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How To Write the Perfect Business Plan in 9 Steps (2023)
- by Desirae Odjick
- Dec 3, 2022
- 25 minute read
A great business plan can help you clarify your strategy, identify potential roadblocks, decide what you’ll need in the way of resources, and evaluate the viability of your idea or your growth plans before you start a business .
Not every successful business launches with a formal business plan, but many founders find value in taking time to step back, research their idea and the market they’re looking to enter, and understand the scope and the strategy behind their tactics. That’s where writing a business plan comes in.
Table of Contents
What is a business plan?
Why write a business plan, business plan formats, how to write a business plan in 9 steps, tips for creating a small business plan, common mistakes when writing a business plan, prepare your business plan today, business plan faq.
A business plan is a document describing a business, its products or services, how it earns (or will earn) money, its leadership and staffing, its financing, its operations model, and many other details essential to its success.
We had a marketing background but not much experience in the other functions needed to run a fashion ecommerce business, like operations, finance, production, and tech. Laying out a business plan helped us identify the “unknowns” and made it easier to spot the gaps where we’d need help or, at the very least, to skill up ourselves. Jordan Barnett, Kapow Meggings
Investors rely on business plans to evaluate the feasibility of a business before funding it, which is why business plans are commonly associated with getting a loan. But there are several compelling reasons to consider writing a business plan, even if you don’t need funding.
- Strategic planning: Writing out your plan is an invaluable exercise for clarifying your ideas and can help you understand the scope of your business, as well as the amount of time, money, and resources you’ll need to get started.
- Evaluating ideas: If you’ve got multiple ideas in mind, a rough business plan for each can help you focus your time and energy on the ones with the highest chance of success.
- Research: To write a business plan, you’ll need to research your ideal customer and your competitors—information that will help you make more strategic decisions.
- Recruiting: Your business plan is one of the easiest ways to communicate your vision to potential new hires and can help build their confidence in the venture, especially if you’re in the early stages of growth.
- Partnerships: If you plan to approach other companies to collaborate, having a clear overview of your vision, your audience, and your business strategy will make it much easier for them to identify whether your business is a good fit for theirs—especially if they’re further along than you in their growth trajectory.
- Competitions: There are many business plan competitions offering prizes such as mentorships, grants, or investment capital. To find relevant competitions in your industry and area, try Googling “business plan competition + [your location]” and “business plan competition + [your industry].”
If you’re looking for a structured way to lay out your thoughts and ideas, and to share those ideas with people who can have a big impact on your success, a business plan is an excellent starting point.
Free: Business Plan Template
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Business plans can span from one page to multiple pages with detailed graphs and reports. There’s no one way to create a business plan. The goal is to convey the most important information about your company for readers.
Common types of business plans we see include, but are not limited to, the following:
- Traditional. These are the most common business plans. Below, we’ll cover the standard elements of a business plan and go into detail for each section. Traditional business plans take longer to write and can be dozens of pages long. Venture capitalist firms and lenders ask for this plan.
- Lean. A lean business plan is a shorter version of a traditional business plan. It follows the same format, but only includes the most important information. Businesses use this plan to onboard new hires or modify existing plans for a specific target market.
- Nonprofit. A nonprofit business plan is for any entity that operates for public or social benefit. It covers everything you’ll find in a traditional business plan, plus a section describing the impact the company plans to make. For example, a speaker and headphone brand that aims to help people with hearing disabilities. Donors often request this plan.
Check out real-world examples of different business plans by reading The Road to Success: Business Plan Examples to Inspire Your Own .
- Draft an executive summary
- Describe your company
- Perform a market analysis
- Outline the management and organization
- List your products and services
- Perform customer segmentation
- Define a marketing plan
- Provide a logistics and operations plan
- Make a financial plan
Few things are more intimidating than a blank page. Starting your business plan with a structured outline and key elements for what you’ll include in each section is the best first step you can take.
Since an outline is such an important step in the process of writing a business plan, we’ve put together a high-level overview you can copy into your blank document to get you started (and avoid the terror of facing a blank page). You can also start with a free business plan template and use it to inform the structure of your plan.
Once you’ve got your business plan outline in place, it’s time to fill it in. We’ve broken it down by section to help you build your plan step by step.
1. Draft an executive summary
A good executive summary is one of the most crucial sections of your plan—it’s also the last section you should write.
The executive summary’s purpose is to distill everything that follows and give time-crunched reviewers (e.g., potential investors and lenders) a high-level overview of your business that persuades them to read further.
Again, it’s a summary, so highlight the key points you’ve uncovered while writing your plan. If you’re writing for your own planning purposes, you can skip the summary altogether—although you might want to give it a try anyway, just for practice.
An executive summary shouldn’t exceed one page. Admittedly, that space constraint can make squeezing in all of the salient information a bit stressful—but it’s not impossible. Here’s what your business plan’s executive summary should include:
- Business concept. What does your business do?
- Business goals and vision. What does your business want to do?
- Product description and differentiation. What do you sell, and why is it different?
- Target market. Who do you sell to?
- Marketing strategy. How do you plan on reaching your customers?
- Current financial state. What do you currently earn in revenue?
- Projected financial state. What do you foresee earning in revenue?
- The ask. How much money are you asking for?
- The team. strong> Who’s involved in the business?
2. Describe your company
This section of your business plan should answer two fundamental questions: who are you, and what do you plan to do? Answering these questions with a company description provides an introduction to why you’re in business, why you’re different, what you have going for you, and why you’re a good investment bet. For example, clean makeup brand Saie shares a letter from its founder on the company’s mission and why it exists.
Clarifying these details is still a useful exercise, even if you’re the only person who’s going to see them. It’s an opportunity to put to paper some of the more intangible facets of your business, like your principles, ideals, and cultural philosophies.
Here are some of the components you should include in your company description:
- Your business structure (Are you a sole proprietorship, general partnership, limited partnership, or incorporated company?)
- Your business model
- Your industry
- Your business’s vision, mission, and value proposition
- Background information on your business or its history
- Business objectives, both short and long term
- Your team, including key personnel and their salaries
Some of these points are statements of fact, but others will require a bit more thought to define, especially when it comes to your business’s vision, mission, and values. This is where you start getting to the core of why your business exists, what you hope to accomplish, and what you stand for.
This is where you start getting to the core of why your business exists, what you hope to accomplish, and what you stand for.
To define your values, think about all the people your company is accountable to, including owners, employees, suppliers, customers, and investors. Now consider how you’d like to conduct business with each of them. As you make a list, your core values should start to emerge.
Once you know your values, you can write a mission statement . Your statement should explain, in a convincing manner, why your business exists, and should be no longer than a single sentence.
As an example, Shopify’s mission statement is “Making commerce better for everyone.” It’s the “why” behind everything we do and clear enough that it needs no further explanation.
What impact do you envision your business having on the world once you’ve achieved your vision?
Next, craft your vision statement: what impact do you envision your business having on the world once you’ve achieved your vision? Phrase this impact as an assertion—begin the statement with “We will” and you’ll be off to a great start. Your vision statement, unlike your mission statement, can be longer than a single sentence, but try to keep it to three at most. The best vision statements are concise.
Finally, your company description should include both short- and long-term goals. Short-term goals, generally, should be achievable within the next year, while one to five years is a good window for long-term goals. Make sure all your goals are SMART: specific, measurable, attainable, realistic, and time-bound.
3. Perform a market analysis
No matter what type of business you start, it’s no exaggeration to say your market can make or break it. Choose the right market for your products—one with plenty of customers who understand and need your product—and you’ll have a head start on success. If you choose the wrong market, or the right market at the wrong time, you may find yourself struggling for each sale.
Market analysis is a key section of your business plan, whether or not you ever intend for anyone else to read it.
