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Making a Risk Management Plan for Your Business
It’s impossible to eliminate all business risk. Therefore, it’s essential for having a plan for its management. You’ll be developing one covering compliance, environmental, financial, operational and reputation risk management. These guidelines are for making a risk management plan for your business.
Developing Your Executive Summary
When you start the risk management plan with an executive summary, you’re breaking apart what it will be compromised of into easy to understand chunks. Even though this summary is the project’s high-level overview, the goal is describing the risk management plan’s approach and scope. In doing so, you’re informing all stakeholders regarding what to expect when they’re reviewing these plans so that they can set their expectations appropriately.
Who Are the Stakeholders and What Potential Problems Need Identifying?
During this phase of making the risk management plan, you’re going to need to have a team meeting. Every member of the team must be vocal regarding what they believe could be potential problems or risks. Stakeholders should also be involved in this meeting as well to help you collect ideas regarding what could become a potential risk. All who are participating should look at past projects, what went wrong, what is going wrong in current projects and what everyone hopes to achieve from what they learned from these experiences. During this session, you’ll be creating a sample risk management plan that begins to outline risk management standards and risk management strategies.
Evaluate the Potential Risks Identified
A myriad of internal and external sources can pose as risks including commercial, management and technical, for example. When you’re identifying what these potential risks are and have your list complete, the next step is organizing it according to importance and likelihood. Categorize each risk according to how it could impact your project. For example, does the risk threaten to throw off timelines or budgets? Using a risk breakdown structure is an effective way to help ensure all potential risks are effectively categorized and considered. Use of this risk management plan template keeps everything organized and paints a clear picture of everything you’re identifying.
Assign Ownership and Create Responses
It’s essential to ensure a team member is overseeing each potential risk. That way, they can jump into action should an issue occur. Those who are assigned a risk, as well as the project manager, should work as a team to develop responses before problems arise. That way, if there are issues, the person overseeing the risk can refer to the response that was predetermined.
Have a System for Monitoring
Having effective risk management companies plans includes having a system for monitoring. It’s not wise to develop a security risk management or compliance risk management plan, for example, without having a system for monitoring. What this means is there’s a system for monitoring in place to ensure risk doesn’t occur until the project is finished. In doing so, you’re ensuring no new risks will potentially surface. If one does, like during the IT risk management process, for example, your team will know how to react.
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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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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.
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How to Write a Business Plan: A Step-by-Step Guide
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A strong, well-thought-out business plan is crucial for a business's success. Without one, it's tough to maintain a vision of the future and what the next steps for your business should be. Think of it as a litmus test to prove that every step taken is part of a larger calculated effort.
Business plans are also crucial for external affairs. If you want to want to take out a loan, bring on a business partner, or more you'll need a solid plan in order. Your plan should be your pitch.
However, writing a business plan isn't easy and not everyone knows exactly what the business plan should outline. What's even more confusing is that no two business plans should look the same. We wrote a complete guide to show what your business plan should detail and how to write it.
- Before You Begin Writing
How to Write a Traditional Business Plan
- How to Write a Lean Startup Plan
Things to know before you begin writing.
Know your audience. For example, if your business operates in a very niche space, you don't want to use niche and complex language that no one will understand if your plan will be reviewed by lenders or investors who don't have much knowledge of your space.
Also, keep the length of your plan in mind when it comes to your reader. We would always recommend keeping your plan as short as possible, but certain readers might want to see more details while others might want only the high level information. For example, a potential business partner will likely want to see a bit more details than an underwriter evaluating your business. However, don't go overboard with this and write a 50-page plan, as no one will read that.
Pick Your Format (traditional vs. lean startup)
There are now two ways you can write your business plan. The traditional route, and the most common, is likely what you'll be using. The traditional plan contains far more details and should be used for most scenarios. Alternatively, you can explore a lean startup plan , which are onepagers and detail your business only at the highest level. This is most appropriate for businesses that are likely to change quickly or are on a very, very short timeline.
A traditional plan is typically comprised of seven sections that are each crucial for explaining a different angle of your business. The length and detail of your plan will vary with the audience of the plan and how mature your business is. You'll use a business plan to sell your business to investors, qualify your business with for a loan with lenders, and more. Having a solid plan is always useful and can also help keep your actions as a business owner on track.
Step 1: Write an Executive Summary
As with any other piece of writing, this introduction to your plan is the hook. Why should the reader believe in your business? Sell your business and explain why it matters. Additionally, supplement your sell with a high level summary of your plan and operating model. However, don't go over one or two pages.
Feel free to include the following as well:
- Business Name
- Key Employees
- Business Background
- Listing of goods/services offered
Step 2: Write a Business Description
This is your first opportunity to really go into detail about your business. What's the opportunity that your business is capitalizing on? What's the target market? How are you standing out from competitors? Highlight how your business is differentiated.
Step 3: Market and Competitive Analysis
Any good business will have done comprehensive analyses of the market that its entering. This doesn't just apply to large corporations, and your reader will likely want to see evidence of this. Here, you can describe the industry and market your business will operate in and highlight the opportunities your business will take advantage of. Did your market research reveal any unique trends? If so, this is the place to show it.
Illustrate the competitive landscape as well. What are your competitors doing well and not so well? Why are you moving into this space, and what's the weakness to be exploited in the industry? How will competitors logically react? Are you going to take competitors' customers? How?
Step 4: Operational Structure
This now gets into the tangible details of your business. How will your business operate on a day-to-day basis? Your plan should really detail this out.
What's your business's legal structure? Is it a sole proprietorship? Include this as well. We'd recommend putting together an organizational chart if there are multiple stakeholders to not only show who's involved but to also show how everyone brings something to the table.
Step 5: Product Description
Now, you finally get to discuss in detail what you'll be selling or offering. What's your good or service that's for sale? This section will likely be a bit longer than the others because of its importance.
Be sure to describe your product and how it is differentiated from similar ones. How will it be priced, and how does that play in the market compared to competitors?
Also include a marketing or promotions plan here. You could have the best product in the world but it won't matter if no one knows about it. Identify your target market and really detail out how you'll make that market aware of your product. What's the message you want to promote and why does that resonate with your specific product and the target audience? How will you build awareness and retain loyalty?
Step 6: Raise Capital
If you intend for a prospective investor or lender to read this, you'll want to include a section here on your funding request. Be clear with how much you're asking for and why. You don't want to ask for a $100,000 loan or investment without a clear plan as to what exactly that money would be used for. On top of explaining what the funds would be used for, also clearly state the projected ROI.
Step 7: Financial Analysis and Projections
It doesn't matter if you include a request for funding in your plan, you will want to include a financial analysis here. You'll want to do two things here: Paint a picture of your business's performance in the past and show it will grow in the future. Use charts and images to help make the experience easier.
If your business has already been operating for a few years, demonstrate stability through your finances. But if your business is newer and not yet profitable, be clear and realistic with your projections. For example, if your sales have been increasing at a steady 5% every quarter, you don't want to suddenly assume 50% sales growth per quarter for no reason.
Research industry norms and look up how comparable businesses have performed. Include income statements, balance sheets and cash flow statements for multiple years if possible. When showing your financial outlook, project your vision out over at least five years. Clearly state the logic behind your projections, and you can also tie this section back to your previous section on raising capital if applicable.
Step 8: Appendix
If you have any remaining pieces of information such as relevant patents, licenses, charts or anything else that wasn't able to fit in organically in the plan elsewhere, feel free to include those here. Don't use this as a space as a document dump. Instead, be absolutely sure that every piece of information that goes here goes toward supporting your business plan.
How to Write a Lean Startup Business Plan
The logic behind lean startup plans is that every business plan can be divided into nine segments. Without going into detail, you can describe each of those segments at a high enough level where they can be listed out on a single page. Compared to the traditional business plan, this allows for far more flexibility in case your business drastically changes quickly. There are dozens of templates to choose from but the most common is listed here .
