content of business plan in entrepreneurship

11.4 The Business Plan

Learning objectives.

By the end of this section, you will be able to:

• Describe the different purposes of a business plan
• Describe and develop the components of a brief business plan
• Describe and develop the components of a full business plan

Unlike the brief or lean formats introduced so far, the business plan is a formal document used for the long-range planning of a company’s operation. It typically includes background information, financial information, and a summary of the business. Investors nearly always request a formal business plan because it is an integral part of their evaluation of whether to invest in a company. Although nothing in business is permanent, a business plan typically has components that are more “set in stone” than a business model canvas , which is more commonly used as a first step in the planning process and throughout the early stages of a nascent business. A business plan is likely to describe the business and industry, market strategies, sales potential, and competitive analysis, as well as the company’s long-term goals and objectives. An in-depth formal business plan would follow at later stages after various iterations to business model canvases. The business plan usually projects financial data over a three-year period and is typically required by banks or other investors to secure funding. The business plan is a roadmap for the company to follow over multiple years.

Some entrepreneurs prefer to use the canvas process instead of the business plan, whereas others use a shorter version of the business plan, submitting it to investors after several iterations. There are also entrepreneurs who use the business plan earlier in the entrepreneurial process, either preceding or concurrently with a canvas. For instance, Chris Guillebeau has a one-page business plan template in his book The $100 Startup . 48 His version is basically an extension of a napkin sketch without the detail of a full business plan. As you progress, you can also consider a brief business plan (about two pages)—if you want to support a rapid business launch—and/or a standard business plan.

As with many aspects of entrepreneurship, there are no clear hard and fast rules to achieving entrepreneurial success. You may encounter different people who want different things (canvas, summary, full business plan), and you also have flexibility in following whatever tool works best for you. Like the canvas, the various versions of the business plan are tools that will aid you in your entrepreneurial endeavor.

Business Plan Overview

Most business plans have several distinct sections ( Figure 11.16 ). The business plan can range from a few pages to twenty-five pages or more, depending on the purpose and the intended audience. For our discussion, we’ll describe a brief business plan and a standard business plan. If you are able to successfully design a business model canvas, then you will have the structure for developing a clear business plan that you can submit for financial consideration.

Both types of business plans aim at providing a picture and roadmap to follow from conception to creation. If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept.

The full business plan is aimed at executing the vision concept, dealing with the proverbial devil in the details. Developing a full business plan will assist those of you who need a more detailed and structured roadmap, or those of you with little to no background in business. The business planning process includes the business model, a feasibility analysis, and a full business plan, which we will discuss later in this section. Next, we explore how a business plan can meet several different needs.

Purposes of a Business Plan

A business plan can serve many different purposes—some internal, others external. As we discussed previously, you can use a business plan as an internal early planning device, an extension of a napkin sketch, and as a follow-up to one of the canvas tools. A business plan can be an organizational roadmap , that is, an internal planning tool and working plan that you can apply to your business in order to reach your desired goals over the course of several years. The business plan should be written by the owners of the venture, since it forces a firsthand examination of the business operations and allows them to focus on areas that need improvement.

Refer to the business venture throughout the document. Generally speaking, a business plan should not be written in the first person.

A major external purpose for the business plan is as an investment tool that outlines financial projections, becoming a document designed to attract investors. In many instances, a business plan can complement a formal investor’s pitch. In this context, the business plan is a presentation plan, intended for an outside audience that may or may not be familiar with your industry, your business, and your competitors.

You can also use your business plan as a contingency plan by outlining some “what-if” scenarios and exploring how you might respond if these scenarios unfold. Pretty Young Professional launched in November 2010 as an online resource to guide an emerging generation of female leaders. The site focused on recent female college graduates and current students searching for professional roles and those in their first professional roles. It was founded by four friends who were coworkers at the global consultancy firm McKinsey. But after positions and equity were decided among them, fundamental differences of opinion about the direction of the business emerged between two factions, according to the cofounder and former CEO Kathryn Minshew . “I think, naively, we assumed that if we kicked the can down the road on some of those things, we’d be able to sort them out,” Minshew said. Minshew went on to found a different professional site, The Muse , and took much of the editorial team of Pretty Young Professional with her. 49 Whereas greater planning potentially could have prevented the early demise of Pretty Young Professional, a change in planning led to overnight success for Joshua Esnard and The Cut Buddy team. Esnard invented and patented the plastic hair template that he was selling online out of his Fort Lauderdale garage while working a full-time job at Broward College and running a side business. Esnard had hundreds of boxes of Cut Buddies sitting in his home when he changed his marketing plan to enlist companies specializing in making videos go viral. It worked so well that a promotional video for the product garnered 8 million views in hours. The Cut Buddy sold over 4,000 products in a few hours when Esnard only had hundreds remaining. Demand greatly exceeded his supply, so Esnard had to scramble to increase manufacturing and offered customers two-for-one deals to make up for delays. This led to selling 55,000 units, generating $700,000 in sales in 2017. 50 After appearing on Shark Tank and landing a deal with Daymond John that gave the “shark” a 20-percent equity stake in return for $300,000, The Cut Buddy has added new distribution channels to include retail sales along with online commerce. Changing one aspect of a business plan—the marketing plan—yielded success for The Cut Buddy.

Link to Learning

Watch this video of Cut Buddy’s founder, Joshua Esnard, telling his company’s story to learn more.

If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept. This version is used to interest potential investors, employees, and other stakeholders, and will include a financial summary “box,” but it must have a disclaimer, and the founder/entrepreneur may need to have the people who receive it sign a nondisclosure agreement (NDA) . The full business plan is aimed at executing the vision concept, providing supporting details, and would be required by financial institutions and others as they formally become stakeholders in the venture. Both are aimed at providing a picture and roadmap to go from conception to creation.

Types of Business Plans

The brief business plan is similar to an extended executive summary from the full business plan. This concise document provides a broad overview of your entrepreneurial concept, your team members, how and why you will execute on your plans, and why you are the ones to do so. You can think of a brief business plan as a scene setter or—since we began this chapter with a film reference—as a trailer to the full movie. The brief business plan is the commercial equivalent to a trailer for Field of Dreams , whereas the full plan is the full-length movie equivalent.

Brief Business Plan or Executive Summary

As the name implies, the brief business plan or executive summary summarizes key elements of the entire business plan, such as the business concept, financial features, and current business position. The executive summary version of the business plan is your opportunity to broadly articulate the overall concept and vision of the company for yourself, for prospective investors, and for current and future employees.

A typical executive summary is generally no longer than a page, but because the brief business plan is essentially an extended executive summary, the executive summary section is vital. This is the “ask” to an investor. You should begin by clearly stating what you are asking for in the summary.

In the business concept phase, you’ll describe the business, its product, and its markets. Describe the customer segment it serves and why your company will hold a competitive advantage. This section may align roughly with the customer segments and value-proposition segments of a canvas.

Next, highlight the important financial features, including sales, profits, cash flows, and return on investment. Like the financial portion of a feasibility analysis, the financial analysis component of a business plan may typically include items like a twelve-month profit and loss projection, a three- or four-year profit and loss projection, a cash-flow projection, a projected balance sheet, and a breakeven calculation. You can explore a feasibility study and financial projections in more depth in the formal business plan. Here, you want to focus on the big picture of your numbers and what they mean.

The current business position section can furnish relevant information about you and your team members and the company at large. This is your opportunity to tell the story of how you formed the company, to describe its legal status (form of operation), and to list the principal players. In one part of the extended executive summary, you can cover your reasons for starting the business: Here is an opportunity to clearly define the needs you think you can meet and perhaps get into the pains and gains of customers. You also can provide a summary of the overall strategic direction in which you intend to take the company. Describe the company’s mission, vision, goals and objectives, overall business model, and value proposition.

Rice University’s Student Business Plan Competition, one of the largest and overall best-regarded graduate school business-plan competitions (see Telling Your Entrepreneurial Story and Pitching the Idea ), requires an executive summary of up to five pages to apply. 51 , 52 Its suggested sections are shown in Table 11.2 .

Are You Ready?

Create a brief business plan.

Fill out a canvas of your choosing for a well-known startup: Uber, Netflix, Dropbox, Etsy, Airbnb, Bird/Lime, Warby Parker, or any of the companies featured throughout this chapter or one of your choice. Then create a brief business plan for that business. See if you can find a version of the company’s actual executive summary, business plan, or canvas. Compare and contrast your vision with what the company has articulated.

• These companies are well established but is there a component of what you charted that you would advise the company to change to ensure future viability?
• Map out a contingency plan for a “what-if” scenario if one key aspect of the company or the environment it operates in were drastically is altered?

Full Business Plan

Even full business plans can vary in length, scale, and scope. Rice University sets a ten-page cap on business plans submitted for the full competition. The IndUS Entrepreneurs , one of the largest global networks of entrepreneurs, also holds business plan competitions for students through its Tie Young Entrepreneurs program. In contrast, business plans submitted for that competition can usually be up to twenty-five pages. These are just two examples. Some components may differ slightly; common elements are typically found in a formal business plan outline. The next section will provide sample components of a full business plan for a fictional business.

Executive Summary

The executive summary should provide an overview of your business with key points and issues. Because the summary is intended to summarize the entire document, it is most helpful to write this section last, even though it comes first in sequence. The writing in this section should be especially concise. Readers should be able to understand your needs and capabilities at first glance. The section should tell the reader what you want and your “ask” should be explicitly stated in the summary.

Describe your business, its product or service, and the intended customers. Explain what will be sold, who it will be sold to, and what competitive advantages the business has. Table 11.3 shows a sample executive summary for the fictional company La Vida Lola.

Business Description

This section describes the industry, your product, and the business and success factors. It should provide a current outlook as well as future trends and developments. You also should address your company’s mission, vision, goals, and objectives. Summarize your overall strategic direction, your reasons for starting the business, a description of your products and services, your business model, and your company’s value proposition. Consider including the Standard Industrial Classification/North American Industry Classification System (SIC/NAICS) code to specify the industry and insure correct identification. The industry extends beyond where the business is located and operates, and should include national and global dynamics. Table 11.4 shows a sample business description for La Vida Lola.

Industry Analysis and Market Strategies

Here you should define your market in terms of size, structure, growth prospects, trends, and sales potential. You’ll want to include your TAM and forecast the SAM . (Both these terms are discussed in Conducting a Feasibility Analysis .) This is a place to address market segmentation strategies by geography, customer attributes, or product orientation. Describe your positioning relative to your competitors’ in terms of pricing, distribution, promotion plan, and sales potential. Table 11.5 shows an example industry analysis and market strategy for La Vida Lola.

Competitive Analysis

The competitive analysis is a statement of the business strategy as it relates to the competition. You want to be able to identify who are your major competitors and assess what are their market shares, markets served, strategies employed, and expected response to entry? You likely want to conduct a classic SWOT analysis (Strengths Weaknesses Opportunities Threats) and complete a competitive-strength grid or competitive matrix. Outline your company’s competitive strengths relative to those of the competition in regard to product, distribution, pricing, promotion, and advertising. What are your company’s competitive advantages and their likely impacts on its success? The key is to construct it properly for the relevant features/benefits (by weight, according to customers) and how the startup compares to incumbents. The competitive matrix should show clearly how and why the startup has a clear (if not currently measurable) competitive advantage. Some common features in the example include price, benefits, quality, type of features, locations, and distribution/sales. Sample templates are shown in Figure 11.17 and Figure 11.18 . A competitive analysis helps you create a marketing strategy that will identify assets or skills that your competitors are lacking so you can plan to fill those gaps, giving you a distinct competitive advantage. When creating a competitor analysis, it is important to focus on the key features and elements that matter to customers, rather than focusing too heavily on the entrepreneur’s idea and desires.

Operations and Management Plan

In this section, outline how you will manage your company. Describe its organizational structure. Here you can address the form of ownership and, if warranted, include an organizational chart/structure. Highlight the backgrounds, experiences, qualifications, areas of expertise, and roles of members of the management team. This is also the place to mention any other stakeholders, such as a board of directors or advisory board(s), and their relevant relationship to the founder, experience and value to help make the venture successful, and professional service firms providing management support, such as accounting services and legal counsel.

Table 11.6 shows a sample operations and management plan for La Vida Lola.

Marketing Plan

Here you should outline and describe an effective overall marketing strategy for your venture, providing details regarding pricing, promotion, advertising, distribution, media usage, public relations, and a digital presence. Fully describe your sales management plan and the composition of your sales force, along with a comprehensive and detailed budget for the marketing plan. Table 11.7 shows a sample marketing plan for La Vida Lola.