This is why market research and analysis is a key section of your business plan, whether or not you ever intend for anyone else to read it. It should include an overview of how big you estimate the market is for your products, an analysis of your business’s position in the market, and an overview of the competitive landscape. Thorough research supporting your conclusions is important both to persuade investors and to validate your own assumptions as you work through your plan.
How big is your potential market?
The potential market is an estimate of how many people need your product. While it’s exciting to imagine sky-high sales figures, you’ll want to use as much relevant independent data as possible to validate your estimated potential market.
Since this can be a daunting process, here are some general tips to help you begin your research:
- Understand your ideal customer profile . If you’re targeting millennial consumers in the US, you first can look for government data about the size of that group. You also could look at projected changes to the number of people in your target age range over the next few years.
- Research relevant industry trends and trajectory. If your product serves retirees, try to find data about how many people will be retiring in the next five years, as well as any information you can find about consumption patterns among that group. If you’re selling fitness equipment, you could look at trends in gym memberships and overall health and fitness among your target audience or the population at large. Finally, look for information on whether your general industry is projected to grow or decline over the next few years.
- Make informed guesses. You’ll never have perfect, complete information about the size of your total addressable market. Your goal is to base your estimates on as many verifiable data points as necessary for a confident guess.
Some sources to consult for market data include government statistics offices, industry associations, academic research, and respected news outlets covering your industry.
A SWOT analysis looks at your strengths, weaknesses, opportunities, and threats. What are the best things about your company? What are you not so good at? What market or industry shifts can you take advantage of and turn into opportunities? Are there external factors threatening your ability to succeed?
These breakdowns often are presented as a grid, with bullet points in each section breaking down the most relevant information—so you can probably skip writing full paragraphs here. Strengths and weaknesses—both internal company factors—are listed first, with opportunities and threats following in the next row. With this visual presentation, your reader can quickly see the factors that may impact your business and determine your competitive advantage in the market.
Here’s an example:
Free: SWOT Analysis Template
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There are three overarching factors you can use to differentiate your business in the face of competition:
- Cost leadership. You have the capacity to maximize profits by offering lower prices than the majority of your competitors. Examples include companies like Mejuri and Endy .
- Differentiation. Your product or service offers something distinct from the current cost leaders in your industry and banks on standing out based on your uniqueness. Think of companies like Knix and Qalo .
- Segmentation. You focus on a very specific, or niche, target market, and aim to build traction with a smaller audience before moving on to a broader market. Companies like TomboyX and Heyday Footwear are great examples of this strategy.
To understand which is the best fit, you’ll need to understand your business as well as the competitive landscape.
You’ll always have competition in the market, even with an innovative product, so it’s important to include a competitive overview in your business plan. If you’re entering an established market, include a list of a few companies you consider direct competitors and explain how you plan to differentiate your products and business from theirs.
You’ll always have competition in the market, even with an innovative product.
For example, if you’re selling jewelry, your competitive differentiation could be that, unlike many high-end competitors, you donate a percentage of your profits to a notable charity or pass savings on to your customers.
If you’re entering a market where you can’t easily identify direct competitors, consider your indirect competitors—companies offering products that are substitutes for yours. For example, if you’re selling an innovative new piece of kitchen equipment, it’s too easy to say that because your product is new, you have no competition. Consider what your potential customers are doing to solve the same problems your product solves.
4. Outline management and organization
The management and organization section of your business plan should tell readers about who’s running your company. Detail the legal structure of your business. Communicate whether you’ll incorporate your business as an S corporation or create a limited partnership or sole proprietorship.
If you have a management team, use an organizational chart to show your company’s internal structure, including the roles, responsibilities, and relationships between people in your chart. Communicate how each person will contribute to the success of your startup.
5. List your products and services
Your products or services will feature prominently in most areas of your business plan, but it’s important to provide a section that outlines key details about them for interested readers.
If you sell many items, you can include more general information on each of your product lines; if you only sell a few, provide additional information on each. For example, bag shop BAGGU sells a large selection of different types of bags, in addition to home goods and other accessories. Its business plan would list out those bags and key details about each.
Describe new products you’ll launch in the near future and any intellectual property you own. Express how they’ll improve profitability.
It’s also important to note where products are coming from—handmade crafts are sourced differently than trending products for a dropshipping business, for instance.
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6. perform customer segmentation.
Your ideal customer, also known as your target market, is the foundation of your marketing plan , if not your business plan as a whole. You’ll want to keep this person in mind as you make strategic decisions, which is why an overview of who they are is important to understand and include in your plan.
To give a holistic overview of your ideal customer, describe a number of general and specific demographic characteristics. Customer segmentation often includes:
- Where they live
- Their age range
- Their level of education
- Some common behavior patterns
- How they spend their free time
- Where they work
- What technology they use
- How much they earn
- Where they’re commonly employed
- Their values, beliefs, or opinions
This information will vary based on what you’re selling, but you should be specific enough that it’s unquestionably clear who you’re trying to reach—and more importantly, why you’ve made the choices you have based on who your customers are and what they value.
For example, a college student has different interests, shopping habits, and pricing sensitivity than a 50-year-old executive at a Fortune 500 company. Your business plan and decisions would look very different based on which one was your ideal customer.
7. Define a marketing plan
Your marketing efforts are directly informed by your ideal customer. Your marketing plan should outline your current decisions and your future strategy, with a focus on how your ideas are a fit for that ideal customer.
If you’re planning to invest heavily in > Instagram marketing , for example, it might make sense to include whether Instagram is a leading platform for your audience—if it’s not, that might be a sign to rethink your marketing plan.
Most marketing plans include information on four key subjects. How much detail you present on each will depend on both your business and your plan’s audience.
- Price. How much do your products cost, and why have you made that decision?
- Product. What are you selling and how do you differentiate it in the market?
- Promotion. How will you get your products in front of your ideal customer?
- Place. Where will you sell your products?
Promotion may be the bulk of your plan since you can more readily dive into tactical details, but the other three areas should be covered at least briefly—each is an important strategic lever in your marketing mix.
8. Provide a logistics and operations plan
Logistics and operations are the workflows you’ll implement to make your ideas a reality. If you’re writing a business plan for your own planning purposes, this is still an important section to consider, even though you might not need to include the same level of detail as if you were seeking investment.
Cover all parts of your planned operations, including:
- Suppliers. Where do you get the raw materials you need for production, or where are your products produced?
- Production. Will you make, manufacture, wholesale , or dropship your products? How long does it take to produce your products and get them shipped to you? How will you handle a busy season or an unexpected spike in demand?
- Facilities. Where will you and any team members work? Do you plan to have a physical retail space? If yes, where?
- Equipment. What tools and technology do you require to be up and running? This includes everything from computers to lightbulbs and everything in between.
- Shipping and fulfillment. Will you be handling all the fulfillment tasks in-house, or will you use a third-party fulfillment partner?
- Inventory. How much will you keep on hand, and where will it be stored? How will you ship it to partners if required, and how will you approach inventory management ?
This section should signal to your reader that you’ve got a solid understanding of your supply chain and strong contingency plans in place to cover potential uncertainty. If your reader is you, it should give you a basis to make other important decisions, like how to price your products to cover your estimated costs, and at what point you plan to break even on your initial spending.
9. Make a financial plan
No matter how great your idea is, and regardless of the effort, time, and money you invest, a business lives or dies based on its financial health. At the end of the day, people want to work with a business they expect to be viable for the foreseeable future.
The level of detail required in your financial plan will depend on your audience and goals, but typically you’ll want to include three major views of your financials: an income statement, a balance sheet, and a cash-flow statement. It also may be appropriate to include financial data and projections.
Here’s a spreadsheet template that includes everything you’ll need to create an income statement, balance sheet, and cash-flow statement, including some sample numbers. You can edit it to reflect projections if needed.