Here are the basic components you'll need in a lean startup plan:
Customer Segments. Describe your target audience(s) that your business will appeal to. Most businesses will have multiple segments listed here and it's imperative that you properly identify them.
Value Proposition. Your business will potentially appeal to different customer segments in different ways. If that's the case, you should list out the different value propositions for each segment clearly and succinctly. If that isn't the case, you can list out the single value proposition your company will have. If you can't figure out what your value proposition is, that means you don't know what your business's value add is.
Channels. How is your value proposition going to be communicated to your customers? Detail out brand awareness as well as ongoing communication channels with your customers.
Customer Relationships. After you've explained how you'll be communicating to your customers, think about the kind of relationship you'll want to maintain with them. Will communication be ongoing? Will you personally be contacting them or sending automated emails?
Revenue Streams. How will your business make money? At what point in the relationship with your customers do you start to recognize revenue? Most companies will have multiple streams although if your business is just starting out, you may only have one. That's OK, but just be sure to demonstrate you know exactly where your revenue will come from.
Key Resources. You've described how you'll be capturing revenue from your customers, but what will the infrastructure look like that will support it? Supporting resources may include but aren't limited to staff or capital.
Key Activities. What are the absolute necessary activities in your plan for your business to be successful? Detail them out here and show why they're important.
Key Partnerships. As a new business, you likely won't own all of your key resources and won't be able to do all of the key activities yourself. What other entities are you working with? Consider suppliers, vendors and anyone else you're planning on doing business with.
Cost Structure. Now that you understand your business's infrastructure and needs, you can detail out the total projected costs of your business or at least identify the biggest costs you have in your plan right now. What is your plan to ensure you're maximizing the value out of those costs?
Be efficient with your plan: Be sure every single word and image in your plan serves a purpose. You don't want window dressing for the sake of window dressing here. Being concise and getting straight to the point will help make your plan more digestible and easier to understand.
If your plan starts to exceed 20 pages, really proofread tosee if anything should be cut out. Also, follow the advice we mentioned above and be aware of your audience. Don't write a plan that will confuse or bore the reader.
Keep yourself honest: Don't assume a fantasy world when writing your plan. Be honest and realistic. Use industry or sector benchmarks to determine what those realistic measures are, and be wary of inflating projections. This is a very common problem and it doesn't help anyone out.
Accept help: There are so many free resources both online and in person to help with all small-business affairs. Nonprofit organizations like SCORE offer things like free mentoring and can help you write your business plan. If you're a woman or a minority, there are many government sponsored resources like the National Women's Business Council that also provide free consulting.
What needs to be in a business plan?
The exact contents of a business plan will differ plan by plan, but in general, the typical plan should include an executive summary, a business description, a market or competitive analysis, a description of the proposed operational structure, a product description, and a pitch to raise capital if applicable.
Why is a business plan important?
Business plans are efficient ways to explain your business in a comprehensive and broad manner. Lenders may make decisions to lend to you based on your business plan. Investors may decide whether they want to invest in your business based on your plan.
Not only are plans useful to externally communicate details about your business, they're also useful as an internal reference. Plans will help keep your business on track and help align your strategic goals with actions that you make on a daily basis.
How do I write a business plan for a loan?
Most lenders will require a business plan from applicants. A business plan should always take the audience into account and in this case, you'll want to emphasize how your business stands out in the market, why it's likely to be a success, and how your plan involves paying off your loan quickly and on time. As long as a lender is confident that you'd be able to meet your loan repayments, your business plan did its job.
What's the difference between a traditional and a lean plan?
A traditional plan is far more common and will carry a lot more detail than a lean plan. While the two are relatively similar in content and structure, a lean plan only contains the bare minimum level of detail. A lean plan is usually a one-pager and only has the minimum amount of detail to be able to describe the business at the highest level and should only be used when the company is both very new and time is scarce.
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.
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Whether you’re a seasoned business owner or just beginning to think about starting a business , demands come at you fast. Amidst the rush of to-do lists and meetings, determining how to write a business plan—much less following a business plan template—often feels time-consuming and intimidating.
But nearly 70% of business owners who have been there and done that recommend writing a business plan before you start a business, according to a recent QuickBooks survey . After all, when done right, business plans have enormous payoffs.
And yet, more than 10% of prospective business owners said they do not intend to write a business plan. Another 10% aren’t sure if they need a plan.
It’s more than the old cliche: A failure to plan is a plan to fail. In fact, a wealth of data now exists on the difference a written business plan makes, especially for small or growing companies.
In this post, we’ll cover everything you need to write a successful business plan, step-by-step, and turn your idea into a reality. Even better, if you’re pressed for time, we’ve compiled the 10 steps and examples into a downloadable (PDF) template . The 10 steps to write a business plan are:
- Create an executive summary
- Compose your company description
- Summarize market research and potential
- Conduct competitive analysis
- Describe your product or service
- Develop a marketing and sales strategy
- Compile your business financials
- Describe your organization and management
- Explain your funding request
- Compile an appendix for official documents
But, first things first.
What is a business plan?
A business plan is a comprehensive road map for your small business’s growth and development. It communicates who you are, what you plan to do, and how you plan to do it. It also helps you attract talent and investors.
But remember that a business idea or business concept is not a plan.
Investors want to know you have:
- Product-market fit: Have you done the research to determine the demand for your product or service?
- A solid team in place: Do you have the people you need to support your goals and objectives?
- Scalability: Can you grow sales volume without proportional growth in headcount and fixed costs?
A templated business plan gives investors a blueprint of what to expect from your company and tells them about you as an entrepreneur.
Why do you need a business plan?
You need a business plan because the majority of venture capitalists (VCs) and all banking institutions will not invest in a startup or small business without a solid, written plan. Not only does a business plan help you focus on concrete objectives, but it gives outside parties reassurance that you’ve thought ahead.
In 2018, entrepreneurial resource center Bplans worked with the University of Oregon to compile and analyze research around the benefits of business planning . Here’s what they found:
- Businesses with a business plan grow 30% faster than those without.
- Owners with business plans are twice as likely to grow, get investments, or secure loans than those without.
- Entrepreneurs with a business plan have a 129% increased likelihood of growing beyond the startup phase and a 260% increased likelihood of growing from “idea” to “new business.”
Perhaps the strongest evidence comes from the Journal of Business Venturing’s 2010 meta-analysis of 46 separate studies on 11,046 organizations: Its findings confirm that “business planning increases the performance of both new and established small firms.”
When do you need a business plan?
Before you leave a nine-to-five income, your business plan can tell you if you’re ready. Over the long term, it’ll keep you focused on what needs to be accomplished.
It’s also smart to write a business plan when you’re:
- Seeking funding, investments, or loans
- Searching for a new partner or co-founder
- Attracting, hiring, and retaining top talent
- Experiencing slow growth and need a change
Feel confident from day one
You're never too small, and it's never too soon to know you're on track for success.
How to write a business plan in 10 steps
Start with a clear picture of the audience your plan will address. Is it a room full of angel investors? Your local bank’s venture funding department? Or is it you, your leaders, and your employees?
Defining your audience helps you determine the language you’ll need to propose your ideas as well as the depth to which you need to go to help readers conduct due diligence.
Now, let’s dive into the 10 key elements of your business plan.
1. Create an executive summary
Even though it appears first in the plan, write your executive summary last so you can condense essential ideas from the other nine sections. For now, leave it as a placeholder.
What is an executive summary?
The executive summary lays out all the vital information about your business within a relatively short space. An executive summary is typically one page or less. It’s a high-level look at everything and summarizes the other sections of your plan. In short, it’s an overview of your business.