Financial Plan

A financial plan seeks to forecast revenue and expenses; project a financial narrative; and estimate project costs, valuations, and cash flow projections. This section should present an accurate, realistic, and achievable financial plan for your venture (see Entrepreneurial Finance and Accounting for detailed discussions about conducting these projections). Include sales forecasts and income projections, pro forma financial statements ( Building the Entrepreneurial Dream Team , a breakeven analysis, and a capital budget. Identify your possible sources of financing (discussed in Conducting a Feasibility Analysis ). Figure 11.19 shows a template of cash-flow needs for La Vida Lola.

Entrepreneur In Action

Laughing man coffee.

Hugh Jackman ( Figure 11.20 ) may best be known for portraying a comic-book superhero who used his mutant abilities to protect the world from villains. But the Wolverine actor is also working to make the planet a better place for real, not through adamantium claws but through social entrepreneurship.

A love of java jolted Jackman into action in 2009, when he traveled to Ethiopia with a Christian humanitarian group to shoot a documentary about the impact of fair-trade certification on coffee growers there. He decided to launch a business and follow in the footsteps of the late Paul Newman, another famous actor turned philanthropist via food ventures.

Jackman launched Laughing Man Coffee two years later; he sold the line to Keurig in 2015. One Laughing Man Coffee café in New York continues to operate independently, investing its proceeds into charitable programs that support better housing, health, and educational initiatives within fair-trade farming communities. 55 Although the New York location is the only café, the coffee brand is still distributed, with Keurig donating an undisclosed portion of Laughing Man proceeds to those causes (whereas Jackman donates all his profits). The company initially donated its profits to World Vision, the Christian humanitarian group Jackman accompanied in 2009. In 2017, it created the Laughing Man Foundation to be more active with its money management and distribution.

• You be the entrepreneur. If you were Jackman, would you have sold the company to Keurig? Why or why not?
• Would you have started the Laughing Man Foundation?
• What else can Jackman do to aid fair-trade practices for coffee growers?

What Can You Do?

Textbooks for change.

Founded in 2014, Textbooks for Change uses a cross-compensation model, in which one customer segment pays for a product or service, and the profit from that revenue is used to provide the same product or service to another, underserved segment. Textbooks for Change partners with student organizations to collect used college textbooks, some of which are re-sold while others are donated to students in need at underserved universities across the globe. The organization has reused or recycled 250,000 textbooks, providing 220,000 students with access through seven campus partners in East Africa. This B-corp social enterprise tackles a problem and offers a solution that is directly relevant to college students like yourself. Have you observed a problem on your college campus or other campuses that is not being served properly? Could it result in a social enterprise?

Work It Out

Franchisee set out.

A franchisee of East Coast Wings, a chain with dozens of restaurants in the United States, has decided to part ways with the chain. The new store will feature the same basic sports-bar-and-restaurant concept and serve the same basic foods: chicken wings, burgers, sandwiches, and the like. The new restaurant can’t rely on the same distributors and suppliers. A new business plan is needed.

• What steps should the new restaurant take to create a new business plan?
• Should it attempt to serve the same customers? Why or why not?

This New York Times video, “An Unlikely Business Plan,” describes entrepreneurial resurgence in Detroit, Michigan.

• 48 Chris Guillebeau. The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future . New York: Crown Business/Random House, 2012.
• 49 Jonathan Chan. “What These 4 Startup Case Studies Can Teach You about Failure.” Foundr.com . July 12, 2015. https://foundr.com/4-startup-case-studies-failure/
• 50 Amy Feldman. “Inventor of the Cut Buddy Paid YouTubers to Spark Sales. He Wasn’t Ready for a Video to Go Viral.” Forbes. February 15, 2017. https://www.forbes.com/sites/forbestreptalks/2017/02/15/inventor-of-the-cut-buddy-paid-youtubers-to-spark-sales-he-wasnt-ready-for-a-video-to-go-viral/#3eb540ce798a
• 51 Jennifer Post. “National Business Plan Competitions for Entrepreneurs.” Business News Daily . August 30, 2018. https://www.businessnewsdaily.com/6902-business-plan-competitions-entrepreneurs.html
• 52 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition . March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf
• 53 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition. March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf; Based on 2019 RBPC Competition Rules and Format April 4–6, 2019. https://rbpc.rice.edu/sites/g/files/bxs806/f/2019-RBPC-Competition-Rules%20-Format.pdf
• 54 Foodstart. http://foodstart.com
• 55 “Hugh Jackman Journey to Starting a Social Enterprise Coffee Company.” Giving Compass. April 8, 2018. https://givingcompass.org/article/hugh-jackman-journey-to-starting-a-social-enterprise-coffee-company/

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What is a Business Plan? Definition, Tips, and Templates

Published: June 07, 2023

In an era where more than 20% of small enterprises fail in their first year, having a clear, defined, and well-thought-out business plan is a crucial first step for setting up a business for long-term success.

Business plans are a required tool for all entrepreneurs, business owners, business acquirers, and even business school students. But … what exactly is a business plan?

In this post, we'll explain what a business plan is, the reasons why you'd need one, identify different types of business plans, and what you should include in yours.

What is a business plan?

A business plan is a documented strategy for a business that highlights its goals and its plans for achieving them. It outlines a company's go-to-market plan, financial projections, market research, business purpose, and mission statement. Key staff who are responsible for achieving the goals may also be included in the business plan along with a timeline.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

What is a business plan used for?

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

Business Plan Template [ Download Now ]

Working on your business plan? Try using our Business Plan Template . Pre-filled with the sections a great business plan needs, the template will give aspiring entrepreneurs a feel for what a business plan is, what should be in it, and how it can be used to establish and grow a business from the ground up.

Purposes of a Business Plan

Chances are, someone drafting a business plan will be doing so for one or more of the following reasons:

1. Securing financing from investors.

Since its contents revolve around how businesses succeed, break even, and turn a profit, a business plan is used as a tool for sourcing capital. This document is an entrepreneur's way of showing potential investors or lenders how their capital will be put to work and how it will help the business thrive.

All banks, investors, and venture capital firms will want to see a business plan before handing over their money, and investors typically expect a 10% ROI or more from the capital they invest in a business.

Therefore, these investors need to know if — and when — they'll be making their money back (and then some). Additionally, they'll want to read about the process and strategy for how the business will reach those financial goals, which is where the context provided by sales, marketing, and operations plans come into play.

2. Documenting a company's strategy and goals.

A business plan should leave no stone unturned.

Business plans can span dozens or even hundreds of pages, affording their drafters the opportunity to explain what a business' goals are and how the business will achieve them.

To show potential investors that they've addressed every question and thought through every possible scenario, entrepreneurs should thoroughly explain their marketing, sales, and operations strategies — from acquiring a physical location for the business to explaining a tactical approach for marketing penetration.

These explanations should ultimately lead to a business' break-even point supported by a sales forecast and financial projections, with the business plan writer being able to speak to the why behind anything outlined in the plan.

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Free Business Plan [Template]

Fill out the form to access your free business plan., 3. legitimizing a business idea..

Everyone's got a great idea for a company — until they put pen to paper and realize that it's not exactly feasible.

A business plan is an aspiring entrepreneur's way to prove that a business idea is actually worth pursuing.

As entrepreneurs document their go-to-market process, capital needs, and expected return on investment, entrepreneurs likely come across a few hiccups that will make them second guess their strategies and metrics — and that's exactly what the business plan is for.

It ensures an entrepreneur's ducks are in a row before bringing their business idea to the world and reassures the readers that whoever wrote the plan is serious about the idea, having put hours into thinking of the business idea, fleshing out growth tactics, and calculating financial projections.

4. Getting an A in your business class.

Speaking from personal experience, there's a chance you're here to get business plan ideas for your Business 101 class project.

If that's the case, might we suggest checking out this post on How to Write a Business Plan — providing a section-by-section guide on creating your plan?

What does a business plan need to include?

• Business Plan Subtitle
• Executive Summary
• Company Description
• The Business Opportunity
• Competitive Analysis
• Target Market
• Marketing Plan
• Financial Summary
• Funding Requirements

1. Business Plan Subtitle

Every great business plan starts with a captivating title and subtitle. You’ll want to make it clear that the document is, in fact, a business plan, but the subtitle can help tell the story of your business in just a short sentence.

2. Executive Summary

Although this is the last part of the business plan that you’ll write, it’s the first section (and maybe the only section) that stakeholders will read. The executive summary of a business plan sets the stage for the rest of the document. It includes your company’s mission or vision statement, value proposition, and long-term goals.

3. Company Description

This brief part of your business plan will detail your business name, years in operation, key offerings, and positioning statement. You might even add core values or a short history of the company. The company description’s role in a business plan is to introduce your business to the reader in a compelling and concise way.

4. The Business Opportunity

The business opportunity should convince investors that your organization meets the needs of the market in a way that no other company can. This section explains the specific problem your business solves within the marketplace and how it solves them. It will include your value proposition as well as some high-level information about your target market.

5. Competitive Analysis

Just about every industry has more than one player in the market. Even if your business owns the majority of the market share in your industry or your business concept is the first of its kind, you still have competition. In the competitive analysis section, you’ll take an objective look at the industry landscape to determine where your business fits. A SWOT analysis is an organized way to format this section.

6. Target Market

Who are the core customers of your business and why? The target market portion of your business plan outlines this in detail. The target market should explain the demographics, psychographics, behavioristics, and geographics of the ideal customer.

7. Marketing Plan

Marketing is expansive, and it’ll be tempting to cover every type of marketing possible, but a brief overview of how you’ll market your unique value proposition to your target audience, followed by a tactical plan will suffice.

Think broadly and narrow down from there: Will you focus on a slow-and-steady play where you make an upfront investment in organic customer acquisition? Or will you generate lots of quick customers using a pay-to-play advertising strategy? This kind of information should guide the marketing plan section of your business plan.

8. Financial Summary

Money doesn’t grow on trees and even the most digital, sustainable businesses have expenses. Outlining a financial summary of where your business is currently and where you’d like it to be in the future will substantiate this section. Consider including any monetary information that will give potential investors a glimpse into the financial health of your business. Assets, liabilities, expenses, debt, investments, revenue, and more are all useful adds here.

So, you’ve outlined some great goals, the business opportunity is valid, and the industry is ready for what you have to offer. Who’s responsible for turning all this high-level talk into results? The "team" section of your business plan answers that question by providing an overview of the roles responsible for each goal. Don’t worry if you don’t have every team member on board yet, knowing what roles to hire for is helpful as you seek funding from investors.

10. Funding Requirements

Remember that one of the goals of a business plan is to secure funding from investors, so you’ll need to include funding requirements you’d like them to fulfill. The amount your business needs, for what reasons, and for how long will meet the requirement for this section.

Types of Business Plans

• Startup Business Plan
• Feasibility Business Plan
• Internal Business Plan
• Strategic Business Plan
• Business Acquisition Plan
• Business Repositioning Plan
• Expansion or Growth Business Plan

There’s no one size fits all business plan as there are several types of businesses in the market today. From startups with just one founder to historic household names that need to stay competitive, every type of business needs a business plan that’s tailored to its needs. Below are a few of the most common types of business plans.

For even more examples, check out these sample business plans to help you write your own .

1. Startup Business Plan

As one of the most common types of business plans, a startup business plan is for new business ideas. This plan lays the foundation for the eventual success of a business.

The biggest challenge with the startup business plan is that it’s written completely from scratch. Startup business plans often reference existing industry data. They also explain unique business strategies and go-to-market plans.

Because startup business plans expand on an original idea, the contents will vary by the top priority goals.

For example, say a startup is looking for funding. If capital is a priority, this business plan might focus more on financial projections than marketing or company culture.

2. Feasibility Business Plan

This type of business plan focuses on a single essential aspect of the business — the product or service. It may be part of a startup business plan or a standalone plan for an existing organization. This comprehensive plan may include:

• A detailed product description
• Market analysis
• Technology needs
• Production needs
• Financial sources
• Production operations

According to CBInsights research, 35% of startups fail because of a lack of market need. Another 10% fail because of mistimed products.

Some businesses will complete a feasibility study to explore ideas and narrow product plans to the best choice. They conduct these studies before completing the feasibility business plan. Then the feasibility plan centers on that one product or service.

3. Internal Business Plan

Internal business plans help leaders communicate company goals, strategy, and performance. This helps the business align and work toward objectives more effectively.

