A good business plan guides you through each stage of starting and managing your business. You’ll use your business plan as a roadmap for how to structure, run, and grow your new business. It’s a way to think through the key elements of your business.

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

• Business Plan Definition
• What is a Business Plan?
• How Many Pages Should my Business Plan be?
• Who Needs a Business Plan?
• What is The Best Business Plan Template?
• Should I Hire Someone to Write my Business Plan For me?
• Should I Use Business Planning Software?
• Free Business Plan Template Word
• Startup Business Plan Template
• Best Business Plan Template
• What Are The 7 Elements of a Business Plan
• How do I Write a Small Business Plan Template?
• What Are The 10 Steps to Writing a Business Plan?
• What Are The 10 Major Parts of a Business Plan?
• What Are The 4 Types of Business Plans?
• What Makes a Good Business Plan?

Business Plan Definition

A Business Plan is a written document that describes your core business objectives and how you plan to achieve them over a set period of time. It is designed to help you, and others, understand how you plan to generate money and make your business sustainable. A Business Plan often includes information about your goals, strategies, marketing and sales plans and financial forecasts.

What is a Business Plan?

A business plan is a written document that describes in detail how a business—usually a startup—defines its objectives and how it is to go about achieving its goals. A business plan lays out a written roadmap for the firm from marketing, financial, and operational standpoints.

Read Also: How to create a Business Plan

Business plans are important documents used to attract investment before a company has established a proven track record. They are also a good way for companies to keep themselves on target going forward.

Although they’re especially useful for new businesses, every company should have a business plan. Ideally, the plan is reviewed and updated periodically to see if goals have been met or have changed and evolved. Sometimes, a new business plan is created for an established business that has decided to move in a new direction.

How Many Pages Should my Business Plan be?

This is one of the most common questions asked by new entrepreneurs. The answer is: “It depends.”

Most business experts and counselors say it should be 30 to 50 pages, as a minimum, while others may say even less or more than this depending on their own personal perspective.

Generally, the shorter your business plan can be, the better. Most business plans are much too long and no investor is going to read a business plan cover to cover.

First and foremost, you want to aim for clear and concise executive summary. The executive summary should include a clear and simple explanation of the problem your company is addressing and how your product solves your customers’ needs. You should also include a summary of the total addressable market, the management team, and an overview of your financial projections.

The rest of the business plan is essentially just more detail on the above topics. But, while you are offering more detail in the body of the plan, it’s critical to keep the plan as easy to read as possible. Use short paragraphs, bullet points, illustrations, and charts and graphs to make consuming the information in your plan as easy as possible.

Typically, your business plan will be the starting point for discussions, so you don’t need to cover every last granular detail in the plan. But, remember, the planning process should have forced you to think about a lot of the details, so be prepared to answer detailed questions in your meetings with investors.

Who Needs a Business Plan?

You need a business plan if you’re running a business.
A business plan is like a map and a compass for a business. Without it, you’re traveling blind. With a plan, you set objectives, establish priorities, and provide for cash flow.

You need a business plan if you’re applying for a business loan.
Most banks require it, and even those that don’t strictly require it expect it. They expect it to be a summary of the business, with some predictable key points.

You need a business plan if you’re looking for business investment.
The plan won’t get you the investment, but not having a plan will mean you won’t get investment. Investors require a business plan. They invest in the people, the idea, the track records, the market, the technology, and other factors; but they look to the business plan to define and explain the business.

You need a business plan if you’re working with partners.
The business plan defines agreements between partners about what’s going to happen.

You need a business plan to communicate with a management team.
The day-to-day business routine is distracting, problems come up, opportunities appear, and commitments should be followed and tracked. How do you know where you are in business without establishing where you started and where you intended to go? How can people commit to a plan they can’t see?

You need a business plan to sell a business, or to set a value on a business for tax or other purposes such as estate planning, or divorce.

Sadly, many of the people who need a plan don’t know they need it. They get trapped by the myths of business planning. They don’t realize that plans are not just for start-ups, loans, or investments. They don’t realize that business plans are easier to develop than most people think.

To succeed in business you simply must plan the steps, set priorities, allocate resources, and manage the cash. Sure, some people say they don’t plan, but if they’re successful then they’re actually always planning in their heads.

And you can keep that plan in your head if your business is very simple, cash flow is always adequate, you don’t work with other people, and you don’t need to communicate your business plan with other people either.

What is The Best Business Plan Template?

Writing a good business plan takes some thought and time. Working off of a template can make the process easier and ensure you don’t leave out anything important. Luckily, there are some top-notch business plan templates available for free to help you get started.

1. Oprah.com’s One-Page Templates

Sometimes, a simple one-page business plan template is the best. Oprah.com offers three sample templates already filled in for different businesses. You can get ideas from these completed models and easily adapt them to suit your business.

Oprah’s site doesn’t offer quite enough variety of business types or templates here for my taste. But, with all your plan’s details on one page, these provide a more manageable way to get started outlining your small business. That’s especially true if longer, multi-page business plans look a little too overwhelming right now.