How do I write an executive summary?
Below, you’ll find an example from a fictional business, Laura’s Landscapers. (We’ll use that same company throughout this guide to make each step practical and easy to replicate.)
This executive summary focuses on what’s often called the value proposition or unique selling point: an extended motto aimed at customers, investors, and employees.
You can follow a straightforward “problem, solution” format, or a fill-in-the-blanks framework:
- For [target customers]
- Who are dissatisfied with [current solutions]
- Our [product or service] solves [key customer problems]
- Unlike [competing product], we have [differentiating key features]
This framework isn’t meant to be rigid, but instead to serve as a jumping-off point.
Example of an executive summary
Market research indicates that an increasing number of wealthy consumers in Richmond are interested in landscape architecture based on sustainable design. However, high-end firms in the area are scarce. Currently, only two exist—neither of which focus on eco-friendly planning nor are certified by green organizations.
Laura’s Landscapers provides a premium, sustainable service for customers with disposable incomes, large yards, and a love of nature.
2. Compose your company description
Within a business plan, your company description contains three elements:
- Mission statement
These elements give context to the bigger picture in your business plan, letting investors know the purpose behind your company so the goals make sense as well.
What is a mission statement?
A mission statement is your business’s reason for existing. It’s more than what you do or what you sell, it’s about why exactly you do what you do. Effective mission statements should be:
- Inspirational to make others believe in your vision
- Emotional to captivate readers and grab their interest
Throughout every part of your plan, less is more. Nowhere is that truer than your mission statement. Think about what motivates you, what causes and experiences led you to start the business, the problems you solve, the wider social issues you care about, and more.
Tip: Review your mission statement often to make sure it matches your company’s purpose as it evolves. A statement that doesn’t fit your core values or what you actually do can undermine your marketing efforts and credibility.
How do you describe a company’s history?
Don’t worry about making your company history a dense narrative. Instead, write it like you would a profile:
- Founding date
- Major milestones
- Number of employees
- Executive leadership roles
- Flagship products or services
Then, translate that list into a few short paragraphs (like the example below).
Why do business objectives matter?
Business objectives give you clear goals to focus on, like the North Star. These goals must be SMART, which stands for:
They must also be tied to key results. When your objectives aren’t clearly defined, it’s hard for employees and team members to work toward a common purpose. What’s worse, fuzzy goals won’t inspire confidence from investors, nor will they have a profitable impact on your business.
Example of a company description
Laura’s Landscapers’ mission is to change the face of our city through sustainable landscaping and help you create the outdoor living space of your dreams.
Founded in 2021 by sisters Laura and Raquel Smith, we have over 25 years of combined landscape architecture experience. Our four employees work in teams of two and have already completed 10 projects for some of Richmond’s most influential business and community leaders.
Our objectives over the next three years are to:
- Solidify a glowing reputation as a service-based business that always exceeds customers’ expectations and honors the environment
- Complete at least 18 projects during year one, 24 in year two, and 36 in year three generated through word of mouth, referrals, and home shows
- Increase revenue from $360,000 in FY2021 to $972,000 in FY2023 based upon 10 completed projects in the last nine months
3. Summarize market research and potential
The next step is to outline your ideal potential customer as well as the actual and potential size of your market. Target markets—also known as personas—identify demographic information like:
By getting specific, you’ll illustrate expertise and generate confidence. If your target market is too broad, it can be a red flag for investors.
- Example: If your product is perfect for people with money to hire landscape architects, listing “anyone with a garden” as your target market might not go over so well.
The same is true with your market analysis when you estimate its size and monetary value. In addition to big numbers that encompass the total market, drill down into your business’s addressable market—meaning, local numbers or numbers that apply the grand total to your specific segments. You may even map your customer’s journey to get a better understanding of their wants and needs.
Example of market research and potential
Laura’s Landscapers’ ideal customer is a wealthy baby boomer, a member of Gen X, or a millennial between the ages of 35 and 65 with a high disposable income. He or she—though primarily, she—is a homeowner. They’re a working professional or have recently retired. In love with the outdoors, they want to enjoy the beauty and serenity of nature in their own backyard, but don’t have the time or skill to do it for themselves.
Market research shows the opportunity for Laura’s Landscapers has never been better:
- In the U.S., total revenue for landscaping services increased from $69.8 billion in 2013 to $99 billion in 2019. ( 1 )
- Among landscaping contractors, designing and building is the second fastest growing service offering. ( 2 )
- What’s more, landscape design and construction is the number one “new service” existing companies plan to add over the next year. ( 3 )
In Richmond, leading indicators for interest in green, eco-friendly, and sustainable landscaping have all increased exponentially over the last five years:
- Online search volume for those terms is up 467%
- 10 new community organizations have been formed
- 73 high-profile projects have been covered by local media
- And currently 13% of Richmond’s residents have a household income of $125,000 or more (compared to the U.S. average of 5%)
4. Conduct competitive analysis
Competitive research begins with identifying other companies that currently sell in the market you’re looking to enter. The idea of carving out enough time to learn about every potential competitor you have may sound overwhelming, but it can be extremely useful.
Answer these additional questions after you’ve identified your most significant competitors:
- Where do they invest in advertising?
- What kind of press coverage do they get?
- How good is their customer service?
- What are their sales and pricing strategies?
- How do they rank on third-party rating platforms?
Spend some time thinking about what sets you apart. If your idea is truly novel, be prepared to explain the customer pain points you see your business solving. If your business doesn’t have any direct competition, research other companies that provide a similar product or service.
Next, create a table or spreadsheet listing your competitors to include in your plan, often referred to as a competitor analysis table.
Example of competitive analysis
Within Richmond’s residential landscaping market, there are only two high-end architectural competitors: (1) Yukie’s Yards and (2) Dante’s Landscape Design. All other businesses focus solely on either industrial projects or residential maintenance.
- Average cost per project: $12,000
- Ongoing maintenance fee: $200 per month
- Google My Business: 3.1 stars from 163 reviews
- Environmental certifications: None
- Primary marketing channels: Google Ads
Dante’s Landscape Design
- Average cost per project: $35,000
- Ongoing maintenance fee: $500 per month
- Google My Business: 3.7 stars from 57 reviews
- Primary marketing channels: Home shows
5. Describe your product or service
This section describes the benefits, production process, and life cycle of your products or services, and how what your business offers is better than your competitors.
When describing benefits, focus on:
- Unique features
- Translating features into benefits
- Emotional and practical payoffs to your customers
- Intellectual property rights or any patents that protect differentiation
For the production process, answer how you:
- Create existing and new products or services
- Source raw materials or components
- Assemble them through manufacturing
- Maintain quality control and quality assurance
- Receive and deliver them (supply chain logistics)
- Manage your daily operations, like bookkeeping and inventory
Within the product life cycle portion, map elements like:
- Time between purchases
- Up-sells, cross-sells, and down-sells
- Future plans for research and development
Example of product or service description
Laura’s Landscapers’ service—our competitive advantage—is differentiated by three core features.
First, throughout their careers, Laura and Raquel Smith have worked at and with Richmond’s three leading industrial landscaping firms. This gives us unique access to the residents who are most likely to use our service.
Second, we’re the only firm certified green by the Richmond Homeowners Association, the National Preservation Society, and Business Leaders for Greener Richmond.
Third, of our 10 completed projects, seven have rated us a 5 out of 5 on Google My Business and our price points for those projects place us in a healthy middle ground between our two other competitors.
- Average cost per project: $20,000
- Ongoing maintenance fee: $250 per month
- Google My Business: 5 stars from 7 reviews
- Environmental certifications: Three (see Appendix)
- Primary marketing channels: Word of mouth, referrals, and home shows
6. Develop a marketing and sales strategy
Your marketing strategy or marketing plan can be the difference between selling so much that growth explodes or getting no business at all. Growth strategies are a critical part of your business plan.
