well-positioned to take the company forward. 

If there are any roles yet to be filled, give details on those positions.

Company structure is your legal structure. For example, limited company or sole trader.

Top Tip: If you’re yet to decide on a business structure, you can weigh up the pros and cons for setting up as a sole trader or limited company in our sole trader vs limited company guide.

If you plan on changing the structure of your company in the future, include details on this as well. For example, you may start as a private limited company (Ltd), but grow to become a public limited company with shares offered to members of the public. 

5. Service or product information

Here is where you get to wax lyrical about your offer and why it’s better than anything currently on the market. 

This section should include: 

• A description of your product or service . Details on what it is and what it does.
• How your product or service will be priced . Do you offer tiered pricing or a subscription model, for example.

Top Tip: Choosing the right pricing strategy is another key part of your go-to-market strategy. Will you price higher, lower, or similar to your competitors? What does the market demand? How does your pricing strategy reflect the value of your products and services? To learn more about how to answer these questions, read our 6-step guide on how to price a product and achieve profitable markups 💷

• How your products compare to competitors . List several competitor products along with their pros and cons.
• The production process . Details on how your products are created, how your source materials, quality control management, supply chain, inventory and bookkeeping.
• Product lifecycle . Details on upsells and cross-sells, research and development plans and time between purchases.
• Orders . Details on how you process and fulfil orders.
• Legal aspects . Details on any intellectual property or trademarks you own.
• Future products or services . If you plan on expanding your offer, give details on the offer and any research and development plans.

While there are formal and practical details to get across, the main point of this section is to get the reader excited about your product. To do this:

• Focus on the benefits . Describe how features give value to the customer. Here are some examples of features turned into benefits:

• Highlight your features. Get across what features your product or service has that the competition doesn’t. For example, your product might be the cheapest on the market or your turnaround time might be quicker or your expertise might allow you to offer a better level of service. 
• Get across why you’re needed . Shine the light on why your product or service is important to the market. This will be especially crucial if your startup is bringing a new invention to the market, or you’re creating an entirely new market. 

6. Marketing and sales strategy

If your business is going to be a success, you need a marketing strategy and sales plan that takes customers on a journey from awareness to purchase.

This section of your business plan should include:

• Your target market . Reiterating the information from the market analysis section.
• Which marketing channels you’ll use and which you’ll prioritise . For example, social media, word of mouth, Google Ads, print or radio advertising, exhibition stands or fairs, or referrals.
• Your plan to attract customers at launch . For example, you might run an opening discount offer to people who share your post on social media. Or give a voucher to every customer who refers a friend.
• Your plan to retain customers . For example, you may offer reward programs that allow customers to collect points for every purchase that can be redeemed for free or discounted products.
• Your expected results . What you hope to achieve from your marketing and how it will help you grow your business in terms of sales and visibility. If you’ve already started marketing your business, give details on what you’ve done and how it’s benefited the business.

7. Funding information 

Funding information is all about how much money you need to start your business, why you need it and how you’ll use any capital. 

The most critical part of this is your startup costs, which detail:

• The cost of producing your product or service
• Your fixed outgoings
• The cost of equipment, premises, supplies, insurance and other necessities required to run your business

Top Tip: If you’re yet to work out how much capital you need, check out our guide on how much it costs to start a business in the UK 📌

If you have the figures in place, you can set out presenting them. 

This section should be broken down into three parts: 

Current and future funding requirements

How funds will be used, current and future financial plans.

Include how much money you need to get your business off the ground, along with any funding you’ll need in the foreseeable future (up to five years). Be clear about why you’re requesting a loan or investment and outline what your needs are based on in your financial forecasts (we’ll get onto those soon). 

If you’re offering equity in exchange for investment, provide details on how an investor will be paid, as well as how and when they can cash out. For most small businesses, investors are paid in dividends (a share of company profits).

This part should explain how you plan to use the funds so that investors can determine if your business is a worthwhile investment. If you plan on using capital for several things, list and provide costs for each.

Again, putting these numbers into a visual format will help to more clearly outline your vision.

Finally, if applicable, provide information on any current investments and/or outstanding loan repayment plans. 

If you’re seeking investment or a loan for the first time, most lenders will have their own repayment schedules. However, you should detail any factors that may affect lenders, such as any plans to relocate or sell the business. 

Unlike other sections, funding information will need to be tailored to each financier. Investors will be interested in return on investment (ROI), whereas lenders will be interested in loan repayments. Create separate reports so that information is relevant to the reader. 

Top Tip: Investors and banks will also be interested in your business credit report (if you have one). To learn more about why your business credit score is important and how it’s determined, read our guide to everything you need to know about your business credit score (and how to improve it) 🙌

8. Financial projections

Financial projections supplement your funding information by showing potential lenders and investors that your business has a positive financial outlook.

This section should include the following key information: 

• Sales forecast. The amount of money you expect to raise from sales.
• Cash flow statement. Your cash flow balance and monthly cash flow patterns–how much is coming in and going out of your business every month.
• Balance sheet. An overview of the financial health of your business.
• Profit and loss statement . Your profit level and how much you expect to make based on projected sales, minus the cost of overheads and providing goods or services. 

Top Tip: Unless you’re an accountant, this part of the business plan can be overwhelming. To learn more about the fundamentals of accounting and how to create each of the aforementioned statements, read our complete guide to accounting for startups 📣 

If your business is already established, you’ll need to include financial figures from the last three years (or however long you’ve been trading if it’s less than three years) for all of the above, other than your sales forecast. 

If you’re a new business, your financial figures need to be predicted.

We’ve built several spreadsheet templates to help you generate the below financial reports:

• Three main financial statements (balance sheet, profit and loss statement, cash flow statement)
• Cash flow forecast
• Estimated sales

Forecasting your finances

Sales forecast.

Use your market analysis and knowledge of industry trends to estimate your future sales. For the first year, break these figures down into monthly sales, detailing what you’re selling, price points and how much you expect to sell. Moving into the second and third year of business, reduce forecasting to quarterly sales.

Cash flow statement

As a startup, your cash flow statement becomes a cash flow forecast based on your sales forecast, minus your expenses. Your expenses are the: 

• Fixed costs . Expenses that are the same or close the same every month (e.g. rent, insurance and utilities).
• Variable costs . Expenses that vary every month depending on demand (e.g.costs for raw materials, production costs, shipping and advertising).

Provide monthly cash flow patterns for the first 36 months. Keep in mind that, depending on your business, you may need to account for a lag in revenue. For example, if you provide a service to a client, their payment terms might dictate the invoice is paid 60 days after being sent.

Top Tip: To learn more about the various types of expenses and how to manage them, read our guide to small business expense management 🙌

Balance sheet

Create a balance sheet by calculating company assets, minus company liabilities.  

Company assets include:

• Property you own
• Equipment you own
• Unsold inventory
• Company vehicles you own
• Outstanding invoices

Company liabilities include:

• The amount you owe on a business loan
• The amount you owe unpaid invoices

Your balance is the difference between your assets total and your liabilities total.

Profit and loss statement

Use the figures from your sales forecast, expenses and cash flow statement to forecast how much you expect in profit and losses for your first three years in business. 

Your statement needs profit and loss projections for each year, as well as a total figure for the three years and should include a breakdown of:

• Sales . Based on figures from your sales forecast.
• Cost of goods sold (COGS) . The total cost of selling your product or service. If you need help with this, check out our guide on everything you need to know about cost of sales .
• Gross margin . Your sales minus your COGS. This is usually listed as a percentage, which you can calculate as: 

Gross margin (total revenue – COGS / total revenue x 100

For example, £500,000 total revenue, minus £300,000 leaves a gross margin of £200,000. 

£200,000 / £500,000 x 100 = 40%

• Operating expenses . A list of all your expenses, minus COGS (which you’ve already included), tax, amortisation and depreciation. List each expense individually and include a total sum. 
• Operating income statement . Your total operating expenses minus your COGS, before interest, tax, amortisation and depreciation.
• Total expenses . Your expenses including interest, tax, amortisation and depreciation.
• Net profit . Your monthly and yearly bottom line.

List financial figures using bullet points and include graphs to show how you predict your business will grow over your first three years of trading.

9. Appendix 

The appendix is the place to include any supporting documents. If a lender or investor hasn’t requested additional documentation, you can choose to leave this section out. But it’s a good place to strengthen your business plan, by including: 

• Reference letters
• Credit reports
• Permits and licences
• Client contracts or customer purchase orders
• Legal documents
• Associations and memberships  

Format the appendix with a clear table of contents and sections that correspond to the business plan section.

5 top tips for writing a compelling business plan 

• Keep it concise . Say what you need to say using simple language (no jargon) in as few words as possible. Your business plan only needs to get the key information across. The intricacies can come later. 
• Make it easy on the eye . Most lenders and investors will skim read your business plan, picking out relevant information as they go. Use headings to define sections and make key data stand out on each page by using bullet points for lists, bolding important sentences and using graphs and charts to add weight to financial figures. 
• Think about your audience . Consider who your business plan is aimed at and write with them in mind. If it’s an internal plan, think about what your team would want to gain from reading the document. If it’s for a lender or investor, think about the questions they might ask and which information is of particular interest to them. 
• Get the figures right. If you’re forecasting costs, sales and expenses, numbers will never be 100% accurate and it’s better to overestimate than underestimate. However, figures must be realistic and they must add up. Expect lenders and investors to scrutinise your calculations. Always double and triple check the numbers. 
• Proofread and proofread again . Don’t let your hard work be undone by something as simple as a typo or grammar mistake. Proofread your document from start to finish and then finish to start. Have someone you trust look over it too.

You now know what goes into a strong business plan, but you might be wondering what tools and frameworks you can use to bring it to life.

In this Tide Masterclass, our Events Manager Cuan Hawker is joined by Tom Horbye , Head of Campaigns Development at Seedrs .

Seedrs connects investors and businesses. They help startups raise capital and grow a supportive community. As they put it, it’s “equity crowdfunding done properly”. It’s unlikely anyone has seen and improved more business plans than Tom!

Tom will explain:

• Why you need a business plan 📘
• How to structure your plan 📃 Two tried-and-tested structures that work.
• What to include in your plan 📋 And what to leave out.
• Tools, help and next steps 🛠

This Masterclass is useful for anyone thinking about starting their own business in the UK.

A business plan is the cornerstone of your company. By clearly detailing your business objectives, strategies, marketing and sales plans, and financial forecasts you’ll be able to set out your business goals and keep track of your progress. 

Use this guide to complete the key components and put together a plan that a) brings clarity to your team, and b) provides assurances to lenders and investors that your business is a safe bet.

Photo by William Ivan, published on Unsplash

Valentine Hutchings

Head of Community and small business enthusiast

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How to write a business plan in 12 steps (2024 edition)

Updated 26 June 2024 • 12 min read

This guide breaks down how to write a business plan, step-by-step, detailing what your document needs to include and what you need to think about to make your business plan as persuasive as possible.

What is a business plan?

A business plan is an essential document that can provide immense value for new and existing companies of all sizes. It is an overview that includes an outline of your business, its key objectives and plan for achieving important goals.

This information can be used to communicate strategic actions to internal teams and also attract interest from potential partners and investors . However, writing a business plan can be a lengthy and involved process. For many, using a business plan template can be a good way to get started.

For best results, you’ll need to do a lot of thinking and planning before you start writing your business plan. This way you have all the information and resources you need at your fingertips and won’t be under time pressure to come up with something at the last minute. After all, a well-thought-out business plan can help you avoid generic information and set your company up for success.

Download your free business plan template .

Why write a business plan?

Writing your business plan helps to get your strategy nailed down and onto the page. A plan that stays in your head is probably going to be full of unrealistic assumptions and biases, whereas a strategically thought-out and organised approach forces you to notice your blind spots and find a way forward.