Your income statement is designed to give readers a look at your revenue sources and expenses over a given time period. With those two pieces of information, they can see the all-important bottom line or the profit or loss your business experienced during that time. If you haven’t launched your business yet, you can project future milestones of the same information.
Your balance sheet offers a look at how much equity you have in your business. On one side, you list all your business assets (what you own), and on the other side, all your liabilities (what you owe). This provides a snapshot of your business’s shareholder equity, which is calculated as:
Assets - Liabilities = Equity
Cash flow statement
Your cash flow statement is similar to your income statement, with one important difference: it takes into account when revenues are collected and when expenses are paid.
When the cash you have coming in is greater than the cash you have going out, your cash flow is positive. When the opposite scenario is true, your cash flow is negative. Ideally, your cash flow statement will help you see when cash is low, when you might have a surplus, and where you might need to have a contingency plan to access funding to keep your business solvent .
It can be especially helpful to forecast your cash-flow statement to identify gaps or negative cash flow and adjust operations as required. Here’s a full guide to working through cash-flow projections for your business.
Download your copy of these templates to build out these financial statements for your business plan.
Know your audience
When you know who will be reading your plan—even if you’re just writing it for yourself to clarify your ideas—you can tailor the language and level of detail to them. This can also help you make sure you’re including the most relevant information and figure out when to omit sections that aren’t as impactful.
Have a clear goal
You’ll need to put in more work and deliver a more thorough plan if your goal is to secure funding for your business versus working through a plan for yourself or even your team.
Invest time in research
Sections of your business plan will primarily be informed by your ideas and vision, but some of the most crucial information you’ll need requires research from independent sources. This is where you can invest time in understanding who you’re selling to, whether there’s demand for your products, and who else is selling similar products or services.
Keep it short and to the point
No matter who you’re writing for, your business plan should be short and readable—generally no longer than 15 to 20 pages. If you do have additional documents you think may be valuable to your audience and your goals, consider adding them as appendices.
Keep the tone, style, and voice consistent
This is best managed by having a single person write the plan or by allowing time for the plan to be properly edited before distributing it.
Use a business plan software
Writing a business plan isn’t the easiest task for business owners. But it’s important for anyone starting or expanding a business. Fortunately, there are tools to help with everything from planning, drafting, creating graphics, syncing financial data, and more. Business plan software also have templates and tutorials to help you finish a comprehensive plan in hours, rather than days.
A few curated picks include:
- LivePlan : the most affordable option with samples and templates
- Bizplan : tailored for startups seeking investment
- GoSmallBiz : budget-friendly option with industry-specific templates
For a more in-depth look at the available options, read Get Guidance: 6 Business Plan Software to Help Write Your Future .
Other articles on business plans would never tell you what we’re about to tell you: your business plan can fail. The last thing you want is for time and effort to go down the drain. Avoid these common mistakes:
- Bad business idea. Not every idea is going to win. Sometimes your idea may be too risky and you won’t be able to get funding for it. Other times it’s too expensive or there’s no market. Aim for small business ideas that require little money and bypass traditional startup costs.
- No exit strategy. Investors reading your business plan want to know one thing: will your venture make them money? If you don’t show an exit strategy, or a plan for them to leave the business with maximum profits, you’ll have little luck finding capital.
- Unbalanced teams. A great product is the cost of entry to starting a business. But an incredible team will take it to the top. Unfortunately, many business owners overlook a balanced team. They assume readers want to see potential profits, without worrying about how you’ll get it done. If you’re pitching a new software idea, it makes sense to have at least one developer or IT specialist on your team.
- Missing financial projections. Your numbers are the most interesting part for readers. Don’t leave out your balance sheet, cash flow statements, P&L statements, and income statements. Include your break-even analysis and return-on-investment calculations to create a successful business plan.
- Spelling and grammar errors. Some businesses think hiring a professional editor is overkill. The reality is, all the best organizations have an editor review their documents. If someone spots typos while reading your business plan, how can they believe you’ll run a successful company?
Read through the following business plan example. You can download a copy in Microsoft Word or Google Docs and use it to inspire your own business planning.
Download sample business plan example (.doc)
A business plan can help you identify clear, deliberate next steps for your business, even if you never plan to pitch investors—and it can help you see gaps in your plan before they become issues. Whether you’ve written a business plan for a new online business idea , a retail storefront, growing your established business, or purchasing an existing business , you now have a comprehensive guide and the information you need to help you start working on the next phase of your own business.
Illustrations by Rachel Tunstall
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How do i write a business plan.
- Executive summary
- Company description
- Market analysis
- Management and organization
- Products and services
- Customer segmentation
- Marketing plan
- Logistics and operations
- Financial plan
What is a good business plan?
What are the 3 main purposes of a business plan, what are the different types of business plans, about the author.
Desirae is a senior product marketing manager at Shopify, and has zero chill when it comes to helping entrepreneurs grow their businesses.
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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.
By: Danielle Fallon-O'Leary , Contributor
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.
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.
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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Writing a business plan in 9 steps
Discover all the doors a solid business plan can help open for you, including business banking accounts, loans and other forms of funding. Presented by Chase for Business .
Whether you're starting your first business or your company is seeking funding , a business plan is essential for charting your path to success.
A well-written and researched business plan can act as a roadmap that outlines your plan for selling and marketing your products and services, making profits and growing over a period of three to five years. Your plan can also help position your company within the industry and set your business apart from competitors.
With the right tools and a little excitement, you can write a business plan. In this article, you'll learn how to write a business plan in a step-by-step process.
1. Ask these questions
To get in the right frame of mind and gather necessary details for writing an effective business plan, ask yourself the following questions:
- Why do I want to start this business? What’s my reasoning or inspiration?
- How does my business stand out from the competition?
- What is my unique value proposition?
- Who are my target customers? How can I reach them?
- Who is already on my management team? What gaps do I need to fill?
- How can my business make a profit? How soon will it break even?
Knowing the answers to these questions will help guide the structure and cadence of your business plan.
2. Research before you write
Your business plan should be a well-researched, actionable document that you can return to again and again. To get the information you need, use the following tactics when writing a business plan:
- Do a SWOT analysis. Consider your company’s strengths, weaknesses, opportunities and threats. This type of analysis allows you to identify what sets your business apart and plan for potential risks.
- Perform due diligence. If you’re planning to buy an existing business, make sure you research the company’s finances, sales, inventory and other aspects to ensure it’s a sound investment.
- Use Porter’s Five Forces . This analytical approach is a framework for analyzing your company’s competitive environment.
3. Think about your audience
Ask yourself, who will read my business plan, and what kind of information do they need? For example, if you’re looking for funding, you should include plenty of financial data and forecasting. If you’re seeking to bring on new business partners, you should include a detailed section where you outline how the business intends to support growth over the next three to five years.
If you want to share your business plan with different types of stakeholders, think about writing more than one version. This will allow you to make sure every reader has the right, targeted details about your business.
4. Include market analysis
Writing and researching a business plan gives you the opportunity to learn more about your industry, market, competitors, audience, local government, suppliers, sales channels and more. It also allows you to assess risk related to your market or supply chain.
To do this research, you can start by looking for online data related to your industry and target audience. It’s a good idea to include data that's recent enough to still be relevant and from a credible source.
With a bit of patience, the information you need can be found online for free. Services also exist that provide customized data for a fee — which can be a good option for business owners without the luxury of time.
5. Make realistic projections
When writing a business plan, you’re naturally going to be excited, and it may feel easy to think positively and overestimate how well your business will perform. Optimism may cause you future distress when investors or business partners expect more than your business is able to provide.
It’s always better to aim low and blow your projections out of the water than to do the opposite. Make your business plan as realistic as possible. When you include accounting data, carefully consider the market, your competitors and the demand for your products.
6. Share your vision
Although financial projections, product descriptions and management charts serve as the focus for most business plans, including a vision statement can help you personalize your goals and refer back to your initial mission.