You should briefly reiterate topics such as your:
- Value proposition
- Ideal target markets
- Existing customer segments
Then, add your:
- Launch plan to attract new business
- Growth tactics for established businesses to expand
- Retention strategies like customer loyalty or referral programs
- Advertising and promotion channels such as search engines, social media, print, television, YouTube, and word of mouth
You can also use this section of your business plan to reinforce your strengths and what differentiates you from the competition. Be sure to show what you’ve already done, what you plan to do given your existing resources, and what results you expect from your efforts.
Example of marketing and sales strategy
Laura’s Landscapers’ marketing and sales strategy will leverage, in order of importance:
- Word of mouth
- Reviews and ratings
- Local Google Ads
- Social media
- Direct mail
Reputation is the number one purchase influencer in high-end landscape design. As such, channels 1-4 will continue to be our top priority.
Our social media strategy will involve YouTube videos of the design process as well as multiple Instagram accounts and Pinterest boards showcasing professional photography. Lastly, our direct mail campaigns will send carbon-neutral, glossy brochures to houses in wealthy neighborhoods.
7. Compile your business financials
If you’re just starting out, your business may not yet have financial data , financial statements, or comprehensive reporting. However, you’ll still need to prepare a budget and a financial plan.
If your company has been around for a while and you’re seeking investors, be sure to include:
- Income statements
- Profit and loss statements
- Cash flow statements
- Balance sheets
Other figures that can be included are:
- How much of your revenue you retain as your net income
- Your ratio of liquidity to debt repayment ability
- How often you collect on your invoices
Ideally, you should provide at least three years’ worth of reporting. Make sure your figures are accurate and don’t provide any profit or loss projections before carefully going over your past statements for justification.
Avoid underestimating business costs
Costs, profit margins, and sale prices are closely linked, and many business owners set sale prices without accounting for all costs. New business owners are particularly at risk for this mistake. The cost of your product or service must include all of your costs, including overhead. If it doesn’t, you can’t determine a sale price to generate the profit level you desire.
Underestimating costs can catch you off guard and eat away at your business over time.
- Example: Insurance premiums tend to go up annually for most forms of coverage, and that’s especially true with business insurance. If an employee gets injured, Laura’s Landscapers’ workmen’s compensation insurance to cover this risk will increase.
Example of business financials
Given the high degree of specificity required to accurately represent your business’s financials, rather than create a fictional line item example for Laura’s Landscapers, we suggest using one of our free Excel templates and entering your own data:
- For new businesses: Start up budget template
- For existing businesses: Income statement template
Once you’ve completed either one, then create a big picture representation to include here as well as in your objectives in step two.
In the case of Laura’s Landscapers, this big picture would involve steadily increasing the number of annual projects and cost per project to offset lower margins:
Current revenue for FY2022: $200,000
- 10 completed projects
- ~$20,000 per project
- 15% profit margins
- $30,000 net
FY2022 projections: $360,000
- 18 completed projects
- $54,000 net
FY2023 projections: $552,000
- 24 completed projects
- ~$23,000 per project
- 12% profit margins
- $66,240 net
FY2024 projections: $972,000
- 36 completed projects
- ~$27,000 per project
- 10% profit margins
- $97,200 net
8. Describe your organization and management
Your business is only as good as the team that runs it. Identify your team members and explain why they can either turn your business idea into a reality or continue to grow it. Highlight expertise and qualifications throughout —this section of your business plan should show off your management team superstars.
You should also note:
- Roles you still need to hire to grow your company
- The cost of hiring experts to assist operations
To make informed business decisions, you may need to budget for a bookkeeper , a CPA, and an attorney. CPAs can help you review your monthly accounting transactions and prepare your annual tax return. An attorney can help with client agreements, investor contracts (like shareholder agreements), and with any legal disputes that may arise.
Ask your business contacts for referrals (and their fees), and be sure to include those costs in your business plan.
Example of organization and management
Laura Smith, Co-founder and CEO
- Professional background
- Awards and honors
- Notable clients
Raquel Smith, Co-founder and Chief Design Officer
Laura’s Landscapers’ creative crews
- Cumulative years of experience
9. Explain your funding request
When outlining how much money your small business needs, try to be as realistic as possible. You can provide a range of numbers if you don’t want to pinpoint an exact number. However, include a best-case scenario and a worst-case scenario.
Since a new business doesn’t have a track record of generating profits, it’s likely that you’ll sell equity to raise capital in the early years of operation. Equity means ownership—when you sell equity to raise capital, you are selling a portion of your company.
- Remember: An equity owner may expect to have a voice in company decisions, even if they do not own a majority interest in the business.
Most small business equity sales are private transactions. The investor may also expect to be paid a dividend, which is a share of company profits, and they’ll want to know how they can sell their ownership interest. Additionally, you can raise capital by borrowing money, but you’ll have to repay creditors both the principal amount borrowed and the interest on the debt.
If you look at the capital structure of any large company, you’ll see that most firms issue both equity and debt. When drafting your business plan, decide if you’re willing to accept the trade-off of giving up total control and profits before you sell equity in your business.
- Tip: Put together a timeline so your potential investors have an idea of what to expect. Some customers may not pay for 30 days or longer, which means the business needs a cash balance to operate.
The founder can access cash by contributing their own money into the business by securing a line of credit (LOC) at a bank or applying for QuickBooks Capital . If you raise cash through a LOC or some other type of loan, it needs to be paid off ASAP to reduce the interest cost on debt.
Example of a funding request
Laura’s Landscapers has already purchased all necessary permits, software, and equipment to serve our existing customers. Once scaled to $972,000 in annual revenue—over the next three years and at a 10% profit margin—our primary ongoing annual expenses (not including taxes) will total $874,800.
While already profitable, we are requesting $100,000 in the form of either a business loan or in exchange for equity to purchase equipment necessary to outfit two additional creative crews.
10. Compile an appendix for official documents
Finally, assemble a well-organized appendix for anything and everything readers will need to supplement the information in your plan. Consider any info that:
- Helps investors conduct due diligence
- Gives context and easy access to you or your employees
Useful details to cover in an appendix include:
- Deeds, local permits, and legal documents
- Certifications that bolster your credibility
- Business registries and professional licenses pertaining to your legal structure or type of business
- Patents and intellectual properties
- Industry associations and memberships
- State and federal identification numbers or codes
- Key customer contracts and purchase orders
Your appendix should be a living section of the business plan, whether the plan is a document for internal reference only or an external call for investors.
- Tip: As you include documents in the appendix, create a miniature table of contents and footnotes throughout the rest of the plan linking to or calling attention to them.
How to make a business plan that stands out
Investors have little patience for poorly written documents. You want your business plan to be as attractive and readable as possible.
- Keep it brief. A typical business plan can range from 10 to 20 pages. As long as you cover the essentials, less is more.
- Make it easy to read. Divide your document into distinct sections, so that investors can quickly flip between key pieces of information.
- Know your margins. List every cost your business incurs, and make sure that you’re assigning those costs to each product or service that you sell.
- Proofread. Double-check for typos and grammatical errors. Then, triple-check. Otherwise, you might risk your credibility.
- Invest in quality design and printing. Proper layout, branding, and decent printing or bookbinding give your business plan a professional feel.
- Be prepared in advance. Have everything ready to go at least two weeks ahead so you have time to make revisions in case of a last-minute change.
3 tips to update your business plan
It’s a good idea to periodically revisit your business plan, especially if you are looking to expand. Conducting new research and updating your plan could also provide answers when you hit difficult questions.