If you’re looking for financing, a bank or investor needs to be persuaded by your business proposal and the opportunity to work with you. Therefore, a well-written business plan can help provide potential financial partners with the confidence that your business can become profitable. Your business plan gives them a comprehensive view of all aspects of your business and details your strategy for achieving your goals.

What are the main sections of a business plan?

Whatever your line of work, your business plan will generally need to provide the following:

An executive summary

A business overview

The market opportunity

Your products/services

How to write a business plan

Make sure you cover each of the following steps when preparing your document:

1. Write an executive summary

This section of your business plan should be 1–2 pages in length and enables potential financiers or partners to get an overview of what your business does and – most importantly — what the opportunity is for them. If they’re interested in the opportunity, they’ll conduct their own due diligence - and this will start with going through your business plan and financials.

It’s a good idea to write your executive summary last, when you’ve clarified your thinking around every section of the document. As an overview section, you don’t want to add any new content that isn’t in your business plan. Aim to keep this summary succinct and engaging by using simple, plain language, as this is much more persuasive than complicated or academic wording.

Use sub-headings and bullet points to help your most important information stand out, especially as busy executives may simply scan your executive summary and use this to decide whether they want to find out more.

What to include in an executive summary?

Make sure you include details on:

What your business does

What the opportunity is

What your unique selling points / differentiators are

How much funding you’re looking for

What the funding will be used for

How you'll succeed

Remember, you’re providing the big picture overview of your business - the detail is in the rest of the document and in the appendices.

2. Write your business overview

This section of your business plan needs to be more than just a list of what your business does. Its purpose is to excite those you’re hoping will work with you or help to fund your business.

Information to address includes:

What's the purpose of your business?

What problem does your business’ product or service solve?

What niche could it fill?

What’s different about your offering?

How are you better than anyone else at what you do?

Consider what your customer value proposition is by deciding what you want to achieve and what your number 1 benefit is for your customer.

3. Identify your USP

Think about what your unique selling points (USP) or differentiators are, and what proof-points you can provide to back them up.

For example, you can use terms like “market-leading” but if you don’t provide any evidence to back up your claims, your reader will take them with a big pinch of salt!

You should certainly reference any awards or endorsements that position you as the best person to provide your product or service, as well as any client testimonials. Make sure you include any education or experience that makes you an expert in your field as well.

4. Describe the market opportunity

Show you understand your industry, market and where you fit in it. While no-one can predict the future, offer up where you think the opportunity is for your business and make sales projections based on that. 

For example, imagine your business is selling personalised cookies - there's little competition in your area and you see your market opportunity to create designs for all calendar and holiday events. You expect to increase sales by 30% in one year and 50% in three years, driven primarily by word-of-mouth referrals.

Make sure you also consider macro trends that may create opportunities for you, such as social, environmental, or technological changes that may affect buying behaviour.

5. Include a SWOT analysis

Whatever your business strengths or opportunities, they’ll always be known and unknown weaknesses and threats; there’s no such thing as certainty in business or in life!

However, you can demonstrate that you’ve examined your business through different lenses and have a thorough understanding of it by doing a SWOT (strengths, weaknesses, opportunities, threats) analysis.

Don’t worry about drawing attention to your business’ shortcomings - every opportunity has them and it’ll give investors and partners confidence in you that you won't bury your head in the sand. Naturally, it's important that you specify what you’re going to do to address these weaknesses and counter these threats.

Here are some areas you can think about to get started: reputation, technology, location, experience, staff, overheads, competition, suppliers and price.

6. Present a competitor analysis

Let’s face it, no matter what industry you’re in, or what you’re selling, there’s going to be other businesses offering the same thing. But instead of worrying about the competition, use this as a positive opportunity to up your game and work out the unique advantages you have that will keep you competitive.

Identify your top 3 competitors and analyse what they're doing well and where they’re coming up short. Try to be as objective as possible and identify how to differentiate yourself from them.

You should also look into who the industry leaders are and what the benchmarks are for your industry so that you can set yourself targets for continuous improvement.

7. Create a customer persona

A customer persona is a fictional person who represents your company's ideal customer. Naturally, the persona can be based on a real person - the more you get to know your ideal customer, the more targeted and successful your marketing efforts will be.

To create a customer persona, you need to conduct research into your ideal customer’s age, sex, income, employment, daily activities, interests and hobbies. If you’re feeling unsure about your customer persona, you may need to give your ideal customer further thought and download the customer persona template to get started.

8. Write your marketing strategy

When you’ve created your customer persona, you need to work out how you’re going to reach them. Do they hang out on social media apps, like Facebook, Instagram, Pinterest, Twitter or LinkedIn? Or are they more used to local, traditional marketing like free local papers or high foot traffic areas?

Once you’ve figured where your audience is likely to hang out, you can outline your strategies for promoting and advertising your products or services in the next 12 months.

Make a list of the marketing channels you’ll use to achieve your advertising strategy and be sure to include your budget. How much can you set aside for advertising? And where are you most likely to see a return on your efforts? Paid ads on Facebook? Half or full paid spreads in an industry magazine? Or even a direct mail out? 

For more structured help around this, check out free course: Business 101 | Get social with your business on Facebook . 

9. Design your customer retention strategy

Business success relies heavily on the relationship you’re able to build with your customers. What techniques will you use to keep them coming back? Consider the following:

What can your business do to increase the number of repeat customers? 

Does your business have a referral or loyalty program? 

Do you have a post-purchase follow up in place?

Will you use surveys to track customer satisfaction?

What ways can you continue delivering outstanding service?

Is there a way to continue educating and adding value to your customers?

10. Present your financials

Most people who are looking at investing their time and/or money in your business will want to see your financial statements - your performance to date and your projections over the short and medium term. They'll also want to know how much you’ve received in funding to date and what these other sources of funding are - including your own investment.

Current finances

You need to show how your business has performed financially over the last year, highlighting metrics such as positive cashflow , net profit and assets.

Financial forecasts

You should also provide a balance forecast projecting total assets, total liabilities and net assets over 1, 2 and 3 years, and a profit and loss forecast for the same periods detailing gross profit /net sales, total expenses and net profit/loss. Finally, you should also provide a cash flow forecast month by month over the next year.

It’s also a good idea to speak to an expert like an accountant or bookkeeper about your finances and get advice on how best to present them in this all-important section of your business plan.

11. Detail how much funding is needed

Naturally, you also need to be very clear about how much money you’re looking for and what you plan to do with it. If you’re looking for a loan , you need to detail what it’s for, over what period it’ll be repaid, and what collateral you have to secure it.

12. Propose an exit strategy

Any financial stakeholder in your business will want a return on investment. If you’re pursuing this type of funding, you should include some detail on your proposed exit strategy . For example, do you want to sell the company at some point or go public?

Similarly, you should outline your succession plan so the business can continue to operate if you decide to step away from it. Likewise, you need a plan for what happens if the business loses money and can’t sustain itself. Documenting this means that everyone is on the same page and potential investors have this information upfront.

Frequently asked questions about writing a business plan:

When to write a business plan.

Typically, entrepreneurs write their business plans within the first year of operations. A business plan is a tool that helps business owners refine their strategy, attract partners and financiers, and grow their business.

If a business plan is written too soon, it may lack the substance that comes with time in the market. However, it’s important to note that a business plan isn't a static document - it can and should change as the business evolves.

How long should your business plan be?

There are no hard and fast rules around how long your business plan should be - it just needs to include all the relevant information. Aim for clear, concise sections and build a business plan that is as easy to read and navigate as possible.

Using a business plan template can help you make sure you have everything covered off, while also having a document that looks as professional as possible. Make sure you run a spelling and grammar check too - any sloppy errors can undermine your credibility.

What’s a business plan on a page?

It’s important to write your business plan as it helps to embed your strategy - as well as communicate what you’re about to potential partners or investors. When you have a comprehensive business plan you can easily adapt it to suit different audiences. For example, a full business plan is essential for raising capital but a business plan on a page may be enough for potential partners or employees.

What do venture capitalists look for in a business plan?

Venture capitalists invest money into businesses with the goal of achieving a return on their investment within the short to medium term. As a result, they’re looking for an attractive market opportunity, a clear point of differentiation, a strong management team, a proven track record, solid financials and, importantly, an exit opportunity.

Where to go for help or more information?

There are many great resources out there to help you fine-tune your business strategy and write your business plan. The Australian Government has a comprehensive website dedicated to supporting businesses at all stages of their journey.

You can also get help from Business Enterprise Centres , business advisors, accountants and fellow business owners. MYOB also has a list of business advisors who can give you feedback on your business plan, so your venture has the very best chance of success. 

Related Guides

How to get a business loan arrow right, how to find investors: a guide for startups arrow right, business models: definitions, types and key components arrow right.

More From Forbes

Business plan template: a step-by-step guide for entrepreneurs.

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What should be in your business plan?

Creating a business plan is a key part of starting any business venture. Even if you’ll never use it in this format for attracting investors and raising capital, it can be vital for helping all entrepreneurs to ask and think through essential questions.

Nowadays business plans are used as an internal roadmap for the execution of the company since pitch decks have taken over when it comes to fundraising required materials.  For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel ( see it here ) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million ( see it here ).

Don’t skip this part of the process. Though, do not let it become a distraction and slow you down from creating an actual business either.

For key insights on the why, when and how to create a business plan, and emerging alternatives for startups versus small businesses, see my Forbes article on How To Create A Business Plan .

There are many variations of business plans today. Especially, with the rapid growth of lean startups. A few minutes on Google will provide plenty of free business plan template options. The following is adapted from the SCORE Association’s recommended outline of categories, which covers most of the bases for exactly what to include in your business plan.

Executive Summary

This is the most critical part of your business planning. If you never flesh out a full business plan, make sure you create a fantastic executive summary. This brings together all of the key elements of your plan and will often be the make or break document which decides whether commercial lenders or investors will have any interest in seeing the rest of your documentation or pursuing a relationship with you. For additional guidance, you may want to review the Executive Summary Template that I recently covered on Forbes as well.

Company Description

This section provides a further overview of your company now.

• The company purpose, mission and vision
• Company formation information
• Who the founders are
• Location and geographical markets served or where you have a presence
• Current status and stage of business
• Any notable achievements so far

Products & Services

List what products and services your company has been formed to create. How are you solving the main problem and are serving the community with your business?

• Definition of the core product or service
• Development stage
• Screenshots or diagrams
• Current pricing
• Past test results
• Anticipated future products and services you hope to develop and roll out

Marketing Plan

This is another section which is an absolute must-have, even if you never develop a fully fledged business plan in its entirety. This holds key information that all financiers and potential investors are going to want to know. Even if you hope to just get away with using a pitch deck to raise the capital you need.

This is also a vital guide for yourself as a founder, and for your growing team as to what needs to be done and how.

Every minute invested in this section can pay great dividends over the longer term.

• Competition and market research
• SWOT analysis (Strengths, Weaknesses, Opportunities & Threats)
• Target market research (total market size and total addressable market (TAM))
• Brand and product positioning
• Elevator pitches and tag-lines
• Target customer personas and profiles
• Results of any testing conducted so far
• Marketing channels to be used
• Marketing budget
• Estimates of cost per action (CPAs)

For further guidance on this section, you may want to review the piece on Forbes with the title How To Create A Marketing Plan . 

Operational Plan

This is your opportunity to organize and demonstrate your understanding of this industry and business.

• Facilities and space needed
• Technology needs
• Equipment needs
• Supply chain management
• Logistics and distribution plans
• Order and fulfillment processes
• Quality control checks
• Legal and accounting needs

Management & Organization

This section of your business plan will help you to identify your own needs, and demonstrate to investors and other licensing bodies and agencies that you are the team to get this job done.

It basically shows your management and industry experience and who will do what.

• Founders and executive team
• Any owners and shareholders
• Board of directors
• Consultants and special advisors
• Key team members and department heads

Financial Plan

Provide an honest snapshot of where you are and where you reasonably hope to go, providing you secure the funding you need.