In this section, briefly discuss your reason for starting the business, share any underlying motivations and hypothesize on how your company can contribute to a larger cause.
7. Keep it concise
As you write your business plan, it's tempting to include every detail about your company. Before you know it, your market analysis alone might be 10 pages long. If your business plan becomes too big, it may become less actionable, or your readers may not devote the time to reading and comprehending it.
Take care to feature only the essential data when you write your business plan. Be sure to include the standard sections mentioned above.
A good suggestion is to feature a page or two for each section plus any financial statements or resumes. If you have additional research or notes that don't fit neatly into your plan, keep them on file for your own internal use.
8. Include a visual element
Most business plans tend to be text-heavy — but that doesn’t mean you can’t make yours visually appealing for the reader. Include relevant graphics, pictures, charts and diagrams.
9. Keep the style simple
Focus on presenting your information and storytelling in a clear way that doesn’t require additional context to be understood. Keep the formatting as simple as possible. Use a classic serif font like Times New Roman to maintain readability. The last thing you want is for investors to focus more on your font choice than your financial projections.
A business plan can help you review your idea and put actionable goals in place. Once you’ve worked out the details, a business banker can walk you through important next steps like setting up a business checking account .
For informational/educational purposes only: The views expressed in this article may differ from those of other employees and departments of JPMorgan Chase & Co. Views and strategies described may not be appropriate for everyone and are not intended as specific advice/recommendation for any individual. Information has been obtained from sources believed to be reliable, but JPMorgan Chase & Co. or its affiliates and/or subsidiaries do not warrant its completeness or accuracy. You should carefully consider your needs and objectives before making any decisions and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results.
You should carefully consider your needs and objectives before making any decisions, and consult the appropriate professional(s).
JPMorgan Chase Bank, N.A. Member FDIC. Equal Opportunity Lender, ©2023 JPMorgan Chase & Co.
Starting a Business | How To
How to Write a Business Plan in 9 Steps
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WRITTEN BY: Blake Stockton
Published October 2, 2019
Blake is an award-winning consultant, writer, and speaker. As a consultant, he helped over 700 biz owners start and grow their business. His expertise is featured across Fit Small Business in starting a business content.
This article is part of a larger series on Starting a Business .
Starting A Business?
Whether you’re just starting your business or are already established, a business plan can help you plot your future. Additionally, a business plan is an opportunity to show why and how your business will become a success. Learning how to write a business plan successfully requires planning ahead and conducting financial and market research.
Here are the nine sections to include in your business plan:
1. Opening Organizational & Legal Pages
The business plan’s first pages help organize the rest of the business plan and legally protect your business idea. A cover page provides important information about the business. A non-disclosure agreement (NDA) is optional but may be necessary if you believe someone could steal your business idea or take strategies within your plan. The table of contents helps organize the entire business plan.
The cover page simply provides contact information about the business and its owner. On the cover page, include the business name and who prepared it, including your name, address, phone number, and email address. Additionally, if the registered company name with the state is different than the business name, you may want to add that as a “company name.”
A non-disclosure agreement (also called a confidentiality agreement) is a legal document that safeguards business information. You’d want someone to sign it before reading your business plan if you believe they could use the information to their advantage and your disadvantage, such as to steal your business idea or, something more focused, like a particular marketing strategy.
Fit Small Business provides a free non-disclosure agreement.
Table of Contents
2. executive summary.
The executive summary is an overview of the business plan and should be no more than one to two pages in length. You may find that investors request only the executive summary. Make it an informative, persuasive, and concise version of your business plan. We recommend you complete the executive summary last, after completing the other sections in the business plan. Waiting to do this section last makes it easier to understand which sections of your business plan are the most important to highlight.
In the opening paragraphs of the executive summary, consider including the following:
- Business description: This is similar to a 30-second pitch describing your business and what makes it unique.
- Products and services: Mention the type of products and services you’re providing customers and their costs.
- Competitors: Briefly describe your biggest competitors and why your business will succeed despite them.
- Management and organization: Discuss the owners’ backgrounds and emphasize how it will help the business succeed. Also, if needed, discuss the management structure within the business.
- Business location (or facility): If the business’ location is important to its success, consider discussing the location benefits and the surrounding area.
- Target market and ideal customer: Outline who your ideal customers are and why they are going to purchase your products or services.
- Financial data and projections: Provide brief financial data and projections relevant to your business, such as startup costs, at what month the business will be profitable, and forecasted sales data.
- Financing needed: Wrap up the opening paragraphs with an explanation of the startup funding sources and the amount of financing being requested.
The bullets above can be combined into several paragraphs. Additionally, you can add or remove sections based on your business’ needs. For example, if you don’t have a physical location, remove that piece of information, or, if a web presence is crucial to your success, include two to three sentences on your online strategy. Remember, keep the executive summary, including the three headers below, to less than two pages in length.
Your business objections are specific and attainable goals for your business. For example, “Attract at least 80 customers per day within the first year in business” or “Generate a positive cash flow from operations with at least 15% net profit to sales.” You can include business financial goals as well. Create at least four business objectives organized by bullet point.
The mission statement discusses the aim, purpose, and values of your business. It’s typically a short statement from one sentence to several sentences in length. You may find that your mission statement evolves as your business grows.
For example, Airbnb’s mission statement is “To live in the world where one day you can feel like you’re home anywhere and not in a home, but truly home, where you belong.” Additionally, Outback Steakhouse’s mission statement is “We’re the leader of the pack by emphasizing consistently high quality delicious food delivering a warm, welcoming environment. Our generous portions are moderately priced. Our casual atmosphere couldn’t be more transporting—it’s like you’re right there in the Australian Outback.”
Keys to Success
Your keys to success are the specific advantages your business will have. For example, if your location is a huge advantage for your business, you should be more specific than simply saying “location,” and describe what about your location makes it a key to success, such as visibility, parking spots, drive-thru, or proximity to housing. Your competitors may have similar keys to success as your business.
Keys to success are different than competitive advantages because typically, the competitive advantage is something your competitors cannot replicate. It is a unique advantage or proprietary information, such as a patent. The competitive advantage can be added as a key to success. List two to three keys to success as bullet points.
3. Company Summary
Overall, the company summary section highlights your company successes (if you’re already in business) or why it will be successful (if you’re a startup). In the opening paragraph or paragraphs, provide facts about the business such as location, owners, hours, products, and services.
Startup Summary (or Company History)
How you structure this section depends on whether you’re a startup or an established business. A startup will discuss the general expenses and steps needed to open the business, such as permits, build-outs, rent, and marketing. An established business will briefly discuss the company’s financial performance over the past three years.
Startup Funding Table
If you’re writing a business plan for the purpose of raising capital from an investor or bank, include a chart listing the items that will be purchased with the capital. For example, if you’re purchasing equipment with the additional funding, list each piece of equipment and the associated cost. At the bottom of the chart, show the total of all expenses, which should be the requested amount of funding.
This startup cost table for a pizza restaurant separates startup expenses from startup assets.
Location & Facilities
If you have a brick-and-mortar location or a facility, like a warehouse, describe it here. Go into detail about the benefits of your location and the surrounding areas. For example, write about square footage, leases or ownership, the surrounding area, and a brief description of the population.
Briefly mention the company ownership team and their backgrounds. Show why these owners are likely to be successful operating this business by providing information such as each owner’s industry experience, previous employers, education, and awards won. This owner’s background will be discussed more in-depth in the management and organization section below .
Ideally, your competitive advantage is what your business can do that your competitors cannot. It’s the one big feature that will make your company successful. Many investors are looking for specific competitive advantages, such as patents, proprietary tech, data, and industry relationships. However, if you don’t have these, describe the number one thing your business will do better than competitors, such as quality of products, quality of services, relationships with vendors, or marketing strategy.