Mid-year is a good time to refocus and revise your original plans because it gives you the opportunity to refocus any goals for the second half of the year. Below are three ways to update your plan.
1. Refocus your productivity
When you wrote your original business plan, you likely identified your specific business and personal goals. Take some time now to assess if you’ve hit your targets.
- Example: If you planned to launch a new tips and trends video series and it hasn’t happened yet, what’s stopping you? Put a timeline together and set a launch date.
If you only want to work a set number of hours per week, you must identify the products and services that deliver the returns you need to make that a reality. Doing so helps you refocus your productivity on the most lucrative profit streams.
Also, use what you’ve achieved and the hard lessons you’ve learned to help you re-evaluate what is and isn’t working.
2. Realign with your goals
Do a gut check to determine whether all of your hard work is still aligned with your original goals and your mission statement. Ask yourself these questions:
- Are my goals still relevant?
- Am I still focused on the big picture?
- Where do I want to be a year from now?
- Will my existing plan still take me where I want to go?
These questions may be tough to answer at first glance, but they reveal your ties to your goals and what most likely needs to change to achieve new wins.
3. Repurpose your offerings
If your time has become more focused on small projects rather than tangible growth and building a valuable client list, consider packaging your existing products or services differently. Can you bundle a few things together?
- Example: Laura’s Landscapers might be able to offer a special pool and patio package. Doing so might help them bring in fewer yet higher-paying projects. Perhaps they can offer a maintenance package as well to keep that customer long term.
You must deliberately manage your revenue streams, and that might require shuffling things around a little to focus on what is working for you.
Business plan template
Even if you don’t plan on seeking investments early on, there are other important reasons to use a business plan template to write a great business plan:
- Clarifies what you’re trying to accomplish
- Identifies opportunities to understand your market, like demographics and behaviors
- Establishes the role of each team member
- Gives team members a benchmark to reference and stay on track
- Helps catch errors to make sure financial projections are accurate
- You’ll see the holes and blind spots that could cause future issues
Download the following template to build your business plan from the ground up, considering all the important questions that will help your investors and employees.
The old cliche is still true today: A failure to plan is a plan to fail. Your business plan is crucial to the growth of your business, from giving direction, motivation, and context to employees, to providing thoughtful reassurance and risk mitigation to financers. Before you get your small business up and running , put down a plan that instills confidence and sets you up for success.
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How to write a business plan in seven simple steps
When written effectively, a business plan can help raise capital, inform decisions, and draw new talent.
Companies of all sizes have one thing in common: They all began as small businesses. Starting small is the corner for those just getting off the ground. Learn about how to make that first hire, deal with all things administrative, and set yourself up for success.
Writing a business plan is often the first step in transforming your business from an idea into something tangible . As you write, your thoughts begin to solidify into strategy, and a path forward starts to emerge. But a business plan is not only the realm of startups; established companies can also benefit from revisiting and rewriting theirs. In any case, the formal documentation can provide the clarity needed to motivate staff , woo investors, or inform future decisions.
No matter your industry or the size of your team, the task of writing a business plan—a document filled with so much detail and documentation—can feel daunting. Don’t let that stop you, however; there are easy steps to getting started.
What is a business plan and why does it matter?
A business plan is a formal document outlining the goals, direction, finances, team, and future planning of your business. It can be geared toward investors, in a bid to raise capital, or used as an internal document to align teams and provide direction. It typically includes extensive market research, competitor analysis, financial documentation, and an overview of your business and marketing strategy. When written effectively, a business plan can help prescribe action and keep business owners on track to meeting business goals.
Who needs a business plan?
A business plan can be particularly helpful during a company’s initial growth and serve as a guiding force amid the uncertainty, distractions, and at-times rapid developments involved in starting a business . For enterprise companies, a business plan should be a living, breathing document that guides decision-making and facilitates intentional growth.
“You should have a game plan for every major commitment you’ll have, from early-stage founder agreements to onboarding legal professionals,” says Colin Keogh, CEO of the Rapid Foundation—a company that brings technology and training to communities in need—and a WeWork Labs mentor in the UK . “You can’t go out on funding rounds or take part in accelerators without any planning.”
How to make a business plan and seven components every plan needs
While there is no set format for writing a business plan, there are several elements that are typically included. Here’s what’s important to consider when writing your business plan.
1. Executive summary
No longer than half a page, the executive summary should briefly introduce your business and describe the purpose of the business plan. Are you writing the plan to attract capital? If so, specify how much money you hope to raise, and how you’re going to repay the loan. If you’re writing the plan to align your team and provide direction, explain at a high level what you hope to achieve with this alignment, as well as the size and state of your existing team.
The executive summary should explain what your business does, and provide an introductory overview of your financial health and major achievements to date.
2. Company description
To properly introduce your company, it’s important to also describe the wider industry. What is the financial worth of your market? Are there market trends that will affect the success of your company? What is the state of the industry and its future potential? Use data to support your claims and be sure to include the full gamut of information—both positive and negative—to provide investors and your employees a complete and accurate portrayal of your company’s milieu.
Go on to describe your company and what it provides your customers. Are you a sole proprietor , LLC, partnership, or corporation? Are you an established company or a budding startup? What does your leadership team look like and how many employees do you have? This section should provide both historical and future context around your business, including its founding story, mission statement , and vision for the future.
It’s essential to showcase your point of difference in your company description, as well as any advantages you may have in terms of expert talent or leading technology. This is typically one of the first pieces of the plan to be written.
3. Market analysis and opportunity
Research is key in completing a business plan and, ideally, more time should be spent on research and analysis than writing the plan itself. Understanding the size, growth, history, future potential, and current risks inherent to the wider market is essential for the success of your business, and these considerations should be described here.
In addition to this, it’s important to include research into the target demographic of your product or service. This might be in the form of fictional customer personas, or a broader overview of the income, location, age, gender, and buying habits of your existing and potential customers.
Though the research should be objective, the analysis in this section is a good place to reiterate your point of difference and the ways you plan to capture the market and surpass your competition.
4. Competitive analysis
Beyond explaining the elements that differentiate you from your competition, it’s important to provide an in-depth analysis of your competitors themselves.
This research should delve into the operations, financials, history, leadership, and distribution channels of your direct and indirect competitors. It should explore the value propositions of these competitors, and explain the ways you can compete with, or exploit, their strengths and weaknesses.
5. Execution plan: operations, development, management
This segment provides details around how you’re going to do the work necessary to fulfill this plan. It should include information about your organizational structure and the everyday operations of your team, contractors, and physical and digital assets.
Consider including your company’s organizational chart, as well as more in-depth information on the leadership team: Who are they? What are their backgrounds? What do they bring to the table? Potentially include the résumés of key people on your team.
For startups, your execution plan should include how long it will take to begin operations, and then how much longer to reach profitability. For established companies, it’s a good idea to outline how long it will take to execute your plan, and the ways in which you will change existing operations.
If applicable, it’s also beneficial to include your strategy for hiring new team members and scaling into different markets.
6. Marketing plan
It’s essential to have a comprehensive marketing plan in place as you scale operations or kick off a new strategy—and this should be shared with your stakeholders and employees. This segment of your business plan should show how you’re going to promote your business, attract customers, and retain existing clients.
Include brand messaging, marketing assets, and the timeline and budget for engaging consumers across different channels. Potentially include a marketing SWOT analysis into your strengths, weaknesses, opportunities, and threats. Evaluate the way your competitors market themselves, and how your target audience responds—or doesn’t respond—to these messages.
7. Financial history and projections
It’s essential to disclose all finances involved in running your company within your business plan. This is so your shareholders properly understand how you’re projected to perform going forward, and the progress you’ve made so far.
You should include your income statement, which outlines annual net profits or losses; a cash flow statement, which shows how much money you need to launch or scale operations; and a balance sheet that shows financial liabilities and assets.
