who would normally write a business plan

• Search Search Please fill out this field.

What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

• How to Start a Business: A Comprehensive Guide and Essential Steps
• How to Do Market Research, Types, and Example
• Marketing Strategy: What It Is, How It Works, How To Create One
• Marketing in Business: Strategies and Types Explained
• What Is a Marketing Plan? Types and How to Write One
• Business Development: Definition, Strategies, Steps & Skills
• Business Plan: What It Is, What's Included, and How to Write One CURRENT ARTICLE
• Small Business Development Center (SBDC): Meaning, Types, Impact
• How to Write a Business Plan for a Loan
• Business Startup Costs: It’s in the Details
• Startup Capital Definition, Types, and Risks
• Bootstrapping Definition, Strategies, and Pros/Cons
• Crowdfunding: What It Is, How It Works, and Popular Websites
• Starting a Business with No Money: How to Begin
• A Comprehensive Guide to Establishing Business Credit
• Equity Financing: What It Is, How It Works, Pros and Cons
• Best Startup Business Loans
• Sole Proprietorship: What It Is, Pros & Cons, and Differences From an LLC
• Partnership: Definition, How It Works, Taxation, and Types
• What is an LLC? Limited Liability Company Structure and Benefits Defined
• Corporation: What It Is and How to Form One
• Starting a Small Business: Your Complete How-to Guide
• Starting an Online Business: A Step-by-Step Guide
• How to Start Your Own Bookkeeping Business: Essential Tips
• How to Start a Successful Dropshipping Business: A Comprehensive Guide

A business plan is a document that outlines a company's goals and the strategies to achieve them. It's valuable for both startups and established companies. For startups, a well-crafted business plan is crucial for attracting potential lenders and investors. Established businesses use business plans to stay on track and aligned with their growth objectives. This article will explain the key components of an effective business plan and guidance on how to write one.

Key Takeaways

• A business plan is a document detailing a company's business activities and strategies for achieving its goals.
• Startup companies use business plans to launch their venture and to attract outside investors.
• For established companies, a business plan helps keep the executive team focused on short- and long-term objectives.
• There's no single required format for a business plan, but certain key elements are essential for most companies.

Investopedia / Ryan Oakley

Any new business should have a business plan in place before beginning operations. Banks and venture capital firms often want to see a business plan before considering making a loan or providing capital to new businesses.

Even if a company doesn't need additional funding, having a business plan helps it stay focused on its goals. Research from the University of Oregon shows that businesses with a plan are significantly more likely to secure funding than those without one. Moreover, companies with a business plan grow 30% faster than those that don't plan. According to a Harvard Business Review article, entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don't.

A business plan should ideally be reviewed and updated periodically to reflect achieved goals or changes in direction. An established business moving in a new direction might even create an entirely new plan.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. It allows for careful consideration of ideas before significant investment, highlights potential obstacles to success, and provides a tool for seeking objective feedback from trusted outsiders. A business plan may also help ensure that a company’s executive team remains aligned on strategic action items and priorities.

While business plans vary widely, even among competitors in the same industry, they often share basic elements detailed below.

A well-crafted business plan is essential for attracting investors and guiding a company's strategic growth. It should address market needs and investor requirements and provide clear financial projections.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, gathering the basic information into a 15- to 25-page document is best. Any additional crucial elements, such as patent applications, can be referenced in the main document and included as appendices.

Common elements in many business plans include:

• Executive summary : This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services : Describe the products and services the company offers or plans to introduce. Include details on pricing, product lifespan, and unique consumer benefits. Mention production and manufacturing processes, relevant patents , proprietary technology , and research and development (R&D) information.
• Market analysis : Explain the current state of the industry and the competition. Detail where the company fits in, the types of customers it plans to target, and how it plans to capture market share from competitors.
• Marketing strategy : Outline the company's plans to attract and retain customers, including anticipated advertising and marketing campaigns. Describe the distribution channels that will be used to deliver products or services to consumers.
• Financial plans and projections : Established businesses should include financial statements, balance sheets, and other relevant financial information. New businesses should provide financial targets and estimates for the first few years. This section may also include any funding requests.

Investors want to see a clear exit strategy, expected returns, and a timeline for cashing out. It's likely a good idea to provide five-year profitability forecasts and realistic financial estimates.

2 Types of Business Plans

Business plans can vary in format, often categorized into traditional and lean startup plans. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These are detailed and lengthy, requiring more effort to create but offering comprehensive information that can be persuasive to potential investors.
• Lean startup business plans : These are concise, sometimes just one page, and focus on key elements. While they save time, companies should be ready to provide additional details if requested by investors or lenders.

Why Do Business Plans Fail?

A business plan isn't a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections. Markets and the economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All this calls for building flexibility into your plan, so you can pivot to a new course if needed.

How Often Should a Business Plan Be Updated?

How frequently a business plan needs to be revised will depend on its nature. Updating your business plan is crucial due to changes in external factors (market trends, competition, and regulations) and internal developments (like employee growth and new products). While a well-established business might want to review its plan once a year and make changes if necessary, a new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is ideal for quickly explaining a business, especially for new companies that don't have much information yet. Key sections may include a value proposition , major activities and advantages, resources (staff, intellectual property, and capital), partnerships, customer segments, and revenue sources.

A well-crafted business plan is crucial for any company, whether it's a startup looking for investment or an established business wanting to stay on course. It outlines goals and strategies, boosting a company's chances of securing funding and achieving growth.

As your business and the market change, update your business plan regularly. This keeps it relevant and aligned with your current goals and conditions. Think of your business plan as a living document that evolves with your company, not something carved in stone.

University of Oregon Department of Economics. " Evaluation of the Effectiveness of Business Planning Using Palo Alto's Business Plan Pro ." Eason Ding & Tim Hursey.

Bplans. " Do You Need a Business Plan? Scientific Research Says Yes ."

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

Harvard Business Review. " How to Write a Winning Business Plan ."

U.S. Small Business Administration. " Write Your Business Plan ."

SCORE. " When and Why Should You Review Your Business Plan? "

• Terms of Service
• Editorial Policy
• Privacy Policy

How to Write a Business Plan (Plus Examples & Templates)

Have you ever wondered how to write a business plan step by step? Mike Andes, told us: 

This guide will help you write a business plan to impress investors.

Throughout this process, we’ll get information from Mike Andes, who started Augusta Lawn Care Services when he was 12 and turned it into a franchise with over 90 locations. He has gone on to help others learn how to write business plans and start businesses.  He knows a thing or two about writing  business plans!

We’ll start by discussing the definition of a business plan. Then we’ll discuss how to come up with the idea, how to do the market research, and then the important elements in the business plan format. Keep reading to start your journey!

What Is a Business Plan?

A business plan is simply a road map of what you are trying to achieve with your business and how you will go about achieving it. It should cover all elements of your business including: 

• Finding customers
• Plans for developing a team
•  Competition
• Legal structures
• Key milestones you are pursuing

If you aren’t quite ready to create a business plan, consider starting by reading our business startup guide .

Get a Business Idea

Before you can write a business plan, you have to have a business idea. You may see a problem that needs to be solved and have an idea how to solve it, or you might start by evaluating your interests and skills. 

Mike told us, “The three things I suggest asking yourself when thinking about starting a business are:

• What am I good at?
• What would I enjoy doing?
• What can I get paid for?”

If all three of these questions don’t lead to at least one common answer, it will probably be a much harder road to success. Either there is not much market for it, you won’t be good at it, or you won’t enjoy doing it. 

As Mike told us, “There’s enough stress starting and running a business that if you don’t like it or aren’t good at it, it’s hard to succeed.”

If you’d like to hear more about Mike’s approach to starting a business, check out our YouTube video

Conduct Market Analysis

Market analysis is focused on establishing if there is a target market for your products and services, how large the target market is, and identifying the demographics of people or businesses that would be interested in the product or service. The goal here is to establish how much money your business concept can make.

Product and Service Demand

A search engine is your best friend when trying to figure out if there is demand for your products and services. Personally, I love using presearch.org because it lets you directly search on a ton of different platforms including Google, Youtube, Twitter, and more. Check out the screenshot for the full list of search options.

With quick web searches, you can find out how many competitors you have, look through their reviews, and see if there are common complaints about the competitors. Bad reviews are a great place to find opportunities to offer better products or services. 

If there are no similar products or services, you may have stumbled upon something new, or there may just be no demand for it. To find out, go talk to your most honest friend about the idea and see what they think. If they tell you it’s dumb or stare at you vacantly, there’s probably no market for it.

You can also conduct a survey through social media to get public opinion on your idea. Using Facebook Business Manager , you could get a feel for who would be interested in your product or service.

 I ran a quick test of how many people between 18-65  you could reach in the U.S. during a week. It returned an estimated 700-2,000 for the total number of leads, which is enough to do a fairly accurate statistical analysis.

Identify Demographics of Target Market

Depending on what type of business you want to run, your target market will be different. The narrower the demographic, the fewer potential customers you’ll have. If you did a survey, you’ll be able to use that data to help define your target audience. Some considerations you’ll want to consider are:

• Other Interests
• Marital Status
• Do they have kids?

Once you have this information, it can help you narrow down your options for location and help define your marketing further. One resource that Mike recommended using is the Census Bureau’s Quick Facts Map . He told us,  

“It helps you quickly evaluate what the best areas are for your business to be located.”

How to Write a Business Plan

Now that you’ve developed your idea a little and established there is a market for it, you can begin writing a business plan. Getting started is easier with the business plan template we created for you to download. I strongly recommend using it as it is updated to make it easier to create an action plan. 

Each of the following should be a section of your business plan:

• Business Plan Cover Page
• Table of Contents
• Executive Summary
• Company Description
• Description of Products and Services

SWOT Analysis

• Competitor Data
• Competitive Analysis
• Marketing Expenses Strategy 

Pricing Strategy

• Distribution Channel Assessment
• Operational Plan
• Management and Organizational Strategy
• Financial Statements and/or Financial Projections

We’ll look into each of these. Don’t forget to download our free business plan template (mentioned just above) so you can follow along as we go. 

How to Write a Business Plan Step 1. Create a Cover Page

The first thing investors will see is the cover page for your business plan. Make sure it looks professional. A great cover page shows that you think about first impressions.

A good business plan should have the following elements on a cover page:

• Professionally designed logo
• Company name
• Mission or Vision Statement
• Contact Info

Basically, think of a cover page for your business plan like a giant business card. It is meant to capture people’s attention but be quickly processed.