4. Products & Services
The products and services section is the most flexible section because its structure depends on what your business sells. Regardless of what you’re selling, include a business model, which describes how your business makes money. Also include future products or services that the business may provide one, two, or five years down the road.
The business model is essentially how the business makes money. If you have a new type of business or a novel way to produce a product or service, this section is important and needs to be in-depth. For example, if you own a pizza restaurant, you should discuss all the ways your business will earn money. Customers can order at a table inside your restaurant, over the phone, on your website, and using an app like Uber Eats. You may even be able to sell your homemade ranch bottles as well.
If you have physical products you’re selling, describe them in this section. Remember to place an emphasis on both product features and benefits. For example, if you’re selling umbrellas, you could describe that they’re made of nylon, metal, and plastic. A benefit is that they keep you dry from rain while being small.
Here you’ll discuss services that the business provides. If your business provides both products and services, have both sections. Remember, services don’t have to be sold for a cost. For example, entertainment like live music or bar games may be a free service your business provides.
Whether you’re selling products, services, or both, it’s important to discuss how each will be delivered. Describe how a service, such as a window installation, will be implemented. Where will the glass be purchased from, acquired, and how will the window be installed? If you’re selling products, how will the products be assembled, packed, and shipped?
Future Products & Services
If you plan to provide additional products and services after the initial launch, outline that here. Don’t limit yourself to providing more of the same product or service. For example, if you have a commercial photography company, you might make plans to hire a graphic designer to provide a different service. Additionally, you can describe how you’d like to expand your business, such as renting out the unit next door, to provide additional services or sell additional products.
5. Market & Industry Analysis
The market and industry analysis section is where you analyze your potential customers and your industry. This section is where you make the case as to why your business should succeed, ideally backed by data. You’ll want to do a deep dive into your competitors and discuss their challenges and successes. Remember, this section should be persuasive and make the case as to why your business will be successful.
Market segmentation is also called your business’ target market. It consists of the customers who are most likely to purchase your products or services. Describe these groups of customers based on demographics, such as age, income, location, and buying habits. Additionally, if you’ll be operating business-to-business (B2B), use characteristics to describe the ideal businesses to which you’ll be selling.
Once your target market is segmented into different groups, use market research data to show that those customers are physically located near your business (or are likely to do business with you if you’re online). You can obtain this data from a free resource, like the U.S. Census and ReferenceUSA, which is free at thousands of libraries across the United States. For example, if you are opening a daycare, you will want to show the data on how many families are in a certain mile radius around your business.
ReferenceUSA collects market research data from over 147 million U.S. citizens.
Target Market Segment Strategy
Once you have at least three segments created, briefly outline the strategy you will use to reach them. Most likely it will be a marketing strategy, although it may be a pricing, networking, or sales strategy. Additionally, describe the general thinking of the segments (or inner workings of the businesses) that would cause them to do business with you. For example, if you owned a restaurant next to a theme park, describe how families will want to visit your family-friendly restaurant after a long day at the theme park.
In addition to the target segments, analyze the business’ industry and explain why it’s a great idea to start a business in that industry. If you’re in a growing industry, a bank is more likely to lend your business capital because it’s predicted to be in demand and have additional customers. Find industry statistics from a free tool, like the Bureau of Labor Statistics , or a paid tool like the Hoovers Industry Research , which provides professionally curated reports for over 1,000 industries.
Wrap up the market and industry analysis section by analyzing at least five competitors within a five-mile radius (expand the radius, if needed). Create a table with the five competitors and mention their distance from your business (if applicable), challenges, and successes. During your analysis, you’ll want to frame their challenges as something you can improve upon. Persuade your reader that your business will provide superior products and services than the competitors do.
6. Marketing Strategy & Implementation Summary
The marketing strategy and implementation section is where you outline your marketing strategy and how it will be carried out. In the opening paragraphs, give an overview of the subsections below. For some businesses, this section may be longer than others. For example, a business relying on ecommerce for sales may outline the website, social media strategy, online advertising, and email marketing strategy. For a company relying on government contracts that won’t do a lot of marketing, this will be a shorter section.
Discuss the overall marketing strategy for the business. Include any trends within the industry you may take advantage of, such as video or Facebook ads. If applicable, include the advertising strategy and budget, stating specific channels. Mention who in the business will be responsible for overseeing the marketing.
Traditional Marketing Plan
Within the marketing strategy, you may want to include a subsection that includes the business’ traditional marketing plan. Traditional marketing includes anything not online-related, such as business cards, flyers, local media, direct mail, magazine advertising, and signage. For example, if you own a retail business, like a dog groomer, traditional marketing will most likely be a strong component of your business.
Online Marketing Plan
An online marketing plan (also called web plan) includes using tools like the business’ website, social media, email marketing, and video, and may require several pages. If you’re hiring a company to do any online work, like creating a website or managing social media, briefly describe them and the overall cost (you can elaborate more on costs in the financial data section ).
If sales is an important component of your business, include a section about your strategy. Include the role of the salesperson (or persons), strategies they will use to close the deal with clients, lead follow-up procedures, and networking they will attend. Additionally, discuss any training your sales staff will attend.
Sales Forecast Table
A sales forecast table gives a high-level summary of where you expect your sales and expenses to occur for each of the next three years in business. In the paragraph before the table, state where you expect growth to come from and include a growth percentage rate. The annual sales forecast chart will be broken down further in the financial projections section below.
The annual sales forecast for this restaurant summarizes sales, cost, and profit for the first three years in business.
In the pricing strategy section, discuss product (or service) pricing, competitor pricing, sales promotions, and discounts—basically anything related to the pricing of what you sell. You should discuss pricing in relation to product and service quality as well. Consider including an overview of pricing for specific products, e.g., pizza price discounts when ordering a specific number of pizzas for catering.
Milestones in a business plan are typically displayed in a table. They outline important tasks to do before the business opens (or expands, if already in business). For each milestone, include the name, estimated start and completion date, cost, person responsible, and department responsible (or outside company responsible). List at least seven milestones.
Milestones for this commercial photography business include hiring staff and completing marketing campaigns.
7. Management & Organization Summary
The management and organization summary discusses the ownership background and the personnel plan in-depth. This is an important section because many investors say they don’t invest in companies, they invest in people. In this section, make the case why you and your team have the experience and knowledge to make this business a success.
Discuss the owners’ backgrounds and place an emphasis on why that background will ensure the business succeeds. For example, if you would like to open a sports and outdoors store, discuss your retail management experience. If you don’t have experience managing a retail business, consider finding a co-owner who does. Typically, banks won’t lend to someone who doesn’t have experience in the type of business they’re trying to open.
Management Team Gaps
If there are any experience or knowledge gaps within the management team, state them. List the consultants or employees you will hire to cover the gaps. Investors who know your industry well may recognize gaps within your business plan, and it’s important to state the gaps without having the investor bring it up. Recognizing any experience gaps makes it appear that you know the industry well.
The personnel plan outlines every position within your business for at least the next three years. In the opening paragraph, discuss the roles within the company and who will report to whom. Include a table with at least three years of salary projections for each employee in your business. Include a total salary figure at the bottom. This table may be broken down further into salaries for each month in the financial projections or appendix.
This commercial photography business has the CEO at the same salary every year, with their employees’ salaries increasing year over year.
8. Financial Data & Analysis
The financial data and analysis section is the most difficult part of a business plan. This section requires you to forecast income and expenses for the next three years. Additionally, it requires a working knowledge of common financial statements, like the profit and loss statement, balance sheet, and cash flow statement.
As you read through the financial data sections below, use the free financial projections template from the Service Corp of Retired Executives (SCORE) to fill in your business’ information. If this is too challenging, we recommend using a business plan and financial projections software, like LivePlan , to assist with the forecasting.