• Current balance sheet
• Past 2 years’ financials if applicable
• Financial projections for 12 months, and annually through year 5
• Break even analysis
• Cash flow projections
• Income and expenses

In this section you may also be including startup cost and capitalization requirements, or funding and loan requests.

Startup costs should be thorough, have some additional cushion built in, and focus on development of physical product or intellectual property and growth. Not what you want to pay yourself as a salary.

If fundraising, be sure to include a repayment schedule for any loans, use of funds, runway to follow up fundraising rounds, and the milestones you expect to achieve by then.

Include all other information, references and required documentation here.

This will typically include:

• Articles of incorporation and status
• Resumes of founders and key team members
• Copies of insurances
• Trademarks and patent registrations
• Deeper research data or links to references

Stay Flexible

Just like your first attempt at coding a website, practicing your pitch, or riding a bike, it’s not going to be perfect. Do your best. Get outside input from an expert. Just don’t wait until you think your business plan is perfectly polished and cannot possible go any further in depth. Otherwise, chances are you will have missed your window of opportunity by a long way.

It is also crucial to understand that nothing in this document is set in stone. Pretty much everything will absolutely change over time. Roles will change, marketing will change, financial projections will change, and your product and service menu can change.

Having raised money for startups, exited them, and after interviewing many of the most successful founders and angel investors on the DealMakers Podcast , I’ve got to experience both the struggles and wins in startup life. Things change rapidly overnight and for this reason you need to adapt quickly to the market and change whatever is required. 

This is a great guide and exercise. It’s a gateway to getting to the next step. Get it done, start taking action and stay flexible.

Creating a business plan remains a valuable part of launching any new business venture. Formats and business plan templates may have evolved, and new documents like pitch decks are becoming even more important.

Though without going through this process many entrepreneurs will find they have huge gaps in their ideas and may fall short when it comes to fielding questions from serious investors. Using this template you will cover most of the bases and will be able to take the next steps with confidence.

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How to Start an Online Business: A Step-By-Step Guide

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How to Start an Online Business: A Step-By-Step Guide was originally published on The Muse , a great place to research companies and careers. Click here to search for great jobs and companies near you.

Whether you’re looking to turn a dream into profit or capitalize on market trends, starting an online business comes with unique advantages and challenges. Yet, the internet makes it easier for anyone with passion and a plan to succeed. You don’t need a ton of money upfront or have to worry about your location to get started.

Use our guide on how to start an online business as your roadmap—from the spark of an initial idea to the exhilarating launch of your online venture. We’ll explore the reasons to embrace the online business model, and offer all the tips you need to identify your niche market, attract customers, and grow.

​​ Build your dream business with the help of a high-paying job—browse open jobs on The Muse »

Why starting an online business might be for you

Online businesses have lower startup costs and overhead expenses compared to their physical counterparts. There’s no need for a physical storefront or extensive infrastructure, so you can allocate resources more efficiently towards product development and marketing.

Running an online business also gives you more flexibility. You can manage operations remotely and serve customers globally, around the clock. Unlike traditional businesses that rely on local foot traffic, online businesses can attract customers from anywhere in the world.

By leveraging digital marketing strategies like SEO, social media, and targeted advertising, you can precisely target your audience and expand your market niche exponentially.

How to start an online business from home in 10 steps

Once you’ve decided to follow this route, it’s time to master how to open an internet business (and thrive!). Here’s our step-by-step guide:

1. Find your niche

Begin by exploring your passions and skills —what interests you most, and where do you excel? Can you turn what you love into a business? Whether it’s photography, exotic vegetarian cuisine, or antique furniture restoration, there’s a market for your unique talents. (Here’s a thorough list of online business ideas for you .)

Next, research market demand. Use free tools like Google Trends and social media insights to identify trending topics, unmet needs, and gaps in the market. What problems can you solve with your skills and expertise? Observe your surroundings and talk to people to uncover hidden opportunities.

2. Conduct market research

Dive into competitor analysis, a key strategy to uncover opportunities and ways to stand out. This helps identify gaps in the market, understand consumer preferences, and refine your unique selling points.

Connect directly with your target audience through customer surveys and interviews. Engaging with potential customers lets you validate assumptions, discover pain points, and fine-tune your products to meet their needs effectively.

Use market research reports, industry publications, and market trends to gain a deeper understanding of your niche. You may find insights into consumer behavior, emerging trends, and competitive dynamics. This helps anticipate changes, spot growth opportunities, and mitigate potential challenges in your market segment.

3. Write a business plan

A well-crafted business plan gives you clarity, direction, and a strategic framework to open your own business online. It guides every aspect of your venture, from initial launch to long-term growth and sustainability. (Want to learn more? Here’s how to write a business plan from scratch.)

Your business plan for an online business should emphasize digital strategies and online channels. This includes leveraging e-commerce platforms, digital marketing tactics like Search Engine Optimization (SEO) and social media, and analytics tools to track performance and optimize operations.

4. Pick the right products or services

Explore different sourcing strategies like dropshipping, partnering with wholesale suppliers, or developing your own products. Each approach has its perks in terms of cost, control, and scalability, so you can make your choices based on your business goals and market demands.

Here’s what you should consider:

Cost analysis : Conduct thorough market research and cost analysis to identify consumer demand trends, competitive pricing, and profit margins to ensure your offerings can generate sustainable revenue and profitability over time.

High-quality : Maintain high standards of product quality to build customer trust and satisfaction.

Fulfillment logistics : Implement effective fulfillment logistics to streamline order processing, shipping, and customer service, ensuring a seamless shopping experience that encourages repeat business and positive reviews.

Scalability : Evaluate the potential of your products or services for long-term growth and adaptability to market changes. By selecting scalable offerings, you position your online business for expansion and diversification, laying the foundation for sustained success in the competitive online marketplace.

5. Define your brand identity and image

Your online business needs more than great products; it needs a personality. That’s where your brand identity comes in—it’s the essence of who you are and what you stand for.

Develop a compelling brand story and a unique selling proposition that sets you apart. What makes your business special? What problem do you solve better than anyone else? Communicate this unique value clearly and consistently.

A standout logo and cohesive color scheme are vital components of your brand’s visual identity. They should be distinctive and reflect your business essence. Choose brand colors that evoke the right emotions and align with your message.

Developing a consistent brand voice that matches your brand’s personality is also key—whether it’s professional, friendly, or innovative. This voice should be evident across all communication channels, from your website to social media and customer interactions.

6. Set up your online presence

Select a memorable domain name that reflects your brand and is easy to remember. This is your online address, so make it count. Next, choose a reliable web hosting service that ensures your website is always accessible and performs well. Look for hosting providers with excellent uptime, security features, and 24/7 customer support.

Your website is the online storefront for your business, and it needs to offer a smooth user experience. Whether you use a DIY website builder or hire a professional web designer, prioritize a clean design with clear navigation, high-quality images, and engaging content. Optimize your content for search engines (Google) to improve visibility in search results and drive organic traffic.

For e-commerce platforms, integrating secure payment gateways is essential. Implement robust security measures to protect customer data and build trust. Additionally, use analytics tools to track visitor behavior, measure performance, and gain insights to optimize your site.

7. Implement marketing strategies

Marketing is the lifeblood of any online business, driving traffic, engagement, and sales. The tricky part is there’s no one-size-fits-all approach. You have to choose the marketing strategies that best resonate with your target audience and budget.

Consider leveraging SEO to rank higher in search results, and explore the power of social media marketing (even with influencer partnerships) to connect with your audience on a more personal level. Email marketing allows for targeted communication and promotions, while pay-per-click (PPC) advertising can drive immediate traffic to your website.

Define clear marketing goals, whether it’s increasing website traffic, boosting sales, or enhancing brand awareness . Allocate your budget across different channels based on their effectiveness and your business goals. A well-rounded marketing strategy ensures you’re reaching your audience through multiple touchpoints, increasing your impact and return on investment.

8. Manage your finances effectively

Familiarize yourself with the different types of business expenses. Fixed costs, such as rent and salaries, remain constant regardless of sales volume, while variable costs, like shipping fees and raw materials, fluctuate based on your business activity. Overhead costs, including utilities and insurance, are necessary for daily operations.

Setting the right price is also important. You want your products or services to be profitable while remaining attractive to your target audience. Use pricing strategies like cost-plus pricing, which adds a markup to the production cost, or value-based pricing, which sets prices based on the value perceived by customers. Adjust your pricing as needed to remain competitive and profitable.

Maintaining accurate financial records is essential for monitoring your business’s health. Use accounting software or tools to track income, expenses, and profits, identify trends, manage cash flow, and make informed financial decisions. If necessary, don’t hesitate to seek guidance from financial advisors or accountants.

9. Ensure compliance with legal and regulatory requirements

It’s crucial to understand the licenses and permits required for your online business and get familiar with your tax obligations. Ensuring compliance with these requirements helps you avoid legal issues and penalties.

Selecting the right business structure is a key decision that affects your legal and financial responsibilities. Common structures include sole proprietorships, limited liability companies (LLCs), and corporations—the first being simpler, and the last being more complex.

Online businesses must comply with various laws related to e-commerce. This includes understanding data privacy regulations, such as the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA). Ensure you have a clear privacy policy that informs customers about how their data is collected, used, and protected.

10. Keep focusing on ongoing growth and development

Launching your online business is just the beginning. To sustain success and drive ongoing growth, focus on these key areas:

• Customer service excellence: Respond to inquiries promptly, address concerns effectively, and go above and beyond to meet customer needs.
• Adapting to evolving trends: Keep an eye on emerging technologies, shifts in customer preferences, and new marketing strategies.
• Continuous learning and development: Invest in your professional development by taking courses, attending workshops, and reading industry publications.
• Celebrating milestones and successes: Whether it’s reaching a sales target, launching a new product, or hitting a business anniversary, celebrating milestones keeps you motivated and fuels continued growth.

Now that you have the ultimate step-by-step guide on how to open a business online, it’s time to put your plans into action. With dedication, creativity, and the right strategies, you can build a successful online business.

Need more encouragement? Read this next: 6 Signs You Have What It Takes to Start Your Own Business

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How to Start a Food Truck Business: A Step-by-Step Guide

Starting a food truck can be an exhilarating opportunity, whether you’re a seasoned restaurateur looking to expand your culinary reach or an aspiring chef eager to introduce your creations to the streets. This guide provides a comprehensive roadmap on how to start a food truck business, covering everything from conceptualization to launch. By the end of this post, you will have a clear understanding of the necessary steps to start a food truck and run it successfully.

How to Start a Food Truck Business

Here's a step-by-step guide to launching your food truck enterprise. This guide will walk you through everything you need to know, from initial market research to the grand opening of your food truck. Each step is designed to help you build a strong foundation for your business and navigate the unique challenges of running a mobile food operation.

Step 1: Research Your Market

Launching a food truck starts with thorough market research. Dive into the local scene to understand which food trucks are successful and why. This includes exploring where they’re located and what they’re serving. Expand your research to include brick-and-mortar restaurants that could be competing for the same clientele.

Focus on identifying gaps in the market by analyzing your competitors’ offerings. Who are they targeting? What seems to be working for them? Where do they fall short? Also, pay attention to demographics, high-traffic areas, and popular gathering spots that could serve as ideal locations for your truck.

Conduct a SWOT analysis to systematically capture these insights—evaluating strengths, weaknesses, opportunities, and threats. This will clarify where the best opportunities lie for your food truck and help you strategize effectively. By understanding both the existing market and competitive environment, you’ll be better positioned to carve out a niche for your culinary venture.

Step 2: Develop Your Concept and Menu

After pinpointing your market niche, it’s time to create a standout concept for your food truck. Select a type of cuisine that appeals to your target audience and offers something distinct from existing options. This could be a fusion of flavors that aren’t currently available or perhaps a modern take on classic dishes.