How to Write a Business Plan Step 2. Create a Table of Contents

Most people are busy enough that they don’t have a lot of time. Providing a table of contents makes it easy for them to find the pages of your plan that are meaningful to them.

A table of contents will be immediately after the cover page, but you can include it after the executive summary. Including the table of contents immediately after the executive summary will help investors know what section of your business plan they want to review more thoroughly.

Check out Canva’s article about creating a  table of contents . It has a ton of great information about creating easy access to each section of your business plan. Just remember that you’ll want to use different strategies for digital and hard copy business plans.

How to Write a Business Plan Step 3. Write an Executive Summary

An executive summary is where your business plan should catch the readers interest.  It doesn’t need to be long, but should be quick and easy to read.

Mike told us,

How long should an executive summary bein an informal business plan?

For casual use, an executive summary should be similar to an elevator pitch, no more than 150-160 words, just enough to get them interested and wanting more. Indeed has a great article on elevator pitches .  This can also be used for the content of emails to get readers’ attention.

It consists of three basic parts:

• An introduction to you and your business.
• What your business is about.
• A call to action

Example of an informal executive summary 

One of the best elevator pitches I’ve used is:

So far that pitch has achieved a 100% success rate in getting partnerships for the business.

What should I include in an executive summary for investors?

Investors are going to need a more detailed executive summary if you want to secure financing or sell equity. The executive summary should be a brief overview of your entire business plan and include:

• Introduction of yourself and company.
• An origin story (Recognition of a problem and how you came to solution)
• An introduction to your products or services.
• Your unique value proposition. Make sure to include intellectual property.
• Where you are in the business life cycle
• Request and why you need it.

Successful business plan examples

The owner of Urbanity told us he spent 2 months writing a 75-page business plan and received a $250,000 loan from the bank when he was 23. Make your business plan as detailed as possible when looking for financing. We’ve provided a template to help you prepare the portions of a business plan that banks expect.

Here’s the interview with the owner of Urbanity:

When to write an executive summary?

Even though the summary is near the beginning of a business plan, you should write it after you complete the rest of a business plan. You can’t talk about revenue, profits, and expected expenditures if you haven’t done the market research and created a financial plan.

What mistakes do people make when writing an executive summary?

Business owners commonly go into too much detail about the following items in an executive summary:

• Marketing and sales processes
• Financial statements
• Organizational structure
• Market analysis

These are things that people will want to know later, but they don’t hook the reader. They won’t spark interest in your small business, but they’ll close the deal.

How to Write a Business Plan Step 4. Company Description

Every business plan should include a company description. A great business plan will include the following elements while describing the company:

• Mission statement
• Philosophy and vision
• Company goals

Target market

• Legal structure

Let’s take a look at what each section includes in a good business plan.

Mission Statement

A mission statement is a brief explanation of why you started the company and what the company’s main focus is. It should be no more than one or two sentences. Check out HubSpot’s article 27 Inspiring Mission Statement for a great read on informative and inspiring mission and vision statements. 

Company Philosophy and Vision

The company philosophy is what drives your company. You’ll normally hear them called core values.  These are the building blocks that make your company different. You want to communicate your values to customers, business owners, and investors as often as possible to build a company culture, but make sure to back them up.

What makes your company different?

Each company is different. Your new business should rise above the standard company lines of honesty, integrity, fun, innovation, and community when communicating your business values. The standard answers are corporate jargon and lack authenticity. 

Examples of core values

One of my clients decided to add a core values page to their website. As a tech company they emphasized the values:

•  Prioritize communication.
•  Never stop learning.
•  Be transparent.
•  Start small and grow incrementally.

These values communicate how the owner and the rest of the company operate. They also show a value proposition and competitive advantage because they specifically focus on delivering business value from the start. These values also genuinely show what the company is about and customers recognize the sincerity. Indeed has a great blog about how to identify your core values .

What is a vision statement?

A vision statement communicate the long lasting change a business pursues. The vision helps investors and customers understand what your company is trying to accomplish. The vision statement goes beyond a mission statement to provide something meaningful to the community, customer’s lives, or even the world.

Example vision statements

The Alzheimer’s Association is a great example of a vision statement:

A world without Alzheimer’s Disease and other dementia.

It clearly tells how they want to change the world. A world without Alzheimers might be unachievable, but that means they always have room for improvement.

Business Goals

You have to measure success against goals for a business plan to be meaningful. A business plan helps guide a company similar to how your GPS provides a road map to your favorite travel destination. A goal to make as much money as possible is not inspirational and sounds greedy.

Sure, business owners want to increase their profits and improve customer service, but they need to present an overview of what they consider success. The goals should help everyone prioritize their work.

How far in advance should a business plan?

Business planning should be done at least one year in advance, but many banks and investors prefer three to five year business plans. Longer plans show investors that the management team  understands the market and knows the business is operating in a constantly shifting market. In addition, a plan helps businesses to adjust to changes because they have already considered how to handle them.

Example of great business goals

My all time-favorite long-term company goals are included in Tesla’s Master Plan, Part Deux . These goals were written in 2016 and drive the company’s decisions through 2026. They are the reason that investors are so forgiving when Elon Musk continually fails to meet his quarterly and annual goals.

If the progress aligns with the business plan investors are likely to continue to believe in the company. Just make sure the goals are reasonable or you’ll be discredited (unless you’re Elon Musk).

You did target market research before creating a business plan. Now it’s time to add it to the plan so others understand what your ideal customer looks like. As a new business owner, you may not be considered an expert in your field yet, so document everything. Make sure the references you use are from respectable sources. 

Use information from the specific lender when you are applying for lending. Most lenders provide industry research reports and using their data can strengthen the position of your business plan.

A small business plan should include a section on the external environment. Understanding the industry is crucial because we don’t plan a business in a vacuum. Make sure to research the industry trends, competitors, and forecasts. I personally prefer IBIS World for my business research. Make sure to answer questions like:

• What is the industry outlook long-term and short-term?
• How will your business take advantage of projected industry changes and trends?
• What might happen to your competitors and how will your business successfully compete?

Industry resources

Some helpful resources to help you establish more about your industry are:

• Trade Associations
• Federal Reserve
• Bureau of Labor Statistics

Legal Structure

There are five basic types of legal structures that most people will utilize:

• Sole proprietorships
• Limited Liability Companies (LLC)

Partnerships

Corporations.

• Franchises.

Each business structure has their pros and cons. An LLC is the most common legal structure due to its protection of personal assets and ease of setting up. Make sure to specify how ownership is divided and what roles each owner plays when you have more than one business owner.

You’ll have to decide which structure is best for you, but we’ve gathered information on each to make it easier.

Sole Proprietorship

A sole proprietorship is the easiest legal structure to set up but doesn’t protect the owner’s personal assets from legal issues. That means if something goes wrong, you could lose both your company and your home.

To start a sole proprietorship, fill out a special tax form called a  Schedule C . Sole proprietors can also join the American Independent Business Alliance .

Limited Liability Company (LLC)

An LLC is the most common business structure used in the United States because an LLC protects the owner’s personal assets. It’s similar to partnerships and corporations, but can be a single-member LLC in most states. An LLC requires a document called an operating agreement.

Each state has different requirements. Here’s a link to find your state’s requirements . Delaware and Nevada are common states to file an LLC because they are really business-friendly. Here’s a blog on the top 10 states to get an LLC.

Partnerships are typically for legal firms. If you choose to use a partnership choose a Limited Liability Partnership. Alternatively, you can just use an LLC.

Corporations are typically for massive organizations. Corporations have taxes on both corporate and income tax so unless you plan on selling stock, you are better off considering an LLC with S-Corp status . Investopedia has good information corporations here .

There are several opportunities to purchase successful franchises. TopFranchise.com has a list of companies in a variety of industries that offer franchise opportunities. This makes it where an entrepreneur can benefit from the reputation of an established business that has already worked out many of the kinks of starting from scratch.

How to Write a Business Plan Step 5. Products and Services

This section of the business plan should focus on what you sell, how you source it, and how you sell it. You should include:

• Unique features that differentiate your business products from competitors
• Intellectual property
• Your supply chain
• Cost and pricing structure 

Questions to answer about your products and services

Mike gave us a list  of the most important questions to answer about your product and services:

• How will you be selling the product? (in person, ecommerce, wholesale, direct to consumer)?
• How do you let them know they need a product?
• How do you communicate the message?
• How will you do transactions?
• How much will you be selling it for?
• How many do you think you’ll sell and why?

Make sure to use the worksheet on our business plan template .

How to Write a Business Plan Step 6. Sales and Marketing Plan

The marketing and sales plan is focused on the strategy to bring awareness to your company and guides how you will get the product to the consumer.  It should contain the following sections:

SWOT Analysis stands for strengths, weaknesses, opportunities, and threats. Not only do you want to identify them, but you also want to document how the business plans to deal with them.

Business owners need to do a thorough job documenting how their service or product stacks up against the competition.

If proper research isn’t done, investors will be able to tell that the owner hasn’t researched the competition and is less likely to believe that the team can protect its service from threats by the more well-established competition. This is one of the most common parts of a presentation that trips up business owners presenting on Shark Tank .

SWOT Examples

Examples of strengths and weaknesses could be things like the lack of cash flow, intellectual property ownership, high costs of suppliers, and customers’ expectations on shipping times.

Opportunities could be ways to capitalize on your strengths or improve your weaknesses, but may also be gaps in the industry. This includes:

• Adding offerings that fit with your current small business
• Increase sales to current customers
• Reducing costs through bulk ordering
• Finding ways to reduce inventory
•  And other areas you can improve

Threats will normally come from outside of the company but could also be things like losing a key member of the team. Threats normally come from competition, regulations, taxes, and unforeseen events.

The management team should use the SWOT analysis to guide other areas of business planning, but it absolutely has to be done before a business owner starts marketing. 

Include Competitor Data in Your Business Plan

When you plan a business, taking into consideration the strengths and weaknesses of the competition is key to navigating the field. Providing an overview of your competition and where they are headed shows that you are invested in understanding the industry.

For smaller businesses, you’ll want to search both the company and the owners names to see what they are working on. For publicly held corporations, you can find their quarterly and annual reports on the SEC website .

What another business plans to do can impact your business. Make sure to include things that might make it attractive for bigger companies to outsource to a small business.

Marketing Strategy

The marketing and sales part of business plans should be focused on how you are going to make potential customers aware of your business and then sell to them.

If you haven’t already included it, Mike recommends:

“They’ll want to know about Demographics, ages, and wealth of your target market.”

Make sure to include the Total addressable market .  The term refers to the value if you captured 100% of the market.