“An income statement is the measure of your financial results for a certain period and the most accurate report of business activities during that time, [whereas a balance sheet] presents your assets, liabilities, and equity,” Amit Perry, a corporate finance expert, explained at a WeWork Labs educational session in Israel.
It’s crucial to understand the terms correctly so you know how to present your finances when you’re speaking to investors. Amit Perry, CEO and founder of Perryllion Ltd.
In addition, if you’re asking for funding, you will need to outline exactly how much money you need as well as where this money will go and how you plan to pay it back.
12 quick tips for writing a business plan
Now that you know what components are traditionally included in a business plan, it’s time to consider how you’ll actually construct the document.
Here are 12 key factors to keep in mind when writing a business plan. These overarching principles will help you write a business plan that serves its purpose (whatever that may be) and becomes an easy reference in the years ahead.
1. Don’t be long-winded
Use clear, concise language and avoid jargon. When business plans are too long-winded, they’re less likely to be used as intended and more likely to be forgotten or glazed over by stakeholders.
2. Show why you care
Let your passion for your business shine through; show employees and investors why you care (and why they should too).
3. Provide supporting documents
Don’t be afraid to have an extensive list of appendices, including the CVs of team members, built-out customer personas, product demonstrations, and examples of internal or external messaging.
4. Reference data
All information regarding the market, your competitors, and your customers should reference authoritative and relevant data points.
5. Research, research, research
The research that goes into your business plan should take you longer than the writing itself. Consider tracking your research as supporting documentation.
6. Clearly demonstrate your points of difference
At every opportunity, it’s important to drive home the way your product or service differentiates you from your competition and helps solve a problem for your target audience. Don’t shy away from reiterating these differentiating factors throughout the plan.
7. Be objective in your research
As important as it is to showcase your company and the benefits you provide your customers, it’s also important to be objective in the data and research you reference. Showcase the good and the bad when it comes to market research and your financials; you want your shareholders to know you’ve thought through every possible contingency.
8. Know the purpose of your plan
It’s important you understand the purpose of your plan before you begin researching and writing. Be clear about whether you’re writing this plan to attract investment, align teams, or provide direction.
9. Identify your audience
The same way your business plan must have a clearly defined purpose, you must have a clearly defined audience. To whom are you writing? New investors? Current employees? Potential collaborators? Existing shareholders?
10. Avoid jargon
Avoid using industry-specific jargon, unless completely unavoidable, and try making your business plan as easy to understand as possible—for all potential stakeholders.
11. Don’t be afraid to change it
Your business plan should evolve with your company’s growth, which means your business plan document should evolve as well. Revisit and rework your business plan as needed, and remember the most important factor: having a plan in place, even if it changes.
A business plan shouldn’t just be a line on your to-do list; it should be referenced and used as intended going forward. Keep your business plan close, and use it to inform decisions and guide your team in the years ahead.
Creating a business plan is an important step in growing your company
Whether you’re just starting out or running an existing operation, writing an effective business plan can be a key predictor of future success. It can be a foundational document from which you grow and thrive . It can serve as a constant reminder to employees and clients about what you stand for, and the direction in which you’re moving. Or, it can prove to investors that your business, team, and vision are worth their investment.
No matter the size or stage of your business, WeWork can help you fulfill the objectives outlined in your business plan—and WeWork’s coworking spaces can be a hotbed for finding talent and investors, too. The benefits of coworking spaces include intentionally designed lounges, conference rooms, and private offices that foster connection and bolster creativity, while a global network of professionals allows you to expand your reach and meet new collaborators.
Using these steps to write a business plan will put you in good stead to not only create a document that fulfills a purpose but one that also helps to more clearly understand your market, competition, point of difference, and plan for the future.
For more tips on growing teams and building a business, check out all our articles on Ideas by WeWork.
Caitlin Bishop is a writer for WeWork’s Ideas by WeWork , based in New York City. Previously, she was a journalist and editor at Mamamia in Sydney, Australia, and a contributing reporter at Gotham Gazette .
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Six steps to an effective business plan
- Your business
- Developing your business
- Planning and strategy
At Lancasters we can provide objective assistance with writing a business plan, based on our experience in helping businesses in the Haddenham area. Here are six elements of a good business plan...
If you think your business performance can improve and, amidst the meetings, phone calls, e-mails and office crises, you find it difficult to know how to begin, then you will benefit from reviewing your business planning.
Don't confuse business planning with crisis management. The former should prevent the latter. Making time for planning now can reduce the time you spend fighting fires later. Here are six key steps that can lead to an effective plan for your business:
Step 1: Establish your mission
In essence, your mission statement explains why your business exists. When you encounter a problem or a key decision, the answer will be informed by your mission. Think about why you started the business, and imagine where you want it to be in the future. These two elements will provide your mission statement.
Step 2: Analyse your SWOT
With your mission statement in mind, analyse your business's s trengths, w eaknesses, o pportunities and t hreats. List each category in full and be honest. Done correctly, this 'SWOT' analysis will help you to take an objective, critical, unemotional look at your business in its entirety.
Step 3: Develop a plan
Try this exercise: from each SWOT category, choose three to five important items. Then set goals to maximise your strengths, correct your weaknesses, make the most of your opportunities and nullify your threats. For example, you could decide to focus more strongly on a particularly successful product or service (a strength), and abandon a side-project which is costing time and money for little return (a weakness). Remember that you can't do everything yourself. Think about how you will delegate tasks and involve all the staff. Avoid dwelling on the negatives - set yourself realistic strategies for improving the business.
Step 4: Create a budget
All missions and strategies need money to succeed. A smart budget will help you to regularly review your expenses and make financially beneficial decisions. You may need to take a wide variety of factors into account when setting your budget. This is where we can help you - why not give us a call?
Step 5: Put it in writing
Make sure you write down your finished plan. Include the mission statement, SWOT analysis, goals and plans, budget and forecasts, and make it clear who is responsible for doing what. Share it with your key staff and shareholders, and encourage their input.
Step 6: Make it a living document
This is vital! Make your business plan a living document that you and your staff can frequently update and improve. Consider reviewing it monthly to track your progress and readjust your strategy as necessary. Hold yourself and your staff accountable for meeting the plan's goals, and think about introducing an incentive programme to keep everyone motivated.
Remember, a good business plan is as much about the process as the final document. Creating your plan will open your eyes to the realities of your business. Keeping it updated will help you stay on the right track. For help with developing your plan, call us .
Start-ups and established businesses in the Haddenham area looking for help with writing a business plan should contact Lancasters for more help and advice.
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7 Steps to Develop a Successful Business Plan
Most people who spend a little time searching on the Internet or in a bookstore can quickly find a guide on how to write a business plan . However, just following these templates doesn’t guarantee that the business plan produce will be successful or even good. A successful business plan needs quite a bit more to actually be useful and even more to be functional and successful. As the elements come together, if done correctly, the most important component of success will come from the business owner and leadership versus the company itself.
Your business plan needs seven specific elements that will make it stand out beyond just the basic pile of applications and home printer documents everyone regularly sees.
If your company is going to run a viable business plan and investors are going to put their money into it, your information has to be top notch. And that includes knowing every topic involved , not just your internal operations. Research and critical analysis are key to developing and communicating a business plan properly. The information used has to be relevant, valuable, and objective. However, you’re not writing a novel, so the presentation also needs to be concise. That means choosing the right research to include versus just a brain dump of anything about the company’s situation.
2. Have a Purpose
What is your business plan being written for? A road map on how to operate? An investor or loan pitch? Both? A historical document? The purpose has to be clear and definitive. If you don’t know why you’re writing a business plan, the effort will be a waste of time. Knowing also means having a target audience you expect the plan to be ready by. With both defined, it will help dictate what information is included and how.