2. My Own Business Institute’s Comprehensive Plan Template

My Own Business Institute offers a comprehensive template broken down into 15 different sections. This template covers everything from your vision for your new business to acquisitions, cash flow, and more.

The formatting is basic and easy to edit, refine, and make your own. The sections and prompts do get you actively thinking about business components you may not have planned out yet. This particular template may be a bit too detailed for some startup founders, but that could make it a better candidate for taking portions and combining them with other templates.

3. BizGym Funding Plan Templates

If you already know you’ll be reaching out to potential investors, the BizGym free business plan template may be an ideal choice. This template is designed specifically to help you pitch your startup business. You can access one-page plans, executive summary versions, and full business plans.

You can even invite teammates to work on and edit the plan online, allowing for a collaborative effort. One of the cons with this template is that you have to sign up for a free BizGym membership to gain access.

4. The Balance’s Business Plan Template

If you’re new to writing a business plan, The Balance’s template is one of the most user-friendly options you’ll find. This template is the most helpful one on the list in my opinion because it’s such a comprehensive and well-written guide and helps you through every section.

One of the cons here is that there’s a lot to sift through that many entrepreneurs may not need. However, the template has an advantage in that you can copy and paste it into a Word document, giving you flexibility for editing.

5. BPlans’ Modern, Professional Template

The BPlans template incorporates everything you’ll want if you plan to approach investors or secure a loan for your business. Students at universities like Princeton and Babson have used this one as they learn how to start a business.

This template digs into the details that matter to investors and banks, which may not be a fit for new founders who just want to get the basics of their business on paper. It will get more advanced founders to think like an investor though. If you’re not sure how to get started, BPlans’ library offers more than 500 sample business plans for inspiration.

Should I Hire Someone to Write my Business Plan For me?

Write your own business plan. The fundamental issue about a business plan is to go through the exercise in properly understanding the strategic, operational and financial aspects of your business. Simply subjecting your business to an “acid test” that shows that it makes sense is important. Many start businesses and spend money, without having a single clue what they are doing.

Later on, you can show your plan to lots of other people and ask them if it makes sense, continuously tweaking it.

Much later, if you still are not satisfied with some things and maybe want to show your plan to financiers, VC people and Angels you can then hire somebody to tweak the plan to perfection so it for example will stand a due diligence process from VC or similar. Spending money on somebody only makes sense for QA purposes. Somebody who can advise you so you will be sure to get financing for your project.

Should I Use Business Planning Software?

There’s no doubt that properly crafting your business plan is important for the future growth and success of your small business. Luckily, the right business plan software should make the process much simpler. Here are some of them.

1. LivePlan

If you want template-rich, modern-feeling business plan software, then LivePlan may be the right pick for you. LivePlan excels with their user interface, which feels updated and slick, and also offers intuitive, easy-to-use features and options.

Their step-by-step instruction will help you kick things off from the beginning, and you can take advantage of their online learning center to continue to gain business skills.

Pricing

• Annual plan: $15 per month, billed every 12 months
• Six-month plan: $18 per month, billed every six months
• Pay-as-you-go plan: $20 per month, billed once every month

2. GoSmallBiz

Next on our list of the best business plan software options is GoSmallBiz, which is much more than just a business plan software. With GoSmallBiz, you have access to business continuity planning software with features that cover creating a roadmap, working through business and legal forms, building a website, and more.

In this way, GoSmallBiz is great for startups or newer businesses looking to access multiple business management tools through one platform.

Pricing

• $39 per month, no contracts, free cancellation

3. Enloop

If you’re looking for free business plan software, Enloop will be one of your closest options—they offer an all-inclusive seven-day free trial, no credit card required. Additionally, unlike some of the other options on our list, Enloop is strictly dedicated to business plan creation, including automated text writing, financial forecast comparisons, and a real-time performance score that tracks your progress.

This being said, if you’d prefer the most straightforward, fast, and simple way to write your business plan, Enloop will be a platform worth considering.

Pricing

• Free plan: Seven-day free trial with no credit card required
• Detailed plan: $19.95 per month or $11 per month, paid annually
• Performance plan: $39.95 per month, or $24 per month, paid annually

4. Bizplan

Best for startups looking to acquire funding or find investors.

Part of the Startups.com suite, Bizplan gets top marks for their user interface—it’s intuitive, easy to use, and modern. You’ll work with a step-by-step business plan builder to get exactly what you’d like from your business plan. It may remind you of a modern website builder, since it has drag-and-drop tools to build templates.

Moreover, for one subscription fee, you have access to all of the tools in the Startups.com network, including self-guided courses, how-to guides, masterclass videos, and more. All in all, with a direct connection to Fundable, Bizplan is a top business plan software option for startups looking to acquire funding and find investors.

Pricing

• Monthly plan: $29 per month
• Annual plan: $20.75 per month, billed at $249 per year
• Lifetime access: $349 one-time fee

5. PlanGuru

Finally, for some of the strongest financial features among business plan software options, including budgeting and forecasting, you might check out PlanGuru. Whereas the other solutions we’ve reviewed were first and foremost focused on writing a business plan, PlanGuru is dedicated to business financial planning—providing the tools you need to create budgets, financial forecasts, reports, and more.