Advertising Strategy

You’ll explain what formats of advertising you’ll be using. Some possibilities are:

• Online: Facebook and Google are the big names to work with here.
• Print : Print can be used to reach broad groups or targeted markets. Check out this for tips .
• Radio : iHeartMedia is one of the best ways to advertise on the radio
• Cable television : High priced, hard to measure ROI, but here’s an explanation of the process
• Billboards: Attracting customers with billboards can be beneficial in high traffic areas.

You’ll want to define how you’ll be using each including frequency, duration, and cost. If you have the materials already created, including pictures or links to the marketing to show creative assets.

Mike told us “Most businesses are marketing digitally now due to Covid, but that’s not always the right answer.”

Make sure the marketing strategy will help team members or external marketing agencies stay within the brand guidelines .

This section of a business plan should be focused on pricing. There are a ton of pricing strategies that may work for different business plans. Which one will work for you depends on what kind of a business you run.

Some common pricing strategies are:

• Value-based pricing – Commonly used with home buying and selling or other products that are status symbols.
• Skimming pricing – Commonly seen in video game consoles, price starts off high to recoup expenses quickly, then reduces over time.
• Competition-based pricing – Pricing based on competitors’ pricing is commonly seen at gas stations.
• Freemium services –  Commonly used for software, where there is a free plan, then purchase options for more functionality.

HubSpot has a great calculator and blog on pricing strategies.

Beyond explaining what strategy your business plans to use, you should include references for how you came to this pricing strategy and how it will impact your cash flow.

Distribution Plan

This part of a business plan is focused on how the product or service is going to go through the supply chain. These may include multiple divisions or multiple companies. Make sure to include any parts of the workflow that are automated so investors can see where cost savings are expected and when.

Supply Chain Examples

For instance, lawn care companies  would need to cover aspects such as:

• Suppliers for lawn care equipment and tools
• Any chemicals or treatments needed
• Repair parts for sprinkler systems
• Vehicles to transport equipment and employees
• Insurance to protect the company vehicles and people.

Examples of Supply Chains

These are fairly flat supply chains compared to something like a clothing designer where the clothes would go through multiple vendors. A clothing company might have the following supply chain:

• Raw materials
• Shipping of raw materials
• Converting of raw materials to thread
• Shipping thread to produce garments
• Garment producer
• Shipping to company
• Company storage
• Shipping to retail stores

There have been advances such as print on demand that eliminate many of these steps. If you are designing completely custom clothing, all of this would need to be planned to keep from having business disruptions.

The main thing to include in the business plan is the list of suppliers, the path the supply chain follows, the time from order to the customer’s home, and the costs associated with each step of the process.

According to BizPlanReview , a business plan without this information is likely to get rejected because they have failed to research the key elements necessary to make sales to the customer.

How to Write a Business Plan Step 7. Company Organization and Operational Plan

This part of the business plan is focused on how the business model will function while serving customers.  The business plan should provide an overview of  how the team will manage the following aspects:

Quality Control

• Legal environment

Let’s look at each for some insight.

Production has already been discussed in previous sections so I won’t go into it much. When writing a business plan for investors, try to avoid repetition as it creates a more simple business plan.

If the organizational plan will be used by the team as an overview of how to perform the best services for the customer, then redundancy makes more sense as it communicates what is important to the business.

Quality control policies help to keep the team focused on how to verify that the company adheres to the business plan and meets or exceeds customer expectations.

Quality control can be anything from a standard that says “all labels on shirts can be no more than 1/16″ off center” to a defined checklist of steps that should be performed and filled out for every customer.

There are a variety of organizations that help define quality control including:

• International Organization for Standardization – Quality standards for energy, technology, food, production environments, and cybersecurity
• AICPA – Standard defined for accounting.
• The Joint Commission – Healthcare
• ASHRAE – HVAC best practices

You can find lists of the organizations that contribute most to the government regulation of industries on Open Secrets . Research what the leaders in your field are doing. Follow their example and implement it in your quality control plan.

For location, you should use information from the market research to establish where the location will be. Make sure to include the following in the location documentation.

• The size of your location
• The type of building (retail, industrial, commercial, etc.)
• Zoning restrictions – Urban Wire has a good map on how zoning works in each state
• Accessibility – Does it meet ADA requirements?
• Costs including rent, maintenance, utilities, insurance and any buildout or remodeling costs
• Utilities – b.e.f. has a good energy calculator .

Legal Environment

The legal requirement section is focused on defining how to meet the legal requirements for your industry. A good business plan should include all of the following:

• Any licenses and/or permits that are needed and whether you’ve obtained them
• Any trademarks, copyrights, or patents that you have or are in the process of applying for
• The insurance coverage your business requires and how much it costs
• Any environmental, health, or workplace regulations affecting your business
• Any special regulations affecting your industry
• Bonding requirements, if applicable

Your local SBA office can help you establish requirements in your area. I strongly recommend using them. They are a great resource.

Your business plan should include a plan for company organization and hiring. While you may be the only person with the company right now, down the road you’ll need more people. Make sure to consider and document the answers to the following questions:

• What is the current leadership structure and what will it look like in the future?
• What types of employees will you have? Are there any licensing or educational requirements?
• How many employees will you need?
• Will you ever hire freelancers or independent contractors?
• What is each position’s job description?
• What is the pay structure (hourly, salaried, base plus commission, etc.)?
• How do you plan to find qualified employees and contractors?

One of the most crucial parts of a business plan is the organizational chart. This simply shows the positions the company will need, who is in charge of them and the relationship of each of them. It will look similar to this:

Our small business plan template has a much more in-depth organizational chart you can edit to include when you include the organizational chart in your business plan.

How to Write a Business Plan Step 8. Financial Statements 

No business plan is complete without financial statements or financial projections. The business plan format will be different based on whether you are writing a business plan to expand a business or a startup business plan. Let’s dig deeper into each.

Provide All Financial Income from an Existing Business

An existing business should use their past financial documents including the income statement, balance sheet, and cash flow statement to find trends to estimate the next 3-5 years.

You can create easy trendlines in excel to predict future revenue, profit and loss, cash flow, and other changes in year-over-year performance. This will show your expected performance assuming business continues as normal.

If you are seeking an investment, then the business is probably not going to continue as normal. Depending on the financial plan and the purpose of getting financing, adjustments may be needed to the following:

• Higher Revenue if expanding business
• Lower Cost of Goods Sold if purchasing inventory with bulk discounts
• Adding interest if utilizing financing (not equity deal)
• Changes in expenses
• Addition of financing information to the cash flow statement
• Changes in Earnings per Share on the balance sheet

Financial modeling is a challenging subject, but there are plenty of low-cost courses on the subject. If you need help planning your business financial documentation take some time to watch some of them.

Make it a point to document how you calculated all the changes to the income statement, balance sheet, and cash flow statement in your business plan so that key team members or investors can verify your research.

Financial Projections For A Startup Business Plan

Unlike an existing business, a startup doesn’t have previous success to model its future performance. In this scenario, you need to focus on how to make a business plan realistic through the use of industry research and averages.

Mike gave the following advice in his interview:

Financial Forecasting Mistakes

One of the things a lot of inexperienced people use is the argument, “If I get one percent of the market, it is worth $100 million.” If you use this, investors are likely to file the document under bad business plan examples.

Let’s use custom t-shirts as an example.

Credence Research estimated in 2018 there were 11,334,800,000 custom t-shirts sold for a total of $206.12 Billion, with a 6% compound annual growth rate.

With that data,  you can calculate that the industry will grow to $270 Billion in 2023 and that the average shirt sold creates $18.18 in revenue.

Combine that with an IBIS World estimate of 11,094 custom screen printers and that means even if you become an average seller, you’ll get .009% of the market.

Here’s a table for easier viewing of that information.

The point here is to make sure your business proposal examples make sense.

You’ll need to know industry averages such as cost of customer acquisition, revenue per customer, the average cost of goods sold, and admin costs to be able to create accurate estimates.

Our simple business plan templates walk you through most of these processes. If you follow them you’ll have a good idea of how to write a business proposal.

How to Write a Business Plan Step 9. Business Plan Example of Funding Requests

What is a business plan without a plan on how to obtain funding?

The Small Business Administration has an example for a pizza restaurant that theoretically needed nearly $20k to make it through their first month.

In our video, How to Start a $500K/Year T-Shirt Business (Pt. 1 ), Sanford Booth told us he needed about $200,000 to start his franchise and broke even after 4 months.

Freshbooks estimates it takes on average 2-3 years for a business to be profitable, which means the fictitious pizza company from the SBA could need up to $330k to make it through that time and still pay their bills for their home and pizza shop.

Not every business needs that much to start, but realistically it’s a good idea to assume that you need a fairly large cushion.

Ways to get funding for a small business

There are a variety of ways to cover this. the most common are:

• Bootstrapping – Using your savings without external funding.
• Taking out debt – loans, credit cards
• Equity, Seed Funding – Ownership of a percentage of the company in exchange for current funds
• Crowdsourcing – Promising a good for funding to create the product

Keep reading for more tips on how to write a business plan.

How funding will be used

When asking for business financing make sure to include:

• How much to get started?
• What is the minimum viable product and how soon can you make money?
• How will the money be spent?

Mike emphasized two aspects that should be included in every plan, 

How to Write a Business Plan Resources

Here are some links to a business plan sample and business plan outline. 

• Sample plan

It’s also helpful to follow some of the leading influencers in the business plan writing community. Here’s a list:

• Wise Plans –  Shares a lot of information on starting businesses and is a business plan writing company.
• Optimus Business Plans –  Another business plan writing company.
• Venture Capital – A venture capital thread that can help give you ideas.

How to Write a Business Plan: What’s Next?

We hope this guide about how to write a simple business plan step by step has been helpful. We’ve covered:

• The definition of a business plan
• Coming up with a business idea
• Performing market research
• The critical components of a business plan
• An example business plan

In addition, we provided you with a simple business plan template to assist you in the process of writing your startup business plan. The startup business plan template also includes a business model template that will be the key to your success.

Don’t forget to check out the rest of our business hub .

Have you written a business plan before? How did it impact your ability to achieve your goals?

80% of businesses fail... Learn how not to.

Learn from business failures and successes in 5 min or less. The stories, frameworks, and tactics that will make you a 10x better founder.

Brandon Boushy

Related articles

25 Side Business Ideas (for 2024)

How to Become an Entrepreneur in 13 Steps

How to Sell on eBay: Learn From $360K/Year Seller

nice work https://binarychemist.com/

My Name is PRETTY NGOMANE. A south African female. Aspiring to do farming. And finding a home away from home for the differently abled persons in their daily needs.