Besides the typical elements in a startup business plan, an internal business plan may also include:

• Department-specific budgets
• Target demographic analysis
• Market size and share of voice analysis
• Action plans
• Sustainability plans

Most external-facing business plans focus on raising capital and support for a business. But an internal business plan helps keep the business mission consistent in the face of change.

4. Strategic Business Plan

Strategic business plans focus on long-term objectives for your business. They usually cover the first three to five years of operations. This is different from the typical startup business plan which focuses on the first one to three years. The audience for this plan is also primarily internal stakeholders.

These types of business plans may include:

• Relevant data and analysis
• Assessments of company resources
• Vision and mission statements

It's important to remember that, while many businesses create a strategic plan before launching, some business owners just jump in. So, this business plan can add value by outlining how your business plans to reach specific goals. This type of planning can also help a business anticipate future challenges.

5. Business Acquisition Plan

Investors use business plans to acquire existing businesses, too — not just new businesses.

A business acquisition plan may include costs, schedules, or management requirements. This data will come from an acquisition strategy.

A business plan for an existing company will explain:

• How an acquisition will change its operating model
• What will stay the same under new ownership
• Why things will change or stay the same
• Acquisition planning documentation
• Timelines for acquisition

Additionally, the business plan should speak to the current state of the business and why it's up for sale.

For example, if someone is purchasing a failing business, the business plan should explain why the business is being purchased. It should also include:

• What the new owner will do to turn the business around
• Historic business metrics
• Sales projections after the acquisition
• Justification for those projections

6. Business Repositioning Plan

When a business wants to avoid acquisition, reposition its brand, or try something new, CEOs or owners will develop a business repositioning plan.

This plan will:

• Acknowledge the current state of the company.
• State a vision for the future of the company.
• Explain why the business needs to reposition itself.
• Outline a process for how the company will adjust.

Companies planning for a business reposition often do so — proactively or retroactively — due to a shift in market trends and customer needs.

For example, shoe brand AllBirds plans to refocus its brand on core customers and shift its go-to-market strategy. These decisions are a reaction to lackluster sales following product changes and other missteps.

7. Expansion or Growth Business Plan

When your business is ready to expand, a growth business plan creates a useful structure for reaching specific targets.

For example, a successful business expanding into another location can use a growth business plan. This is because it may also mean the business needs to focus on a new target market or generate more capital.

This type of plan usually covers the next year or two of growth. It often references current sales, revenue, and successes. It may also include:

• SWOT analysis
• Growth opportunity studies
• Financial goals and plans
• Marketing plans
• Capability planning

These types of business plans will vary by business, but they can help businesses quickly rally around new priorities to drive growth.

Getting Started With Your Business Plan

At the end of the day, a business plan is simply an explanation of a business idea and why it will be successful. The more detail and thought you put into it, the more successful your plan — and the business it outlines — will be.

When writing your business plan, you’ll benefit from extensive research, feedback from your team or board of directors, and a solid template to organize your thoughts. If you need one of these, download HubSpot's Free Business Plan Template below to get started.

Editor's note: This post was originally published in August 2020 and has been updated for comprehensiveness.

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, 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.

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A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

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, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• 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: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

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

How frequently a business plan needs to be revised will depend on the nature of the business. 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 an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

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

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

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How To Write a Business Plan

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

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

Table of contents

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

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Step 1: Write your executive summary

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

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

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

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

Step 2: Do your market research homework

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

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

Step 3: Set your business goals and objectives

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

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

Step 4: Plan your business strategy

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

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

Step 5: Describe your product or service

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

Step 6: Crunch the numbers

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

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

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

Step 7: Finalize your business plan

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

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

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The takeaway

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

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

Noah Parsons

24 min. read

Updated May 7, 2024

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

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

• The basics of business planning

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

You understand that planning helps you: 

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

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

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

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

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

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

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

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

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

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

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• What to include in your business plan

Executive summary

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

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

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

Your executive summary should include:

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

Dig Deeper: How to write an effective executive summary

Products and services description

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

This is usually called a problem and solution statement .

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

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

Market analysis

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

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

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

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

Related: Target market examples

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

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

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

Dig Deeper: Learn how to write a market analysis

Competitive analysis

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

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

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

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

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

Marketing and sales plan

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

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

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

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

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

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

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

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

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

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

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

Business operations

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

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

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

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

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

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

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

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

Key milestones and metrics

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

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

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

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

Possible milestones might be:

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

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

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

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

Dig Deeper: How to use milestones in your business plan

Organization and management team

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

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

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

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

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

• Sole proprietor
• Partnership

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

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

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

Financial plan

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

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

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

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

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

Dig Deeper: How to create financial forecasts and budgets

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

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

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

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

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

Your cover page should be simple and include:

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

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

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

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

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

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

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

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

• Writing tips and strategies

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

Determine why you are writing a business plan

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

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

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

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

Keep things concise

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

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

Have someone review your business plan

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

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

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

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

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

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

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

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

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

Common pitfalls and how to avoid them

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

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

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

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

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

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

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

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

Use your business plan to manage your business

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

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

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

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

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

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

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

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

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

Learn More: How to run a regular plan review

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How to write a business plan FAQ

What is a business plan?

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

What are the benefits of a business plan?

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

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

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

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

What are the 5 most common business plan mistakes?

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

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

What questions should be answered in a business plan?

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

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

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

How long should a business plan be?

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

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

What are the different types of business plans?

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

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

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

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

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

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

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

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

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

Table of Contents

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

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Learn how to create a business plan

What is a Business Plan?

A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing .

A business plan should follow a standard format and contain all the important business plan elements. Typically, it should present whatever information an investor or financial institution expects to see before providing financing to a business.

Contents of a Business Plan

A business plan should be structured in a way that it contains all the important information that investors are looking for. Here are the main sections of a business plan:

1. Title Page

The title page captures the legal information of the business, which includes the registered business name, physical address, phone number, email address, date, and the company logo.

2. Executive Summary

The executive summary is the most important section because it is the first section that investors and bankers see when they open the business plan. It provides a summary of the entire business plan. It should be written last to ensure that you don’t leave any details out. It must be short and to the point, and it should capture the reader’s attention. The executive summary should not exceed two pages.

3. Industry Overview

The industry overview section provides information about the specific industry that the business operates in. Some of the information provided in this section includes major competitors, industry trends, and estimated revenues. It also shows the company’s position in the industry and how it will compete in the market against other major players.

4. Market Analysis and Competition

The market analysis section details the target market for the company’s product offerings. This section confirms that the company understands the market and that it has already analyzed the existing market to determine that there is adequate demand to support its proposed business model.

Market analysis includes information about the target market’s demographics , geographical location, consumer behavior, and market needs. The company can present numbers and sources to give an overview of the target market size.

A business can choose to consolidate the market analysis and competition analysis into one section or present them as two separate sections.

5. Sales and Marketing Plan

The sales and marketing plan details how the company plans to sell its products to the target market. It attempts to present the business’s unique selling proposition and the channels it will use to sell its goods and services. It details the company’s advertising and promotion activities, pricing strategy, sales and distribution methods, and after-sales support.

6. Management Plan

The management plan provides an outline of the company’s legal structure, its management team, and internal and external human resource requirements. It should list the number of employees that will be needed and the remuneration to be paid to each of the employees.

Any external professionals, such as lawyers, valuers, architects, and consultants, that the company will need should also be included. If the company intends to use the business plan to source funding from investors, it should list the members of the executive team, as well as the members of the advisory board.

7. Operating Plan

The operating plan provides an overview of the company’s physical requirements, such as office space, machinery, labor, supplies, and inventory . For a business that requires custom warehouses and specialized equipment, the operating plan will be more detailed, as compared to, say, a home-based consulting business. If the business plan is for a manufacturing company, it will include information on raw material requirements and the supply chain.

8. Financial Plan

The financial plan is an important section that will often determine whether the business will obtain required financing from financial institutions, investors, or venture capitalists. It should demonstrate that the proposed business is viable and will return enough revenues to be able to meet its financial obligations. Some of the information contained in the financial plan includes a projected income statement , balance sheet, and cash flow.

9. Appendices and Exhibits

The appendices and exhibits part is the last section of a business plan. It includes any additional information that banks and investors may be interested in or that adds credibility to the business. Some of the information that may be included in the appendices section includes office/building plans, detailed market research , products/services offering information, marketing brochures, and credit histories of the promoters.

Business Plan Template

Here is a basic template that any business can use when developing its business plan:

Section 1: Executive Summary

• Present the company’s mission.
• Describe the company’s product and/or service offerings.
• Give a summary of the target market and its demographics.
• Summarize the industry competition and how the company will capture a share of the available market.
• Give a summary of the operational plan, such as inventory, office and labor, and equipment requirements.

Section 2: Industry Overview

• Describe the company’s position in the industry.
• Describe the existing competition and the major players in the industry.
• Provide information about the industry that the business will operate in, estimated revenues, industry trends, government influences, as well as the demographics of the target market.

Section 3: Market Analysis and Competition

• Define your target market, their needs, and their geographical location.
• Describe the size of the market, the units of the company’s products that potential customers may buy, and the market changes that may occur due to overall economic changes.
• Give an overview of the estimated sales volume vis-à-vis what competitors sell.
• Give a plan on how the company plans to combat the existing competition to gain and retain market share.

Section 4: Sales and Marketing Plan

• Describe the products that the company will offer for sale and its unique selling proposition.
• List the different advertising platforms that the business will use to get its message to customers.
• Describe how the business plans to price its products in a way that allows it to make a profit.
• Give details on how the company’s products will be distributed to the target market and the shipping method.

Section 5: Management Plan

• Describe the organizational structure of the company.
• List the owners of the company and their ownership percentages.
• List the key executives, their roles, and remuneration.
• List any internal and external professionals that the company plans to hire, and how they will be compensated.
• Include a list of the members of the advisory board, if available.

Section 6: Operating Plan

• Describe the location of the business, including office and warehouse requirements.
• Describe the labor requirement of the company. Outline the number of staff that the company needs, their roles, skills training needed, and employee tenures (full-time or part-time).
• Describe the manufacturing process, and the time it will take to produce one unit of a product.
• Describe the equipment and machinery requirements, and if the company will lease or purchase equipment and machinery, and the related costs that the company estimates it will incur.
• Provide a list of raw material requirements, how they will be sourced, and the main suppliers that will supply the required inputs.

Section 7: Financial Plan

• Describe the financial projections of the company, by including the projected income statement, projected cash flow statement, and the balance sheet projection.

Section 8: Appendices and Exhibits

• Quotes of building and machinery leases
• Proposed office and warehouse plan
• Market research and a summary of the target market
• Credit information of the owners
• List of product and/or services

Related Readings

Thank you for reading CFI’s guide to Business Plans. To keep learning and advancing your career, the following CFI resources will be helpful:

• Corporate Structure
• Three Financial Statements
• Business Model Canvas Examples
• See all management & strategy resources
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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

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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.

• Developing a Business Plan in Entrepreneurship: A Comprehensive Guide

Welcome to our comprehensive guide on developing a business plan in entrepreneurship! Whether you're a seasoned entrepreneur or just starting out on your business journey, having a well-crafted business plan is essential for success. In this article, we will walk you through the process of creating a business plan from start to finish, providing valuable insights and expert advice along the way.

Table of Contents

☑️ 1. understanding the importance of a business plan, 👩‍💻 2. conducting market research: identifying your target audience, 🎯 3. defining your business goals and objectives, 🛠️ 4. crafting a unique value proposition, 👥 5. analyzing the competitive landscape, 🛗 6. developing a marketing and sales strategy, ⚙️ 7. creating an operational plan, 📈 8. building a financial plan: budgeting and forecasting, 💼 9. securing funding for your business, ⚖️ 10. legal and regulatory considerations, 📏 11. measuring success: key performance indicators (kpis), 🎛️ 12. adapting and evolving your business plan, ✨ conclusion.

💡 A business plan is more than just a document; it's your roadmap to entrepreneurial success. It guides you, step by step, on your journey towards building a thriving business. When you take the time to create a comprehensive business plan, you not only gain a deeper understanding of your vision and objectives, but you also show potential investors, partners, and stakeholders that you mean business.

💡 A well-crafted business plan allows you to present your business idea in a structured and organized way. Clearly outlining your products or services, target market, and unique selling proposition effectively communicates your concept to others and build trust in your vision.

💡 Additionally, a business plan helps you strategize and set realistic goals. It prompts you to analyze the market, assess competition, and identify opportunities and challenges. Armed with this knowledge, you can make informed decisions that minimize risks and increase your chances of success.