Once your concept is defined, the next task is crafting a menu that embodies this theme. Focus on a selection of dishes that can be executed quickly yet maintain high quality. Speed is crucial in the food truck business, but so is uniqueness. Infuse each dish with distinctive flavors that elevate your menu beyond the ordinary. This approach will not only differentiate your food truck from others but also keep your customers returning for those unique culinary experiences they can’t find elsewhere.

With your concept and menu ready, the next crucial step is to develop a comprehensive business plan.

Step 3: Create a Business Plan

Creating a comprehensive business plan is essential for launching your food truck successfully. Here’s how to structure it to cover all critical aspects, ensuring a smooth start and sustained operation.

Executive Summary . Begin with an executive summary that captures the essence of your food truck. This section should succinctly explain what your business does, its unique culinary experience, and your vision for its future. Include basic information about your leadership team and summarize key points that will follow in more detail throughout the plan.

Company Description . Provide a detailed description of your food truck, emphasizing any unique features or competitive advantages. This could be your culinary style, specific dishes, or innovative service methods that distinguish your business from others in the market.

Market Analysis . Summarize the insights gathered from your initial market research. Highlight key observations about the local food truck scene, competition, and the demographics of your target audience. Detail how these findings influence your strategic choices regarding the food truck's location and menu design, emphasizing the market opportunities you aim to capitalize on.

Organization and Management Plan . Detail your business’s structure and the management hierarchy. Explain your food truck’s legal structure, such as whether it’s an LLC, a sole proprietorship, or a partnership. Describe the roles and responsibilities of team members, highlighting how their expertise will contribute to the success of your venture.

Service or Product Line Description . Discuss your food truck’s menu and service offerings. Describe the types of dishes you plan to serve and why they will appeal to your target market. This section should make it clear how your offerings stand out in the culinary landscape.

Marketing and Sales Strategies . Outline your strategies for attracting and retaining customers. Include both digital and traditional marketing tactics you intend to use, such as social media campaigns, local advertising, participation in community events, and any loyalty programs .

Funding Request . If you seek financing, specify the amount needed and how you plan to utilize these funds. Break down the costs for the truck purchase, equipment , initial inventory, and any other startup expenses. Be clear about the terms and type of funding you are looking for.

Financial Projections . Provide financial projections that forecast your revenue and expenses over the next few years. Include quarterly projections for at least the first two years. Support your projections with data from your market analysis and planned marketing strategies.

Appendix . Include any additional documents that support your business plan, such as credit histories, licenses, permits, or legal documents. This section is optional but can be valuable in providing deeper insights to lenders or investors.

This comprehensive business plan will serve as a roadmap for your food truck, guiding you from startup to operational success and helping you secure any necessary funding.

Step 4: Secure Financing

Once your business plan is ready, it’s time to secure the necessary financing to get your food truck rolling. You’ll find several options at your disposal, each with its own set of advantages. Using personal savings can be a straightforward approach, as it involves no borrowing and no debt. However, a bank loan could be a viable alternative if your savings are insufficient. Banks often provide loans specifically designed for small businesses, which can come with favorable terms and rates.

Another option is seeking investors willing to provide capital in exchange for a stake in your business. This route can also offer additional support like business advice and networking opportunities. When approaching potential lenders or investors, present your business plan confidently to showcase the profitability and viability of your food truck. A well-prepared presentation can make a significant difference, highlighting your understanding of the market, your unique concept, and your detailed financial projections.

Remember, securing financing is not just about getting the funds—it’s about creating a sustainable financial foundation for your food truck business. Choose the best option that aligns with your business goals and financial situation.

Step 5: Register Your Business

To officially start your food truck, complete the registration of your chosen business structure for liability protection and tax purposes. Register your business with the state to ensure all legal requirements are met. Obtaining an Employer Identification Number (EIN) from the IRS is essential for tax reporting and is also useful when opening a business bank account or applying for business loans.

Once your business is registered and you’ve obtained your EIN, you can move on to acquiring the necessary licenses and permits to operate your food truck legally.

Step 6: Acquire Licenses and Permits

Securing the right licenses and permits is a critical step in launching your food truck. This process can vary greatly depending on where you plan to operate, so it's crucial to understand the specific requirements for your city, state, and the federal guidelines that apply to mobile food services.

At a minimum, you will likely need:

Mobile Food Facility Permit : Sometimes called a food truck permit, this is essential for operating your mobile kitchen.

Health Permit : Ensures your food truck meets health and safety standards.

Employee Health Permit : Required if you have employees preparing or handling food.

Seller’s Permit : Allows you to sell goods and collect sales tax.

Food Service License : Required by most local health departments.

Business License : Grants you the legal right to operate a business in your town or city.

Parking Permit : Necessary for operating in certain locations, especially in urban or highly regulated areas.

Additionally, check with the local Chamber of Commerce, your regional Health Department, and the Department of Motor Vehicles (DMV) for other specific requirements. For example, you may need a vehicle license specific to food trucks, fire certificates for safety compliance, and zoning permits to ensure you can operate in certain areas without violating local ordinances.

Starting the application process early is advisable, as obtaining these permits can sometimes take months. Make sure to stay on top of this to avoid any delays in your launch schedule.

Step 7: Purchase and Outfit Your Truck

Selecting the right truck is pivotal in starting your food truck business. Whether you opt to buy a new or used truck, or even consider renting, it’s crucial that the vehicle meets your operational needs within your budget. Ensure the truck is spacious enough for efficient movement and is equipped with the necessary commercial-grade kitchen appliances that cater to your specific menu.

Equally important is the safety of your staff and customers. Your truck must be fitted with essential safety equipment, including fire extinguishers and first aid kits. These are not just mandatory but critical for handling potential emergencies that might arise on the go. Remember, the right truck is the foundation of your mobile kitchen, so prioritize functionality and safety in your choice to set the stage for your culinary success.

Step 8: Invest in the Right Technology

Once you have your truck outfitted, the next step is integrating advanced technology to ensure the smooth operation of your food truck and enhance the overall customer experience. Start by equipping your truck with a reliable food truck POS system . This system not only speeds up transactions but also helps manage orders more efficiently, ensuring quick service that customers appreciate.

Also, consider adding a food truck kiosk . This setup allows customers to place their orders directly, reducing wait times and freeing up your staff to focus on food preparation and customer service. A handheld POS device is another great addition. It enables you to take orders and process payments anywhere around the truck, perfect for busy spots or when you’re serving at large events.

Together, these technologies streamline your operations and improve your interaction with customers, making their dining experience with your food truck memorable and hassle-free.

Step 9: Hire Staff

Running a food truck solo is possible, but hiring staff can significantly enhance your efficiency and customer service. You’ll need help with food preparation, cooking, and taking orders. As your business grows, having reliable employees allows you to take time off and manage other aspects of the business.

When hiring employees for your food truck, look for individuals who:

Have experience in food preparation and cooking

Exhibit strong customer service skills

Show enthusiasm and a positive attitude

Can handle the fast-paced, sometimes stressful food truck environment

Proper training is also essential. Ensure your staff understands your menu, the quality standards, and the importance of food safety. With a dedicated and well-trained team, your food truck can operate smoothly and provide an excellent experience for your customers.

Step 10: Develop Your Brand

Creating a strong brand is crucial for your food truck’s success. Start by selecting a catchy name that resonates with your concept and appeals to your audience. Then, design a memorable logo that captures the essence of your culinary offerings and brand personality. The visual appeal of your truck is equally important; it should draw the eye and invite customers to step up to your service window.

Incorporate consistent restaurant branding elements across all platforms, from the design of your truck to your menu layout, website, and social media profiles. This consistency helps build recognition and trust with your customers, reinforcing your presence in their minds.

Step 11: Plan Your Locations

Once your brand is established, the next step is to find the right spots to park your food truck. Start by identifying high-traffic areas such as business districts, college campuses, festivals, and parks, which are typically hotspots for food trucks. Each location offers a unique customer base and sales potential, so consider the type of clientele you aim to attract with your culinary offerings.

It’s crucial to stay informed about local regulations for food truck operations in each area you’re considering. Rules can vary widely, affecting where and when you can operate. Regularly check with city or county officials to stay compliant and avoid potential fines.

Additionally, explore opportunities to partner with local businesses or event organizers. Establishing regular spots through partnerships can provide stability and consistent customer traffic. These relationships can also lead to special event invitations and collaborations, further expanding your reach and brand presence in the community.

Selecting the right locations will maximize your visibility and enhance your food truck’s profitability and growth potential.

Step 12: Market Your Food Truck

Marketing your food truck effectively is key to attracting and retaining customers. Here’s how you can spread the word and create a buzz:

Embrace Social Media : Create dedicated business accounts on Instagram, Facebook, and Twitter. Post updates about your locations, featured dishes, and special events regularly. Engaging with your followers through polls, behind-the-scenes content, and live videos can enhance interaction and keep your audience engaged.

Leverage Local Advertising : Consider local radio or TV ads to reach a broader audience. Additionally, printing and distributing flyers in high-traffic areas can drive local interest. Ensure your marketing materials highlight your unique selling points and include eye-catching designs.

Optimize Your Website : Develop a professional website that reflects your brand identity. Implement SEO best practices to improve your visibility in search engine results. Include your menu, location schedule, and a blog to share news and updates.

Sell Branded Merchandise : Imprint merchandise like T-shirts, hats, or reusable cups with your logo or slogan. This not only promotes your brand but also provides an additional revenue stream.

Utilize Digital Innovations : Incorporate a digital menu board or a printed QR code that directs customers to your online menu. This can streamline the ordering process and reduce wait times. Using kiosk machines with splash screen promotions can also enhance customer interaction and provide an opportunity for POS marketing .

Drive Around : Simply driving your food truck around different neighborhoods can generate visibility. Make sure your vehicle design is bold and eye-catching to grab attention.

Word-of-mouth : Encourage satisfied customers to spread the word. Word-of-mouth recommendations remain one of the most effective marketing strategies.

By integrating these strategies into your restaurant marketing plan , you can effectively promote your food truck and build a loyal customer base.

Step 13: Purchase Food, Ingredients, and Supplies

If you already own a restaurant, use your established supplier relationships to source high-quality ingredients for your food truck. This streamlines the process and can help you secure better prices due to larger order volumes. 

For those new to the industry, it’s important to start building strong connections with reliable suppliers. Look for those who can provide flexibility in order sizes and delivery schedules, critical for the dynamic nature of food truck operations. 

In both scenarios, prioritize suppliers who align with your culinary vision and can consistently deliver fresh, top-quality products. This strategic approach will help maintain the excellence of your offerings and ensure your food truck stands out in the competitive market.

Step 14: Do a Test Run

Before the grand opening , a test run is essential to ensure your food truck is ready for the public. This step is your opportunity to put everything into practice under real-world conditions. During the test run, focus on how well your staff applies their training in food safety, preparation techniques, and customer service. This is also the time to test all the technology and equipment installed in your truck. 

Check if your point-of-sale system , digital menus, and any other tech solutions are functioning as expected. Observe the flow of operations and identify any areas where processes can be streamlined or where additional training might be needed. Addressing these issues before you officially open will help you launch confidently, knowing that your team and truck are fine-tuned for excellent performance.

Step 15: Launch Your Food Truck

As you gear up for your food truck’s launch day, focus on perfecting every detail to make a stellar first impression. Ensure that your food supplies are fully stocked, your staff is well-prepared, and your marketing efforts are peaking interest.

Kick off your first day with a bang by hosting special activities or offering inaugural discounts to attract a large crowd. This initial buzz is crucial for capturing attention and drawing people in to experience what you offer.

As the day unfolds, actively gather feedback from your first customers. This direct input is invaluable, allowing you to quickly make adjustments to improve both your food and service. Making a memorable start not only boosts your visibility but also sets the tone for the success of your food truck business.