Become a business owner in less than 90 days

Start your 10-day free trial of the UpFlip Academy and learn how to start your own business from scratch.

Get business advice straight to your   Inbox 

Home > Business > Business Startup

How To Write a Business Plan

We are committed to sharing unbiased reviews. Some of the links on our site are from our partners who compensate us. Read our editorial guidelines and advertising disclosure .

Starting a business is a wild ride, and a solid business plan can be the key to keeping you on track. A business plan is essentially a roadmap for your business — outlining your goals, strategies, market analysis and financial projections. Not only will it guide your decision-making, a business plan can help you secure funding with a loan or from investors .

Writing a business plan can seem like a huge task, but taking it one step at a time can break the plan down into manageable milestones. Here is our step-by-step guide on how to write a business plan.

Table of contents

• Write your executive summary
• Do your market research homework
• Set your business goals and objectives
• Plan your business strategy
• Describe your product or service
• Crunch the numbers
• Finalize your business plan

By signing up I agree to the Terms of Use and Privacy Policy .

Step 1: Write your executive summary

Though this will be the first page of your business plan , we recommend you actually write the executive summary last. That’s because an executive summary highlights what’s to come in the business plan but in a more condensed fashion.

An executive summary gives stakeholders who are reading your business plan the key points quickly without having to comb through pages and pages. Be sure to cover each successive point in a concise manner, and include as much data as necessary to support your claims.

You’ll cover other things too, but answer these basic questions in your executive summary:

• Idea: What’s your business concept? What problem does your business solve? What are your business goals?
• Product: What’s your product/service and how is it different?
• Market: Who’s your audience? How will you reach customers?
• Finance: How much will your idea cost? And if you’re seeking funding, how much money do you need? How much do you expect to earn? If you’ve already started, where is your revenue at now?

Step 2: Do your market research homework

The next step in writing a business plan is to conduct market research . This involves gathering information about your target market (or customer persona), your competition, and the industry as a whole. You can use a variety of research methods such as surveys, focus groups, and online research to gather this information. Your method may be formal or more casual, just make sure that you’re getting good data back.

This research will help you to understand the needs of your target market and the potential demand for your product or service—essential aspects of starting and growing a successful business.

Step 3: Set your business goals and objectives

Once you’ve completed your market research, you can begin to define your business goals and objectives. What is the problem you want to solve? What’s your vision for the future? Where do you want to be in a year from now?

Use this step to decide what you want to achieve with your business, both in the short and long term. Try to set SMART goals—specific, measurable, achievable, relevant, and time-bound benchmarks—that will help you to stay focused and motivated as you build your business.

Step 4: Plan your business strategy

Your business strategy is how you plan to reach your goals and objectives. This includes details on positioning your product or service, marketing and sales strategies, operational plans, and the organizational structure of your small business.

Make sure to include key roles and responsibilities for each team member if you’re in a business entity with multiple people.

Step 5: Describe your product or service

In this section, get into the nitty-gritty of your product or service. Go into depth regarding the features, benefits, target market, and any patents or proprietary tech you have. Make sure to paint a clear picture of what sets your product apart from the competition—and don’t forget to highlight any customer benefits.

Step 6: Crunch the numbers

Financial analysis is an essential part of your business plan. If you’re already in business that includes your profit and loss statement , cash flow statement and balance sheet .

These financial projections will give investors and lenders an understanding of the financial health of your business and the potential return on investment.

You may want to work with a financial professional to ensure your financial projections are realistic and accurate.

Step 7: Finalize your business plan

Once you’ve completed everything, it's time to finalize your business plan. This involves reviewing and editing your plan to ensure that it is clear, concise, and easy to understand.

You should also have someone else review your plan to get a fresh perspective and identify any areas that may need improvement. You could even work with a free SCORE mentor on your business plan or use a SCORE business plan template for more detailed guidance.

Compare the Top Small-Business Banks

Data effective 1/10/23. At publishing time, rates, fees, and requirements are current but are subject to change. Offers may not be available in all areas.

The takeaway

Writing a business plan is an essential process for any forward-thinking entrepreneur or business owner. A business plan requires a lot of up-front research, planning, and attention to detail, but it’s worthwhile. Creating a comprehensive business plan can help you achieve your business goals and secure the funding you need.

Related content

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

Best Small Business Loans

5202 W Douglas Corrigan Way Salt Lake City, UT 84116

Accounting & Payroll

Point of Sale

Payment Processing

Inventory Management

Human Resources

Other Services

Best Inventory Management Software

Best Small Business Accounting Software

Best Payroll Software

Best Mobile Credit Card Readers

Best POS Systems

Best Tax Software

Stay updated on the latest products and services anytime anywhere.

By signing up, you agree to our Terms of Use  and  Privacy Policy .

Disclaimer: The information featured in this article is based on our best estimates of pricing, package details, contract stipulations, and service available at the time of writing. All information is subject to change. Pricing will vary based on various factors, including, but not limited to, the customer’s location, package chosen, added features and equipment, the purchaser’s credit score, etc. For the most accurate information, please ask your customer service representative. Clarify all fees and contract details before signing a contract or finalizing your purchase.

Our mission is to help consumers make informed purchase decisions. While we strive to keep our reviews as unbiased as possible, we do receive affiliate compensation through some of our links. This can affect which services appear on our site and where we rank them. Our affiliate compensation allows us to maintain an ad-free website and provide a free service to our readers. For more information, please see our  Privacy Policy Page . |

© Business.org 2024 All Rights Reserved.

• Start free trial

Start selling with Shopify today

Start your free trial with Shopify today—then use these resources to guide you through every step of the process.

How To Write a Business Plan in 9 Steps (2024)

Business plans aren’t just for entrepreneurs who need to secure funding—they can help you plan and evaluate new ideas or growth plans, too. Find out how to write a business plan and get the most out of the process in this comprehensive guide.

A great business plan can help you clarify your strategy, identify potential roadblocks, determine necessary resources, and evaluate the viability of your idea and growth plan 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.

Learn how to write a business plan with a step-by-step guide, get tips for getting the most of your plan, and see real business plan examples to inspire you.

What is a business plan?

A business plan is a strategic document that outlines a company's goals, strategies for achieving them, and the time frame for their achievement. It covers aspects like market analysis , financial projections, and organizational structure, serving as a roadmap for business growth and a tool to secure funding.

Often, financial institutions and investors need to see a business plan before funding any project. Even if you don’t plan to seek outside funding, a well-crafted plan becomes the guidance for your business as it scales.

How to write a business plan in 9 steps

• Draft an executive summary.
• Write a company description.
• 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 to get you started (and avoid the terror of facing a blank page).

Once you have your business plan template 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 distills everything that follows and gives 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. 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. Who’s involved in the business?

2. Write a company description.

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. 

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

Brand values and goals

To define your brand 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.

Your company description should also 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 your goal setting includes SMART goals : specific, measurable, attainable, realistic, and time-bound.

Vision and mission statements

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.

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.

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.

Here is an example to illustrate how to approach this section:

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. Look for government data about the size of your target market , learn where they live, what social channels they use, and their shopping habits.
• Research relevant industry trends and trajectory. Explore consumer trends and product trends in your industry by looking at Google Trends, trade publications, and influencers in the space.
• Make informed guesses. You’ll never have perfect, complete information about your total addressable market. Your goal is to base your estimates on as many verifiable data points as necessary.

Some sources to consult for market data include government statistics offices, industry associations, academic research, and respected news outlets covering your industry.

Read more: What is a Marketing Analysis? 3 Steps Every Business Should Follow

SWOT analysis

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?

SWOT is often depicted in a grid or visual way. With this visual presentation, your reader can quickly see the factors that may impact your business and determine your competitive advantage in the market.

Competitive analysis

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.

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.

4. Outline the management and organization.

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 categories and key details about the products within 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.

6. Perform customer segmentation.

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.

Put your customer data to work with Shopify’s customer segmentation

Shopify’s built-in segmentation tools help you discover insights about your customers, build segments as targeted as your marketing plans with filters based on your customers’ demographic and behavioral data, and drive sales with timely and personalized emails.

7. Define a marketing plan.

If you’re planning to invest heavily in Instagram marketing or TikTok ads , for example, it might make sense to include whether Instagram and TikTok are a leading platform for your audience—if it’s not, that might be a sign to rethink your marketing plan.

Market your business with Shopify’s customer marketing tools

Shopify has everything you need to capture more leads, send email campaigns, automate key marketing moments, segment your customers, and analyze your results. Plus, it’s all free for your first 10,000 emails sent per month.

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? On what channels and in which markets?

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.

Here is an example of a marketing plan for a new business:

8. Provide a logistics and operations plan.

Logistics and operations are the workflows you’ll implement to make your business idea 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.

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.

Let’s review the types of financial statements you’ll need.

Income statements

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.

Balance sheets

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 statements

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.

📚 Read more: What Is Cash Flow Management: Template and Examples

Why write a business plan?

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. 

Business plans also help owners identify areas of weakness before launching, potentially avoiding costly mistakes down the road. “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,” says Jordan Barnett, owner of Kapow Meggings .

There are several other compelling reasons to consider writing a business plan, including:

• 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 collaborate with other brands , having a clear overview of your vision, your audience, and your business strategy will make it much easier for them to identify if your business is a good fit for theirs.
• Competitions. There are many business plan competitions offering prizes such as mentorships, grants, or investment capital. 

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.

Business plan types

Business plan types 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 business plans we see include, but are not limited to, the following types:

Traditional business plans

These are the most common business plans. Traditional business plans take longer to write and can be dozens of pages long. Venture capitalist firms and lenders ask for this plan. Traditional business plans may not be necessary if you don’t plan to seek outside funding. That’s where the next type comes in.

Lean business plans

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 lean business plans to onboard new hires or modify existing plans for a specific target market.

Nonprofit business plans

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.

📚 Read more: The Road to Success: Business Plan Examples to Inspire Your Own .

7 tips for creating a small business plan

There are a few best practices when it comes to writing a business plan. While your plan will be unique to your business and goals, keep these tips in mind as you write.

1. 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.

2. Have a clear goal.

When creating a business plan, you’ll need to put in more work and deliver a more thorough plan if your goal is to secure funding for your business versus working through a plan for yourself or even your team.

3. Invest time in research.

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.

4. 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.

5. 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.

6. Use a business plan template.

You can also use a free business plan template to provide a skeleton for writing a plan. These often guide you through each section from financial projects to market research to mission statement ensuring you don’t miss a step.