💡 Now let's talk finances. Financial projections are another vital aspect of a business plan. You can create a realistic financial forecast by thoroughly analyzing your costs, revenue streams, and cash flow. This not only helps you gauge the financial viability of your business, but it also provides essential information for potential investors evaluating your venture's profitability and sustainability.

💡 Moreover, a business plan is often required by external parties when seeking funding. But here's the thing: a well-structured and comprehensive plan showcases your professionalism, competence, and dedication to your venture. It boosts your credibility with potential investors who are more likely to invest in a business with a clear and well-thought-out plan.

💡 To sum it up, developing a business plan is a critical step in entrepreneurship. It helps you clarify your vision, effectively communicate your ideas, make informed decisions, and attract potential investors. So, take the time to craft a comprehensive business plan so you can establish a solid foundation for the success of your venture and demonstrate your commitment to its growth and sustainability.

Let's get started on that business plan and set yourself up for success !

You know what's essential for developing a successful business plan? Understanding your target audience. That's right, it's all about conducting thorough market research to gain valuable insights into the needs, preferences, and behaviors of your potential customers . This knowledge will empower you to customize your products or services to meet their specific demands, giving you a competitive edge in the market .

🔍 So, how do you go about this market research? Well, it involves gathering and analyzing data related to your industry, target market, and competition. It's a comprehensive process that allows you to identify and assess potential opportunities and challenges within your chosen market segment. You won't be relying on assumptions or guesswork. Instead, you'll make informed decisions based on reliable data.

👂 Let's talk about identifying your target audience . These are the individuals or groups who are most likely to be interested in and benefit from your products or services. To identify them, think about demographic factors such as age, gender, location, income level, and occupation. And don't forget to delve into psychographic factors too, like interests, values, lifestyles, and purchasing behaviors. The more detailed and specific you can be in defining your target audience, the better you'll be able to tailor your marketing strategies to effectively reach and engage them.

🎛️ Now, let's dive into the methods of market research. You can use surveys, interviews, focus groups, and analyze data from secondary sources. Surveys will provide you with quantitative data, giving you insights on a large scale. And when it comes to interviews and focus groups, you'll get qualitative data that takes you deeper into the thoughts, opinions, and motivations of your target audience. Secondary sources like industry reports, government publications, and online databases will provide you with valuable information about market trends, competitor analysis, and customer behavior.

📊 Once you have all this data, it's time to analyze it . Look for patterns, trends, and opportunities that will inform your business strategies. When you truly understand your target audience's needs, pain points, and preferences, you'll be able to develop products or services that truly resonate with them. And guess what? This customer-centric approach increases the likelihood of customer satisfaction, loyalty, and ultimately, business success.

🧐 But wait, there's more! Market research also helps you assess the competitive landscape . Take a close look at your competitors' strengths, weaknesses, and market positioning. This analysis will help you identify gaps and differentiation opportunities for your business. Armed with this knowledge, you can develop unique value propositions and effective marketing strategies that set you apart from the competition.

Ready to dive into market research and gain valuable insights? Let's get started and propel your business forward!

Welcome to the next step in developing your business plan: defining your goals and objectives. It is important to set clear and well-defined goals and objectives for your business. These goals serve as guideposts, directing and giving purpose to your entrepreneurial journey. With the SMART framework—specific, measurable, attainable, relevant, and time-bound—you can set yourself up for success and ensure that your efforts are focused and effective.

With a clear roadmap in place, you are well-positioned to navigate the challenges and achieve the success you envision for your business.

Let's break down each element of the SMART framework:

✅ Specific: Your goals should be clear, concise, and well-defined. Instead of stating a vague objective like "increase revenue," let's be specific. For example, you could aim to "increase annual revenue by 20% within the next fiscal year."

✅ Measurable: It is important to establish metrics or key performance indicators (KPIs ) that allow you to track your progress. This enables you to measure the success of your strategies and determine whether you are on track to achieve your goals. For instance, if your goal is to expand your customer base, you can track the number of new customers acquired within a specific period.

✅ Attainable: While setting ambitious goals is important, they should also be realistic and attainable. Consider your available resources, market conditions, and industry trends when defining your objectives. Finding the balance between ambition and practicality is key to avoiding frustration and disappointment.

✅ Relevant: Ensure that your goals align with your overall vision, mission, and values. They should be relevant to your industry, target market, and the specific needs of your customers. Set relevant goals so you can stay focused on what truly matters for the growth and success of your business.

✅ Time-bound: Set specific timeframes or deadlines for achieving your objectives. This creates a sense of urgency, helps you prioritize tasks, and allows you to track your progress. Having a timeline ensures that your goals remain actionable and within reach.

Defining your business goals and objectives brings numerous benefits:

✔️ It keeps you focused and motivated, providing a clear vision of what you want to accomplish. Goals serve as milestones, giving you a sense of achievement as you make progress toward them.

✔️ They also provide a framework for decision-making, enabling you to effectively prioritize tasks and allocate resources.

✔️ Moreover, clearly defined goals make it easier to communicate your vision and strategies to your team members, investors, and stakeholders. Alignment of efforts and shared purpose foster collaboration and synergy within your organization.

In the world of business, standing out from the competition is key to your success. In today's crowded marketplace, having a unique value proposition (UVP) is essential. Your UVP is what sets you apart and defines the special benefits and value your products or services offer to customers.

With a strong UVP, you can thrive in a crowded marketplace and build a loyal customer base that recognizes and appreciates what you bring to the table.

Let's dive into the steps of crafting a compelling UVP that will attract and retain customers , differentiate your business, and build a strong and sustainable brand.

Step 1: Identify your target audience. Get to know your customers inside and out. Understand their needs, desires, and pain points. This knowledge forms the foundation for creating a UVP that truly resonates with them.

Step 2: Analyze the competition. Take a closer look at your competitors and their value propositions. What are others offering? Can you identify gaps and opportunities in the market that you can leverage to set your business apart?

Step 3: Focus on differentiation. Determine what makes your offerings unique. What are the standout features, advantages, or benefits that set you apart? How do your products or services better address the specific needs of your target audience compared to the competition?

Step 4: Communicate the value. Craft a clear and concise statement that communicates the value customers can expect from choosing your business. Use compelling language to highlight the benefits and outcomes they can achieve by using your products or services.

Step 5: Make it memorable. Your UVP should be easy to understand and leave a lasting impression. Consider using a catchy slogan or tagline that captures the essence of your UVP and resonates with your target audience.

Step 6: Consistency is key. Keep your Unique Value Proposition (UVP) consistently communicated across all your marketing and communication channels. It should shine through on your website, social media presence, advertising materials, and customer interactions. Consistency builds trust and reinforces your brand identity.

When it comes to developing a robust and resilient business plan, understanding your competitors and their strategies is crucial.

Analyzing the competitive landscape involves a comprehensive examination of your direct and indirect competitors within your industry or market segment.

When you understand your competitors' strengths, weaknesses, and market positioning, you can identify opportunities, develop differentiated strategies, and gain a competitive edge. Regularly update your analysis to stay ahead of the competition and ensure your business remains relevant and successful in the ever-changing business landscape.

To begin, let's break down the key steps for effectively analyzing the competition:

Step 1: Identify your competitors Start by identifying your direct competitors—those businesses offering similar products or services to the same target audience. Additionally, consider indirect competitors—those providing alternative solutions that fulfill the same customer needs. This broader understanding will uncover both direct and indirect threats and opportunities.

Step 2: Gather information Collect as much information as possible about your competitors. Study their websites, social media presence, advertising campaigns, product offerings, pricing strategies, distribution channels, customer reviews, and any available market reports or industry publications. Utilize tools like SWOT analysis to organize and evaluate the data.

Step 3: Assess strengths and weaknesses Analyze the strengths and weaknesses of your competitors. Identify what they excel at, such as unique features, exceptional customer service, strong brand recognition, or extensive industry experience. Similarly, pinpoint their weaknesses, like limited product range, poor customer reviews, outdated technology, or inefficient processes. This assessment will highlight areas where you can leverage your strengths and differentiate yourself.

Step 4: Understand market positioning Examine how your competitors position themselves in the market. Consider their target audience, brand image, value propositions, and marketing messages. Identify the specific niche or market segment they focus on and determine if there are untapped opportunities for you to capitalize on. Positioning your business uniquely will attract customers who resonate with your specific value propositions.

Step 5: Identify opportunities and threats Through your analysis, identify potential opportunities and threats within the competitive landscape. Look for gaps in the market that your competitors have overlooked or underserved customer needs that you can address. Also, be on the lookout for emerging trends, technological advancements, or regulatory changes that may impact your business. This knowledge enables you to adapt and strategize effectively.

Step 6: Develop strategies for differentiation Based on your analysis, devise strategies that differentiate your business from the competition. Leverage your unique strengths and address customer pain points that your competitors haven't resolved. Focus on developing value-added features, delivering exceptional customer experiences, or offering innovative solutions that set you apart. Effective differentiation will give you a competitive edge and attract customers who appreciate your distinct offerings.

When it comes to growing and making your business profitable, having a well-defined and comprehensive marketing and sales strategy is key. It outlines the steps you'll take to promote your products or services, attract customers, and generate sales. An effective marketing and sales strategy in your business plan increases brand visibility, reaches a wider audience, and ultimately drives revenue.

With a well-designed marketing and sales strategy, you can establish a strong brand presence, attract customers, and achieve sustainable business growth.

Here are some important elements to consider as you develop your marketing and sales strategy:

• Identify your target market: Start by clearly defining your target market and understanding their demographics, preferences, and buying behavior. This knowledge will help you tailor your marketing messages and promotional activities to effectively reach and engage your ideal customers.
• Choose the right marketing channels: Determine the most suitable marketing channels to reach your target audience. This could include a mix of traditional and digital channels such as print media, television, radio, search engine marketing (SEM) , social media platforms, email marketing, and content marketing. Select the channels based on your target audience's preferences and behavior.
• Leverage digital marketing techniques: Maximize your online presence and attract potential customers by leveraging digital marketing techniques. This includes search engine optimization (SEO) to improve your website's visibility in search engine results, social media marketing to engage with your audience and build brand awareness, and content marketing to provide valuable and relevant information that establishes your expertise and credibility.
• Craft compelling marketing messages: Develop clear and compelling marketing messages that effectively communicate the unique value of your products or services. Highlight the key benefits, features, and solutions your offerings provide to address customer needs and pain points. Emphasize what sets your business apart from competitors and how customers stand to benefit by choosing your products or services.
• Determine your pricing strategy: Align your pricing strategy with your target market, positioning, and business goals. Take into account factors such as production costs, market demand, perceived value, and competitor pricing. Striking the right balance between affordability and profitability is essential to attract customers while maintaining healthy profit margins.
• Plan targeted promotional activities: Plan and execute targeted promotional activities to create awareness and generate interest in your offerings. This may include advertising campaigns, public relations efforts, participation in industry events, sponsorships, or partnerships with complementary businesses. Use both online and offline channels to reach a broader audience and maximize exposure.
• Develop a sales forecast: Create a sales forecast that outlines your projected sales revenues based on your marketing and sales strategies. Consider factors such as market size, growth potential, customer acquisition rate, and conversion rates. This will provide you with a realistic view of your revenue goals and help you track your progress.
• Monitor and evaluate: Continuously monitor the performance of your marketing and sales efforts and make necessary adjustments. Keep track of key metrics such as website traffic, conversion rates, social media engagement, and sales revenue to gauge the effectiveness of your strategies. Use analytics tools to gain insights into customer behavior and preferences, allowing you to refine your marketing and sales approaches.

In this section, we'll explore the importance of an operational plan and provide you with valuable insights to help you create one that sets the stage for smooth and efficient business operations. Let's dive in!

An operational plan is a vital component of your business plan, serving as a guide for your day-to-day activities and processes. It covers various aspects of your operations, such as production, inventory management, supply chain logistics, quality control, and more. With a comprehensive operational plan, you will have seamless operations while being prepared to tackle challenges.

With a well-designed operational plan in place, you can confidently manage day-to-day activities and position your business for long-term success.