3. Craft a Company Snapshot
Some people call it a company profile, others a snapshot. Either way, your business plan needs a section that gives a reader a clear view of what your company is, does and provides in a few paragraphs. This should be the same information that one would find if they looked on the business’ website. It’s designed to be quick and digestible mentally because it needs to stick in a reader’s mind quickly, especially as more information is provided later in the plan. If the reader remembers nothing else, he or she will have the profile well entrenched in memory. And that matters when your plan is being considered with others.
4. Detail the Company in Total
Some folks write their business plan to only highlight what they think are the selling points and good features of their venture. That’s a mistake. Most readers have a pretty good idea where the company sits in the big picture. Detail the company’s status in full, good and bad. And where there are weaknesses, include plans on how they will be addressed given the right support. Details should also include key features like patents, licenses, copyrights and unique strengths no one else has.
5. Write the Marketing Plan Beforehand
A simple mistake made by most startups is that people think they can write a business plan without knowing first how something is going to be sold . A strategic marketing plan is essential; it shows how your product or service is going to be delivered, communicated and sold to customers. It covers where, when and how much, all the key pieces that later on feed into the financial statement projections in the business plan. No surprise, marketing has to be nailed down before planning out the rest of the business.
6. Be Willing to Change the Plan for Your Audience
Another common mistake folks often make is writing only one business plan. The document given to a lender is going to be very different than the one for internal direction. Smart startups have multiple versions, just like candidates have multiple resumes for different prospective employers. Match the plan and message to the audience you are addressing.
7. Include Your Motivation
This is the most important piece in a successful plan – your motivation and goals. Why are you going through all this effort, work, sweat and effort? Your motivation needs to be a reason that will convince people the business will succeed, through thick and thin. A business needs a mission that drives it, not just selling to make money. Your motivation defined in the business plan is that mission.
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How to write a business plan in 7 steps
With this step-by-step guide, learn how to write a well-written professional business plan that can help you successfully start your business, apply for funding, and grow.
Writing a business plan doesn’t have to be complicated. You don’t need to have a business or accounting degree to put together a viable business plan. Business planning can be simple—even fun!
This guide will show you how to get your plan done without any complexity or frustration. By the time you’re done, you’ll be better prepared to start, run, and grow your business. Here are the 7 steps to write a business plan:
- Executive summary
- Products & services
- Market analysis
- Marketing & sales
- Company organization and management team
- Financial projections
Be sure to download our free business plan template to start writing your own business plan as you work through this guide. For a more detailed guide to writing a business plan, download our free ebook : The Easy Way to Write Your Business Plan.
What is a business plan?
A business plan is a document that describes your business, the products and services you sell, and the customers that you sell to. It explains your business strategy. How you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.
Most business plans also include financial forecasts for the future. Setting sales goals, expense budgets, and predictions for cash flow.
Now, a business plan can be far more than just a static document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. A management tool to analyze results, make strategic decisions, and showcase how your business will operate and grow. In short, if you’re thinking of starting a business or plan to pitch to investors or venture capitalists, writing a business plan can improve your chances of success.
Why do you need a business plan?
You likely already have a good idea of your business strategy in your head. So you may be wondering, “Why should I spend my time making a business plan?” Here are the top reasons why you should invest in planning:
Businesses that plan grow 30% faster.
A surprising amount of research has been done on business planning and has shown that companies that take the time to write a plan and review it regularly grow 30% faster than those businesses that don’t plan. Not only do these companies grow faster, but they perform better and are less likely to fail in the long run.
Lenders and investors need business plans
If you’re growing your business and plan on getting a business loan or raising money from investors, you’ll need a business plan. Most lenders and investors will ask for a plan, but even if they don’t want to see the actual document, they will ask you questions that only a solid business plan will be able to answer.
Business plans reduce risk
Starting and running a business is always risky. Instead of flying by the seat of your pants, you can use a plan to forecast potential cash flow issues and get ahead of any potential roadblocks so you aren’t caught off guard. A business plan will help you reduce your risk and help you navigate the future.
Business planning helps you make smart spending decisions
Before you make a big spending decision for your business, you need to know the potential impacts on your finances. With a business plan in place, you can easily explore different scenarios and see what impacts a new hire or an expansion to a second location will have on your business.
Need more reasons for why you need a business plan? Read our full list of reasons why having a business plan is important for small businesses .
How to write a business plan step-by-step
Whether you’re building a business plan to raise money and grow your business or just need to figure out if your idea will work, every business plan needs to cover 6 essential sections. Here’s an overview of each section:
1. Executive summary
The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. Most people write it last, though.
Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. In fact, it’s very common for investors to ask for only the executive summary when they are evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation, and more in-depth financials.
Your executive summary should include a summary of the problem you are solving, a description of your product or service, an overview of your target market, a brief description of your team, a summary of your financials, and your funding requirements (if you are raising money).
Learn more about writing an effective executive summary .
2. Products & services
The products & services chapter of your business plan is where the real meat of your plan lives. It includes information about the problem that you’re solving, your solution, and how your product or service fits into the existing competitive landscape.
Start the products & services chapter by describing the problem that you are solving for your customers and what your solution is. This is a description of your product or service.
Next, you should outline your competition . Who else is providing solutions that try to solve your customers’ pain points? What are your competitive advantages over other businesses?
If you happen to have any competitive advantages, such as specific intellectual property or patents that protect your product—this chapter is a great place to talk about those things.
Finally, review your milestones and metrics. This is an overview of the next steps that you need to accomplish to get your product or service ready to sell, with target dates. If you’ve already achieved some key milestones, such as landing a crucial customer or taking on pre-orders, discuss that here.
3. Market analysis
This section is where you will showcase all of the information about your potential customers. You’ll cover your target market as well as information about the growth of your market and your industry.
First, describe your target market . Your target market is the group of people that you plan on selling to. Try to be as specific as possible. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers.
Next, provide any market analysis and market research that you have. You’ll want to explain how your market is growing over time and also explain how your business is positioned to take advantage of expected changes in your industry.
4. Marketing & sales
The marketing and sales plan section of your business plan details how you plan to reach your target market segments, how you plan on selling to those target markets, what your pricing plan is, and what types of activities and partnerships you need to make your business a success.
Some businesses that distribute their products and reach their customers through stores like Amazon.com, Walmart, Target, grocery store chains, and other retail outlets should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles that the business may have to overcome.
The marketing & sales chapter of your business plan can also be a good place to include a SWOT analysis . This is purely optional but can be a good way to explain how your products and services are positioned to deal with competitive threats and take advantage of opportunities.
5. Company organization and management team
Investors look for great teams in addition to great ideas. Use this chapter to describe your current team and who you need to hire. You will also provide a quick overview of your legal structure, location, and history if you’re already up and running.
Include brief bios that highlight the relevant experiences of each key team member. It’s important here to make the case for why the team is the right team to turn an idea into a reality. Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before?
Your company overview should also include a summary of your company’s current business structure. The most common business structures include:
- Sole proprietor
Be sure to provide a review of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.
6. Financial projections
Last, but certainly not least, is your financial plan chapter. This is often what entrepreneurs find most daunting, but it doesn’t have to be as intimidating as it seems. Business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. That said, if you need additional help, there are plenty of tools and resources out there to help you build a solid financial plan.
A typical financial plan will include:
Sales and revenue projections
A monthly sales and revenue forecast for the first 12 months, and then annual projections for the remaining three to five years. Three-year projections are typically adequate, but some investors will request a five-year forecast.
Profit and loss statement
An income statement , also known as the profit and loss (or P&L), is where your numbers all come together and show if you’re making a profit or taking a loss.