7. Try 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 has business plan 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
• Go Small Biz : budget-friendly option with industry-specific templates

📚 Read more: 6 Best Business Plan Software to Help Write Your Future

Common mistakes when writing a business plan

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. Sometimes your idea may be too risky for potential investors, too expensive to run, or there’s no market. Aim for small business ideas that require low startup costs.
• No exit strategy. If you don’t show an exit strategy, or a plan for investors 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 focus on potential profits, without worrying about how it will be done. 
• Missing financial projections. 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 in your financial projections to create a successful business plan.
• Spelling and grammar errors. 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?

Prepare your business plan today

Whether you’re working on starting a new online business idea , building a retail storefront, growing your established business, or purchasing an existing business , you now understand how to write a business plan that suits your business’s goals and needs.

Feature illustration by Rachel Tunstall

• How to Start a Dropshipping Business- A Complete Playbook for 2024
• The Ultimate Guide To Dropshipping (2024)
• AliExpress Dropshipping- How to Dropship From AliExpress
• How to Start a Clothing Line in 12 Steps (2024)
• How To Source Products To Sell Online
• How To Do Crowdfunding: With Expert Tips and Examples From Successful Campaigns
• How to Start a Candle Business (with Examples)
• What Is Affiliate Marketing and How to Get Started
• Pinterest Marketing 101- How to Promote Your Business on Pinterest
• Getting Started on IG- A Beginner’s Guide to Instagram Marketing

Business plan FAQ

How do i write a business plan.

Learning how to write a business plan is simple if you use a business plan template or business plan software. Typically, a traditional business plan for every new business should have the following components :

• Executive summary
• Company description, including value proposition
• Market analysis and competitive analysis
• Management and organization
• Products and services
• Customer segmentation
• Marketing plan
• Logistics and operations
• Financial plan and financial projections

What is a good business plan?

A good business plan starts with a strong executive summary. It also adequately outlines idea feasibility, target market insights, and the competitive landscape. A business plan template can help businesses be sure to follow the typical format of traditional business plans which include financial projections, details about the management team, and other key elements that venture capital firms and potential investors want to see.

What are the 3 main purposes of a business plan?

The three main purposes of a business plan are: 

• To clarify your plans for growth
• To understand your financial needs
• To attract funding from investors or secure a business loan

What are the different types of business plans?

The types of business plans include startup, refocusing, internal, annual, strategic, feasibility, operations, growth, and scenario-based. Each type of business plan has a different purpose. Business plan formats include traditional, lean, and nonprofit. Find a business plan template for the type of plan you want to write.

Keep up with the latest from Shopify

Get free ecommerce tips, inspiration, and resources delivered directly to your inbox.

By entering your email, you agree to receive marketing emails from Shopify.

popular posts

The point of sale for every sale.

Subscribe to our blog and get free ecommerce tips, inspiration, and resources delivered directly to your inbox.

Unsubscribe anytime. By entering your email, you agree to receive marketing emails from Shopify.

Latest from Shopify

Aug 23, 2024

Aug 22, 2024

Learn on the go. Try Shopify for free, and explore all the tools you need to start, run, and grow your business.

Try Shopify for free, no credit card required.

Flash Sale Savings ⚡

up to 60% off LivePlan Premium. Save Now

0 results have been found for “”

 Return to blog home

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

Posted july 17, 2024 by noah parsons.

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

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

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

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

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

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

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

A one-page plan should cover:

• Value proposition
• Market need
• Your solution

Competition

Target market.

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

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

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

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

When do you need a more detailed business plan?

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

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

How to write a detailed business plan

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

1. Executive summary

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

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

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

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

2. Opportunity

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

Problem & solution

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

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

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

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

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

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

3. Execution

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

Marketing & sales

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

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

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

Milestones & metrics

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

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

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

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

Organizational structure

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

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

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

5. Financial plan and forecasts

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

Financial forecasts

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

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

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

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

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

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

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

Historical Financial statements

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

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

6. Appendix 

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

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

Tips to write a detailed business plan

Keep it brief.

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

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

Start with what you know

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

Set time limits

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

Reference business plan examples

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

Just be sure not to copy and paste anything.

Prioritize sections that really matter

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

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

Download a free business plan template

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

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

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

Use your detailed business plan to grow your business

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

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

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

Sources in this article

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

Like this post? Share with a friend!

Noah Parsons

Posted in business plan writing, join over 1 million entrepreneurs who found success with liveplan, like this content sign up to receive more.

Subscribe for tips and guidance to help you grow a better, smarter business.

You're all set!

Exciting business insights and growth strategies will be coming your way each month.

We care about your privacy. See our privacy policy .

14 Tips to Write Your Business Plan

3 min. read

Updated August 1, 2024

Learn to craft an excellent business plan with our curated selection of business plan tips and tricks, plus a complete business plan template —developed by seasoned planning experts with over 80 years of experience writing and reviewing business plans.

• Tips to write your business plan

1. Do this before writing your business plan

If you dive right into the planning process you’re more likely to waste time and become overwhelmed. Before you start, consider why you need a plan and organize your thoughts on a single page.

2. Explore business plan templates

There are plenty of great business plan templates that can help you write your plan. Here are a few of our favorites.

3. Understand what makes a great plan

There are certain factors that make a great business plan. This includes the plan fitting your business needs, being realistic, and addressing assumptions. Here are a few other traits that can truly elevate your plan.

4. Focus on crafting a compelling message

Many small business owners use their plan to convince others that their business idea is worth investing in. To do this successfully, you need to consider how the plan will be read and what can make it engaging.

5. Know why business plans fail

A big reason why businesses fail is ineffective planning. Knowing what causes business plans to hinder business growth or be rejected by lenders can help you write a better plan and become a better business owner.

6. Avoid these common planning mistakes

Simple mistakes can lead to a mediocre or ineffective business plan. Skipping planning altogether is the biggest, but several others connected to your financials can sink your idea before it ever gets off the ground.

7. Don't forget to spend time on formatting

You may have a killer business idea, detailed market research, and captivating descriptions that will grab the attention of anyone who reads your plan. But none of it matters if your plan appears dense and overly complex…

8. Use the right tools and resources

Take the time to explore any tools or resources that can help you write a business plan. Aside from this guide that you’re already reading, here are a few of our favorites that you should check out for yourself.

9. Ensure your plan is accurate

How accurate does your business plan need to be? Learn from seasoned business planning expert Tim Berry what accuracy in your plan really means.

10. Know how you will use your plan

You likely have a single goal in mind for your business plan, like applying for a loan or making your idea official. Stay focused but take note of the many other ways to get immediate and long-term use out of a plan.

11. Disregard these planning myths

There are numerous misconceptions about business planning that have developed over the years. These range from what your plan should include to if plans are truly valuable—and you should know why they aren’t true.

12. Try writing your plan in one day

Did you know that you can get all of the components of your business plan down in just a single day? All it takes is a little prep work, knowledge of what to include, and a focus on keeping things simple.

13. Participate in writing a business plan month

There’s never a wrong time to write or update your business plan. However, if you want the inspiration of writing alongside thousands of other entrepreneurs, why not participate in “Write a Business Plan Month.”

14. Consider working with a business plan writer

Working with a business plan writer allows you to spend more time on the other startup steps. But the wrong writer can lead to wasted money on an unusable business plan. So, be sure that you ask the right questions.

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

Related Articles

6 Min. Read

How to Write Your Executive Summary for Specific Audiences

7 Min. Read

7 Financial Terms Small Business Owners Need to Know

How to Write a Nail Salon Business Plan + Free Sample Plan PDF

8 Min. Read

How to Write a Business Plan in One Day [2024 Guide]

The LivePlan Newsletter

Become a smarter, more strategic entrepreneur.

Your first monthly newsetter will be delivered soon..

Unsubscribe anytime. Privacy policy .

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

The Forbes Advisor editorial team is independent and objective. To help support our reporting work, and to continue our ability to provide this content for free to our readers, we receive payment from the companies that advertise on the Forbes Advisor site. This comes from two main sources.

First , we provide paid placements to advertisers to present their offers. The payments we receive for those placements affects how and where advertisers’ offers appear on the site. This site does not include all companies or products available within the market.

Second , we also include links to advertisers’ offers in some of our articles. These “affiliate links” may generate income for our site when you click on them. The compensation we receive from advertisers does not influence the recommendations or advice our editorial team provides in our articles or otherwise impact any of the editorial content on Forbes Advisor.

While we work hard to provide accurate and up to date information at the time of publication that we think you will find relevant, Forbes Advisor does not and cannot guarantee that any information provided is complete and makes no representations or warranties in connection thereto, nor to the accuracy or applicability thereof. You should always check with the product provider to ensure that information provided is the most up to date.

How To Write A Business Plan

Reviewed By

Updated: Nov 10, 2023, 4:23pm

Important Disclosure: The content provided does not consider your particular circumstances and does not constitute personal advice. Some of the products promoted are from our affiliate partners from whom we receive compensation. Read More

If you require any personal advice, please seek such advice from an independently qualified financial advisor. While we aim to feature some of the best products available, this does not include all available products from across the market. Although the information provided is believed to be accurate at the date of publication, you should always check with the product provider to ensure that information provided is the most up to date. Read Less

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.

Every business starts with a vision – and this vision is distilled and communicated through a business plan . A strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started (in addition, of course, to your hopes and dreams). In this guide, we’ll walk you through how to write a watertight and effective business plan that you can stick to.

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.

Featured Partner - Work Management

Free version available

Starting Price

From £8 monthly per user

Key Features

Customised business workflows, OKR & budget templates, 10+ data views, automations, 37+ integrations

On monday.com's Website

Track your projects, set deadlines, assign tasks and monitor progress with monday.com

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name, your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship, limited liability company (LLC), partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business operations costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Think about task management software

Task management software can be really useful in mapping out the scope of a project, including getting your new business up and running. There are many apps out there, so finding the right solution can be tricky. We compiled this list of the best task management software (which ranks Monday.com in first place) which could help narrow down your search.

Featured Partner - Task Management

Mobile app available, All plans include unlimited free viewers, unlimited docs, shareable forms and more

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.

Frequently Asked Questions (FAQs)

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.

This includes 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.