Here are key considerations for creating your plan:

• Production processes: Start by describing the specific steps involved in producing your products or delivering your services. Outline the necessary resources, equipment, and manpower for each stage. Identify any bottlenecks or areas for improvement to streamline your processes and boost productivity.
• Inventory management: Detail how you'll manage your inventory to meet customer demand while minimizing costs. Determine optimal inventory levels, establish tracking systems, and implement replenishment strategies for stock availability. This avoids stockouts or excess inventory, enhancing customer satisfaction and reducing expenses.
• Supply chain logistics: Outline your supply chain logistics, including sourcing raw materials, managing suppliers, and coordinating distribution. Identify potential risks and develop contingency plans to mitigate disruptions. Streamline processes to minimize lead times, optimize transportation, and improve overall efficiency.
• Quality control: Explain how you'll maintain quality standards and ensure consistency in your products or services. Define quality control measures, such as inspections, testing procedures, and adherence to industry standards. Implement feedback loops to capture customer input and continuously enhance your offerings.
• Resource allocation: Determine how you'll allocate financial, human, and technological resources to support your operations. This involves budgeting, workforce planning, and identifying technology solutions that boost efficiency and productivity.
• Risk management: Assess potential risks and develop strategies to minimize their impact on your operations. Identify key risks like supply chain disruptions, compliance issues, cybersecurity threats, or natural disasters. Establish contingency plans and protocols for business continuity.
• Legal and regulatory compliance: Make sure your operational plan considers legal and regulatory requirements. Familiarize yourself with applicable laws, regulations, and industry standards. Incorporate measures for compliance, such as obtaining licenses, implementing data protection policies, and adhering to health and safety guidelines.
• Monitoring and evaluation: Establish key performance indicators (KPIs) to track the effectiveness of your operational plan. Consistently monitor and evaluate your operations against these metrics to identify areas for improvement. Continuously refine your plan based on feedback and changing business needs.

In this part, we'll explore the importance of budgeting and forecasting in developing a robust financial plan for your business. Focus on these key aspects so you can demonstrate your financial expertise to potential investors and lenders.

When you are able to build a comprehensive financial plan through budgeting and forecasting, you demonstrate your financial acumen to potential investors and lenders. This gives them a clear understanding of how you'll manage the financial aspects of your business, instilling confidence in your ability to achieve profitability and sustainable growth.

💰 Budgeting: Controlling Costs and Allocating Resources

When establishing your business's financial foundation, budgeting plays a pivotal role. It allows you to identify and estimate startup costs, ongoing expenses, and projected revenues. To efficiently allocate resources, optimize cash flow, and ensure long-term financial sustainability, meticulously track and control costs.

Here are some key steps to consider when creating your budget:

• Identify startup costs: Start by determining the initial investments needed to launch your business, such as equipment purchases, lease agreements, legal fees, marketing collateral, and website development. Accurately estimating these costs will help you avoid unexpected financial burdens and ensure a smooth startup process.
• Outline ongoing expenses: Once your business is up and running, consider the recurring expenses for day-to-day operations, such as rent, utilities, employee salaries, inventory costs, marketing expenses, insurance premiums, and loan repayments. Thoroughly identifying these expenses provides a comprehensive understanding of your financial commitments.
• Project revenues: Forecast your expected revenues by conducting market research and analyzing industry trends. Consider factors like market demand, competition, and seasonality. Projecting revenues gives you insights into your business's financial viability and empowers you to make informed decisions.
• Track and adjust: Remember, a budget is a dynamic tool that requires continuous monitoring and adjustment. Regularly compare your actual expenses and revenues against your budgeted figures. This enables you to identify deviations, make necessary adjustments, and maintain financial discipline. Stay vigilant and proactively address any financial challenges that may arise.

📈 Financial Forecasting: Anticipating Future Performance

Alongside budgeting, financial forecasting plays a critical role in your financial plan. It involves estimating future cash flows, financial performance, and potential risks. You can project the financial health of your business and make informed strategic decisions by forecasting.

Consider the following elements when conducting financial forecasting:

• Sales projections: Develop realistic sales projections based on market research, industry trends, and historical data. Factor in customer demand, pricing strategies, marketing initiatives, and potential competition impact. These projections serve as a foundation for estimating future revenues.
• Expense projections: Forecast ongoing expenses, considering factors like inflation, changes in supplier costs, and potential growth-related expenses. This helps you anticipate and plan for the financial resources required to support your business operations.
• Cash flow analysis: Analyze projected cash inflows and outflows to assess your business's liquidity and solvency. Monitoring cash flow allows you to identify potential shortages and take proactive measures to ensure adequate working capital.
• Financial ratios and indicators: Calculate key financial ratios and indicators to assess your business's performance, including profitability, liquidity, debt-to-equity, and return on investment (ROI). Analyzing these metrics provides valuable insights into your financial stability and growth potential.
• Risk assessment: Identify potential risks that may impact your financial performance, such as market conditions, regulatory changes, or economic downturns. Develop contingency plans to mitigate these risks and ensure business continuity.

Turn your entrepreneurial vision into reality! Securing funding is vital for bringing your business plan to life. In this section, we'll explore funding options and strategies to help you obtain the financial resources you need. Let's get started!

• Understand Your Funding Needs

Before diving into the world of funding, it's crucial to assess your business's financial requirements. Take the time to evaluate startup costs, working capital needs, and projected expenses. Consider factors such as equipment purchases, inventory costs, marketing campaigns, employee salaries, and overhead expenses. Understand your funding needs so you can develop a targeted approach to secure the necessary capital.

• Explore Funding Options

There are numerous funding options available today. It's important to explore these options and select the ones that align with your business goals and industry requirements. Some common funding sources include:

• Loans: Traditional bank loans, Small Business Administration (SBA) loans, and MSME Financing Programs offer favorable interest rates and repayment terms for businesses with a solid credit history and collateral.
• Grants: Research grants and government-sponsored programs provide non-repayable funds specific to your industry or business sector, supporting growth and development.
• Venture Capital: Venture capital firms invest in high-growth potential businesses, providing capital, expertise, and industry connections to help your business thrive.
• Angel Investors: Angel investors invest their own capital in startups or early-stage companies in exchange for equity. They often bring industry experience and valuable networks to the table.
• Crowdfunding: Utilize online platforms to raise funds from individuals who believe in your business idea. Crowdfunding allows you to showcase your product or service and attract support from a broad audience.
• Craft a Compelling Business Plan

A well-crafted and compelling business plan is crucial when seeking funding. Clearly articulate your value proposition, target market, competitive advantage, and growth potential. Include financial projections, market analysis, and a solid understanding of your industry. Present a persuasive case that highlights the profitability and viability of your venture. Your business plan should inspire confidence in potential investors and convince them of the potential returns on their investment.

• Network and Build Relationships

Building strong relationships within your industry and entrepreneurial ecosystem can significantly enhance your funding prospects. Attend networking events, industry conferences, and pitch competitions to connect with potential investors and mentors. Join relevant industry associations and participate in community events to expand your network. Cultivating these relationships can open doors to funding opportunities and valuable advice from experienced professionals.

• Demonstrate Your Commitment and Expertise

Investors want to see your dedication and ability to execute your business plan. Demonstrate your commitment by investing your own capital into the business and showcasing your industry expertise. Highlight your past achievements, relevant experience, and the skills that make you uniquely qualified to succeed. Investors are more likely to fund entrepreneurs who are passionate, knowledgeable, and committed to their business's success.

• Be Prepared for Due Diligence

When investors show interest in your business, they will likely conduct due diligence to assess its viability and potential risks. Be prepared to provide detailed financial statements, legal documentation, market research, and any other relevant information. Show transparency and professionalism throughout the due diligence process to build trust with potential investors.

When developing your business plan, it is very important to consider the legal and regulatory requirements that apply to your industry and location. Adhering to these requirements not only ensures that your business operates within the boundaries of the law but also establishes trust with customers, investors, and other stakeholders. In this section, we will explore the key legal and regulatory considerations that you should address in your business plan.

Addressing legal and regulatory considerations in your business plan shows your commitment to operating ethically and lawfully. This instills confidence in stakeholders, assuring them that you've taken steps to safeguard your business and maintain compliance with relevant laws and regulations.

Step 1: Research Applicable Laws and Regulations

Begin by conducting thorough research to identify the specific laws, regulations, licenses, and permits that apply to your industry and location. Laws and regulations can vary significantly depending on the nature of your business, whether it is a food service establishment, a healthcare provider, or an e-commerce platform. Stay up to date with any changes in legislation that may impact your business operations.

Step 2: Obtain the Necessary Licenses and Permits

Ensure that your business obtains all the required licenses and permits before starting operations. These may include business licenses, professional licenses, health and safety permits, environmental permits, and zoning permits. Failure to secure the necessary licenses and permits can result in fines, penalties, or even legal action that could jeopardize the viability of your business.

Step 3: Protect Intellectual Property

Safeguarding your intellectual property (IP) is crucial for protecting your business's unique assets and competitive advantage. Intellectual property refers to creations of the mind, such as inventions, designs, logos, and artistic works. Depending on the type of IP you want to protect, consider applying for trademarks, copyrights, or patents. Addressing intellectual property considerations in your business plan demonstrates your commitment to safeguarding your innovations and brand.

Step 4: Ensure Compliance with Employment Laws

If you plan to hire employees, it is essential to understand and comply with employment laws and regulations. These laws govern aspects such as minimum wage, working hours, employee benefits, workplace safety, and anti-discrimination practices. Familiarize yourself with both federal and state employment laws to ensure fair treatment of your employees and avoid legal issues that could harm your business's reputation.

Step 5: Protect Consumer Rights and Privacy

Consumer protection and privacy laws are designed to safeguard the rights of your customers and their personal information. Ensure that your business follows best practices for data protection, privacy policies, and marketing practices. Incorporate compliance measures into your business plan to demonstrate your commitment to protecting consumer rights and privacy.

Step 6: Address Compliance and Risk Management

In your business plan, demonstrate your commitment to compliance and risk management by outlining the strategies and processes you will implement. This can include establishing internal controls, conducting regular audits, and addressing potential risks and mitigation measures. Proactively address compliance and risk management to show potential investors and partners that you prioritize responsible and ethical business practices.

Step 7: Seek Legal Counsel

Consider consulting with legal professionals experienced in your industry to ensure that your business plan accurately addresses all legal and regulatory considerations. They can provide guidance on specific legal requirements, review your business plan for compliance, and help you navigate any complex legal issues that may arise.

It's vital to have a clear understanding of how well your business is performing. That's where Key Performance Indicators (KPIs) come in. These quantifiable metrics allow you to measure the success and progress of your business. Identifying and tracking the right KPIs provides valuable insights into your strategies' effectiveness and empowers you to make informed growth-oriented decisions. In this section, we'll emphasize the significance of KPIs and assist you in selecting the most relevant ones for your business.

👉 Choosing the Right KPIs

Selecting the right KPIs is crucial for accurately measuring the success of your business. Let's go through some steps to help you choose the most relevant KPIs:

• Define Your Business Goals: Start by clearly defining your business goals and objectives. What do you want to achieve? Whether it's revenue growth, customer acquisition, operational efficiency, or customer satisfaction, your KPIs should align with your overarching goals.
• Identify Key Areas of Focus: Identify the key areas of your business that directly contribute to achieving your goals. These could include sales, marketing, customer service, production, or financial performance. Focus on KPIs that provide insights into these critical areas.
• Quantify and Measure: Determine how you will quantify and measure each KPI. Ensure that the metrics are reliable, consistent, and easily measurable. Consider both lagging indicators (reflecting past performance) and leading indicators (predicting future outcomes) for a comprehensive view.
• Be Specific and Relevant: Choose KPIs that are specific to your business and industry. Generic metrics may not accurately reflect the unique aspects and challenges of your business. Tailor your KPIs to measure the factors that drive success in your particular market.
• Keep it Balanced: Select a mix of financial and non-financial KPIs to gain a holistic view of your business's performance. While financial metrics like revenue and profit are important, don't overlook other aspects such as customer satisfaction, employee engagement, or brand recognition.

📋 Examples of Common KPIs

Now, let's look at some examples of common KPIs that businesses track:

• Revenue Growth Rate: Measures the percentage increase in revenue over a specific period.
• Customer Acquisition Cost (CAC): Calculates the cost required to acquire a new customer.
• Customer Lifetime Value (CLV): Estimates the total value a customer brings to your business over their lifetime.
• Conversion Rate: Tracks the percentage of website visitors or leads that convert into customers.
• Net Promoter Score (NPS): Measures customer satisfaction and loyalty based on surveys.
• Return on Investment (ROI): Evaluates the profitability of an investment or marketing campaign.
• Employee Turnover Rate: Measures the percentage of employees who leave your organization within a given period.