Therefore, if you need a software solution that can streamline the financial piece of your business planning processes, PlanGuru will certainly have the most to offer.

Pricing

• 14-day free trial
• $99 per month (additional users $29 per month)
• $899 per year (additional users $299 per year)

Free Business Plan Template Word

If you’re starting a new business, or changing or expanding an existing one, it’s critical to have a solid plan to guide your decisions.

A Microsoft business plan template can help get you started. Business plan templates offer step-by-step instructions and prefabricated slides for your executive summary, company overview, financial plan, and more. You’ll even find a business plan template for specific industries including business plan templates in Word for healthcare providers, professional services, and retail.

Enlist your management team, or for a sole proprietor, trusted family and friends, to contribute to your plan using a checklist business plan template in Excel. Assign tasks and deadlines to keep everyone accountable and on track. There are also free business plan templates to help you determine your business’ legal structure, define your target audience, and map out your marketing plan.

Explore all the business plan template options to find what suits your needs.

Startup Business Plan Template

Writing a business plan for a startup can sometimes seem overwhelming. To make the process easier and more manageable, this template will guide you step-by-step through writing it.

The template includes easy-to-follow instructions for completing each section of the business plan, questions to help you think through each aspect, and corresponding fillable worksheet/s for key sections.

The business plan sections include:

• Executive Summary
• Company Description
• Products and Services
• Marketing Plan
• Operational Plan
• Management and Organization
• Startup Expenses and Capitalization
• Financial Plan
• Appendices

One-Page Startup Business Plan Template

This one-page business plan is ideal for startup companies that want to document and organize key business concepts. The template offers an easy-to-scan layout that’s ideal for investors and stakeholders. Use this plan to create a high-level view of your business idea and as a reference as you flesh out a more detailed roadmap for your business.

Best Business Plan Template

There are many variations of business plans today. Especially, with the rapid growth of lean startups. A few minutes on Google will provide plenty of free business plan template options. The following is adapted from the SCORE Association’s recommended outline of categories, which covers most of the bases for exactly what to include in your business plan.

Executive Summary

This is the most critical part of your business planning. If you never flesh out a full business plan, make sure you create a fantastic executive summary. This brings together all of the key elements of your plan and will often be the make or break document which decides whether commercial lenders or investors will have any interest in seeing the rest of your documentation or pursuing a relationship with you.

Company Description

This section provides a further overview of your company now.

Include:

• The company purpose, mission and vision
• Company formation information
• Who the founders are
• Location and geographical markets served or where you have a presence
• Current status and stage of business
• Any notable achievements so far

Products & Services

List what products and services your company has been formed to create. How are you solving the main problem and are serving the community with your business?

Include:

• Definition of the core product or service
• Development stage
• Screenshots or diagrams
• Current pricing
• Past test results
• Anticipated future products and services you hope to develop and roll out

Marketing Plan

This is another section which is an absolute must-have, even if you never develop a fully fledged business plan in its entirety. This holds key information that all financiers and potential investors are going to want to know. Even if you hope to just get away with using a pitch deck to raise the capital you need.

This is also a vital guide for yourself as a founder, and for your growing team as to what needs to be done and how.

Every minute invested in this section can pay great dividends over the longer term.

Include:

• Competition and market research
• SWOT analysis (Strengths, Weaknesses, Opportunities & Threats)
• Target market research (total market size and total addressable market (TAM))
• Brand and product positioning
• Elevator pitches and tag-lines
• Target customer personas and profiles
• Results of any testing conducted so far
• Marketing channels to be used
• Marketing budget
• Estimates of cost per action (CPAs)

Operational Plan

This is your opportunity to organize and demonstrate your understanding of this industry and business.

Include:

• Facilities and space needed
• Technology needs
• Equipment needs
• Supply chain management
• Logistics and distribution plans
• Order and fulfillment processes
• Quality control checks
• Legal and accounting needs

Management & Organization

This section of your business plan will help you to identify your own needs, and demonstrate to investors and other licensing bodies and agencies that you are the team to get this job done.

It basically shows your management and industry experience and who will do what.

Include:

• Founders and executive team
• Any owners and shareholders
• Board of directors
• Consultants and special advisors
• Key team members and department heads

Financial Plan

Provide an honest snapshot of where you are and where you reasonably hope to go, providing you secure the funding you need.

Include:

• Current balance sheet
• Past 2 years’ financials if applicable
• Financial projections for 12 months, and annually through year 5
• Break even analysis
• Cash flow projections
• Income and expenses

In this section you may also be including startup cost and capitalization requirements, or funding and loan requests.

Startup costs should be thorough, have some additional cushion built in, and focus on development of physical product or intellectual property and growth. Not what you want to pay yourself as a salary.

If fundraising, be sure to include a repayment schedule for any loans, use of funds, runway to follow up fundraising rounds, and the milestones you expect to achieve by then.

Appendices

Include all other information, references and required documentation here.