Cash flow statement
A cash flow statement . While the income statement calculates your profits and losses, the cash flow statement keeps track of how much cash (money in the bank) you have at any given point.
A balance sheet lists the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business.
Optional sections to include when seeking funding
If you are raising money from investors, you should include a brief section of your business plan that details exactly how you plan on using your investors’ cash. This is typically just called, “Use of Funds.”
Investors will also want to see a short section on your exit strategy. An exit strategy is your plan for eventually selling your business, either to another company or to the public in an IPO. If you have investors, they will want to know your thoughts on this. If you’re running a business that you plan to maintain ownership of indefinitely, and you’re not seeking angel investment or VC funding, you can skip the exit strategy section.
For more information, read our guide on the different types of exit strategies .
Finally, discuss any assumptions and important risks for your business. Knowing what your assumptions are as you start a business can make the difference between business success and business failure. When you recognize your assumptions, you can set out to prove that your assumptions are correct. The more that you can minimize your assumptions, the more likely it is that your business will succeed.
An appendix to your business plan isn’t a required chapter by any means. However, it is a useful place to stick any charts, tables, definitions, legal notes, or other critical information that either felt too long or too out-of-place to include elsewhere in your business plan. If you have a patent or a patent-pending, or illustrations of your product, this is where you’d want to include the details. For more details, read about what to include in your business plan appendix .
Business plan writing tips
To help streamline the business plan writing process here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .
Determine why you are writing a business plan
Knowing why you are writing a business plan will determine your approach to your planning project. For example, if you are writing a business plan for yourself or just for use inside your own business, you can probably skip the section about your team and organizational structure.
If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the money you want and exactly how you’re going to use those funds. So, before you start writing your plan, think about why you are writing a business plan and what you’re trying to get out of the process.
Keep things concise
Probably the most important tip is to keep your business plan short and simple . There are no prizes for long business plans. In fact, the longer your plan, the less likely it is to be read.
So, focus on trimming things down to the essentials that your readers need to know. Skip the extended descriptions of your target market and instead focus on creating a plan that is easy to read.
Have someone review your business plan
Writing a business plan in a vacuum is never a good idea. It’s helpful to zoom out from time to time and make sure that your plan is logical and makes sense. You also want to make sure that it’s easy to read and understand. Don’t wait until your plan is “done” to get a second look, though.
Start sharing your plan early and find out from your reader what questions the plan leaves unanswered. This early review cycle will help keep you on track. If you need a more detailed review, you may want to explore hiring a professional plan writer to give it a thorough examination.
Use a free business plan template to get started
Knowing what information you need to cover in a business plan sometimes isn’t quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. If you’re looking for a free downloadable business plan template to get you started, download the template that’s been used by more than 1 million businesses.
Or, if you just want to see what a completed business plan looks like, check out our library of over 500 free sample business plans .
How do I write a simple business plan?
If you’re not ready to work on a detailed business plan and want to start with something shorter and simpler, we recommend starting with a simple one-page business plan . You’ll be able to put together an initial plan in less than 30 minutes. For many businesses, this is a great way to get started. And, if you’re not raising money from investors, this may be all the plan you need.
Next steps for writing your business plan
Whether you’re writing a plan to explore a new business idea, establishing steps to start a business, looking to raise money from investors, seeking a loan, or just trying to run your business better—a solid business plan will help get you there.
Business planning is a continuous process that can help you validate your idea, set goals, manage, and successfully pitch your business. One of the most helpful things you can do to build a successful business is to jump in and start planning. If you’re looking for a more comprehensive step-by-step walkthrough for writing a business plan, check out our Business Planning Guide .
If you need more than a template, we recommend exploring business planning software, such as LivePlan. It features step-by-step guidance that ensures you include only what you need in your plan and reduces the time you spend on formatting and presenting.
You’ll also get help building solid financial models that you can trust, without having to worry about getting everything right in a spreadsheet. Finally, it will transform your plan into a management tool that will help you easily compare your forecasts to your actual results. This makes it easy to track your progress and make adjustments as you go.
Business plan FAQ
A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investor, and identify areas for growth. Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.
The seven steps to writing a business plan include: 1. Write a brief executive summary. 2. Describe your products and services. 3. Conduct market research and compile data into a cohesive market analysis. 4. Describe your marketing and sales strategy. 5. Outline your organizational structure and management team. 6. Develop financial projections for sales, revenue, and cash flow. 7. Add any additional documents to your appendix.
There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid: 1. Not taking the planning process seriously. 2. Having unrealistic financial projections or incomplete financial information. 3. Inconsistent information or simple mistakes. 4. Failing to establish a sound business model. 5. Not having a defined purpose for your business plan.
Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan. However, these are the key questions you should ask and answer with your business plan: – How will your business make money? – Is there a need for your product or service? – Who are your customers? – How are you different from the competition? – How will you reach your customers? – How will you measure success?
The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place. If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan or a 3-10 page Lean Plan to get all of the necessary information in place.
While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering. Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea. One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business. Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.
A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision. However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.
The core elements of business planning are the same for nonprofit organizations and for-profit businesses. The main difference between the two is that nonprofits are primarily driven by a specific mission or purpose. While a for-profit organization is typically driven by growth and improved performance. Additionally, nonprofit organizations will need to intently focus on their promotional, partnership, and fundraising strategies. While some of this is present in for-profit businesses, the need to thoroughly outline how and who you will continue to receive funding is far more important as a nonprofit.
Noah is currently the COO at Palo Alto Software, makers of the online business plan app LivePlan. You can follow Noah on Twitter .
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How To Write A Business Plan (2023 Guide)
Updated: Aug 20, 2022, 2:21am
Table of Contents
Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.
Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.
Drafting the Summary
An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.
Ask for Help
When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.
After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business.
The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.
Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.
Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.
Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.
Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.
The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.
If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.
This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.
You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.
Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.
Business Operations Costs
Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.
Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.
Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.
Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.
How do I write a simple business plan?
When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.
What are some common mistakes in a business plan?
The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.
What basic items should be included in a business plan?
When writing out a business plan, you want to make sure that you cover everything related to your concept for the business, an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.
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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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There are a few simple things you can do to make planning for the future easier. Things like establishing a savings habit, making it automatic, and calculating how much you’ll need.
It’s impossible to eliminate all business risk. Therefore, it’s essential for having a plan for its management. You’ll be developing one covering compliance, environmental, financial, operational and reputation risk management.
How to write a business plan in 9 steps. Draft an executive summary; Describe your company; Perform a market analysis; Outline the management
1. Write an executive summary · 2. Describe your company · 3. State your business goals · 4. Describe your products and services · 5. Do your market
Traditional business plan format · Executive summary · Company description · Market analysis · Organization and management · Service or product line · Marketing and
Step 1: Write an Executive Summary · Step 2: Write a Business Description · Step 3: Market and Competitive Analysis · Step 4: Operational Structure.
A business plan is a comprehensive road map for your small business's growth and development. It communicates who you are, what you plan to do
How to make a business plan and seven components every plan needs · 1. Executive summary · 2. Company description · 3. Market analysis and
Six steps to an effective business plan · Step 1: Establish your mission · Step 2: Analyse your SWOT · Step 3: Develop a plan · Step 4: Create a budget · Step 5: Put
7 Steps to Develop a Successful Business Plan · 1. Research · 2. Have a Purpose · 3. Craft a Company Snapshot · 4. Detail the Company in Total · 5. Write the
The seven steps to writing a business plan include: 1. Write a brief executive summary. 2. Describe your products and services. 3. Conduct
Table of Contents · Brainstorm an Executive Summary · Create a Company Description · Brainstorm Your Business Goals · Describe Your Services or
Writing a Business Plan? Here's How to Do It, Step by Step · 1. Executive summary. · 2. Company description. · 3. Market analysis. · 4. Organization