You should also look at financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

• Best Website Builders
• Best E-Commerce Platforms
• Best Blogging Platforms
• Cheap Website Builders
• Best Web Hosting Services
• Best WordPress Hosting Services
• Best Cloud Hosting Services
• Best VPS Hosting Services
• Best Project Management Software & Tools
• Best Accounting Software
• Best Social Media Management Tools
• Best Recruitment Software
• Best Free Project Management Tools And Software
• Wix Pricing 2023
• Wix Vs Squarespace
• Squarespace Review
• Shopify Review
• How To Make Money Online
• How To Start A Business
• Small Business Ideas
• How To Build A Website For Free
• Best Antivirus Software

More from  

Square pricing and fees (guide), how to make money on social media in 2024, uk remote and hybrid working statistics 2024, uk small business statistics, how to start a vending machine business, how to build a website on godaddy.

Julia is a writer in New York and started covering tech and business during the pandemic. She also covers books and the publishing industry.

Kelly is an SMB Editor specializing in starting and marketing new ventures. Before joining the team, she was a Content Producer at Fit Small Business where she served as an editor and strategist covering small business marketing content. She is a former Google Tech Entrepreneur and she holds an MSc in International Marketing from Edinburgh Napier University. Additionally, she manages a column at Inc. Magazine.

I've been involved in personal finance and property journalism for the past 20 years, editing websites and writing for national newspapers. My objective has always been to offer no-nonsense information to readers that either saves or earns them cash.

• Case Studies
• Flexible Products

• Expert Insights
• Research Studies

• Creativity and Culture
• Management and Leadership
• Business Solutions

• Member Spotlight
• Employee Spotlight

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? 

Related articles

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 .

Should you send that follow-up? Get your answer by discovering the best practices for pitching to investors.

If you’ve been asking questions like, how will I know when I find a product market fit? How long should I explore before launching? Or what should I initially price my product? These are all questions that founders have asked, and below are the answers from the founders who’ve figured it out.

Tom Hewitson, Chief AI Officer at leading AI training company General Purpose , offers tips for small businesses

Business Plan: Everything You Need to Know

A business plan is a written description of your small business's future.It shows what you intend to do and the way you intend to do it. 3 min read updated on September 19, 2022

What Is a Business Plan?

A business plan is a written description of your small business's future. It shows what you intend to do and the way you intend to do it. Business plans are inherently strategic. Your plan reveals how you're going to start and grow your business.

Executive Summary

This defines the marketing strategy. The executive summary ought to inform the reader of what you plan to accomplish overall in your business. Clearly state what you are expecting. Typically, it's advisable that you simply write the executive summary after you have completed the rest of the document. Ideally, this section can act as a stand-alone page that covers the highlights of your detailed plan.

It’s quite common for investors to ask for only the executive summary when they're evaluating your small business. If buyers like what they see within the abstract, they’ll usually request the whole business plan , a pitch presentation, or additional information about your small business. Ideally, your abstract will be one to two pages at the most. It should be designed to give quick information that sparks curiosity and makes your investors interested in hearing more.

The Critical Components of a Winning Executive Summary

Create a one-sentence overview of your small business that sums up the essence of what you might be doing. Doing so is usually more practical if the sentence describes what your organization truly does. This is often known as your value proposition. Describe the issue you might be fixing for your intended customer.

Present a short overview of your staff or proposed staff, and include a brief clarification of why you and your staff are the best individuals to take your idea to market. If your small business method (i.e., “the way you generate income”) needs further clarification, then say you will describe it in more detail in later sections of the business plan. In case you are generating cash to start out or to further develop your small business, you could include a small statement of what you want within the main summary. Don’t include comments on possible additional  funding , however, since that can all be negotiated later.

Company Overview

The corporate overview will most certainly be the shortest part of your marketing strategy. The corporate overview should show your mission statement, an assessment of your organization’s structure and possessions, a short history of the business, if it’s an established one, and a mention of the business location. Your organization mission statement needs to be brief—one or two sentences at most—and it ought to embody what you are attempting to provide.

Business Structure

Your company overview also needs to embody a summary of your organization’s present  business structure . Are you an LLC ? A C-corp? An S-corp ? A sole proprietor? A partnership ? Potential investors will want to know the structure of the enterprise before they'll consider funding.

Business History

In case you are writing a plan or marketing strategy for an existing firm, it’s acceptable to  incorporate  a short history of the business and spotlight the main achievements. Keep the business history part brief, though. The business history section is very helpful in providing context for the remainder of your plan.

Business Description

The business description often begins with a brief description of the trade. When describing the trade, talk about the current outlook in addition to future prospects. You also need to give info on all the competitors and the market along with any new merchandise or developments that can bring profits or that can have a negative effect on your small business.

Products and Services

The products and services section is where the bulk of your plan should be. The services section is where you'll describe the issue that you are fixing, your resolution, and how your services or products match the present market. You’ll also use the services section to reveal what sets your business above others and how you intend to broaden your services or products later.

Using Your Plan

Your business plan is one thing you will use to pitch for funding, and you must keep it updated as your company develops.

If you need help with creating a  business plan , you can  post your legal need  on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

Content Approved by UpCounsel

• How To Write A Good Business Plan Executive Summary
• Creating a Business Plan
• How to Write An Executive Summary for a Business Plan
• Business Plan Format: Everything you Need to Know
• LLC Business Plan Template
• Business Description Outline
• Parts of Business Plan and Definition
• Service Business Plan
• Startup Business Plan Presentation Template
• Contents of a Business Plan
• Atlanta Business Lawyers
• Austin Business Lawyers
• Boston Business Lawyers
• Chicago Business Lawyers
• Dallas Business Lawyers
• Houston Business Lawyers
• Los Angeles Business Lawyers
• New York Business Lawyers
• Philadelphia Business Lawyers
• San Francisco Business Lawyers
• Seattle Business Lawyers
• Charlotte Business Lawyers
• Denver Business Lawyers
• Jacksonville Business Lawyers
• Las Vegas Business Lawyers
• Phoenix Business Lawyers
• Portland Business Lawyers
• San Antonio Business Lawyers
• San Diego Business Lawyers
• San Jose Business Lawyers
• View All Business Lawyers

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

When Should Entrepreneurs Write Their Business Plans?

• Francis J. Greene
• Christian Hopp

Don’t write a plan before you understand your customer.

It pays to plan. Entrepreneurs who write business plans are more likely to succeed, according to research. But while this might tempt some entrepreneurs to make writing a plan their very first task, a subsequent study shows that writing a plan first is a really bad idea. It is much better to wait, not to devote too much time to writing the plan, and, crucially, to synchronize the plan with other key startup activities.

It pays to plan. Entrepreneurs who write business plans are more likely to succeed, according to our research, described in an earlier piece for Harvard Business Review . But while this might tempt some entrepreneurs to make writing a plan their very first task, our subsequent study shows that writing a plan first is a really bad idea. It is much better to wait, not to devote too much time to writing the plan, and, crucially, to synchronize the plan with other key startup activities.

• FG Francis J. Greene is Chair in Entrepreneurship in the University of Edinburgh Business School.
• CH Christian Hopp is Chair in Technology Entrepreneurship in the TIME Research Area, the Faculty of Business and Economics, RWTH Aachen University.

Partner Center

A step-by-step guide to writing a business plan that will boost your startup's chance at success

• For all of the popularity of pitch decks , business plans still serve an important function for entrepreneurs who are building a business.
• A 2017 study of more than 1,000 entrepreneurs found that those with a business plan were more successful than those without.
• Business Insider asked entrepreneur, business mentor, and former Wall Street bank executive Cate Luzio to distill her decades of experience into a guide.
• Her advice is the basis for these eight essential elements founders should include in a business plan, and why they matter.
• Visit BI Prime for more stories.

A pitch deck is not a plan.

For all of the popularity of pitch decks, business plans still serve an important function for entrepreneurs who are building a business.

A 2017 study of more than 1,000 entrepreneurs found that those with a business plan were more successful than those without. Among pairs of otherwise identical founders, planners were 16% more likely to be profitable for at least 6 months out of the preceding year.

Professor Francis Greene, who co-authored the study with Christian Hopp, told Business Insider the pairs of entrepreneurs were "like twins" in every observable way, and that the results were "fairly definitive."

"It's pretty clear that if you plan, it pays," Greene said.

Of course, a fancy plan won't save a bad business model, but a thoughtful strategy can give a promising idea the winning edge in a competitive market.

And that edge doesn't exclusively apply to startups seeking venture funding. Just ask former Wall Street bank executive Cate Luzio, who left her 17-year corporate career to launch Luminary NYC, a co-working and event hub for professional women.

The importance of time — and timing

Luzio attributes Luminary's success to the business plan she wrote in one week, a feat that Greene says typically takes founders about 2 months to produce. 

Greene also stresses that his research shows that much of the value of a plan is tied to when you write it. In an earlier study, he and Hopp found a sort of Goldilocks zone of time — roughly 7-12 months after the initial idea, and usually 1-2 years before launching the product or service — as the optimal time to start writing.

Still, Greene says there can be significant internal value to the practice of writing a plan beyond simply raising funds, and Luzio would agree. As a self-financed bootstrapper, Luzio told Business Insider that she's often asked why she wrote a plan if she's not out raising money.

"I need a business plan to run the business," she said. "Business plans weren't created 50 years ago for founders to sell their companies. Business plans were created to build their business, understand cash flow and, and manage the business."

For first-time founders and seasoned pros

As Managing Director and the Global Head of Multinational Corporate Banking at HSBC, Luzio had a $2 billion portfolio and a team of more than 2,000 people across 72 countries.

"It's important for startups to make sure their product/service produces value and meets needs," Luzon said. "It's not about any method being the preferred way. I think it's important to have a plan with actionable-steps and a mission 'North Star' for your business."

Greene describes a good business plan as a "pre-mortem," or an analysis of everything that could go wrong with the business, from which even serial founders with numerous exits under their belt could benefit.

"A plan is a corrective device for solving for your biases," he said.

A strategic framework for your business' growth

Over the years, Luzio has reviewed countless plans and she regularly helps entrepreneurs write their own. This February, she will lead a business plan bootcamp at Luminary in New York.

Business Insider asked Luzio to distill her decades of experience into a guide, which she emphasizes is exactly that: a guide, not a rubric.

"I don't want to focus on a one size fits all approach. I want to underscore for new entrepreneurs the importance of fully mapping out their vision," she said. "Whatever the plan or the framework you use, you have to be able to execute."

Related stories

A business plan simply happens to be a very useful framework, and Luzio's advice is the basis for these 8 essential elements founders should include in their plans, and why they matter.

If you have written a plan for your business that you'd like to share with Business Insider, please get in touch via email at dreuter[at]businessinsider.com .

1. Executive Summary

The first section of a business plan is best written last, once you've worked through the questions raised in the other sections.