This will typically include:

• Articles of incorporation and status
• Resumes of founders and key team members
• Copies of insurances
• Licenses
• Trademarks and patent registrations
• Contracts
• Appraisals
• Deeper research data or links to references

Stay Flexible

Just like your first attempt at coding a website, practicing your pitch, or riding a bike, it’s not going to be perfect. Do your best. Get outside input from an expert. Just don’t wait until you think your business plan is perfectly polished and cannot possible go any further in depth. Otherwise, chances are you will have missed your window of opportunity by a long way.

It is also crucial to understand that nothing in this document is set in stone. Pretty much everything will absolutely change over time. Roles will change, marketing will change, financial projections will change, and your product and service menu can change.

What Are The 7 Elements of a Business Plan

While you can include more elements to make your case, as long as your plan covers these seven topics, you’re in good shape.

1. Executive Summary

The point of the executive summary is to give context to the rest of your business plan with a high-level overview — essentially an elevator pitch. Entrepreneurs frequently complete the executive summary last, because it sums up what’s in the rest of the business plan.

Business owners often talk about the mission of their business idea, as well as the history of the business founders. A value proposition is usually found in the executive summary as well, which explains how the new business idea differs from other companies on the market, which could be competing for the same audience.

For instance, someone who wants to open a coffee shop might talk about their experience as a barista, their connections with coffee farmers in a given region, and what sets their coffee shop apart from others, such as a line of vegan breakfast pastries or a planned coffee educational component for customers.

2. Business Description

While you want to tease out your business in the Executive Summary, the Business Description section lets you go into full detail on your food business concept.

No two business descriptions are exactly alike, since no businesses are quite the same. Questions to guide your thinking in writing this section include:

• Where are you located?
• What products will you sell?
• Who are your target customers?
• What is your projected growth?
• What opportunities does your business have?
• Who are the principal partners in your business?
• What factors give you a competitive advantage vis-a-vis your concept?

The Business Description can be a powerful motivator for you as you hustle to open your business. Read it over anytime you need to remember the end goal of all your hard work!

3. Market Analysis

To succeed in business, you need to know who your competitors are and where you fit in the market. In a Market Analysis, you’ll need to outline where your business fits in the market, for instance whether your coffee shop targets college students who need a late-night study hangout or the morning commuter crowd, who want healthy breakfast items and strong coffee.

As you describe your target market, you might include profiles or personas of your ideal customers.

• Who are they?
• what else do they like to do?
• why would they choose your new coffee shop over others in the same neighborhood?

You might also include a SWOT analysis, in which you discuss the strengths, weaknesses, opportunities, and threats affecting your business. An opportunity might be a trending neighborhood location where there are no other coffee shops, where a threat might be a neighborhood saturated with cafes. A strength could be your coffee education; a weakness might be the lack of a coffee education, to be overcome with smart hiring.

Going into depth this way will show investors that you understand your customer and have anticipated their needs within your business model. If you have customer testimonials — for instance, if you tested out your concept with a coffee cart and gained a following — you can include this information here.

The last section of the market analysis includes research, which looks at the chief trends within the industry and geographic area. For instance, third wave coffee is a major trend, thus a new coffee shop would want to offer high-quality beans sourced directly from coffee farmers. Wellness foods are another major trend, thus vegan pastries with superfoods could be a hit.

4. Organization and Management Structure

You’re not starting your business alone. This section of the business plan lets you show off the superstar talent who are going to help you launch your new cafe.

Well, that holds true in many pitch rooms, because funders value your management and leadership connections more than, say, your connections to the best Nicaraguan coffee farmers (although they’ll want to hear about that, too).

Funders place such a high value on management, because they know that an effective management team has the experience to weather tough storms. A good manager can help you pivot your concept if there’s something that’s not working — say, your vegan pastries aren’t a hit.

Spend time talking about the different players on your team, highlighting the qualifications, experience, and education of everyone who plays a role in your venture.

5. Sales Strategies

Your idea won’t be a hit unless you hit your sales goals. That means funders won’t bite unless you show them how you’ve got creative ideas to push your product.

Start by discussing your price point.

• How much will your beverages and food cost?
• How does the price point relate to everything else you’re doing?
• How does it relate to the competition?

If your coffee drinks cost more than others in the neighborhood, be prepared to explain why you’re charging more money.

After you situate your products on the market, you should talk about the promotional strategies you’re using while launching the business and any great ideas you want to try later. While you’re not open yet, perhaps you’re teasing your coffee company on social media or writing a press release to announce that you’ve secured a location. Detail these strategies along with anything you’re planning for your grand opening and beyond.

Don’t forget to talk about your business website, including your SEO (search engine optimization) strategy, or any customer loyalty strategies, like a student discount.

6. Funding

Finally, the money you need to open your business comes into play. In this section, you talk about how much money you need to open your business.

This section can be stressful for business owners, but as long as you are being realistic and backing up your ask with data, you will be in good shape. Look for funding data on the type of business you want to open to guide your thinking. Coffee shops cost anywhere from $200,000 to $500,000 to open and can enjoy a profit margin as high as 25 percent. After three years in operation, a successful coffee shop can earn annual revenues of $1 million.