Step 16: Continuously Evaluate and Adapt

After your food truck hits the road, it’s crucial to stay vigilant. Regularly review how your business is performing. Listen closely to customer feedback—what are they loving, and what could be better? This input is invaluable. Keep an eye on your financials, too. Are you meeting your targets? Where can you cut costs or boost revenue?

Adaptation is key. Maybe a dish isn’t selling? Consider tweaking the recipe or replacing it. Are some locations underperforming? Explore new spots that might capture more foot traffic. Continuous improvement will not only help you maintain profitability but also keep your customers satisfied and coming back for more. Always be prepared to make changes that enhance your food truck’s performance and appeal.

Step 17: Expand Your Food Truck Fleet

Once your food truck business is thriving, expanding becomes a viable next step. Assessing the growth potential involves looking at customer demand, financial health, and your ability to manage a larger operation. Consider adding more trucks to your fleet if you find that customer lines are consistently long and your single truck cannot meet demand. Alternatively, exploring a transition to a brick-and-mortar location might make sense if you want to capture a more permanent customer base while still operating the trucks as an extension of your brand.

Before making any expansion decisions, analyze the logistics and costs involved. Ensure that your current business model is scalable and that you have the management capacity to maintain quality and service across multiple locations. Whether adding another truck or opening a restaurant, each option should align with your long-term business goals and brand vision. By carefully planning your growth strategy, you can continue to build on your success and sustainably scale your culinary empire.

By following these steps, you can establish a successful food truck business that brings your culinary creations directly to the streets, creating a dynamic dining experience that draws customers back time and again.

Are you looking to make your food truck business a roaring success?   Discover how the right technology can enhance your operational efficiency and boost your revenue. Chowbus POS offers the best food truck POS system in the US , featuring robust features from sales tracking to a fully integrated food truck kiosk. Book a Free Demo/Consultation with Chowbus POS to learn more and take your food truck business to the next level!

Frequently Asked Questions About How to Start a Food Truck Business

Here are the answers to your most common questions about starting a food truck business. Find insights on profitability, necessary permits, investment potential, successful types of food trucks, and the effects of seasons on operations.

How Profitable is a Food Truck?

Owning a food truck can be quite profitable, with average annual revenues ranging from $250,000 to $500,000 for successful businesses. Profit margins typically vary between 6% and 9% . Factors like location, food quality, and operational efficiency significantly impact profitability.

What Permits Do You Need for a Food Truck?

To operate a food truck, you typically need the following permits: a business license, a food vendor's license, and a health department permit. Additionally, depending on your location, you may require parking permits, fire certificates, and special event permits if participating in festivals or gatherings. Check with your local city or county government for specific requirements.

Is a Food Truck a Good Investment?

Yes, a food truck can be a good investment. It typically requires lower startup and operating costs compared to traditional restaurants. Additionally, food trucks offer flexibility in location and menu, allowing owners to tap into various markets and adapt to consumer preferences quickly. However, success depends on strategic planning, understanding local regulations, and effective marketing.

What Type of Food Trucks Make the Most Money?

Food trucks that typically make the most money are those serving fast, easy-to-eat, and popular foods such as tacos, burgers, pizzas, and ice cream. Trucks specializing in unique or gourmet offerings, like ethnic cuisines or fusion dishes, also often see high profitability due to their appeal to food enthusiasts looking for new culinary experiences.

How Do Seasons Impact the Food Truck Industry?

Seasons significantly impact the food truck industry by influencing customer turnout, menu selections, and operational locations. Warmer months typically see higher foot traffic, allowing trucks to offer a broader range of menu items and expand to outdoor events and festivals. In contrast, colder seasons might reduce customer flow and prompt food trucks to relocate to more sheltered areas or adjust their menus to include warmer, comfort foods. Weather conditions also affect operational days and hours across different seasons.

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Relocating Your Business Can Be Complicated — Here's Your Step-by-Step Guide to a Seamless Move If you've decided to move your business to another state, there are specific processes to follow. Here's how to do it right.

By Nellie Akalp Edited by Kara McIntyre Jul 16, 2024

Key Takeaways

• Relocating a business to another state requires meticulous research on legalities, tax implications and market trends, coupled with a detailed step-by-step relocation plan.
• The domestication process allows businesses to maintain their corporate credit history and Federal Tax ID while reducing paperwork, with specific conditions varying by state.
• Transparent communication and strategic HR planning are crucial for addressing employee relocation, remote work opportunities and providing transition assistance.

Opinions expressed by Entrepreneur contributors are their own.

Starting and establishing a business is challenging , but the endeavor seems almost impossible when you decide to start over again in another state.

I don't mean opening an out-of-state location but moving your business from one state to another. My company has helped scores of business owners who want to relocate . The key is to tackle the process step-by-step.

Whatever your reason for moving, starting over in a new state requires detailed planning, in-depth research and patience. Here's what to consider if you're thinking about moving your business .

Related: 6 Critical Considerations Before Relocating Your Business to Another City

Do your research

Before making any move, it's crucial to do your research. Consider any legal and regulatory concerns. Make sure you understand the new state's steps for business formation , employment, licensing and tax requirements.

Then, define the specific reasons you're relocating. Are taxes an issue? While nine states (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming) currently don't levy an income tax, you need to find out about any local business, sales, property, and franchise taxes required by the state.

Are you moving to a state with a lower cost of living (COL)? These expenses are defined as "the cost of maintaining a certain standard of living," including housing, food, transportation, taxes, healthcare and more. The COL varies by state and fluctuates by city, so don't eliminate a state based on the costs in one specific location.

Accessing market trends and opportunities in the states you're considering moving to is also critical. Consumer demographics, market competition and economic indicators can impact your success. Compare statistics on industries and business conditions across the U.S.

Every state touts the availability of skilled labor, but the reality of your business's ability to attract and keep the right talent will vary. What are the prevailing wages for your type of business? Some companies benefit from being located near a college, which provides a pipeline of potential employees. The U.S. Chamber of Commerce keeps tabs on where the labor shortage is hitting hardest.

Also, consider your company's infrastructure needs. Depending on your business, concerns such as transportation, access to suppliers and availability of distribution centers may impact operations. Contact state and local economic development agencies for information about infrastructure and resources.

Many locales may meet your business criteria. However, they also need to fit your quality of life requirements. Does the state provide the healthcare, education and lifestyle options you need? Is the climate to your liking? Can you find the type of housing that suits your personal situation?

Related: Relocating Your Company? Don't Make These 10 Moving Mistakes.

Business domestication

We typically recommend that entrepreneurs who own LLCs and corporations domesticate (or redomesticate) their companies. This means your business ceases to exist in its state of formation and only exists in your new location.

Only 31 states and Washington, D.C. allow domestication. Each state has its own rules and processes. Check with Secretary of State offices to see which states allow domestication and their requirements.

Generally, the domestication process works in a specific order: You apply for domestication in a new state and then dissolve your company in your current home state. The process to domesticate entails getting the approval of all board members, applying for Articles of Domestication or Articles of Continuance and providing a Certificate of Good Standing and a copy of the application for Articles of Dissolution from your former state. Once approved, you'll file Articles of Dissolution in your former state. You must pay any outstanding fees or taxes.

Domestication has several benefits:

• You don't have to change your Federal Tax ID Number (Employee Identification Number/EIN).
• There's less paperwork and tax consequences.
• Your business can keep its credit history.
• You'll save money since you won't have to pay for annual reports and fees incurred by doing business in multiple states.

If your corporation or LLC wants to keep your old state as your state of formation or conduct business in both states, you must file for a foreign qualification in the new state. While every state has its own process for foreign qualification, you can usually file online for a Certificate of Authority and pay a fee.

Maintaining multiple locations means you must designate a registered agent in the state you are not headquartered in. This person must have a local address and the authority to accept legal documents and government notices on your behalf.

Sole proprietorships and partnerships

Moving your business is less complex if it's a sole proprietorship or partnership. There's still a process you must follow:

• Cancel local business licenses and permits and apply for new ones in your new state.
• Pay any outstanding fees and taxes.
• Withdraw any assumed names ( Doing Business As/DBAs ) from your Secretary of State's office and apply for the DBA in your new location.
• If your business bank does not have branches in your new state, close your bank accounts.
• Inform the IRS of your new business address.
• If you move mid-year, you must pay taxes in your new and old states.

Related: Patagonia Gave 90 Staff a Choice — Relocate Across the U.S. or Leave the Company. They Got 3 Days to Decide.

HR considerations

When you decide to relocate, it's essential to tell your staff as soon as possible and that you be transparent, honest and empathetic. It's best to hold an in-person meeting, allow time for questions and provide a timeline for the move.

Do you plan to offer your team the opportunity to move with you? Most small businesses cannot afford to pay employee relocation expenses, which typically cost thousands of dollars. Will you offer them the opportunity to work remotely?

If not, consider offering them severance and/or job transition assistance. If you know local companies looking for talent, offer to make introductions. And make sure you provide employees with letters of recommendation.

Taking the required steps to ensure a seamless transition will help ensure a smooth start in your new location.

Entrepreneur Leadership Network® Contributor

CEO of CorpNet.com

As CEO of  CorpNet.com , a legal-document-preparation filing service, Nellie Akalp helps entrepreneurs incorporate their business, form a limited liability company, set up a sole proprietorship and comply with state filing requirements.  

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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How to develop a money management plan

PayPal Editorial Staff

July 9, 2024

A money management plan can help individuals stay on top of daily expenses and save for the future. Digital tools can help make the process easy, convenient, and personalized based on unique financial situations.

Why is a money management plan needed?

A money management plan can help individuals manage personal finances and work toward achieving long-term and short-term goals . These could include:

• Savings. Allocate and save funds for specific savings goals, like an emergency fund  or a vacation.
• Avoiding debt.  Monitor spending and increase financial awareness to avoid debt.
• Making informed decisions.  Get a clear overview of income and expenses to manage bills  and other expenditures.
• Reducing financial stress.  Make a plan to secure finances and know that financial goals are on track to reduce money-related stress and anxiety.

Step-by-step guide to building a money management plan

A comprehensive budget plan that tracks income and expenses helps to provide a clear path to financial stability.

Here's how to set financial goals and track expenses to create a budget plan effectively.

Step 1: Gather financial information

The first step is to collect all financial details, including:

• Income sources, like a primary job, side hustles, investments, and any other income.
• Recurring expenses, such as rent, utilities, and different types of household expenses .
• Non-essential spending,  like entertainment and dining out.

Step 2: Choose a tracking method

The next step is to choose a method to track finances:

• Budgeting apps can automatically track spending , offering convenience and accuracy. But they might have additional fees.
• Spreadsheets,  like Microsoft Excel or Google Sheets, can be customized to individual needs. However, they require regular manual updates.
• Pen and paper are good for beginners but are more error-prone than digital methods.

Step 3: Set SMART financial goals

Next, set financial goals that are:

• Specific.  Define clearly what to achieve.
• Measurable.  Set a specific amount to track progress.
• Achievable.  Ensure the goal is realistic.
• Relevant.  Make sure the goal fits overall financial plans.
• Time-bound.  Set a deadline to reach the goal.

A SMART financial goal could be: "Save $5,000 for a vacation in the next six months by setting aside $833 each month." SMART goals provide clear targets that may help improve the chances of success.

Step 4: Analyze spending habits

To analyze spending, categorize expenses into essentials (like housing and food) and non-essentials (like entertainment and dining out).

For expensive essentials, explore cheaper alternatives or consider maximizing savings by using cash back apps . For non-essentials, consider which expenses to reduce or eliminate.

Step 5: Create a budget

To create a budget that addresses savings and expenses, consider the 50/30/20 rule. It allocates 50% of income to necessities, 30% to wants, and 20% to savings and paying off debt.

Choosing a specific budgeting strategy will depend on each individual’s needs, so evaluate all options to find the right fit for one’s situation.

Step 6: Consider automating finances

Automating personal finances can improve financial discipline. Automated savings apps , for example, automatically transfer funds into a savings account. PayPal Savings 1 allows users to setup automatic transfers into their account and allocate funds to specific goals.