Here is where you introduce your company's narrative, and define what success will look like. What problem or opportunity will your business address, and who are your target customers?

This is also where you'll introduce your finance strategy. Are you looking for equity investors, taking on debt, or working with existing cash? How much financing will you need from different sources, and when will you be profitable enough to deliver returns?

Boil down the work you've done in the following sections into a few sentences that get straight to the point.

2. Company Overview

If you have an elevator pitch prepared, this is where it belongs. Summarize what your company stands for, and what its guiding principles are. Why does your business do what it does ? Who are the stakeholders that are concerned with your company's success?

Briefly introduce your target market or customer base, how your product or service will meet a demand, and what operational and staffing considerations are necessary for the business to function.

Lastly, Luzio said you should be very upfront about your financial needs and goals, like start-up costs and revenue forecasts. Businesses depend on cash flow, so don't be coy about how you're going to manage that necessity.

3. Business Description

Here is where you start to delve into the details of the market opportunity your company will capitalize on. Consider factors like geographies, demographics, and industries, and demonstrate how your product or service is different.

Identify who the key suppliers or partners are and the extent to which your business will depend on those relationships.

As before, remember to think carefully about the financial picture. Base your revenue and pricing models on thoughtful research and design a structure that can compete in your target market. If you're charging more or less than the competition, provide a solid rationale as to why.

4. Market Research and Analysis

Expand on the market discussion from the previous section, and demonstrate how well you understand your competitive landscape. Who are the dominant players, and what are the growth trends in your industry?

With nearly eight billion people in the world, your odds of success are improved if you can narrow your target to a more specific segment. Depending on your competition, what percentage of that segment do you realistically think your business can address, and how big does your business need to be to handle that percentage?

Round out the section with a good old-fashioned SWOT analysis . Listing the strengths, weaknesses, opportunities, and threats, is a time-honored method of keeping track of the concerns you'll need to manage for your company.

5. Operating Plan

Your company's operations will possibly be the hardest thing to plan in advance. Do your best to spell out how you will generate sales, deliver your product or service to the market, and handle payments from customers.

Think about what you'll need in terms of facilities (like offices, warehouses, storefronts, coworking spaces) and technology (like web services, payment processing, customer resource management), or other capital investments that may be specific to your business.

Review your mission-critical suppliers from earlier, and also identify any key customer relationships that could have a significant impact on your success. Luzio categorizes a key partners as any single customer who delivers more than 10% of your annual revenue.

This is also the beginning of one of the biggest ongoing challenges all business owners face: building your team. Luzio recommends outlining the key roles that need filling in the first two years of operation for your company to succeed. Determine if these must be hires or can be contracted out.

In addition to defining an organizational structure and each position's responsibilities, make a plan for recruiting, retaining, and compensating your team. You may need professional consultation to navigate HR issues, or if you'll be offering equity ownership of the company.

6. Marketing and Sales Plan

Once you've established your target customer segment, you'll need to develop a strategy for crafting the right messaging to reach them.

"How you promote the business is an important element of your success," Luzio said.

With the vast array of available marketing channels, you may need some help from public relations and marketing professionals to choose the right ones for your business and shaping the messaging that's appropriate for each.

This also figures into your hiring plan, since you many need to staff up for sales and support.

7. Financial Plan

Luzio said estimating your startup costs and projected earnings growth "is critical to see when the business becomes profitable or is targeted to be."

Startup costs include one-time and ongoing expenses that are essential to get the business up and running, and should be summarized here and laid out in greater detail in the Appendix.

Your profit-and-loss (P&L) model, also known as a pro forma income statement, is a projection of your expected income and expenses for the first 12 months, and up to a period up to five years. A summary P&L will suffice here, but be based on a more thorough model that is included in the Appendix.

Much as you would love to see the so-called hockey-stick growth curve for your business, few founders will ever see that sort of rapid scale-up. If you've done your diligence in preparing your startup costs and P&L projections, you should have a reasonable idea of when your business will break even and start earning profits.

Equity investors appear to exempt some companies or industries from expectations of foreseeable profitability, but debt investors and lenders are generally less tolerant of cash-burning businesses. They'll want to know when you expect to become EBITDA-positive, since that's when they'll begin seeing repayment on your loans.

8. Appendix

The appendix is the home for any other matters you need to include, but may not merit a fully fleshed-out section.

It's also that place for the tables, charts, and analyses that are summarized in earlier sections, such as:

• Estimated start-up costs: A more detailed breakdown of the expenses and investments required to get your business up and running.
• P&L projections: Also known as pro-forma income statements, here's where you'd go into more detail about your revenues and expenses, forecast up to five years out.
• Additional market research: Provide more specific details about the basis for the analysis and assumptions discussed in section four.
• Competitive analysis: Deeper analysis of individual competitors or potential competitors that could challenge your model.

Now that you've completed all the sections, you're ready to return to the top and work on the Executive Summary.

You can use this guide to inform your own original plan, or if you would like more detailed instructions, check out the Startup Business Plan Template from SCORE, the business mentoring organization .

Watch: It's time for iTunes to die, even though it was key to Apple's early success

• Main content

Products For

• Help Guides
• Billing FAQs
• Business Plan

Anatomy of a Business Plan: 15 Tips for Writing a Plan That Leads to Success

If you are starting a new business or restructuring a business you already own, then one of your most important tasks is writing a business plan.

Table of Contents

Remember the reasons why you need a business plan, make the company description your elevator pitch, know your numbers, do a thorough market analysis, be clear about your business organization, create an organizational chart, use graphs and charts to make the plan come alive, create a private business plan, make it actionable, establish a page limit, ask others to review and proofread your plan, show them the money, be realistic, tell a human story.

Before you write a business plan, consider the function of a business plan document to a new business or company changing direction.

Investopedia defines a business plan as “[a] written document that describes in detail how a new business is going to achieve its goals.”

A comprehensive legal business plan includes sections about the company's budget, financing, projected revenue, marketing strategies, market analysis, expenses, costs, and operational objectives.

Many people think a business plan document is just a report that is created to attract potential investors or to secure a loan. While a business plan is definitely valuable for investors, it is also a tool to help the business owner understand how his or her business will operate.

The act of writing a business plan forces owners to examine their assumptions and identify areas that may have been overlooked. In addition, business plan documents will identify goals and milestones that the company can use as targets during the official launch and beyond.

Before you sit down to write your business plan, make sure you understand what areas are usually included in a business plan template.

The plan is a document that should guide your business for the first years of its operation, so plan to revisit your plan periodically to update your progress.

One of the common mistakes people make when drafting a business plan is opening with a dry description of the company and its objectives. Instead, your business plan should open with an attention-grabbing hook that describes why your business is an incredible idea.

An elevator pitch is a brief speech that you use to generate interest in what your company does. The reason it is called an elevator pitch is because it should be a statement you can deliver in the time it would take to ride down in an elevator.

When you make the company description section of your business plan read like an elevator pitch, you are defining the company in a succinct, memorable, and persuasive way.

Assume your audience is someone who has no experience in your industry. Use a three-step process:

• First, begin by identifying the problem that your business will solve.
• Second, give a brief explanation of how your company solves the problem and why your solution is unique.
• Third, include a call to action that makes the reader want to connect with the business in the future.

Limit your pitch to no more than three quarters of a page. Once you have an engaging description of your company, you can move on to the next phase of your business plan.

If you've ever watched ABC's investor reality show Shark Tank , you know that one of the death knells for entrepreneurs is a failure to know their numbers. This is a common problem, but one that can easily be resolved by putting time into market analysis and financial projections in your business plan.

The market analysis section should always come before the financial projections section of your business plan document. Some business owners skip this step, going straight to financial projections without laying the foundation for where the data comes from.

These companies may struggle because they did not do their due diligence and do not have a thorough understanding what the numbers are based on.

A common mistake in business plans is relying on projections or guesses about what will happen in the future. Since investors can take six months or more to make decisions, make sure you can easily update your business plan documents to include the latest numbers.

There are many factors that should be analyzed when considering the market for your business. According to the Small Business Administration , the most important factors include understanding your target market and performing a competitive analysis.

Figure out what your target market is and narrow it down to a realistic size. Consider the following questions about your target market:

• Characteristics  –  What are the group's demographics, where can you find them, and what problem can you solve?
• Market share – What is the market share percentage and/or number of customers you think you can attain in your area?
• Pricing – Define your pricing structure and set your gross margins.

Identify your competitors in the market and consider their characteristics:

• Market share – Define the size of the market and what share your competitors hold.
• Strengths/weaknesses – Where are your competitors strong? Where are they vulnerable?
• Barriers to entry – Identify any barriers that will prevent you from entering the market, such as government regulations, secondary competitors, new technology, or high investment costs.

In order to run a business, you need to decide how your business will be legally organized. The first task is selecting the right legal structure for your business. Is it a sole proprietorship or a limited liability company (LLC)? Is it a general partnership or a corporation?

Be familiar with the legal business plan documents and requirements that apply in your state and consult a lawyer if you have questions. Wherever possible, use business plan templates that provide legally sound language to ensure that you have not overlooked any detail in corporate formation.

Once your legal structure has been completed, draft an organizational chart showing the complete hierarchy of the company. A good chart will:

• help identify any gaps or redundancy in your management structure;
• show ownership, management, and employees; and
• define job responsibilities.

Since some job functions will change and become more detailed after your company launches, remember to update your plan to reflect actual practice.

Use hard data to back up assertions you make in your business plan. Consider putting your data in easily readable form by using charts, graphs, and other visual formats to make your business plan more readable and easier to understand.

A line chart, for example, is an excellent way to demonstrate your company's projected growth.

Use software that imports data from QuickBooks directly into tables and charts so investors can see how actual sales, profits, and expenses compare to your projections.

For some business owners, having two business plans may be even more helpful, especially if this is the person's first business.

A public business plan is for lenders or investors. A private business plan document is closer to a personal road map on what should be done week by week and month to month. This is a good way to ensure you do not overlook important details.

When you are writing your private business plan, it is important to make your goals actionable.

It is fine to have a goal of achieving a 5% conversion rate after six months in business, for example, but you also need actionable steps to help you get there.

Using this example, make a list of actions you will take to achieve your goals, which in this case is to increase your conversions.

• Do A/B testing – A/B or split testing is comparing two versions of a website to see which performs better.
• Set up a sales funnel – A sales funnel refers to the buying process that companies lead customers through when buying products. In this example, a sales funnel could be as simple as awareness/interest/sale, or it could be more complex and include things like offering free trials. Make sure you include a date for when this item should be done.
• Collect testimonials – Once you have satisfied customers, you could collect testimonials. These are useful as references for other customers, as calls to action on social media, and as examples for your website. Once again, establish deadlines for completing this action.