If you’re not 100 percent sure how much money you need, a range is acceptable. If you are giving a range rather than a precise figure, make sure to include best-case and worst-case scenarios that explain why your maximum and minimum are set where they are.

Along with financials, you’ll want to include a timeline, so anyone who invests understands when you plan to open and what needs to happen between now and then. In the timeline, you can talk about your location, build-out, licenses and permits, business insurance, inventory sourcing, hiring, employee training, and more.

The more detail you include in this section, the more impressed funders will be. When they see that you know your stuff and have thought through everything that needs to happen, they’ll be more likely to sign on.

7. Financial Projections

You may have thought the last section covered all your financials, but there’s one more thing you need to cover: projections for the future.

Draw on market trends and projected revenue growth to talk about how profitable your business will be. Point out when investors would be repaid. Talk about the cash flow you will develop, then paint a picture of how your cash flow will help you grow.

To ace this section, you’ll need to connect the dots between all the other information in your business plan, from your sales strategies to trends in the market to revenue growth. If you’ve had any earlier successes, such as a well-received trial run with a coffee cart, describe these here.

If you have a small food business and are seeking expansion funds, you’ll also want to dwell on your successful track record, pointing out things like profitability, repeat customers, media attention, and more.

How do I Write a Small Business Plan Template?

There are two main types of business plans: simple and traditional. Traditional business plans are long, detailed plans that expound on both short-term and long-term objectives. In comparison, a simple business plan focuses on a few key metrics in concise detail so as to quickly share data with investors.

Simple business plan

Business model expert Ash Maurya has developed a simple type of business plan called a lean canvas. The model, which was developed in 2010, is still one of the most popular types of business plans emulated today.

A lean canvas comprises nine sections, with each part of the plan containing high-value information and metrics to attract investors. This lean business plan often consists of a single page of information with the following listed:

• Problem
• Solution
• Key metrics
• Unique proposition
• Unfair advantage
• Channels
• Customer targets
• Cost structures
• Revenue streams

Traditional business plan 

Traditional plans are lengthy documents, sometimes as long as 30 or 40 pages. A traditional business plan acts as a blueprint of a new business, detailing its progress from launch to several years in the future when the startup is an established business. The following is covered in a traditional business plan:

• Executive summary
• Company description
• Products and services
• Market analysis
• Management team
• Financial plan
• Operational plan
• Appendices

1. Executive summary 

The executive summary is the most important section of your business plan, because it needs to draw your readers into your plan and entice them to continue reading. If your executive summary doesn’t capture the reader’s attention, they won’t read further, and their interest in your business won’t be piqued.

Even though the executive summary is the first section in your business plan, you should write it last. When you are ready to write this section, we recommend that you summarize the problem (or market need) you aim to solve, your solution for consumers, an overview of the founders and/or owners, and key financial details. The key with this section is to be brief yet engaging.

2. Company description 

This section is an overview of your entire business. Make sure you include basic information, such as when your company was founded, the type of business entity it is (a limited liability company, an S corporation, etc.) what state it is registered in, etc. Provide a summary of your company’s history to give the readers a solid understanding of who you are and what your business is.

3. Products and services 

Next, describe the products and/or services your business provides. Focus on your customers’ perspective (and needs) by demonstrating the problem you are trying to solve. The goal with this section is to prove that your business fills a bona fide market need and will remain viable for the foreseeable future.

4. Market analysis 

In this section, clearly define who your target audience is, where you will find customers, how you will reach them and, most importantly, how you will deliver your product or service to them. Provide a deep analysis of your ideal customer and how your business provides a solution for them. 

You should also include your competitors in this section and illustrate how your business is uniquely different from the established companies in the industry or market. What are their strengths and weaknesses, and how will you differentiate yourself from the pack?

You will also need to write a marketing plan based on the context of your business. For example, if you’re a small local business, you want to analyze your competitors who are located nearby. Franchises need to conduct larger-scale analysis, potentially on a national level.

Competitor data helps you know the current trends in your target industry and the growth potential. These details also prove to investors that you’re very familiar with the industry.

For this section, the listed target market paints a picture of what your ideal customer looks like. Data to include may be the age range, gender, income levels, location, marital status, and geographical regions of target consumers.

A SWOT analysis is a common tool entrepreneurs use to bring all collected data together in a market analysis. SWOT stands for strengths, weaknesses, opportunities and threats. Strengths and weaknesses analyze the advantages and disadvantages unique to your company, while opportunities and threats analyze the current market risks and rewards.

5. Management team 

Before anyone invests in your business, they want a complete understanding of what they are investing in and who the company principals are. This section should illustrate how your business is organized. It should list key members of the management team, the founders/owners, board members, advisors, etc. 

As you list each individual, provide a summary of their experience and their role within your company. Treat this section as a series of mini resumes and consider appending full-length resumes to your business plan.

6. Financial plan 

Last, the financial plan should include a detailed overview of your finances. At the very least, you should include cash flow statements, as well as your profit and loss projections, over the next three to five years. You can also include historical financial data from the past few years, your sales forecast, balance sheet, etc. 