Congratulations on developing a solid business plan! However, it's important to remember that a business plan is not set in stone. In today's dynamic business environment, the ability to adapt and evolve is crucial for long-term success. In this section, we will explore why it's necessary to be flexible with your business plan and provide strategies for effectively adapting to changes.

🎚️ The Importance of Adaptation

The business landscape is ever-changing, shaped by technology, market trends, customer preferences, and competition. Holding onto an outdated plan can hinder progress and limit opportunities. Embracing adaptation keeps you ahead and fuels continued growth.

🤳 Embracing Market Trends

Market trends have a profound impact on your business's success. Stay ahead by monitoring industry trends, identifying opportunities, and anticipating threats. Stay informed through market research, industry publications, and networking with experts. Adapt your strategies to align with changes in consumer behavior, technology, and competition. Stay proactive and make necessary adjustments to ensure your business thrives.

👂 Listening to Customer Feedback

Your customers hold a wealth of valuable insights and feedback. Engage with them directly through surveys, focus groups, and social media. Listen attentively to their needs, preferences, and challenges. This feedback is a treasure trove of guidance to enhance your offerings and elevate the customer experience. Incorporating customer feedback into your business plan showcases your dedication to meeting their evolving needs. Let their voices shape your success.

💪 Remaining Agile and Flexible

In today's fast-paced business environment, agility and flexibility are essential. Be ready to make quick decisions and pivot when needed. This could mean adjusting marketing strategies, exploring new distribution channels, or even modifying your business model. Regularly assess performance and be willing to adapt based on insights gained. Stay nimble and open-minded, embracing change for your business's success.

🧿 Leveraging Emerging Opportunities

While navigating the business landscape, keep a keen eye out for emerging opportunities that align with your core competencies and goals. This could entail embracing new technologies, exploring untapped markets, or forging partnerships with complementary businesses. Actively seeking and seizing these opportunities positions your business for growth and differentiation. Stay vigilant and stay ahead in this dynamic journey!

There are three predicted trends of emerging change, worries, and hopes that we need to brace ourselves for. Read “ Future-proof Your Team in the New Normal ” blog post or watch the webinar replay for free to learn more.

🖥️ Monitoring Key Performance Indicators (KPIs)

Continuously monitor and assess your KPIs to gauge the effectiveness of your strategies. Identify trends, patterns, and areas of improvement. Regularly review your KPIs to ensure their relevance and alignment with your evolving business goals. Use this data-driven approach to guide your decision-making process and make informed adjustments to your business plan.

📖 Frequently Asked Questions (FAQs)

FAQ 1: What is the purpose of a business plan in entrepreneurship?

A business plan plays a pivotal role in entrepreneurship by serving as a roadmap for your journey. It encompasses various elements such as your business idea, strategies, goals, and financial projections. The primary purpose of a business plan is to provide clarity and direction to your entrepreneurial endeavors. Documenting your vision and outlining the steps to achieve it helps you stay focused, make informed decisions, and effectively communicate your ideas to potential investors, partners, and stakeholders. A well-crafted business plan showcases your professionalism and strategic thinking, increasing your chances of success in the competitive business landscape.

FAQ 2: How do I identify my target audience for my business plan?

Identifying your target audience is crucial for developing a business plan that resonates with your customers. To do this, conduct thorough market research to gather valuable insights. Start by analyzing demographic information such as age, gender, location, and income level. Next, delve deeper into understanding their needs, preferences, and behaviors. Surveys, focus groups, and social media analytics are effective tools for gathering such information. If you understand your target audience, you can tailor your products or services to meet their specific demands, develop effective marketing strategies, and differentiate yourself from competitors. This understanding of your target audience will give you a competitive edge and increase your chances of success.

FAQ 3: Why is a unique value proposition important in a business plan?

A unique value proposition (UVP) is of paramount importance in a business plan as it sets your business apart from competitors. It encapsulates the unique benefits and value that your products or services offer to customers. In today's crowded marketplace, where consumers have numerous options, a compelling UVP helps you attract and retain customers. It communicates why customers should choose your business over others and highlights the distinct advantages you bring to the table. When crafting your UVP, emphasize the key features, advantages, and benefits that differentiate your offerings. When you clearly articulate your UVP in your business plan, you demonstrate your understanding of the market, customer needs, and how your business fulfills those needs better than others.

FAQ 4: How can I secure funding for my business?

Securing funding is often a critical aspect of developing a business plan. There are various avenues to explore, including loans, grants, venture capital, angel investors, and crowdfunding. It is essential to tailor your funding strategy based on your business needs and industry requirements. Start by thoroughly researching and identifying the funding options that align with your goals and vision. Craft a compelling business plan that highlights the profitability and viability of your venture, showcasing potential investors or lenders the potential return on their investment. Include detailed financial projections, market analysis, and a clear plan for utilizing the funds. Demonstrating your financial acumen and presenting a compelling case increases your chances of securing the necessary funding to turn your entrepreneurial dreams into reality.

FAQ 5: Why is it important to adapt and evolve your business plan?

Adapting and evolving your business plan is essential because the business landscape is constantly changing. Market trends, technological advancements, consumer preferences, and competitive forces can impact your business significantly. Regularly review and update your business plan to align your strategies with the evolving market dynamics. This allows you to seize new opportunities, mitigate risks, and stay ahead of the competition. Additionally, customer feedback plays a vital role in adapting your business plan. Actively listening to your customers and incorporating their feedback into your strategies will continuously improve your offerings and enhance the customer experience. Adaptability and flexibility are key traits of successful entrepreneurs, enabling them to navigate challenges and capitalize on emerging trends.

FAQ 6: How can I measure the success of my business?

Measuring the success of your business requires the establishment of key performance indicators (KPIs) that align with your business goals. KPIs are measurable metrics that allow you to track and evaluate your performance over time. Examples of KPIs include revenue growth, customer acquisition rate, customer satisfaction, and market share. It's important to identify the KPIs that are most relevant to your business and industry. Regularly track and analyze these metrics to gain insights into your business's progress and performance. This data-driven approach enables you to make informed decisions, identify areas for improvement, and capitalize on your strengths. To measure your business's success objectively and make crucial adjustments, it's essential to consistently monitor and assess your Key Performance Indicators (KPIs). This enables you to stay on track and work towards your long-term goals.

You've reached the end of this comprehensive guide, and now you have the tools to create a business plan that leads to success. Your business plan is more than just a document—it's your roadmap on this entrepreneurial journey. So, let's summarize the key points you should keep in mind:

• Understand the importance of a business plan: A well-crafted plan clarifies your vision and effectively communicates your ideas to stakeholders.
• Conduct thorough market research: Identify your target audience's needs and preferences to tailor your products or services and gain a competitive edge.
• Define SMART goals: Set specific, measurable, attainable, relevant, and time-bound goals to stay focused and motivated throughout your entrepreneurial journey.
• Craft a unique value proposition: Highlight the unique benefits and value your offerings provide to differentiate yourself in a crowded marketplace.
• Analyze the competitive landscape: Understand your competitors and develop strategies to gain a competitive advantage.
• Develop a marketing and sales strategy: Outline your marketing channels, pricing, promotions, and leverage digital marketing techniques to reach a wider audience.
• Create a robust operational plan: Ensure smooth business operations by addressing aspects such as production processes, inventory management, and quality control.
• Build a comprehensive financial plan: Demonstrate your financial acumen by creating a budget, conducting financial forecasting, and identifying potential risks.
• Secure funding strategically: Explore various funding options and present a compelling case in your plan to attract investors.
• Consider legal and regulatory requirements: Comply with applicable regulations and showcase your commitment to operating within the legal framework.
• Measure success with KPIs: Establish relevant metrics to track and analyze your business's progress and make data-driven decisions.
• Adapt and evolve your plan: Regularly review and update your strategies to align with market trends, customer feedback, and emerging opportunities.

Now, it's time for you to take action. Based on the insights you've gained from this guide, which key aspect of your business plan will you focus on improving? How do you think this refinement will contribute to the success of your venture?

For those who are just starting up a business, here's an additional question to consider:

As you embark on your entrepreneurial journey, what initial steps will you take to validate your business idea and ensure its feasibility in the market? How will this validation process contribute to building a solid foundation for your business?

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How to Write a Business Plan, Step by Step

Rosalie Murphy is a small-business writer at NerdWallet. Since 2021, she has covered business insurance, banking, credit cards and e-commerce software, and her reporting has been featured by The Associated Press, MarketWatch, Entrepreneur and many other publications. Rosalie holds a graduate certificate in Quantitative Business Management from Kent State University and is now pursuing an MBA. She is based in Chicago.

Ryan Lane is an editor on NerdWallet’s small-business team. He joined NerdWallet in 2019 as a student loans writer, serving as an authority on that topic after spending more than a decade at student loan guarantor American Student Assistance. In that role, Ryan co-authored the Student Loan Ranger blog in partnership with U.S. News & World Report, as well as wrote and edited content about education financing and financial literacy for multiple online properties, e-courses and more. Ryan also previously oversaw the production of life science journals as a managing editor for publisher Cell Press. Ryan is located in Rochester, New York.

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What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

ZenBusiness

A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

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Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

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Contents of a Business Plan: Everything You Need to Know

The contents of a business plan consist of a detailed description of what, when, why, where, and how the business's operations will be accomplished. 3 min read updated on January 01, 2024

Overview of a Business Plan

A business plan includes the cost of organizing the business, the anticipated sources of revenue, how the products and services are customer oriented, and anticipated profit margins. Business plans serve two main purposes. First, they are a guide business owners use to streamline management and planning/organization of the business. Second, they show potential venture capitalists, bankers, and other lenders a comprehensive plan to encourage them to invest in the business.

Sublevels of a business plan include:

• Marketing plan
• Financial plan
• Human resource plan
• Production plan

Elements of a Business Plan

A well-written business plan will include the following:

• Cover letter

Table of Contents

Executive Summary

• Mission statement
• Company background
• Products and services
• Competitive analysis

Marketing/Realization

• Location/Production/Administrative
• Management and international organization
• Risk analysis
• Financial planning

Summary/Conclusion

Cover Letter

The business plan's cover letter has the same purpose as a cover letter for a resume. The point is to engage prospective investors using the cover letter so they'll look at the entire plan. The cover letter should include the recipient's address, the date, and your address. Begin the cover letter with "Dear" followed by the person's name.

In the body of the cover letter, let the recipient know you're submitting a business plan with a short one-sentence description of the business and what the recipient can expect when reading the plan. In the next paragraph, indicate that you look forward to hearing from them and provide a phone number they can call at their convenience.

Thank them for their time. Sign off. Include your name in typewritten form along with your signature.

Keep this page short and to the point. Include your business logo, business name, if there is a founder, and the name. Add "Business Plan," an image (optional), and the date.

The table of contents is a roadmap to help the recipient peruse the list and easily find each section. Some people may choose to read sections one after the other while others may choose to skip around. Include every section and subsection that may be of interest to a potential investor.

This is an important section. Because you're targeting executives, the overview of your business should be top-quality information to entice them to read the complete plan. The focus should be a summary of the main facets of your business plan.

Mission Statement

This section is a short statement about your business's goal and what you plan to create through the enterprise.

Company Background

This is a short statement including the date the business was developed, its founders, stages of development, the date it was incorporated, and, for existing businesses, the level of success.

Also, include the key figures in the business and the ownership and legal structure.

Products and Services

Under this section, provide a detailed description of your customer needs, benefits to customers, marketing services, and advantages and disadvantages of any competitor services or products.

Marketing Plan

This will include an overview of the market in general with an emphasis on purchase incentives, market analysis, and customer structure. It will also include the position your business holds in the market using information from target customer groups, canvassed market segments, and sale channels.

Competitive Analysis

Provide information about your main competitors' names, locations, market positions, weaknesses, strengths, and target markets.

This section covers details about product range, services, and pricing strategies. Sales targets for the next five years should also be included.

Location/Production/Administration

Include the location of the business and the advantages and disadvantages of its location. The production should discuss in-house and/or outsourced production and material costs. The administration portion will discuss the office infrastructure, such as accounting and technical support.

Management and International Organization

This section could work written as an organizational chart outlining member functions and responsibilities, special skills, and salaries.

Risk Analysis

Provide information on anticipated internal risks such as marketing, production, management, and financing. External risks would include information on ecological, economic, social, and legal areas.

Financial Planning

Lay out your plan for short- and long-term financial planning.

This is a final wrap up of the business plan that binds the everything together.

If you need help with outlining the contents of 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.