Writing a business plan can be a daunting task. Seeking out examples from other businesses or using a business plan template removes the guesswork and saves you time.

Speak to people you admire and seek out people in your network who have successful businesses. They are usually willing to offer you advice.

Ask them what part of the business plan was most helpful to their business, and what parts of the business plan they wished they had approached differently.

Business plan templates give your plan structure, but there is no generally accepted length for business plans.

Impose a page limit on your business plan documents, such as 20 pages, and stick to it. This will force you to use clear and concise language.

Include only the details that are most essential, which means you will avoid turning your plan into an endless to-do list.

There are other productivity apps you can use to manage your day-to-day tasks, so leave the minutia out of your finished plan.

To help you stick to your page limit, come up with creative ways to present information. As explained in tips 9 and 10, graphs and charts are an excellent way to convey data. The mark of a true professional is making the proposal easy for other busy professionals to digest.

A business plan is not a school test where you must do your own work and then turn it in to your teacher. Friends, family, employees, other business owners—all of them can provide important feedback about what you've written.

Your social network is the best test of your document's readability, clarity, and ability to generate interest. Take the opportunity to see what others think after they read your plan.

You also want to ensure that there are no errors in your document. A single spelling, numerical, or grammatical error can be devastating in a professional environment. Trust others to proofread your work.

If lenders and investors are an important audience for your business plan, then you need to explain how they will make money by investing with you .

Don't forget to investigate the people you are pitching to: What kinds of businesses have they funded? What things do they avoid? Why are they a good fit for your company?

The following is a non-exhaustive list of what investors want to see when they are reviewing a proposal.

• State how much money you will need and how that money will be spent
• Identify when the business will start making a profit
• State when investors can expect to make a return on their investment
• Explain the projected growth of the company over time
• State how much control of the company you are willing to give up
• Identify the risks that investors will face in this particular market
• Explain whether you will run your business full-time and whether you will take a salary

After you've addressed these questions, then go back and write your executive summary.

It's important to have goals and dreams, but be wary of including your fantasies of world domination in your business plan.

For instance, assume you have started a company that is creating eco-friendly baby bottles and cups. Some first-time entrepreneurs will define their target market as all parents who have children under four years old.

Since there were about 22 million children under the age of two in the United States in 2014, a hopeful business owner may say that the market encompasses all 22 million kids and their parents.

If you have included calculations that look like this, then go back and re-do your market analysis because you have totally overestimated the market.

Determining the real available market is a necessity.

This process starts by creating a profile of your ideal customer. Figure out who is most likely to have the problem that your company wants to solve. Determine where this customer lives and works and where they are likely to buy products or services. Consider your ideal customer's purchasing strategies.

• Do they use coupons?
• Are they on a tight budget?
• How much money do they allocate to your kind of product or service?

Once you have narrowed down the ideal customer, include a brief profile of this person in your business plan documents.

Take a look at the number of people that fit your demographic who live in a geographic area that is reachable by your company.

For example, do you have the capacity to create and ship products from New York to California? Does it make financial sense for you to focus on customers on the other side of the country?

Don't act on a hunch; always get numbers to back up your claims. Decide whether you can meet the needs of people in the area you are targeting.

Your business structure may be sound and your numbers all add up, but at the center of every business is a human story.

Lenders and investors are constantly receiving strong pitches. Your personal history can make you stand out. The same is true of your customers—telling your story and explaining why it enables you to solve their problems is the essence of sales.

Passion and excitement are infectious. A compelling story will explain why you are the one who deserves their attention and purchasing power.

Use the process of writing a business plan as an exercise to immerse yourself in what will make your company successful.

Begin with business plan templates that will give your report structure and then start your research.

Knowing your numbers, analyzing the market, and presenting your information in a compelling way will help create a business plan that makes sure your business is a hit with investors, employees and customers.

Ready to get started? Create a business plan right now.

• Sources of Business Finance
• Small Business Loans
• Small Business Grants
• Crowdfunding Sites
• How to Get a Business Loan
• Small Business Insurance Providers
• Best Factoring Companies
• Types of Bank Accounts
• Best Banks for Small Business
• Best Business Bank Accounts
• Open a Business Bank Account
• Bank Accounts for Small Businesses
• Free Business Checking Accounts
• Best Business Credit Cards
• Get a Business Credit Card
• Business Credit Cards for Bad Credit
• Build Business Credit Fast
• Business Loan Eligibility Criteria
• Small-Business Bookkeeping Basics
• How to Set Financial Goals
• Business Loan Calculators
• How to Calculate ROI
• Calculate Net Income
• Calculate Working Capital
• Calculate Operating Income
• Calculate Net Present Value (NPV)
• Calculate Payroll Tax

12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

• The name and location of your company
• Products and services offered by your company
• Mission and vision statements
• Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

• Business location
• The legal structure of your business
• Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

• The geographical location of your target market
• Needs of your target market and how your products and services can meet those needs
• Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

• Industry description and statistics
• Demographics and profile of target customers
• Marketing data for your products and services
• Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

• Your competitors' identified advantages in the market
• How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
• The standout qualities that distinguish you from other companies
• Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

• Information about how your company plans to carry out its operations.
• The base location from which your company intends to operate.
• The number of employees to be utilized and other information about your company's operations.
• Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

• Projected income statements
• Cash flow statements
• Balance sheets
• Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

• Legal documents
• Licenses and permits
• Credit histories
• Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

• The management team and other stakeholders resume
• Marketing research
• Permits and relevant legal documents
• Financial documents

Was This Article Helpful?

Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

• Search Search Please fill out this field.
• Building Your Business
• Becoming an Owner
• Business Plans

Why You Should Write a Business Plan

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

To Test the Feasibility of Your Business Idea

To give your new business the best chance of success, to secure funding, to make business planning manageable and effective, to attract investors, frequently asked questions (faqs).

The Balance / Getty Images

A business plan  is the blueprint for your business. Starting a business without a business plan is like building a house without a blueprint. Yet, unlike a house, a business isn't static. We often make the mistake of thinking of a business plan as a single document that you put together once when you're starting out and never touch again. But as the business develops, so should its business plan. In fact, any particular business may have multiple business plans as its objectives change.

Writing a business plan is time-consuming, but it's essential if you want to have a successful business that's going to survive the startup phase.

Key Takeaways

• Writing a business plan reveals how tenable your idea is.
• Updating and amending a business plan as the business develops and its goals change is vital to your success.
• A good business plan helps you define your target market, competitive advantage, optimum pricing strategies, and better prepares the business for upcoming challenges.
• A business plan helps you secure funding and attract new investors.

Writing a business plan is the best way—other than going out and doing it—to test whether an idea for starting a business is feasible. In this sense, the business plan is your safety net. If working through a business plan reveals that your business idea is untenable, it will save you a great deal of time and money.

Often, an idea for starting a business is discarded at the marketing analysis or competitive analysis stage , freeing you to move on to a new (and better) idea.

Unfortunately, many prospective business owners are so convinced that their idea for a product or service is a can't-miss proposition, that they don't take the time to do the necessary research and work through a proper business plan. The more you know about your industry, your prospective customers, and the competition, the greater the likelihood that your business will succeed.

Writing a business plan will ensure that you pay attention to the broad operational and financial objectives of your new business and the small details, such as budgeting and market planning. The process will ultimately make for a smoother startup period and fewer unforeseen problems as your business gets up and running.

The exercise of budgeting and market planning will help you define your  target market , your unique selling proposition, optimum pricing strategies, and outline how you intend to sell and deliver your products to customers. In addition, developing a budget for implementation will assist with determining your startup and operating capital requirements.

According to the Small Business Administration, one of the most-cited reasons why businesses fail is inadequate planning. By starting too soon and without a sufficient plan, your business is setting itself up for failure.

Most new businesses need startup and operating capital to get off the ground. Without a well-developed business plan, there is no chance of getting  debt financing from established financial institutions such as banks or  equity financing  from angel investors.

Established businesses often need money, too, to buy new equipment or property, or because of market downturns. Having an up-to-date business plan gives you a much better chance of getting the money you need to keep operating or expand.

Even an angel investor will want to ensure their money is going to a business that knows what it's doing. The easiest way to prove this is via a well-developed business plan.

Investors and financiers are always looking at the risk of default, and word of mouth is no substitute for written facts and figures in a properly prepared business plan.

A business plan is essential if you're thinking of starting a business, but it's also an important tool for established businesses. Viable businesses are dynamic; they change and grow. Your company's original business plan needs to be revised as you set new goals .

Reviewing the business plan can also help you see what goals have been accomplished, what changes need to be made, or what new directions your company's growth should take.

Whether you want to shop your business to venture capitalists or attract angel investors , you need to have a solid business plan. A presentation may pique their interest, but they'll need a well-written document they can study before they'll be prepared to make any investment commitment.​​​

Be prepared to have your business plan scrutinized. Both venture capitalists and angel investors will want to conduct extensive background checks and competitive analyses to be certain that what's written in your business plan is indeed the case.

What are the sections of a business plan?

A comprehensive business plan should include the following sections:

• Executive summary
• Company description
• Competitor analysis
• Industry analysis
• Product and services description
• Financial data

What is the purpose of a business plan?

A business plan has four main purposes:

• Tests the feasibility and model of your business idea
• Attracts investors
• Sets a plan for growth
• Identifies capital needs

Small Business Administration. " Selecting a Business That Fits ."

How to write a business plan

Guide published: 6 may 2020  minute read.

The resource provides information, support and templates to help you produce a Business plan for your charity or community group.

A business plan is important to help manage your organisation by stating your objectives and how and when you aim to achieve them. Your business plan be useful as a point of reference for staff, trustees, potential investors and other stakeholders in your organisation.

This resource covers all of the main areas your need to consider when producing a business plan. These range from writing your mission statement to defining and describing your services, making financial projections to carrying out risk analyses.

This guide is for all community groups but has a focus on cooperatives.

What will I learn?

• What a business plan is and why you need one
• Writing a mission statement
• Describing your products and services
• Explaining your social impact
• Knowing your market
• Writing a marketing plan
• Identifying the key people involved in your organisation
• Your organisational structure
• Making financial projections
• Carrying out a risk analysis

Create a free account

Create a My Community account today and get our latest resources and tools delivered straight to your inbox.

Support my community to keep running

Please consider making a small donation of the price of a cup of coffee to keep my community running. We receive minimal funding which doesn't cover our running costs and your donation means we can keep running and provide free resources for those who need them.