Another example is scheduling automatic payments for recurring bills, which can help save time and avoid potential late fees.

Step 7: Regularly review and update budgets

Regularly review the budget to ensure it aligns with changing goals and life circumstances. If one’s income, expenses, or spending patterns change, the budget should be updated to reflect this.

Examples of money management strategies

There are different strategies to manage money. Some examples include:

• Daily expense tracking to get a clear picture of where money is being spent.
• Budgeting tools or budgeting templates to help visualize and stick to financial plans.
• 52-week savings challenge to help save a little more each week throughout the year.
• Rewards programs  to earn cash back or perks on everyday purchases.
• Budgeting tips such  as planning meals, negotiating bills, and unsubscribing from unused services.

Start building a money management plan

Knowing how to build a money management plan and stick to it is crucial for gaining control over finances.

Start effective money management with the PayPal digital wallet . It helps in splitting bills, tracking spending, and monitoring savings all in one place.

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Introduction to debt consolidation

Steps to consolidate debt, choosing the right debt consolidation method, debt consolidation alternatives, how to consolidate debt: a step-by-step guide.

Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate personal loans to write unbiased product reviews.

• Debt consolidation involves paying off multiple debts with one large debt at a lower interest rate.
• You can consolidate debt using one of the  best debt consolidation loans . 
• Consolidating debt will add a hard inquiry to your credit report and affect your credit utilization.

Having multiple debts, all at different interest rates with different payment dates, can be stressful and expensive. One payment that falls through the cracks and ends up on your credit report can hurt your credit score. 

Instead of dealing with all these debts, it may be worth your time to consolidate your smaller debts into one large debt with a lower interest rate. This can save you money, but consolidating your debt isn't a decision you should take lightly. 

Assessing your debt

If you have a considerable number of debts, consider debt consolidation. However, while simplifying your debt may increase your quality of life, that sole reason shouldn't justify going through the consolidation process, especially when there are debt-tracking services that can help you manage your debts. Some of them are even free.

You should consolidate debt mainly to get a better interest rate. Unfortunately, it's hard to determine your APR on any credit consolidation products since many lenders only tell you what interest rate you qualify for once you apply. That said, your interest rates will be more favorable the higher your credit score is.

That said, the credit scoring algorithms give you a rate-shopping window when applying for loans. This means that you can apply to multiple loans within a short period of time, within 14 to 45 days, without triggering a hard inquiry on your credit report for each application. Instead, all those applications will be calculated as a single inquiry. This allows you to compare rates between lenders and find the best deal.

Additionally, balance transfer credit cards usually come with a 0% introductory APR period which generally lasts for 12 to 21 months, depending on the card.

Related: The best personal loans for bad credit  »

Researching consolidation options

If you decide to move forward with debt consolidation, you'll have one of three options: a balance transfer credit card, consolidation loan, or home equity loan .

Balance transfer credit cards

Balance transfer cards offer another smart way to consolidate debt and save money on interest. These cards, also known as 0% APR cards, allow you to transfer your balances on other credit cards onto one card that usually comes with an introductory 0% APR which can last anywhere from 12 to 21 months. Read about our picks for the best balance transfer cards here.

You may have to pay a 3% or 5% balance transfer fee for the privilege, but the price can be well worth the interest you save. Also, note that some balance transfer cards don't charge fees if you transfer your balances within a specified amount of time.

Balance transfer cards are best for:

• Consumers who have the discipline to stop using credit cards after they transfer a balance
• Anyone willing to attack their debts with force during their card's introductory offer period
• People who have a smaller amount of debt they can pay off in 12 to 21 months

Consolidation loans

One of the best options for debt consolidation is a personal loan. These unsecured loans let you consolidate multiple debts into a new loan with a fixed interest rate, fixed monthly payment, and a fixed repayment period. This means you'll know exactly how much you owe each month and when your debts will be paid off.

You can shop for the best personal loan rates  on marketplaces like SoFi personal loans . As mentioned earlier, you will have a rate-shopping window where all the hard inquiries that lenders pull within a certain period of your first application will be calculated into your credit score as one hard inquiry.

Most personal loans let you borrow up to $35,000, then repay it over three to five years (terms vary based on the lender you choose).

Personal loans are best for:

• Consumers who have a lot of debt to pay off over several years
• Anyone who wants a fixed interest rate, fixed payment, and fixed payoff date
• People who prefer to stop using credit while they pay down debt

See our picks for the best personal loans »

Home equity loans and lines of credit

It's also possible to consolidate your debt using a  home equity loan or home equity line of credit (HELOC) . While these options come with lower interest rates than credit cards and some additional benefits such as no  origination fees  or annual fees, these can be impractical and risky methods for debt consolidation. This is because you need a lot of equity in your home to qualify. Also note that you're putting your home up as collateral for these loans, meaning you risk foreclosure if you don't repay.

Navigating the debt consolidation process

Application and approval.

Once you've made your choice, you need to apply for your chosen debt consolidation product. As you are essentially opening a new line of credit to pay off your other credit accounts, applying for these loans will trigger a hard inquiry on your credit report. 

Managing consolidated debt

Once you get approved, you will need to manage your debt accordingly. Consolidation loans give you more structure in your repayment plan, but reaping the benefits of a balance transfer requires more discipline on your part. You will need to be aggressive with your credit card debt and try to pay off the entire balance within the introductory period.

Potential pitfalls and considerations

Understanding the risks.

Depending on how your credit report looks, consolidating debt may affect your credit score in several ways. 

The most apparent consequence of using a debt consolidation product is the hard inquiry it will add to your credit report. Consolidation loans and balance transfer credit cards, while serving a specific function, are still lines of credit that will result in a hard pull on your credit report. This will lower your credit score by a few points, provided you haven't opened any other lines of credit recently.

A balance transfer credit card also has the potential to affect your credit utilization ratio , the ratio between the credit you're using and your total available credit. Generally, you want to keep this under 30%, though every dollar into your credit limit counts against your credit score. The credit scoring algorithms such as FICO and VantageScore look at your credit utilization on revolving credit accounts overall and for each account. 

Let's say you have three credit cards with the following balances and credit limits : 

• Credit card 1: $2,000 out of a $4,000 limit.
• Credit card 2: $1,000 out of a $3,000 limit
• Credit card 3: $2,000 out of a $10,000 limit. 

Your respective ratios would be 50%, 33%, and 20%, respectively, and an overall utilization ratio of 29.4%. Now you consolidate those debts onto a balance transfer card with a $10,000 limit. Now you have three cards with a 0% utilization ratio and one with a 50% utilization ratio. Additionally, your overall utilization ratio has dropped to 18.5%.

A consolidation loan's effect on your utilization ratio may shake out differently based on how much debt you have, how many credit cards you have, and the credit limit on your balance transfer card. Like your interest rates, your credit limit also varies based on your credit score.

There are other ways to get control of your debt aside from debt consolidation.

Debt settlement

Try a debt settlement plan if you simply have too much debt. This will take a heavy toll on your credit score, but you may emerge from the process with less debt. Unfortunately, there's no guarantee that your creditors will agree to a debt settlement.

If you're drowning in debt and consolidating it isn't an option, consider a debt settlement service. Working yourself out of a financial hole can be difficult, but you have opportunities to do so. Some options include:

• National Debt Relief
• CreditAssociates
• Accredited Debt Relief
• American Consumer Credit Counseling

Rework your budget

Oftentimes, there may be unexpected room in your budget to put toward your debt if you reallocate your spending to prioritize doing so. You may be able to cut down on discretionary expenses, or if that isn't an option, pick up a little extra work in the gig economy to get the extra cash you need. You can use any of the best budgeting apps to track your spending habits, find ways to spend less and save more, and budget effectively.

Debt consolidation can affect your credit score due to credit inquiries. However, if managed well, it can improve your score over time.

You can consolidate most types of unsecured debts, like credit card debts and personal loans. Secured debts, such as mortgages, typically cannot be consolidated in the same way.

There are some fees associated with debt consolidation, especially when it comes to things like balance transfer credit cards and personal loans. Consider these costs when deciding if consolidation is cost-effective.

Choosing the best method to consolidate debt depends on your financial situation, the types of debt you have, your credit score, and your ability to make regular payments. Compare your options and seek advice from a financial advisor.

When consolidating debt, avoid accruing additional debt, and understand the terms of your consolidation. Remember, consolidation is not a cure-all solution, so maintain financial discipline.

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A Step-by-Step Guide to OKR Planning

By Courtney Patterson | July 9, 2024

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The OKR (objectives and key results) methodology is a system that teams and companies use to set the right goals and measure them effectively. Here, you’ll learn all about the OKR planning process and find expert tips and tools to help you get started.

In this article, you’ll find the following:

• Step-by-step how-to for planning OKRs
• Best practices and tips for planning OKRs
• Starter kit for planning OKRs
• Quarterly vs. annual OKRs

What Is OKR planning?

OKR planning aims to ensure that various teams are aligned on their individual and collective objectives. The OKR approach consists of four stages: set goals, define key results, implement the plan, and gather feedback. OKR planning is the first step.

When utilized effectively, OKR planning gets all teams on the same page in terms of goals and key metrics for success,  whether this planning takes place quarterly or annually . From this baseline, all teams should be able to work together successfully to achieve the stated objectives.

Steps in the OKR Planning Process

Before you set your goals, identify desired key results, or institute systems to track your success, you need to plan. Follow the steps below at the team or company level to plan your OKRs and keep your team aligned.

• What is our company trying to achieve? What is its big strategy? What are its big goals?

• Collect Initial Ideas OKRs differ from other planning strategies in their multi-directional nature. In other words, these goals aren’t simply dictated from the executive level using a top-down approach. At Google, for example, many  teams devise about 60 percent of their goals from the bottom up . The OKR process should involve discussions among employees and managers. Some companies require OKRs at every level, including the individual level. This step is key when writing OKRs. An initial staff meeting can provide an opportunity for employees and managers to negotiate the specifics of each OKR and to collaborate and ensure that individual, team, and company goals are all aligned. Learn more about  how to write OKRs with our comprehensive guide.  
• Training: It’s critical to train all your employees on the OKR method and what it involves. This ensures that everyone understands the system and that you gain buy-in from the entire time  before  you begin setting OKRs. Your OKR planning process will run more smoothly if everyone knows what to expect, along with their roles and responsibilities.
• Templates: You can ease the process of planning OKRs by using an  OKR template in either Excel or a Google Docs format. OKR templates should be user-friendly and straightforward, and you can use them to facilitate brainstorming activities. Montgomery says, “At this stage, I'm typically working on a whiteboard,” which could be either physical or digital. “Some dedicated OKR platforms actually include a whiteboard; it turns looser information into data.”
• Platform: Pick an OKR management platform that allows your team to collaborate remotely, automate workflows, and centralize your planning process. At the same time, Montgomery notes, trying to over-automate an essentially creative process can leave you with “a big soup of what other people have already thought and said.” It’s okay to keep this simple and low-tech if that’s what you need.  
• Pick an OKR Facilitator Before introducing OKRs into your organization, choose someone to lead the process and oversee the OKR project plan. Because this person will be everyone’s go-to in case of a problem, they should ideally have experience facilitating workshops and planning sessions and have goal-setting responsibilities in the company. It could be someone from Human Resources, which is often responsible for introducing OKRs or any other new system into the company culture and measuring performance. It could also be a team leader, a project manager or operations manager, an investor, or anyone with previous experience with OKRs. The OKR planning leader should be able to drive accountability with their peers.  
• What are our top objectives or primary goals for this quarter/year?
• What are the steps required for each of these objectives?
• What resources or tools do we need to accomplish these objectives?
• Do we have the expertise required, or do we need training or outside help?
• What challenges should we expect as we work toward these objectives? How can we turn these challenges into opportunities?
• How can we measure our progress toward these objectives? What are the main indicators of our performance?
• What are the key results or outcomes that we’re looking for?
• What are the specific actions or initiatives required to achieve these key results?
• Who should be in charge of keeping track of progress and holding accountability with each of these actions?
• How can different teams and individuals best collaborate on these shared objectives?