Make sure this section is precise and accurate. It’s often best practice to create this section with a professional accountant. Finally, if you’re seeking outside funding for your business, highlight why you’re seeking financing, how you will use that money and when investors can expect a return on their investment.

Investors want detailed information to confirm the viability of your business idea. Expect to provide an income statement for the business plan that includes a complete snapshot of your business. The income statement will list revenue, expenses and profits. Income statements are generated monthly for startups and quarterly for established businesses.

Another element of your financial plan is your projection for cash flow. In this section, you estimate the expected amount of money coming in and going out of your business. There are two benefits to including a cash flow projection.

The first is that this forecast demonstrates whether your business is a high or low-risk venture. The second benefit of doing a cash flow projection is that it shows you whether you would benefit most from short-term or long-term financing.

Finally, a break-even analysis should be included in your financial plan. The break-even point is the point at which your company’s sales totals cover all of its expenses. Investors want to see your revenue requirements to assess whether your business is capable of reaching the financial milestones you’ve laid out in your business plan.

7. Operational plan

The operational plan section details the physical needs of your business. The section discusses the location of the business, as well as the required equipment or critical facilities needed to make your products. Some companies, depending on their business type, may also need to detail their inventory needs, including information about suppliers. For manufacturing companies, all processing details are spell out in the operational plan section.

For startups, you want to divide the operational plan into two distinct phases: the developmental plan and the production plan. The developmental plan explains each step in the process of bringing your product or service to market. You want to outline the risks and the protocols you’re taking to demonstrate to investors that you’ve examined all potential liabilities and that your business is well positioned for success.

For instance, if workers (or your products) are exposed to toxic materials during the production process, in your developmental plan, you want to list the safety measures you will follow to minimize the risk of illness and injury to workers and consumers and how you plan to minimize any potential culpability to your business.

Production plans have the day-to-day operation information, such as your business hours, the work site(s), company assets, equipment pieces, raw materials and any special requirements.

What Are The 10 Steps to Writing a Business Plan?

If you’ve never written a business plan before, it can be a daunting prospect. But these 10 steps will help you create the perfect business plan.

1. The executive summary

This is where you describe your company and the product or service that it will sell. This must be brief, to catch and hold people’s attention.

Try to describe the goal and mission of your business in just a couple of sentences. Work hard at this and try to make it memorable.

Treat this section as an ‘elevator pitch’ document – it should be succinct and easy to remember.

2. Who are your customers?

Do you have a clear idea of the type of people (or businesses) who will buy your product or service? If not, think carefully until you do.

This is one of the first questions any investor will ask you about your business plan. Have your answers ready:

• Know whether your customers will be consumers or businesses. If they are businesses, who will you target within those companies? Maybe it’s the salesperson, or perhaps it’s the CEO?
• Determine whether you’ll have regular clients or one-off buyers.
• Make sure you’ve actually spoken to some of your potential customers.

3. Evaluate the target audience

There’s no room for guessing here. You need to identify the people who will buy from you. Think about the following:

• Demographics – such as age, gender and social status.
• Firmographics – this applies when selling to businesses. Firmographics includes size of the company, revenue of the company and services or products of the company.
• Location – perhaps a specific area, town, or even country.
• Profession – maybe you’re targeting accountants, police or lawyers, for example.
• Groups – such as people with shared interests or habits.

The better you evaluate your target audience, the more comprehensive your business plan will be.

4. What are your opportunities?

Successful businesses think big. You might be starting small, but you don’t have to stay that way. So write down the possible opportunities for your business as it grows.

For example, perhaps you’re planning to start by selling over the internet. That’s great, but how will you get traffic to your site? How will people find you online? Will you need salespeople? If not, how will you convince people to buy from you?

As the business grows, is there scope for a bricks-and-mortar retail outlet? What other opportunities will you have if your business grows as planned?

5. Understand the competition

Every business has competition. If you don’t mention yours, investors will think you’re unprofessional – or just plain naive. Be thorough, and list all your existing and potential competitors:

• Who are your direct competitors – those selling the same products as you?
• Who are your indirect competitors – those whose market overlaps yours?
• What will prevent other companies competing with you – what are the barriers to entry?
• What is your USP (unique selling proposition)? In other words, what’s your point of difference that makes you different from your competitors?

That last point is important. You need to explain how your business will differentiate itself from all the others. That might be based on price, service, quality, range or value. Make sure you spell it out.

6. Build a simple financial plan

All business plans should contain some financial information. This should include the overall costs of setting up your business. For example:

• Cost to make or buy products.
• Costs for labor and manufacture, including raw materials.
• Staff costs, especially for service businesses.
• Distribution and marketing costs.
• Fixed and variable overheads.

Good accounting software will help you create a draft financial model.

7. Include an outline marketing plan

For this section of your business plan, you need to think about the five ‘Ps’:

• Pricing – how will you price the end product?
• Positioning – how does your product or service fit into the market?
• Promotion – what channels will you use to attract and communicate with customers?
• Profit – how much do you expect to make per item sold?
• Place – what are your sales outlets?