In the opening paragraphs of the financial data and analysis section, give an overview of the sections below. Discuss the break-even point and the projected profit at the first, second, and third year in business. State the assets and liabilities from the projected balance sheet as well.
If you’re getting a loan from a bank, say how long and from what source the loan will be repaid. One of the main pieces of information bankers want to ascertain from financial forecasting is if they will be paid back and how likely that is to happen.
The break-even analysis is the point at which revenue exceeds expenses and a profit occurs. In this section’s opening paragraph, state what the monthly fixed costs will be and what the average percent variable cost is, which is the cost that changes with output. For example, variable costs for the example below increase 8% for every additional dollar made.
The break-even point for this document shredding business is $31,500 in a month.
Projected Profit & Loss
The profit and loss table is a month-by-month breakdown of income and expenses (including startup expenses). The profit and loss table shows the month during which the business will earn a profit. Typically, you should expect your business to show a profit within the first year of operating and increase in years two and three. Be sure to show income and expenses month-by-month for the first two years in operation. Create a separate chart that shows income and expenses year-by-year for the first three years.
Projected Cash Flow
The cash flow section shows the business’ incoming and outgoing cash. This is broken down in a month-by-month table and should cover the first two years in business. Projected cash flow is different than the profit and loss projection, because it focuses specifically on cash within the business. Cash flow is important because you want cash on hand to meet repayment obligations and unexpected cash needs.
In this section’s introductory paragraph (before the projected cash flow table), mention what you plan to do with the excess cash. For example, will you pay down long-term debt, build cash contingency reserves, or reinvest in certificates of deposit or U.S. Treasuries?
Projected Balance Sheet
The balance sheet shows the net worth of the business and the financial position of the company on a specific date. The balance sheet is different than the profit and loss statement because it focuses on the assets and liabilities of the business. The profit and loss statement focuses on income and expenses. Ideally, the balance sheet should show that the net worth of your business increases. Prepare a projected year-by-year balance sheet for the first three years.
Business ratios (also called financial ratios) are a way to evaluate the performance of your business. It’s helpful to compare your projected business ratios to the industry standard. LivePlan provides business ratios for over 1,000 industries with its paid plan. Project your business ratios by year for the first three years.
For example, you should know your business’ current ratio, which is the total current assets (cash and other assets that can be liquidated easily) to total current liabilities (short-term debts due in less than a year). If you have $2,000 in current assets and $2,000 in current liabilities, your current ratio would be 1:1.
A 1:1 current ratio means for every $1 of current assets on the books, your business has $1 of current liabilities. Anything below a 1:1 could indicate your business will not be able to pay its debts, which would be a red flag to lenders and investors.
The appendix is where you put information about a business that doesn’t fit in the above categories. What you put here largely depends on the type of business you’re creating. A good recommendation is to put any visual components in the appendix. For example, if you are opening a restaurant, consider adding a menu and an artist rendering of the interior and exterior.
Consider including the following items in your business plan appendix:
- Building permits
- Artist mock-up of interior
- Leases and agreements
- Equipment documentation
- Supplier agreements
- Incorporation documents
- Licenses and permits
- Media coverage
- Marketing materials
- Letters of recommendation
An appendix is not required in a business plan, but it is highly recommended for additional persuasion. Often, documents like media coverage, agreements, and equipment documentation show the investor and banker you’re serious about the business. If your appendix becomes too long, more than 10 pages, consider creating a second table of contents placed before the appendix.
Detailed Financial Projections
Frequently asked questions (faqs) about how to write a business plan.
This section includes the most frequently asked questions about how to write a business plan.
What needs to be in a business plan?
What you should put in a business plan depends on its purpose. If you’re seeking funding from a bank or investor, you’re going to need most of the sections above. However, if you have time to only do one section, it’s the financial projections. Your research and company information are great, but investors and bankers want to read your financials first. The research involved to determine the forecasted numbers takes a lot of time, but it will help you prepare for the business’ launch.
How do you write a business plan for a startup?
The business plan for a startup is similar to a business plan for an established business. The startup business plan will include startup costs, which will be listed by item and factored into the financial projections. Additionally, since your business hasn’t proven it can be successful yet, you may need additional information about the ownership, business model, market, and industry to convince the reader your business will succeed.
How long does it take to write a business plan?
A simple business plan may only take a couple hours. However, for the business plan provided with this template, which includes financial projections, it may take over 60 hours to research the income and costs associated with running your business. Additionally, you have to format those costs into a chart; it’s a best practice to showcase the data with easy-to-understand charts.
Is writing a business plan hard?
Yes, creating a business plan for funding from a bank or investor is hard. Unless you have a background in financial statements, the financial projections are difficult for the average business owner. If you want to create a more simple business plan than the one presented here, consider a business model canvas (BMC) ; it’s a more modern business plan and can be finished more quickly.
Every type of business, whether it’s a side hustle or a multimillion dollar business, needs to have a business plan. The industry analysis and market segmentation sections validate your business idea. Researching and forecasting financial projections helps logically think through income and expenses, which lessens the risk of business failure. Remember to get feedback on your business plan from business employees and associates. If necessary, have them sign an NDA before they review the plan.
About the Author
Find Blake On LinkedIn Twitter
Blake Stockton is a staff writer at Fit Small Business focusing on how to start brick-and-mortar and online businesses. He is a frequent guest lecturer at several undergraduate business and MBA classes at University of North Florida . Prior to joining Fit Small Business, Blake consulted with over 700 small biz owners and assisted with starting and growing their businesses.
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How to Create a Business Plan in 9 Steps
Writing a business plan can be complicated—but it doesn’t have to be. Learn how to create a business plan in less than 10 steps.
A well-crafted business plan is the foundation of any successful company. If you want to start a business , writing a business plan is necessary to define the goals of the business you intend to create. A good business plan will help you to build an effective and appropriate marketing strategy, but that is just the start.
What is a Business Plan?
A business plan is a document that describes the products or services the business will offer, and how it will earn its money. It describes the style, type, and organization of the leadership that runs the business, its operating model, staffing, financing, and numerous other details about the proposed business. Taking this description into consideration, it is easy to see why a business plan is important. Let's just take a quick look at the most common business plan components:
- Business type
- Product or service offered
- Unique value proposition
- Description and estimate of existing market demand
- Staffing type and structure
- Leadership type and structure
- Financing model
Looking at all these elements at a glance, it is easy to imagine how they might (or might not) fit together nicely to create a functional business that has good market viability.
A good and successful business can be compared to an animal living in its environment. A well-adapted animal has a body type that fits nicely into the environment. There is food in the environment (demand), and the animal has the right adaptations to catch, acquire, and consume that food.
The animal will have fur and body fat that is optimized to protect it from the elements or know how to build shelter. Good business is very much like this. It has to be adapted to the market it intends to operate in. But not only this, it has to have the agility to change as the environment (market) changes around it.
Many people believe they can simply jump into the market without a plan, or even a marketing strategy. It is the rare entrepreneur who is lucky or talented enough to do that, and good business people do not like to bet on luck. We want to bet on proven strategies that have been shown to work, and for that, you need a plan.
Why You Need to Write a Business Plan
A well-written business plan will help you to secure funding. Whether you seek funding from a financial institution or from a venture capitalist, a good business plan lays out in clear black and white your core value proposition and how you intend to deliver that value. It also shows that there is an existing demand for the value you intend to offer. That is to say, people want it.
Your business plan should communicate whether or not your idea is worth an investor's money. It will set and communicate your goals. Any good business plan is built around an accurate vision of the present and the future. By establishing your goals in writing, you will be more likely to achieve them.
A good business plan can prove that your idea is viable in the market. Usually, when this is the case it is because the plan is based on quality market research. A good business plan will represent a response to trends and a reasonable vision of the future.