How often should we check in and update each other on our progress toward these objectives?

Download OKR Brainstorm Questions for Microsoft Word  |  Adobe PDF  | Google Docs  

A potential OKR workshop schedule day could look like this:

• Internal Challenges: These challenges come from within the company, and they can be both planned and unplanned. For example, your company could be trying to appeal to a new target audience or changing or expanding its brand image; you could be facing new budget constraints; employee morale may be low; or a new competitor may have recently entered the market. 

• Set Clear Priorities At this stage, focus on gathering all the important information that you will need to set OKRs — doing so will enable you to realistically set timelines and have a clear view of your capacity. “Remember that you shouldn’t try to do everything,” advises  Allan Kelly , author of  Succeeding With OKRs in Agile and The Art of Agile Product Ownership . “It’s absolutely key to limit the number of objectives the team has.”   
• Get Feedback Once you’ve drafted your OKRs in the brainstorming session, allow team leads and managers to circulate feedback, and revisit the draft OKRs if necessary. This step is also important to conduct at the end of the quarter when assessing the OKRs that have already been set. Employees should see the impacts of their ideas when put into practice, so they feel more invested in the planning process.  
• Plan an Execution Strategy Initiate this process during the brainstorming session. Break down your execution plan into manageable action items, including initiatives and regular check-ins, so that OKRs don’t feel out of reach or leave employees feeling unmotivated. Initiatives are the tasks, projects, and activities that you undertake in order to achieve the stated OKRs. (See our roundup of  examples of OKRs for every department for inspiration on how to write effective OKRs.) Check-ins are regular team review sessions designated for updates and discussions about progress. “Just agree on how you’re going to check in on [the OKRs] and how you’re going to track them,” says Montgomery. “Get the commitment to keep having conversations about them and be transparent about the results.”It’s important to also set up a tracking system, which will come in handy when you revisit the process at the end of the quarter to help with Step 12.Tracking and check-ins happen throughout the implementation process, but you should also incorporate a decision on an  OKR scoring system beforehand. Consider setting up an OKR dashboard to track your efforts; you can use this  set of OKR tracking templates to get started.  
• What is our role in achieving this company objective?
• Where should we be in three months in order to be successful?
• What needs to be changed or fixed in three months? But remember: “Don't rush the setting process; it takes time,” advises Allan Kelly. “Setting is not planning: When setting goals, be outcome- and customer-focused. Have another meeting after you set the OKRs to decide how you will achieve them and plan the work.”  
• Make Amendments Before the end of the quarter, it’s important to review and make any adjustments necessary for the following quarter. You can use the feedback from your earlier brainstorming sessions, new feedback, and other data you’ve gathered throughout the quarter to help you make these adjustments.

OKR Planning Starter Kit

Download the OKR Planning Starter Kit

Use this free starter kit to help you plan out your quarterly or annual OKRs. This kit includes resources to help you evaluate and compare different types of OKRs, as well as set goals effectively.

In this kit, you’ll find:

• A  quarterly vs. annual OKR reference chart for Adobe PDF  to help decide when to do each type of OKR
• A  brainstorming guide worksheet for Adobe PDF  to help you decide which method to utilize
• An  OKR goal-setting template for Microsoft Word  to help you plan and set your goals
• An  OKR planning workbook for Excel  to organize your thoughts and plan your OKRs with your team
• A  brainstorming cheat sheet for Microsoft Word  to use during a problem-solving session
• An  OKR workshop schedule for Microsoft Word  to plan your day

OKR Planning Best Practices

As you set and plan your goals, here are a few tips to help you succeed. Though you don’t have to implement every tip in every OKR planning session, consider them all within the context of your team and company.

• Maximize Buy-In:  Doing so can help prevent issues with communication or motivation later in the process. It also can help foresee potential issues. “Make sure everyone on the team is involved in the setting process so that they can spot any problems,” Kelly advises.
• Set Stretch Goals:  “I like to call it a ‘moonshot,’” says Montgomery. “The outcome is uncertain, but nobody gets blamed or punished if you don’t get there.” Montgomery also notes that it’s especially important not to link OKR performance to compensation — “otherwise, people will play it safe.” The OKR framework is for moving into new territory, and people should feel comfortable enough to take risks and make mistakes that they can learn from.
• Be Transparent:  “OKRs are public; everyone in the company should be able to see what everyone else is working on (and how they did in the past),” wrote Rick Klau, who spent nearly a decade at Google Ventures, in 2012, in a paper about  how Google sets goals . Every project team member, contributor, and stakeholder should be aligned on the team and company objectives, and discussing OKRs transparently ensures accountability and cooperation. Once the team discusses and agrees upon objectives, you can also identify a clear set of key results.
• Be Realistic:  Allan Kelly considers one objective per quarter to be ideal, while Daniel Montgomery generally follows the rule of “three, plus or minus one.” They both agree that for most businesses — that is, those focusing on growth rather than solely innovation — it’s important to be realistic, even while being ambitious.
• Stay on Offense: The OKR framework is not for damage control or firefighting. It’s for growth, transformation, and change. Avoid falling into a defense stance, or sandbagging — piling up a fortification just to hold back a flood.

• Consult Experts:  “I often state that ‘a little structure goes a long way toward desired outcomes,’” says  Doug Gray , CEO of Action Learning Associates, LLC. “There are two types of objectives or outcomes: behavioral and performance. Most teams do better when an external facilitator drives the process with a regular cadence and executive involvement.”

• Avoid Wordiness:  To keep the focus on growth and innovation, even if BAU needs to be taken into account, it’s important to write OKRs that are short, clear, and concise, and that lend themselves to “timely resolution of disagreements,” according to Vetri Vellore, a former VP at Microsoft and author of  OKRs for All: Making Objectives and Key Results Work for Your Entire Organization . “Keep the planning process concise, and avoid spending too much time on wording,” he advises.

OKR Quarterly Planning vs. OKR Annual Planning

Annual OKR planning is the strategic process of defining an organization’s or a team’s objectives and key results over the course of a full year.  Quarterly OKR planning defines these objectives and key results for a three-month, or quarterly, period.

Quarterly OKR planning often involves breaking down annual goals into shorter-term action items. During quarterly OKR planning, teams define their organization’s and their own objectives to help them achieve their quarterly goals. These quarterly goals should directly drive progress toward the organization’s longer-term goals.

Opinions vary on which type of planning works best for an organization. For some, it works best to choose one or the other; for others, it might be best to use both for different purposes. But before you can assess this for your company, it’s important to consider the broad ways in which the two strategies and their impacts differ.  

• Flexibility: Different timelines means different levels of flexibility. One major difference between annual and quarterly OKRs is that annual OKRs encourage more longer-term strategic planning, while quarterly OKRs encourage more flexibility and greater responsiveness to changing markets and conditions.
• Forethought: Setting and planning annual OKRs requires more forethought than setting and planning quarterly OKRs, since annual OKRs need to align with a longer-term company mission.
• Feedback:  Depending on the timeline of your goal setting, you will have different approaches to evaluating your systems and implementing changes. Annual OKRs typically involve review and evaluation at the end of every year, while quarterly OKRs require conducting this review every three months.

According to Allan Kelly and Dan Montgomery, quarterly OKRs are a must-have for teams. Teams  can  set annual OKRs, but this isn’t necessary. “Even if longer-term goals are not formulated as OKRs, teams should know what are the company goals and priorities for the longer term. Then, when they set quarterly OKRs, they should be producing OKRs that support those long-term OKRs,” Kelly explains.

Montgomery agrees: “I wouldn’t do two separate OKRs. It’s just too much to keep track of. We set annual goals, but we don’t actually set OKRs for the year. We break the annual goal down into the quarters, and then set OKRs for the quarter.”

Even if you use both annual and quarterly goals, it’s important to make sure that they’re connected, so that a focus on one fully supports the other, rather than distracting from it. “What do things need to look like a year from now?” Montgomery asks. “Then, what needs to be true in 90 days for us to feel convinced that we’re going to get to that outcome in a year?”

Quarterly OKR planning

Quarterly OKRs keep employees focused on their stated goals for a three-month period, but their efforts should also align to the company’s annual goals. Setting quarterly OKRs should ideally help you define your annual goals and strategy in terms of more manageable targets. 

Quarterly OKRs can help teams see how their weekly or daily tasks fit into their overarching objectives. They also have several advantages over annual OKRs. For example, they have the following qualities:  

• Simple: Shorter timelines means that OKRs have to be simpler and more actionable.
• Flexible: Quarterly OKRs are necessarily more agile, meaning that they should be able to adapt to changing situations more easily.
• Repetitive: Setting, planning, and evaluating OKRs every 90 days enables an iterative learning process where teams have the time and space to try the same things in new ways, experiment, and build on past mistakes. It also offers more frequent opportunities to celebrate small successes.
• Top of Mind: Annual goals may be susceptible to a “set it and forget it” mindset. With a 90-day timeframe, this is far less likely.
• Receptive to Change: “Quarterly OKR feedback sessions are much more effective than annual sessions,” says Doug Gray. “Related research abounds from annual performance reviews (which have low value) versus quarterly or monthly or weekly feedback sessions. As millennials demand more feedback from other work groups or clients in the workforce, those sessions may become more frequent and even more valuable.” These quicker feedback loops means that you will be more ready for change — and better able to make improvements — as you wrap up the quarter.
• Not Too Stressful: The ideal OKR success rate is between 60 and 70 percent. Removing the expectation of a perfect score leaves more room for mistakes, new lessons, and change.
• Just Stressful Enough: Because of the time constraint that they come with, quarterly OKRs have the potential to inspire more creative thinking, focus, momentum, and efficiency. This is especially valuable in cases where the company faces external challenges, such as rapidly changing market dynamics or emerging trends.

These particular qualities make quarterly OKRs especially useful when the company is in an environment characterized by the following:  

• Constraint: Allocating resources based on shorter-term priorities can enable teams to optimize their workforce and budget by planning at a more detailed level.
• Experimentation: Setting out to do something you’ve never done before is an important reason for using the OKR system. Quarterly OKRs allow for more room to experiment, test hypotheses, and learn from mistakes; because they are shorter-term, they come with less risk of time lost when mistakes happen.
• Low Morale: Quarterly OKRs keep a team focused on more manageable goals — and since they require reevaluation every three months rather than every year, they are useful  to motivate employees more regularly and celebrate achievements as well as to adopt course-correction measures.
• Uncertainty: For young companies such as startups or in rapidly changing industries such as healthcare or technology, quarterly OKRs are useful for setting goals that you may need to quickly adjust. If these companies are experiencing growth in a volatile market, then it’s important to have these shorter timeframes, rather than running the risk of having to make longer-term predictions.

Annual OKR planning

Annual OKR planning involves defining an organization’s objectives and goals over the course of a full year, as well as laying out the results that will be used to measure progress toward those goals. Annual OKRs are more top-level than quarterly OKRs, and they offer a general roadmap or compass for developing strategies and making decisions.

More so than quarterly OKRs, annual OKRs enable the following:  

• Collaboration: Because annual OKRs are more high-level than quarterly OKRs, they require coordination between different departments. This provides the opportunity for a wide range of teams to collaborate toward shared goals, building a sense of appreciation and community within the organization.
• Resource Planning: The high-level roadmap offered by annual OKRs helps organizations set priorities and allocate resources for longer-term goals, such as investing in research and development.
• Strategic Planning: The longer time frame of annual OKRs affords a company time to plan more ambitious initiatives, such as launching new products, entering new markets, or developing new processes. This enables greater potential for impact within and by the organization.
• Time: There is less pressure on employees in the case of annual OKRs. Since  evaluations and progress reports take place once a year, teams have the flexibility to make up for lost time if needed. Annual OKRs also allow organizations to measure the impact of their activities over the course of a year and more, and then make strategic decisions for the long run.
• Transparency With Stakeholders: Annual OKRs provide a framework to include the interests of investors, clients, and other stakeholders outside of the organization’s immediate circle, who are interested in the organization’s overall growth. The annual cycle encourages progress reports that can be shared with these stakeholders and improve confidence in the organization.  