8. Plan your operations

Put your vision to one side for a moment. What are the daily tasks that need to be done when running the business? Include all business processes such as manufacture and packaging. Try to cover all departments too, including sales and customer service.

9. Get the right people

This is one of the most important factors. Think about who you want to hire. How will you find people whose skills complement yours? And how will you convince them to work for you?

Also think about who you want as your business advisors. You’ll need people you can trust, to guide and mentor you at times when you need it.

10. Simplicity is the key

Keep it simple. Complex and long documents won’t be read – either by you or by potential investors. A business plan should be brief, relevant and focused.

If you find yourself getting carried away while writing, stop and take a break. Then go back and edit what you’ve written. Shorter is better. The core of a good business plan should be just a few pages long.

What Are The 10 Major Parts of a Business Plan?

The 10 components or sections of a business plan that you must include are as follows:

1. Executive Summary

The executive summary provides a succinct synopsis of the business plan, and highlights the key points raised within. It often includes the company’s mission statement and description of the products and services. It’s recommended by me and many experts including the Small Business Administration to write the executive summary last.

The executive summary must communicate to the prospective investor the size and scope of the market opportunity, the venture’s business and profitability model, and how the resources/skills/strategic positioning of the company’s management team make it uniquely qualified to execute the business plan. The executive summary must be compelling, easy-to-read, and no longer than 2-4 pages.

2. Company Analysis

This business plan section provides a strategic overview of the business and describes how the company is organized, what products and services it offers/will offer, and goes into further detail on the business’ unique qualifications in serving its target markets.

As any good business plan template will point out, your company analysis should also give a snapshot of the company’s achievements to date, since the best indicator of future success are past accomplishments.

3. Industry or Market Analysis

This section evaluates the playing field in which the company will be competing, and includes well-structured answers to key market research questions such as the following:

• What are the sizes of the target market segments?
• What are the trends for the industry as a whole?
• With what other industries do your services compete?

To conduct this market research, do research online and leverage trade associations that often have the information you need.

4. Analysis of Customers

The customer analysis business plan section assesses the customer segment(s) that the company serves. In this section, the company must convey the needs of its target customers. It must then show how its products and services satisfy these needs to an extent that the customer will pay for them.

The following are examples of customer segments: moms, engaged couples, schools, online retailers, teens, baby boomers, business owners, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of business you operate as different segments often have different needs. Try to break out your target customers in terms of their demographic and psychographic profiles.

With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. With regards to psychographic variables, discuss whether your customers have any unique lifestyles, interests, opinions, attitudes and/or values that will help you market to them more effectively.

5. Analysis of Competition

All capable business plan writers discuss the competitive landscape of your business. This element of your plan must identify your direct and indirect competitors, assesses their strengths and weaknesses and delineate your company’s competitive advantages. It’s a crucial business plan section.

Direct competitors are those that provide the same product or service to the same customer. Indirect competitors are those who provide similar products or services. For example, the direct competitors to a pizza shop are other local pizza shops. Indirect competitors are other food options like supermarkets, delis, other restaurants, etc.

The first five components of your business plan provide an overview of the business opportunity and market research to support it. The remaining five business plan sections focus mainly on strategy, primarily the marketing, operational, financial and management strategies that your firm will employ.

6. Marketing, Sales & Product Plan

The marketing and sales plan component of your business plan details your strategy for penetrating the target markets. Key elements include the following:

• A description of the company’s desired strategic positioning
• Detailed descriptions of the company’s product and service offerings and potential product extensions
• Descriptions of the company’s desired image and branding strategy
• Descriptions of the company’s promotional strategies
• An overview of the company’s pricing strategies
• A description of current and potential strategic marketing partnerships/ alliances

7. Operations Strategy, Design and Development Plans

These sections detail the internal strategies for building the venture from concept to reality, and include answers to the following questions:

• What functions will be required to run the business?
• What milestones must be reached before the venture can be launched?
• How will quality be controlled?

8. Management Team

The management team section demonstrates that the company has the required human resources to be successful. The business plan must answer questions including:

• Who are the key management personnel and what are their backgrounds?
• What management additions will be required to make the business a success?
• Who are the other investors and/or shareholders, if any?
• Who comprises the Board of Directors and/or Board of Advisors?
• Who are the professional advisors (e.g., lawyer, accounting firm)?

9. Financial Plan

The financial plan involves the development of the company’s revenue and profitability model. These financial statements detail how you generate income and get paid from customers. The financial plan includes detailed explanations of the key assumptions used in building the business plan model, sensitivity analysis on key revenue and cost variables, and a description of comparable valuations for existing companies with similar business models.

One of the key purposes of your business plan is to determine the amount of capital the firm needs. The financial plan does this along with assessing the proposed use of these funds (e.g., equipment, working capital, labor expenses, insurance costs, etc.) and the expected future earnings.

It includes Projected Income Statements, Balance Sheets (showing assets, liabilities and equity) and Cash Flow Statements, broken out quarterly for the first two years, and annually for years 1-5.