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More From Forbes

The Key Benefits To A Comprehensive Business Plan

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Starting a new business is an exhilarating adventure filled with many possibilities with the thrill of turning a vision into reality. The excitement stems from the opportunity to innovate, create something unique, and make a meaningful impact in the world.

However, with this excitement comes the challenge of juggling numerous tasks. From developing a solid business plan and securing funding to building a brand and assembling a team, the initial phase of launching a business demands attention to detail and effective time management. Navigating these multifaceted responsibilities requires resilience and strategic planning, but the reward of seeing your entrepreneurial dream come to life makes every effort worthwhile.

One of the key elements to ensure your venture's success is a well-constructed business plan. Whether you're a seasoned entrepreneur or a budding startup, having a solid business plan is crucial for several reasons.

Let's explore why a good business plan is indispensable for your business.

1. provides a roadmap for success.

A business plan serves as a roadmap, guiding you through each phase of your business journey. It helps you outline your business goals, identify your target market, and define your unique selling proposition (USP). With a clear plan in place, you can make informed decisions and stay on track, ensuring your business moves in the right direction.

Best High-Yield Savings Accounts Of 2024

Best 5% interest savings accounts of 2024, 2. helps secure funding.

Your business plan can help to secure funding . Investors and lenders need to see a detailed plan that demonstrates your business's potential for success. A comprehensive business plan shows them that you've done your homework, understand your market, and have a clear strategy for growth. It gives them confidence that their investment will yield returns.

3. Clarifies Your Business Idea

Writing a business plan forces you to thoroughly analyze your business idea. It helps you identify potential challenges and opportunities, refine your business model, and ensure your idea is viable. This process of critical thinking and reflection is invaluable, as it can save you time and money in the long run by addressing issues before they become major problems.

4. Facilitates Strategic Planning

A business plan is not just about the present; it's also about the future. It allows you to set long-term goals and develop strategies to achieve them. By regularly reviewing and updating your business plan, you can adapt to changing market conditions, stay ahead of competitors, and seize new opportunities as they arise.

5. Improves Communication

Whether you're pitching to investors, recruiting new team members, or collaborating with partners, a business plan helps you clearly communicate your vision and goals. It ensures everyone involved understands the direction of the business and their role in achieving success. This alignment is crucial for building a cohesive and motivated team.

6. Aids in Risk Management

Every business must manage risk but a good business plan helps you anticipate and mitigate those risks. When potential risks are identified you can create contingency plans to minimize their impact on your business. This proactive approach to risk management can make the difference between thriving and merely surviving in a competitive market.

7. Tracks Progress and Measures Success

A business plan offers benchmarks so that you can measure your progress against your goals. By setting specific, measurable goals, you can track your performance, identify areas for improvement, and celebrate your achievements. This ongoing assessment is essential for maintaining momentum and driving continuous growth.

The bottom line is that in the dynamic world of business, a good business plan is your best ally. It not only lays the foundation for your venture but also guides you through the complexities of entrepreneurship. By following these tips you have a laid out plan to navigate the challenges and opportunities that come your way.

Melissa Houston, CPA is the author of Cash Confident: An Entrepreneur’s Guide to Creating a Profitable Business and the founder of She Means Profit . As a Business Strategist for small business owners, Melissa helps women making mid-career shifts, to launch their dream businesses, and I also guide established business owners to grow their businesses to more profitably.

The opinions expressed in this article are not intended to replace any professional or expert accounting and/or tax advice whatsoever.

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The importance of a business plan

Business plans are like road maps: it’s possible to travel without one, but that will only increase the odds of getting lost along the way.

Owners with a business plan see growth 30% faster than those without one, and 71% of the fast-growing companies have business plans . Before we get into the thick of it, let’s define and go over what a business plan actually is.

What is a business plan?

A business plan is a 15-20 page document that outlines how you will achieve your business objectives and includes information about your product, marketing strategies, and finances. You should create one when you’re starting a new business and keep updating it as your business grows.

Rather than putting yourself in a position where you may have to stop and ask for directions or even circle back and start over, small business owners often use business plans to help guide them. That’s because they help them see the bigger picture, plan ahead, make important decisions, and improve the overall likelihood of success. ‍

Why is a business plan important?

A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the ability to lay out their goals and track their progress as their business begins to grow. Business planning should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business is on the right path and worth putting money into.

Business plans typically include detailed information that can help improve your business’s chances of success, like:

• A market analysis : gathering information about factors and conditions that affect your industry
• Competitive analysis : evaluating the strengths and weaknesses of your competitors
• Customer segmentation : divide your customers into different groups based on specific characteristics to improve your marketing
• Marketing: using your research to advertise your business
• Logistics and operations plans : planning and executing the most efficient production process
• Cash flow projection : being prepared for how much money is going into and out of your business
• An overall path to long-term growth

What is the purpose of a business plan?

A business plan is like a map for small business owners, showing them where to go and how to get there. Its main purposes are to help you avoid risks, keep everyone on the same page, plan finances, check if your business idea is good, make operations smoother, and adapt to changes. It's a way for small business owners to plan, communicate, and stay on track toward their goals.

10 reasons why you need a business plan

I know what you’re thinking: “Do I really need a business plan? It sounds like a lot of work, plus I heard they’re outdated and I like figuring things out as I go...”.

The answer is: yes, you really do need a business plan! As entrepreneur Kevin J. Donaldson said, “Going into business without a business plan is like going on a mountain trek without a map or GPS support—you’ll eventually get lost and starve! Though it may sound tedious and time-consuming, business plans are critical to starting your business and setting yourself up for success.

To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business.

1. To help you with critical decisions

The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and crisis management. Sitting down and considering all the ramifications of any given decision is a luxury that small businesses can’t always afford. That’s where a business plan comes in.

Building a business plan allows you to determine the answer to some of the most critical business decisions ahead of time.

Creating a robust business plan is a forcing function—you have to sit down and think about major components of your business before you get started, like your marketing strategy and what products you’ll sell. You answer many tough questions before they arise. And thinking deeply about your core strategies can also help you understand how those decisions will impact your broader strategy.

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2. To iron out the kinks

Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers. Even if the document itself were to disappear as soon as it’s completed, the practice of writing it helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.

3. To avoid the big mistakes

Only about half of small businesses are still around to celebrate their fifth birthday . While there are many reasons why small businesses fail, many of the most common are purposefully addressed in business plans.

According to data from CB Insights , some of the most common reasons businesses fail include:

• No market need : No one wants what you’re selling.
• Lack of capital : Cash flow issues or businesses simply run out of money.
• Inadequate team : This underscores the importance of hiring the right people to help you run your business.
• Stiff competition : It’s tough to generate a steady profit when you have a lot of competitors in your space.
• Pricing : Some entrepreneurs price their products or services too high or too low—both scenarios can be a recipe for disaster.

The exercise of creating a business plan can help you avoid these major mistakes. Whether it’s cash flow forecasts or a product-market fit analysis , every piece of a business plan can help spot some of those potentially critical mistakes before they arise. For example, don’t be afraid to scrap an idea you really loved if it turns out there’s no market need. Be honest with yourself!

Get a jumpstart on your business plan by creating your own cash flow projection .

4. To prove the viability of the business

Many businesses are created out of passion, and while passion can be a great motivator, it’s not a great proof point.

Planning out exactly how you’re going to turn that vision into a successful business is perhaps the most important step between concept and reality. Business plans can help you confirm that your grand idea makes sound business sense.

A critical component of your business plan is the market research section. Market research can offer deep insight into your customers, your competitors, and your chosen industry. Not only can it enlighten entrepreneurs who are starting up a new business, but it can also better inform existing businesses on activities like marketing, advertising, and releasing new products or services.

Want to prove there’s a market gap? Here’s how you can get started with market research.

5. To set better objectives and benchmarks

Without a business plan, objectives often become arbitrary, without much rhyme or reason behind them. Having a business plan can help make those benchmarks more intentional and consequential. They can also help keep you accountable to your long-term vision and strategy, and gain insights into how your strategy is (or isn’t) coming together over time.

6. To communicate objectives and benchmarks

Whether you’re managing a team of 100 or a team of two, you can’t always be there to make every decision yourself. Think of the business plan like a substitute teacher, ready to answer questions any time there’s an absence. Let your staff know that when in doubt, they can always consult the business plan to understand the next steps in the event that they can’t get an answer from you directly.

Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing, why, and share the same understanding of long-term objectives.

7. To provide a guide for service providers

Small businesses typically employ contractors , freelancers, and other professionals to help them with tasks like accounting , marketing, legal assistance, and as consultants. Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, while ensuring everyone is on the same page.

8. To secure financing

Did you know you’re 2.5x more likely to get funded if you have a business plan?If you’re planning on pitching to venture capitalists, borrowing from a bank, or are considering selling your company in the future, you’re likely going to need a business plan. After all, anyone that’s interested in putting money into your company is going to want to know it’s in good hands and that it’s viable in the long run. Business plans are the most effective ways of proving that and are typically a requirement for anyone seeking outside financing.

Learn what you need to get a small business loan.

9. To better understand the broader landscape

No business is an island, and while you might have a strong handle on everything happening under your own roof, it’s equally important to understand the market terrain as well. Writing a business plan can go a long way in helping you better understand your competition and the market you’re operating in more broadly, illuminate consumer trends and preferences, potential disruptions and other insights that aren’t always plainly visible.

10. To reduce risk

Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce the risk factor from an inherently precarious way to make a living. Having a business plan allows you to leave less up to chance, make better decisions, and enjoy the clearest possible view of the future of your company.

Business plan FAQs

How does having a business plan help small business owners make better decisions.

Having a business plan supports small business owners in making smarter decisions by providing a structured framework to assess all parts of their businesses. It helps you foresee potential challenges, identify opportunities, and set clear objectives. Business plans help you make decisions across the board, including market strategies, financial management, resource allocation, and growth planning.

What industry-specific issues can business plans help tackle?

Business plans can address industry-specific challenges like regulatory compliance, technological advancements, market trends, and competitive landscape. For instance, in highly regulated industries like healthcare or finance, a comprehensive business plan can outline compliance measures and risk management strategies.

How can small business owners use their business plans to pitch investors or apply for loans?

In addition to attracting investors and securing financing, small business owners can leverage their business plans during pitches or loan applications by focusing on key elements that resonate with potential stakeholders. This includes highlighting market analysis, competitive advantages, revenue projections, and scalability plans. Presenting a well-researched and data-driven business plan demonstrates credibility and makes investors or lenders feel confident about your business’s potential health and growth.

Understanding the importance of a business plan

Now that you have a solid grasp on the “why” behind business plans, you can confidently move forward with creating your own.

Remember that a business plan will grow and evolve along with your business, so it’s an important part of your whole journey—not just the beginning.

Related Posts

Now that you’ve read up on the purpose of a business plan, check out our guide to help you get started.

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

The Biden admin has no firm plan to call out domestic disinformation in the 2024 election

The Biden administration has no firm   plans to alert the public about deepfakes or other false information during the 2024 election unless it is clearly coming from a foreign actor and poses a sufficiently grave threat , according to current and former officials.

Although cyber experts in and outside of government expect an onslaught of disinformation and deepfakes during this year’s election campaign, officials in the FBI and the Department of Homeland Security remain worried that if they weigh in, they will face accusations that they are attempting to tilt the election in favor of President Joe Biden’s re-election.

Lawmakers from both parties have urged the Biden administration to take a more assertive stance .

“I’m worried that you may be overly concerned with appearing partisan and that that will freeze you in terms of taking the actions that are necessary,” Sen. Angus King, a Maine independent who caucuses with the Democrats, told cybersecurity and intelligence officials at a hearing last month.

Sen. Marco Rubio, R-Fla., asked how the government would react to a deepfake video. “If this happens, who’s in charge of responding to it? Have we thought through the process of what do we do when one of these scenarios occurs?” he asked. “‘We just want you to know that video is not real.’ Who would be in charge of that?”

A senior U.S. official familiar with government deliberations said federal law enforcement agencies, particularly the FBI, are reluctant to call out disinformation with a domestic origin.

The FBI will investigate possible election law violations, the official said, but does not feel equipped to make public statements about disinformation or deepfakes generated by Americans.

“The FBI is not in the truth detection business,” the official said.

In interagency meetings about the issue, the official said, it’s clear that the Biden administration does not have a specific plan for how to deal with domestic election disinformation, whether it’s a deepfake impersonating a candidate or a false report about violence or voting locations being closed that could dissuade people from going to the polls.