In several situations, annual OKRs may be better suited to an organization than quarterly OKRs:  

• Annual Sales Cycle: Industries such as education, insurance, or real estate might be more suited to annual OKRs since they involve buying processes that require a lot of lead time or are subject to seasonal change.
• Established Routines: Organizations that have well-established routines may choose to use annual OKRs over quarterly OKRs to avoid introducing new processes or potential disruptions.
• Long-Term Projects: Intensive, longer-term initiatives that require adequate time for research and development — especially if the resources for R&D or administration are limited — may be better suited to annual planning than quarterly planning.
• Need for Smooth Workflow: Annual OKRs require annual check-ins and evaluations to reassess whether they are appropriate for the following year. This may be more suitable for companies than quarterly OKRs, which have cycles involving more frequent pauses that may be disruptive to workflow.
• Stable Environment: Annual OKRs are suitable for organizations that belong to a relatively stable industry, such as the food industry, where you can more easily foresee and plan for changes.

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How to Create a Leadership Development Plan: Explained in Detail

Interested in learning how to design a Leadership Development Plan and outline your goals, objectives, and actions? Then, you are at the right place. This blog will help you learn How to Create a Leadership Development Plan that is effective, realistic, and aligned with your personal and professional aspirations.

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Leadership Development is the process of enhancing your abilities, skills and knowledge so that you can lead people effectively. It can help you reach your professional and personal objectives and have a positive impact on your team and business. But do you know How to Create a Leadership Development Plan that can help you reach your long-term objectives? 

Read this blog to understand How to Create a Leadership Development Plan that is suitable for your business. If you're in a Leadership role or aspiring to be, this blog will help you understand the process and improve your Leadership skills. 

Table of Contents

1) What is a Leadership Development Plan? 

2) Creating a Leadership Development Plan 

   a) Evaluate and Recognise Talent 

   b) Secure Approval from Important Stakeholders 

   c) Define the Leadership Approach 

   d) Identify Essential Leadership Skills 

   e) Evaluate Critical Leadership Skills 

   f) Develop the Leadership Development Plan 

  g) Implement Continuous 360-degree Leadership Assessments 

2) Conclusion 

What is a Leadership Development Plan?  

Leadership Development is the intricate process of improving Leadership Skills and competences through various activities. It teaches critical Leadership skills needed at all levels of employees to effectively manage, motivate, and empower their teams to success. This kind of development is essential for cultivating a Leadership culture throughout a company.  

Leadership Development training can take various forms, including on-site training and mentorship programs and off-site events like training seminars, conferences, online training, and graduate programs. An organisation should design a Leadership Development Plan to fulfil the purpose of carrying out Leadership Development effectively. 

This plan will outline how it should be followed, what to expect for the staff who are going through this development, and how it will benefit the organisation and the staff. A Leadership Development Plan can have various formats and components, depending on your preferences and needs. However, the basic Leadership Development Plan includes the following: 

a) A vision statement that describes your long-term vision and purpose as a Leader. 

b) A mission statement that describes your short-term mission and goals as a Leader. 

c) A SWOT Analysis that helps identify your Strengths, Weaknesses, Opportunities, and Threats as a Leader. 

d) A gap analysis that identifies the gaps and areas of improvement between your current and desired level of Leadership Development. 

e) A skill matrix that identifies the specific skills and competencies that you want to develop or enhance as a Leader. 

f) An action plan that identifies the specific actions and activities that you will take to develop or enhance those skills and competencies. 

g) A measurement plan that identifies the specific measures and indicators that you will use to track and evaluate your progress and outcomes. 

A Leadership Development Plan can help you to: 

a) Clarify your vision, mission, and goals as a Leader. 

b) Assess your current level of Leadership Development and identify your areas of improvement. 

c) Define the specific skills and competencies that you want to develop or enhance as a Leader. 

d) Plan the specific actions and activities that you will take to develop or enhance those skills and competencies. 

e) Monitor and gauge your progress and outcomes and adjust your plan as needed.  

Creating a Leadership Development Plan  

Now that you have learned what a Leadership Development Plan is let’s read further and understand How to Create a Leadership Development Plan. Here are the steps: 

1) Evaluate and Recognise Talent  

Understand what kind of Leader you want to be, and your end-goal. This helps you define smaller skills and traits to help you achieve overall goals. It will also give you a clear idea of the kinds of training programmes, courses and other resources to help you to achieve them. 

To evaluate and recognise your talent as a Leader, you can use various tools and methods, such as: 

a) Use self-assessment tests to understand Leadership style and competencies. 

b) Collect 360-degree feedback from various stakeholders for insights. 

c) Evaluate achievements via Performance reviews for Leadership effectiveness. 

d) Showcase Leadership Skills and accomplishments as a part of your career plans 

e) Seek guidance from mentors or coaches for Leadership Development. 

When you assess and recognise your talent as a Leader, you should be honest, objective, and constructive. You should focus on your strengths, weaknesses, opportunities and threats. You should also be open, curious, and willing to learn from your feedback and results. 

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2) Secure Approval from Important Stakeholders  

You need to communicate your vision, mission, and goals as a Leader and get the support from the people who can influence or be affected by your Leadership Development Plan. These people may include your manager, team, organisation, customers, or stakeholders. 

To secure approval from important stakeholders, you can use various strategies, including: 

a) Present your plan clearly, emphasising benefits. 

b) Align with stakeholders' goals and values. 

c) Incorporate feedback and suggestions. 

d) Negotiate resources and set expectations. 

e) Build trust and keep stakeholders updated. 

When you secure approval from important stakeholders, you should be respectful, persuasive, and collaborative. You should focus on the common interests and goals and your Leadership Development Plan's mutual benefits and value. You should also be flexible, adaptable, and responsive to the needs and expectations of your manager, team, organisation, customers, or stakeholders. 

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3) Define the Leadership Approach  

You must decide what kind of Leader you want to become and what principles and values guide your Leadership. You also need to decide the Leadership styles and behaviours that suit your personality, preferences, and capabilities and match the needs and expectations of your team, organisation, customers, or stakeholders. 

To define the Leadership approach, you can use various sources and references, including: 

a) Use Leadership theories, models, and frameworks. 

b) Learn from Leadership examples and case studies. 

c) Seek guidance from mentors or role models. 

d) Gather feedback from stakeholders for improvement. 

It is important to be precise, dependable, and genuine while defining the Leadership strategy. You should concentrate on the goals and objectives that guide your Leadership as well as the abilities and proficiencies that make it possible. A Leader must also be conscious, introspective, and flexible in order to modify their approach to Leadership to fit the many and ever-changing circumstances and settings they encounter. 

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4) Identify Essential Leadership Skills  

You need to determine the specific skills and competencies you want to develop or enhance as a Leader that are relevant and important for your personal and professional goals and your team, your organisation, your customers, or your stakeholders. 

To identify essential Leadership Skills, you can use various criteria and methods, such as: 

a) Define Leadership approach and chosen styles to determine needed skills. 

b) Gather feedback from various stakeholders to identify expected competencies. 

c) Use performance reviews and career plans to measure required skills. 

d) Assess strengths and weaknesses through self-assessment and feedback. 

e) Refer to Leadership theories and frameworks to understand essential skills. 

When you identify essential Leadership Skills, you should be specific, realistic, and prioritised. You should focus on the relevant skills and competencies for your personal and professional goals and your team, your organisation, your customers, or your stakeholders. You should also focus on the skills and competencies that are most feasible and achievable for your time and resources. 

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5) Evaluate Critical Leadership Skills  

You must assess your current proficiency and performance level based on the essential skills you have identified for your Leadership Development. You also need to analyse your desired proficiency and performance level on those skills and the gap between your current and desired level. 

To evaluate critical Leadership Skills, you can use various tools and methods, such as: 

a) Use rating scales to assess proficiency levels and identify gaps. 

b) Utilise rubrics to define criteria and assess proficiency levels. 

c) Create portfolios to collect evidence and analyse proficiency. 

d) Take tests to measure and demonstrate proficiency levels. 

When you evaluate critical Leadership Skills, you should be objective, accurate, and consistent. You should use the same tools and methods to assess your current and desired proficiency and performance level on each skill and competency and calculate the gap between them. You should also use multiple sources and perspectives for evaluating your skills and competencies, such as your self-evaluation, your manager's evaluation, your peer's evaluation, your subordinate's evaluation, your customer's evaluation, or your stakeholder's evaluation. 

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6) Develop the Leadership Development Plan  

You need to create a document explaining your goals, objectives, actions, and measures for your Leadership Development based on your evaluation of critical Leadership Skills. You also need to create a timeline and a budget for your Leadership Development Plan and assign roles and responsibilities for yourself and others involved in your Leadership Development Plan. 

To develop the Leadership Development Plan, you can use various formats and templates, such as: 

a) Set SMART goals for clear objectives. 

b) Develop action plans outlining steps. 

c) Establish measurement plans for progress tracking. 

d) Create timeline plans with milestones. 

e) Prepare budget plans for resource allocation. 

f) Define responsibility plans for clear roles. 

Make sure to be clear and succinct in designing a Leadership Development Plan. All aspects and features of the Leadership Development Plan should be covered, with adequate details and information to guide you and others involved in your pursuit of excellence. Be flexible, adaptable, and responsive to changing situations or contexts, and consider feedback and input from your manager, team, organisation, customers, or stakeholders. 

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7) Implement Continuous 360-degree Leadership Assessments  

Implement ongoing 360-degree Leadership assessments. This means that you need to execute and monitor your Leadership Development Plan and collect and analyse feedback and input from your manager, team, organisation, customers, or stakeholders on your Leadership performance and areas of improvement. You also need to review and update your Leadership Development Plan regularly and adjust it as required. 

To implement ongoing 360-degree Leadership assessments, you can use various tools and methods, such as: 

a) Utilise online, paper, or phone surveys to gather feedback from stakeholders. 

b) Conduct face-to-face, phone, or video interviews to collect input. 

c) Obtain feedback through direct, indirect, or participant observations. 

d) Measure progress and outcomes with progress, status, or outcome reports. 

e) Evaluate and reflect on progress and outcomes through performance, career development, or learning reviews. 

When implementing ongoing 360-degree Leadership assessments, you should be proactive, diligent, and open. You should execute and monitor your Leadership Development Plan regularly and consistently and collect and analyse feedback and input from your manager, team, organisation, customers, or stakeholders frequently and thoroughly. You should also review and update your Leadership Development Plan periodically and systematically and adjust it as needed. 

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Conclusion  

Becoming a strong, capable Leader is a commitment you can make at any stage of your career. However, starting earlier lets you enjoy the benefits for longer. By analysing your current professional standing and thoughtfully considering your future goals, you can Create a Leadership Development Plan that matches your passions and helps you develop the skills needed to be more impactful in your role. 

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Frequently Asked Questions

A Leadership Development Plan should be comprehensive yet concise, typically spanning from six months to two years. This allows for thorough skill development and progress tracking while remaining focused on achievable goals and actionable steps. 

Regularly review and update your Leadership Development Plan at least annually to reflect evolving goals, progress, and feedback. Additional updates may be necessary based on significant changes in roles, responsibilities, or organisational priorities. 

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Alongside our diverse Online Course Catalogue, encompassing 17 major categories, we go the extra mile by providing a plethora of free educational Online Resources like News updates, Blogs , videos, webinars, and interview questions. Tailoring learning experiences further, professionals can maximise value with customisable Course Bundles of TKA . 

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