Your business plan will help you to avoid failure. Failure can happen if the market offers no demand for the product or service proposed. It will fail if the necessary amount of capital has not been taken into account. If the market is already saturated with the product or service offered, failure is likely. Naturally, if prices are too high, failure is once again, a predictable consequence.
Finally, a good business plan will reduce the risk your company is exposed to. Risky decisions are part of almost any successful business plan, but a good one will minimize the risks, making success more likely.
As you read through this guide on how to write a business plan, keep these four tips in mind. Let them act as your guidelines as you consider and draft your own business plan.
How to create a business plan
The hardest part of writing a good business plan is getting started. Your plan should begin with a product or service that you want to sell. That product or service needs to be something that you are uniquely positioned to offer.
Then, you need to have talent (or access to talented people), you need capital (or access to capital) and you need to find a market, that is a place and people, where your product or service is needed or wanted. Finally, you need a unique value proposition (UVP). That is a special and unusual way that you are able to deliver the product or service you offer. Your UVP represents your ability to offer your product or service in a way that few or none can match. In other words, why are your customers going to you and not to someone else? Remember the four tips.
With that in mind, let's look at some of the most common business plan formats that we might choose from or use as guides.
Most businesses are based on a traditional business plan. Traditional business plans are based on structures and methods that are time-tested and proven to work. They take longer to write because the history of proven business methods is long. So if you choose to follow this path, you have some pretty big shoes to fill. But in general, traditional business plans take fewer risks and are very attractive to many investors for that reason.
This kind of business is designed to generate a benefit for the community at large. They tend to be based on traditional business plan structuring, except that it is based on donations from the community. These could be a traditional nonprofit, like a homeless shelter. It could also be an organization that proposes to create a product that will help people with disabilities, such as a novel, electric, self-balancing mobility device, for example.
This type of business model is an abbreviated version of a traditional business plan. It follows the same or a similar format but it only includes only the most essential information about the proposed business. Businesses based on a lean model are designed to onboard new people or modify the plan to suit a specific market. This type of plan might also be referred to as an Agile business plan since it depends on an ability to adapt to new or changing circumstances as the business entity emerges.
How to write a business plan
We're not going to lie. Sitting over that blank page and expecting to deliver the goods is intimidating. But you can do it! Here's how. Remember, this is only a draft. You can look it over, think about it, sleep on it, and make changes in your own time. So take a deep breath, and let's get started.
1. Draft your executive summary
Your executive summary is a high-level overview of the business plan designed to persuade potential investors. You can think of it as the elevator pitch version of your overall plan. On paper, it will look like a five or six-line paragraph centered on the page.
2. Describe the company
In this portion, you need to describe who you are and what you do. This is not about convincing a major investor during an elevator ride. It is only meant to give a script to answer the question, "What is your business about?" In it, you explain your essential branding idea and why the market will beat down your door to get what you offer.
3. Do a market analysis
Now, this is where the rubber meets the road. A market analysis is a research-based, detailed examination of the environment your business proposes to survive and thrive in. A market analysis is going to be exploratory if you have not found the market you plan to work in yet. Conversely, if you believe you have found your market, it should prove why that is the right market for your company. It should explain how big the potential market is, and how much demand for your UVP it contains.
4. Outline organization and management
This section outlines who will be running your company. It should give details as to the legal structure of the business management system. You will need to communicate whether you intend to incorporate the business as an S corporation, form a limited partnership, or a sole proprietorship. This part of your business plan can look like a flow chart. That's usually a good way to start drafting this component of your plan.
5. List products and services
This should be easy. Your product and service descriptions should be compelling and concise. It is a good idea to use images and offer critical details about what makes your offerings special and attractive.
6. Describe and categorize customer demographics
You can think of this portion of your business plan as an extension of your market analysis. Here, you want to profile the people who will be buying what you're selling. It should answer the following questions:
- Where do they live?
- What is their age range?
- What is their level of education?
- What are some common behavior patterns?
- How do they spend their free time?
- Where do they work?
- What kinds of technology do they use?
- How much do they earn?
- Where are they often employed?
- What are their values, beliefs, and opinions?
After you complete these questions for a given demographic, you then want to outline another demographic that will also be interested in what your business offers. One group might buy higher-end versions of your products, and the other a lower-end version. One might use your products for work while the other may use them on vacation.
Once you have defined these demographics, you will find that it is very helpful in developing an email marketing strategy.
7. Define your marketing plan
Unless you plan to erect a kiosk in front of the home of each person in your customer demographic, you need a marketing plan. Here, you will develop a plan to sell and promote your business. You need a branding scheme. You need to describe your pricing, products, promotional channels, and places where your promotional materials will appear. If you are to have an effective marketing strategy, you will need all these things in reality. So it is a good idea to plan for them early.
8. Logistics and operations plan
This part of your plan outlines the details of how your business will function, giving details on the following:
- Suppliers: Who supplies what you need to operate?
- Production: How you make your products
- Facility: Where you produce products
- Equipment: What you need to actuate production
- Fulfillment & shipping: How your products will reach your customers
- Inventory: What and how much do you need to keep on hand, store, and move
9. Draft a financial plan
This is the part where you show that, at the end of the day, it is worthwhile to do business with you. The amount of detail needed in your financial plan depends on who you are pitching to, your goals, their goals, and what they expect.
5 Tips for crafting a small business plan
Know your audience.
Chances are you will have to pitch to several different investors, groups of investors, or capital finance lenders. When you speak to one, you will pitch in a certain way meant to appeal to their needs and perspective. There is a very real chance that when you move on to another, you will have to alter your business plan to appeal to them. Be ready for this. Do NOT expect every investor to fall in love with your idea at first sight, or at all. That simply does not happen in the real world.
Have clear goals
Your plan should be clear. You should understand it so well that you can phrase it simply and quickly. Your goals should match or resonate with those of potential investors.
Do your research
Have facts and figures on hand ready to go. Know what your product is worth and what your customer demographics are willing and able to pay for it. Know how your marketing scheme will work, where, and to whom it will be presented. Automated SMART goals are a good way to fill out a functional marketing plan. You should have an answer to every question, and those answers should include facts and figures that will pan out when investors look into it for themselves.
Keep it simple. Yes, you are laying out some complex ideas. But you need to be able to communicate with them rapidly, easily, and effectively. Start your draft simply. Keep it very bare bones. Add to it only as needed, and be ready to strip away any excess material before performing your pitch.
Use business plan drafting software
You will find there are some quality business plans drafting software products out there that will help you enormously. They will give you useful templates and help you follow a clean organizational format. Best of all, you won't be able to call it finished until you have filled out everything your business plan needs to work.
Common pitfalls to avoid when writing a business plan
Before you get started, understand that your business plan is not a sure thing. Far from it. There are deadly mistakes you can make that will kill your business. This is true about every living thing. Even the most powerful and established creatures can fall off a cliff, get poisoned, or encounter a bigger, hungrier fish.
1. Bad business ideas
You should know by now that most businesses fail. Most successful entrepreneurs have failed many times. If you expect your business to take off like a rocket, you probably aren't being as careful as you should be.
2. Lack of an exit strategy
Knowing that most businesses fail, it would be prudent to have a plan for that very possibility. What will you do if it fails? How will you live? Do not put all your eggs into one entrepreneurial basket. Investors will spot a missing exit strategy and be turned off by it.
3. Team imbalance
Think of TV sitcoms. What makes them good, above all else, is the cast. You could take a weak business idea and make it work with a great team. But you cannot do anything with a poorly cast or badly balanced team.
4. Inaccurate financial projections
If you are missing projections or your projections are not well researched, investors will walk out of the room. Have a fulsome, complete, and well-written balance sheet. It's okay to be marginally wrong about one projection or another. But it is unacceptable to have missed a necessary projection entirely.