In a statement to NBC News, the FBI acknowledged that even when it investigates possible criminal violations involving false information, the bureau is unlikely to immediately flag what’s false.

“The FBI can and does investigate allegations of Americans spreading disinformation that are intended to deny or undermine someone’s ability to vote,” the statement said. “The FBI takes these allegations seriously, and that requires that we follow logical investigative steps to determine if there is a violation of federal law. Those investigative steps cannot be completed ‘in the moment.’”

The bureau added that it will “work closely with state and local election officials to share information in real time. But since elections are administered at the state level, the FBI would defer to state-level election officials about their respective plans to address disinformation in the moment.” 

A senior official at the Cybersecurity and Infrastructure Security Agency (CISA), the federal entity charged with protecting election infrastructure, said state and local election agencies were best placed to inform the public about false information spread by other Americans but would not rule out the possibility that the agency might issue a public warning if necessary.

“I won’t say that we wouldn’t speak publicly about something. I would not say that categorically. No, I think it just depends,” the official said.

“Is this something that’s specific to one state or jurisdiction? Is this something that’s happening in multiple states? Is this something that’s actually impacting election infrastructure?” the official said.

CISA has focused on helping educate the public and train state and local election officials about the tactics employed in disinformation campaigns, the official said.

“At CISA, we certainly have not stopped prioritizing this as a threat vector that we take very seriously for this election cycle,” the official said.

The late-breaking deepfake

Robert Weissman, president of Public Citizen, a pro-democracy group that has been urging states to criminalize political deepfakes, said that the current federal approach is a recipe for chaos.

The biggest fear, he said, is a late-breaking deepfake that reflects poorly on a candidate and could influence the outcome of an election. Right now, government bodies — from county election boards to federal authorities — have no plans to respond to such a development, he said.

“If political operatives have a tool they can use and it’s legal, even if it’s unethical, they are pretty likely to use it,” Weissman said. “We are foolish if we expect anything other than a tsunami of deepfakes.”

Disinformation designed to keep people from voting is illegal, but deepfakes mischaracterizing the actions of candidates are not prohibited under federal law and by the laws of 30 states.

The Department of Homeland Security has  warned election officials across the country that generative artificial intelligence could allow bad actors — either foreign or domestic — to impersonate election officials and spread false information, something that has happened in other countries around the world in recent months.

At a recent meeting with tech executives and nonpartisan watchdog groups, a senior federal official in cybersecurity acknowledged that fake videos or audio clips generated by AI posed a potential risk in an election year. But they said that CISA would not try to intervene to warn the public because of the polarized political climate.

Intelligence agencies say they are closely tracking false information spread by foreign adversaries, and officials  said  recently they are prepared if necessary to issue a public statement about certain disinformation if the author of the false information is clearly a foreign actor and if the threat is sufficiently “severe” that it could jeopardize the outcome of the election. But they have not clearly defined what “severe” means.

At a Senate Intelligence Committee hearing last month on the disinformation threat, senators said the government needed to come up with a more coherent plan as to how it would handle a potentially damaging “deepfake” during the election campaign.

Sen. Mark Warner, D-Va., the committee’s chair, told NBC News that the threat posed by generative AI is “serious and rampant” and that the federal government needed to be ready to respond.

“While I continue to push tech companies to do more to curb nefarious AI content of all varieties, I think it’s appropriate for the federal government to have a plan in place to alert the public when a serious threat comes from a foreign adversary,” he said. “In domestic contexts, state and federal law enforcement may be positioned to determine if election-related disinformation constitutes criminal activity, such as voter suppression.”

How other countries respond

Unlike the U.S. government, Canada has published an  explanation  of its decision-making protocol for how Ottawa will respond to an incident that could put an election at risk. The government website promises to “communicate clearly, transparently and impartially with Canadians during an election in the event of an incident or a series of incidents that threatened the election’s integrity.”

Some other democracies, including Taiwan, France and Sweden, have adopted a more proactive approach to disinformation, flagging false reports or collaborating closely with nonpartisan groups that fact-check and try to educate the public, experts said.

Sweden, for example, set up a special government agency in 2022 to combat disinformation — prompted by Russia’s information warfare — and has tried to educate the public about what to look out for and how to recognize attempts to spread falsehoods.

France has set up a similar agency, the Vigilance and Protection Service against Foreign Digital Interference, known as Viginum, which regularly issues detailed public reports about Russian-backed propaganda and false reports, describing fake government websites, news sites and social media accounts.

The European Union, following the lead of France and other member states, has set up a center for sharing information and research between government agencies and nonprofit civil society groups that track the issue.

But those countries are not plagued by the same degree of political division as in the United States, according to David Salvo, a former U.S. diplomat and now managing director of the Alliance for Securing Democracy at the German Marshall Fund think tank. 

“It’s tough, because the best practices tend to be in places where either trust in government is a hell of a lot higher than it is here,” he said. 

Discord derailed U.S. effort

After the 2016 election in which Russia spread disinformation through social media, U.S. government agencies began working with social media companies and researchers to help identify potentially violent or volatile content. But a federal court ruling in 2023 discouraged federal agencies from even communicating with social media platforms about content.

The Supreme Court is due to take up the case as soon as this week, and if the lower court ruling is rejected, more regular communication between federal agencies and the tech firms could resume.

Early in President Joe Biden’s term, the administration sought to tackle the danger presented by false information circulating on social media, with DHS setting up a disinformation working group led by an expert from a nonpartisan Washington think tank. But Republican lawmakers denounced the Disinformation Governance Board as a threat to free speech with an overly vague role and threatened to cut off funding for it. 

Under political pressure, DHS  shut it down  in August 2022 and the expert who ran the board, Nina Jankowicz, said she and her family received numerous death threats during her brief tenure. 

Even informal cooperation between the federal government and private nonprofit groups is more politically fraught in the U.S. due to the polarized landscape, experts say. 

Nonpartisan organizations potentially face accusations of partisan bias if they collaborate or share information with a federal or state government agency, and many have faced allegations that they are stifling freedom of speech by merely tracking online disinformation.

The threat of lawsuits and intense political attacks from pro-Trump Republicans have led many organizations and universities to pull back from research on disinformation in recent years. Stanford University’s Internet Observatory, which had produced influential research on how false information moved through social media platforms during elections, recently laid off most of its staff after a spate of legal challenges and political criticism.

The university on Monday  denied  it was shutting down the center because of outside political pressure. It does, however, “face funding challenges as its founding grants will soon be exhausted,” the center said in a statement.

Given the federal government’s reluctance to speak publicly about disinformation, state and local election officials likely will be in   the spotlight during the election, having to make decisions quickly about whether to issue a public warning. Some already have turned to a coalition of nonprofit organizations that have hired technical experts to help detect AI-generated deepfakes and provide accurate information about voting.

Two days before New Hampshire’s presidential primary in January, the state attorney general’s office put out a  statement  warning the public about AI-produced robocalls using fake audio clips that sounded like Biden telling voters not to go to the polls. New Hampshire’s secretary of state then spoke to news outlets to provide accurate information about voting.

Dan De Luce is a reporter for the NBC News Investigative Unit. 

Ken Dilanian is the justice and intelligence correspondent for NBC News, based in Washington.

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How to Embrace the Motivating Power of Fear and Reach Your Highest Goals So many entrepreneurs get caught up in the excitement of making an impact with their new business and the income potential it may provide, but this can blind you to the sometimes harsh realities of scaling a startup. You can plan for them though — here's how.

By Nancy Solari Edited by Kara McIntyre Jun 19, 2024

Key Takeaways

• Grant yourself permission to make mistakes.
• Consider all possibilities of a scenario when in the planning stages so you're not caught off guard if things go wrong.
• Have a structure in place for everything from the start.

Opinions expressed by Entrepreneur contributors are their own.

For any entrepreneur starting a business, deciding whether the risk is worth the reward can be intimidating. But the key to scaling a business concept is to embrace the "fear factor" — let it teach you the right steps to take toward real growth. In the early days, it's easy to get swept up in visions of wealth and fame. But the excitement of making an impact and the income potential can blind you to the realities. Here are three strategies to give you the staying power to reach your highest goals.

Grant yourself permission to make mistakes

You're not always going to have the right information to make the perfect decision. Don't let fear of making a move keep you from growing your business. When you're considering the risk versus reward, build in the inevitability of gaffes, missteps and bad decisions. You're going to make them, and these errors in judgment will probably not bring the end of the world. In fact, even if you never made a mistake, you could still lose your business.

On the other hand, many mistakes and oversights can be avoided with a little proactive planning . For example, business meetings are fertile ground for misunderstandings. Different people walk away from a meeting with entirely different perspectives on what was said. To avoid this confusion, you should have a policy that everything is in writing. Taking minutes in meetings, insisting on written agreements and keeping communication lines open will help keep some of the confusion to a minimum.

In my own business, I take advantage of technology that allows me to hold online conference calls — audio only — and have them recorded. Anyone can listen to the recording; this not only helps with clarifying decisions in staff meetings, but it also assists my team and me with interviews, planning meetings and writing assignments. Zoom gives you the video and audio component as well, of course, with the added benefit of chat comments and digital whiteboard instruction. Recording even one-on-one sessions can prevent the constant barrage of emails or multiple phone calls where I'm merely repeating myself.

Related: The Path to Success Is Filled With Mistakes. Do These Four Things to Tap Into Their Growth Potential.

Consider all possibilities when planning

From the beginning, there are baby steps to starting a business ; small decisions that carry a lot of weight. When you look at what you are trying to build, you must decide whether your enterprise is best built by yourself or whether you need partners. Since you know your skill set best, think of what you need that other talent could bring to the table. I work with a team of professionals on the TV show I created. Together, we have a synergy. Our combined skills cover operations, fundraising, production and education.

This strategy works in any business. For example, a contractor who provides the labor could team up with an investor who finances the projects. The right person for your business could be someone who has expertise, connections or even influence. It's important to take the time to think about the foundation you are building upon and who can help you get there.

In the planning stages, it's important to take the best and worst-case scenarios to the limit. Allowing your mind to cover all the possibilities is healthy for you and your enterprise. Growing a business brings highs and lows — it's part of the territory — and you have to be prepared for this. Let's assume you experience real growth and attract investors. You will have to expand. You must have accounting support to oversee that kind of growth. You should already be considering potential candidates or firms to handle the money. Depending on what business you have, you might consider inviting an attorney, an accountant or a marketing guru as a foundation partner to minimize risk — and save costs.

Rather than waiting until the need arises, be thinking about who will cover for you if you get sick; how you will be paid; what your hiring process will look like; and how you will grow and compensate your team.

Related: 5 Fears All Entrepreneurs Face (and How to Conquer Them)

Have a structure in place for everything from the start

You may not realize it, but the clock starts ticking the minute you begin to invest your time, spend seed money and put people to work building your new business. Regret can become your worst enemy. You don't want to look back and say to yourself, "I wish I had done that sooner" or "I've wasted so much time." There is a real danger that you may miss out on an opportunity or fail to maximize your potential. The best way to avoid regret is to have a structure in place for everything you do — from the beginning.

From the start, work out your branding, logo, slogan and message, making sure everything is in sync — from the email to the website, even the advertising and billing. The customer service account specialists need to know your message, how your company began and what the company's mission is. If everyone on your team is in alignment, there is a greater chance that your clients will come to know your purpose . Remember, it's not what you do; it's who you are and what you stand for that matters.

Develop a hiring process and departmental training guides with multi-media components to reach every person's learning style. Something as simple as a list of emails and passwords or links to important sites in a training guide can save your employees time and avoid confusion. Use digital tools for simple tasks such as social media posting or appointment scheduling. Make as many things as possible automated to keep work flowing.

Whether you start the business by yourself or assemble a team, every entrepreneur needs support . You truly can't do it alone. Regret is most acutely felt when we as executives look back at all the things we missed in our personal lives because we were so busy growing the business. Many leaders are people who can't rest. They almost always feel that there is something else they should be doing. But slowing down and celebrating victories great and small help me remember why I'm doing all of this in the first place. In the first planning session for your enterprise, build a support system that keeps you from burning out and missing what is truly important in your life.

Related: 8 Ways to Harness the Power of Fear for Personal Success

Final thoughts

You can be proactive in the way you start your company. Facing your fears by accepting your imperfections, running the scenarios and building a regret-free business will keep your vision clear and your productivity high. By embracing the things that can go wrong, you will reap the benefits and build the kind of success your entire organization can share.

Entrepreneur Leadership Network® Contributor

CEO of Living Full Out

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