Importantly, all of the assumptions and projections in the financial plan must flow from and be supported by the descriptions and explanations offered in the other sections of the plan. The financial plan is where the entrepreneur communicates how he/she plans to “monetize” the overall vision for the new venture.

Note that in addition to traditional debt and equity sources of startup and growth funding that require a business plan (bank loans, angel investors, venture capitalists, friends and family), you will probably also use other capital sources, such as credit cards and business credit, in growing your company.

10. Appendix

The appendix is used to support the rest of the business plan. Every business plan should have a full set of financial projections in the appendix, with the summary of these financials in the executive summary and the financial plan.

Other documentation that could appear in the appendix includes technical drawings, partnership and/or customer letters, expanded competitor reviews and/or customer lists.

What Are The 4 Types of Business Plans?

Business plans guide owners, management and investors as businesses start up and grow through stages of success.

A business owner or prospective business owner writes a business plan to clarify each aspect of his business, describing the objectives that will anticipate and prepare for growth. Savvy business owners write a business plan to guide management and to promote investment capital.

Start-Up Business Plans

New businesses should detail the steps to start the new enterprise with a start-up business plan. This document typically includes sections describing the company, the product or service your business will supply, market evaluations and your projected management team.

Potential investors will also require a financial analysis with spreadsheets describing financial areas including, but not limited to, income, profit and cash flow projections.

Internal Business Plans

Internal business plans target a specific audience within the business, for example, the marketing team who need to evaluate a proposed project. This document will describe the company’s current state, including operational costs and profitability, then calculate if and how the business will repay any capital needed for the project.

Internal plans provide information about project marketing, hiring and tech costs. They also typically include a market analysis illustrating target demographics, market size and the market’s positive effect on the company income.

Strategic Business Plans

A strategic business plan provides a high-level view of a company’s goals and how it will achieve them, laying out a foundational plan for the entire company. While the structure of a strategic plan differs from company to company, most include five elements: business vision, mission statement, definition of critical success factors, strategies for achieving objectives and an implementation schedule.

A strategic business plan brings all levels of the business into the big picture, inspiring employees to work together to create a successful culmination to the company’s goals.

Feasibility Business Plans

A feasibility business plan answers two primary questions about a proposed business venture: who, if anyone, will purchase the service or product a company wants to sell, and if the venture can turn a profit.

Feasibility business plans include but are not limited to, sections describing the need for the product or service, target demographics, and required capital. A feasibility plan ends with recommendations for going forward.

What Makes a Good Business Plan?

Good business plans are usually highly detailed and include information on all aspects of the business, including the industry, marketing, finance, personnel and various operating procedures. They are specific, communicate to all company employees and require commitment from everyone.

Significance

Good business plans should include all financial information. Write up details about all loans and when they will be paid off. Moreover, summarize details about capital equipment that will be used and how it will be depreciated. Conduct a break-even analysis that estimates when your company will likely turn a profit. Base your break-even analysis on a three-year forecast of sales and profits.

Project your sales and profits each month the first year and every quarter for years two and three, according to the Small Business Administration. Including all financial details in your business plan will enable you to pinpoint how much capital you will need for continued growth.

Identification

State the industry in which you will be operating in your business plan. For example, if you are in the RV (recreational vehicle) industry, define which types of vehicles you offer and their prices. Indicate whether you will offer premium-priced vehicles or discounted and slightly used vehicles.

Clearly outline who the major competitors are in your industry by market. Competitors will likely vary if you serve multiple cities or states.

Compare your strengths and weaknesses to these competitors. Identify the advantages you have over each competitor and plan how you will exploit those advantages. For example, you may have a much more qualified service repair department than most competitors.

Features

Highlight details about your executive and management team in your business plan. Determine in which functional areas you have the most experience. A good business plan fairly identifies employee strengths and weaknesses.

Read Also: How to Write a Business Proposal

For example, your management team may be heavily engineer-oriented but lack marketing experience. Pinpoint specific hiring needs. Determine when you will need to add personnel. Define what qualifications you will be seeking in all new employees.

Function

A good or effective company business plan must include all sales and marketing plans. Knowing how you will market your business will get your business up and running much more quickly. Explain whether you will primarily be using outside or inside sales reps and in which regions you will base your sales managers.

Also, include detailed information about your advertising plans, such as magazine or newspaper ads, direct mail campaigns, Internet marketing or radio and television advertising.

Considerations

A good business plan will also include details about a company’s operations. Your business will operate much more efficiently if you know how various departments and production will be run. One way to ensure a more efficient operation is deciding on the right organizational structure.

For example, if you decide that a functional organizational structure works best for your organization, include it in your business plan. Companies with such structures organize departments by functional area, such as marketing, finance, accounting and research and development.

Conclusion

Creating a business plan remains a valuable part of launching any new business venture. Formats and business plan templates may have evolved, and new documents like pitch decks are becoming even more important.

Though without going through this process many entrepreneurs will find they have huge gaps in their ideas and may fall short when it comes to fielding questions from serious investors. Using this template you will cover most of the bases and will be able to take the next steps with confidence.