5. Bad writing
Many people gauge their self-worth by the number of things they look down their noses at. When it comes to any written document, a spelling error or a grammatical error is all the excuse many people need to turn off. Make sure your business plan is grammatically impeccable with equally impeccable spelling.
No one writes a perfect first draft
Remember to go easy on yourself in the drafting phase. Go ahead and write down everything that comes to mind, knowing you will firm it all up with facts, figures, and stunning research after you have your draft.
Use business plan software to make things easier. Take your time refining your plan, your pitch, and your numbers. Think of those pitch meetings as a Broadway performance that could launch you into stardom. Rehearse your pitch. Refine your plan, and get ready to shine!
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How to Write a Business Plan, Step by Step
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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. add additional information to an appendix, business plan tips and resources.
A business plan is a document that outlines your business’s financial goals and explains how you’ll achieve them. A strong, detailed plan will provide a road map for the business’s next three to five years, and you can share it with potential investors, lenders or other important partners.
Here’s a step-by-step guide to writing your business plan.
» Need help writing? Learn about the best business plan software .
This is the first page of your business plan. Think of it as your elevator pitch. It should include a mission statement, a brief description of the products or services offered, 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, which should contain 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, it should cover 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 exactly what you’d like to accomplish, both in the near term and over the long term.
If you’re looking for a business loan or outside investment, you can use this section to explain why you have a clear need for the funds, how the financing will help your business grow, and how you plan to achieve your growth targets. The key is to provide a clear explanation of the opportunity presented and how the loan or investment will grow your company.
For example, if your business is launching a second product line, you might explain how the loan will help your company launch the new product and how much you think sales will increase over the next three years as a result.
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.
Your sales strategy.
Your distribution 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.
» 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.
You may also include 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.
» NerdWallet’s picks for setting up your business finances:
The best business checking accounts .
The best business credit cards .
The best accounting software .
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.
List any supporting information or additional materials that you couldn’t fit in elsewhere, such as resumes of key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts and personal and business credit history. If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.
Here are some tips to help your business plan stand out:
Avoid over-optimism: If you’re applying for a business loan at a local bank, the loan officer likely knows your market pretty well. Providing unreasonable sales estimates can hurt your chances of loan approval.
Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors, taking their mind off your business and putting it on the mistakes you made. 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. You can search for a mentor or find a local SCORE chapter for more guidance.
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.
A Nine-Step Guide to Writing a Business Plan
Having a well-thought-out and solid business plan is essential to any business’s success. It provides you with a clear road map for your business. Writing a business plan allows you to work through your business’s validity and get a clear picture of your financial needs and the competition in your sector.
Step 1: Write an Executive Summary
Step 2: create a business description, step 3: provide a market and competitive analysis, step 4: describe your operational and management structure.
Here is where you get to give details of your business’s legal structure, history, and location. It includes yourself, your team, type of ownership (is it a sole proprietorship, partnership, or corporation). What are the percentages of ownership and the extent of involvement of each member? You can make use of an org chart to describe your structure.
Step 5: Include Your Product and Service Description
Step 6: outline a sales and marketing plan, step 7: create your financial analysis and projections, step 8: make a funding request, step 9: write your appendix, signup for the newsletter.
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How to Write a Business Plan: In 9 Steps
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Though it can feel daunting, putting together a business plan is a really crucial and exciting step when turning your dreams into something tangible.
Bringing your great idea to life with a well-considered plan to back it up will not only mean you’re more likely to be successful, but also can be helpful in understanding and achieving your goals, achieving funding, and proving to key stakeholders (like investors, banks or even potential co-founders) that you mean business.
In short, a business plan is a crucial tool when starting your business. There are plenty of reasons for this, but here are three key reasons why:
It shows the financial viability of your business idea. By writing how you plan to make money and how much it will cost, you will quickly realise if your idea is financially sound.
It will provide clarity. A business plan will help you articulate what problem or need your business addresses and why it’s necessary for your target market. This will help your future marketing and selling efforts and will provide a clear picture of what you are working to accomplish.
It will help establish goals and benchmark against other players in the industry. Writing a business plan will help you establish benchmark goals and targets to ensure that your company is always moving forward.
So, if you hadn’t considered writing a business plan until now you might want to get started - even if you are not looking to seek investment right now.
Loads of entrepreneurs have a great idea but aren’t quite sure how to explain it. With 50% of start-ups failing within the first 5 years, we want to help get you on track for success - and it starts with an effective business plan.
Your basic business plan framework checklist
Here’s a useful checklist for the 9 key sections to add to your business plan . Almost every business plan follows the same framework. You can expand this however you’d like, but make sure these essential pieces are in place:
1. Executive summary
This is effectively an extended elevator pitch for your business. Here, you’ll outline your idea including what you’re offering, your mission statement, and how your business is uniquely positioned to succeed.
2. Company overview
This section will provide a quick glance at your business history, location, the core issue your business solves and a brief overview of your target market and any core ideas of growth you have - which you’ll explore further later in the business plan.
3. Industry overview
Here, you’ll answer this question: what does the rest of the sector look like and how are you planning to fit into or challenge it? You can do this using data such as statistics, consumer demographics and any industry trends.
4. Market analysis
This section needs to contain details about research you’ve validated to prove there is demand for your business, including who your competition is and what market share it has, if there are any barriers to entry for the market and perhaps most importantly, how you’ll distinguish yourself from the rest of the market - what is your unique selling point?
5 Sales and marketing plan
What strategies or tactics will you use to achieve your business goals and mission? You should also explain how you’ll sell your products, your pricing and advertising strategy, and how you intend to market your unique selling point to potential customers in order to increase your market share and grow your business.
6. Team structure
Here’s where you’ll explain the legal structure (sole trader, partnership etc) and key members of your business, including a brief overview of their involvement in the company and if they own any of the business.
7. Operating plan
This section will detail what the day-to-day practicalities of your business will look like. A good guide for starting is to answer the following: Where will your team be based? What expenses will you incur? Who needs to be hired?
The financial section of your business plan is crucial, particularly in gaining trust and credibility from key stakeholders such as potential investors or to gain a bank loan. It is where you need to show how your business will make money and grow over time, so it’s important as a minimum to honestly break down a cash flow projection to show you can identify and mitigate risk, a balance sheet to detail the assets and worth of your business, and anticipated expenses.
Nobody expects you to be a financial whiz, so you may want to consider getting some outside help writing this up or getting it checked over.
Last but not least - here’s your chance to add links, documents (such as bank statements) and citations to help you support your business plan.
By following this business plan template, you’ll have no problem turning your great idea to reality - so you can then keep working on building your business. Check our infographic below for a recap so you don't miss any steps.
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How to write a business plan in 9 steps. Draft an executive summary; Describe your company; Perform a market analysis; Outline the management
Writing a Business Plan? Here's How to Do It, Step by Step · 1. Executive summary. · 2. Company description. · 3. Market analysis. · 4. Organization
Writing a business plan in 9 steps · 1. Ask these questions · 2. Research before you write · 3. Think about your audience · 4. Include market analysis · 5. Make
How to Write a Business Plan in 9 Steps.
How to write a business plan · 1. Draft your executive summary · 2. Describe the company · 3. Do a market analysis · 4. Outline organization and management · 5. List
How to write a business plan · 1. Start with the executive summary · 2. Include your company description · 3. Showcase market analysis · 4. Outline the organization
Traditional business plan format · Executive summary · Company description · Market analysis · Organization and management · Service or product line · Marketing and
How to Write a Business Plan, Step by Step · 1. Write an executive summary · 2. Describe your company · 3. State your business goals · 4. Describe
Step 1: Write an Executive Summary · Step 2: Create a Business Description · Step 3: Provide a Market and Competitive Analysis · Step 4: Describe
Your basic business plan framework checklist · 1. Executive summary · 2. Company overview · 3. Industry overview · 4. Market analysis · 5 Sales and