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How to Write a Business Plan in 9 Steps (+ Template and Examples)

Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.

If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.

Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.

You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.

Let’s get started.

What Do You Need A Business Plan For?

Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.

1. Secure Funds

One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.

For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.

A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.

Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.

2. Monitor Business Growth

A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:

• The business goals
• Methods to achieve the goals
• Time-frame for attaining those goals

A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.

You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.

3. Measure Business Success

A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.

Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.

You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.

4. Document Your Marketing Strategies

You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.

Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.

In your business plan, your marketing strategy must answer the questions:

• How do you want to reach your target audience?
• How do you plan to retain your customers?
• What is/are your pricing plans?
• What is your budget for marketing?

How to Write a Business Plan Step-by-Step

1. create your executive summary.

The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.

Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.

A good executive summary should do the following:

• A Snapshot of Growth Potential. Briefly inform the reader about your company and why it will be successful)
• Contain your Mission Statement which explains what the main objective or focus of your business is.
• Product Description and Differentiation. Brief description of your products or services and why it is different from other solutions in the market.
• The Team. Basic information about your company’s leadership team and employees
• Business Concept. A solid description of what your business does.
• Target Market. The customers you plan to sell to.
• Marketing Strategy. Your plans on reaching and selling to your customers
• Current Financial State. Brief information about what revenue your business currently generates.
• Projected Financial State. Brief information about what you foresee your business revenue to be in the future.

The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.

Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.

View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:

• Who is your target audience?
• What sector or industry are you in?
• What are your products and services?
• What is the future of your industry?
• Is your company scaleable?
• Who are the owners and leaders of your company? What are their backgrounds and experience levels?
• What is the motivation for starting your company?
• What are the next steps?

Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.

The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.

If you are writing your business plan for your planning purposes, you do not need to write the executive summary.

2. Add Your Company Overview

The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.

Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.

Your company overview should contain the following:

• What products and services you will provide
• Geographical markets and locations your company have a presence
• What you need to run your business
• Who your target audience or customers are
• Who will service your customers
• Your company’s purpose, mission, and vision
• Information about your company’s founders
• Who the founders are
• Notable achievements of your company so far

When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.

If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.

• Who are you targeting? (The answer is not everyone)
• What pain point does your product or service solve for your customers that they will be willing to spend money on resolving?
• How does your product or service overcome that pain point?
• Where is the location of your business?
• What products, equipment, and services do you need to run your business?
• How is your company’s product or service different from your competition in the eyes of your customers?
• How many employees do you need and what skills do you require them to have?

After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.

The company description or overview section contains three elements: mission statement, history, and objectives.

• Mission Statement

The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.

Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”

When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:

• Founding Date
• Major Milestones
• Location(s)
• Flagship Products or Services
• Number of Employees
• Executive Leadership Roles

When you fill in this information, you use it to write one or two paragraphs about your company’s history.

Business Objectives

Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.

3. Perform Market and Competitive Analyses to Proof a Big Enough Business Opportunity

The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.

Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.

This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.

Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?

You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.

Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?

Illustrate the competitive landscape as well. What are your competitors doing well and not so well?

Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.

Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.

Market Analysis

Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.

The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.

A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.

• Market Research

To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.

• Your target market’s needs or pain points
• The existing solutions for their pain points
• Geographic Location
• Demographics

The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.

Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.

You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.

How to Quantify Your Target Market

One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:

• Your Potential Customers: They are the people you plan to target. For example, if you sell accounting software for small businesses , then anyone who runs an enterprise or large business is unlikely to be your customers. Also, individuals who do not have a business will most likely not be interested in your product.
• Total Households: If you are selling household products such as heating and air conditioning systems, determining the number of total households is more important than finding out the total population in the area you want to sell to. The logic is simple, people buy the product but it is the household that uses it.
• Median Income: You need to know the median income of your target market. If you target a market that cannot afford to buy your products and services, your business will not last long.
• Income by Demographics: If your potential customers belong to a certain age group or gender, determining income levels by demographics is necessary. For example, if you sell men's clothes, your target audience is men.

What Does a Good Market Analysis Entail?

Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.

You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:

• Industry Description. You find out about the history of your industry, the current and future market size, and who the largest players/companies are in your industry.
• Overview of Target Market. You research your target market and its characteristics. Who are you targeting? Note, it cannot be everyone, it has to be a specific group. You also have to find out all information possible about your customers that can help you understand how and why they make buying decisions.
• Size of Target Market: You need to know the size of your target market, how frequently they buy, and the expected quantity they buy so you do not risk overproducing and having lots of bad inventory. Researching the size of your target market will help you determine if it is big enough for sustained business or not.
• Growth Potential: Before picking a target market, you want to be sure there are lots of potential for future growth. You want to avoid going for an industry that is declining slowly or rapidly with almost zero growth potential.
• Market Share Potential: Does your business stand a good chance of taking a good share of the market?
• Market Pricing and Promotional Strategies: Your market analysis should give you an idea of the price point you can expect to charge for your products and services. Researching your target market will also give you ideas of pricing strategies you can implement to break into the market or to enjoy maximum profits.
• Potential Barriers to Entry: One of the biggest benefits of conducting market analysis is that it shows you every potential barrier to entry your business will likely encounter. It is a good idea to discuss potential barriers to entry such as changing technology. It informs readers of your business plan that you understand the market.
• Research on Competitors: You need to know the strengths and weaknesses of your competitors and how you can exploit them for the benefit of your business. Find patterns and trends among your competitors that make them successful, discover what works and what doesn’t, and see what you can do better.

The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.

Here are some questions you can answer that can help you position your product or service in a positive light to your readers.

• Is your product or service of superior quality?
• What additional features do you offer that your competitors do not offer?
• Are you targeting a ‘new’ market?

Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.

Competitive Analysis

In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.

Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.

Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.

The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.

Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.

When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.

Find answers to the following questions after you have identified who your competitors are.

• What are your successful competitors doing?
• Why is what they are doing working?
• Can your business do it better?
• What are the weaknesses of your successful competitors?
• What are they not doing well?
• Can your business turn its weaknesses into strengths?
• How good is your competitors’ customer service?
• Where do your competitors invest in advertising?
• What sales and pricing strategies are they using?
• What marketing strategies are they using?
• What kind of press coverage do they get?
• What are their customers saying about your competitors (both the positive and negative)?

If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.

If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.

Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.

The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.

Direct vs Indirect Competition

You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.

There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.

If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.

In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.

For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.

There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.

Factors that Differentiate Your Business from the Competition

There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.

1. Cost Leadership

A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.

A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.

2. Product Differentiation

Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.

Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.

3. Market Segmentation

As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.

If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.

4. Define Your Business and Management Structure

The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.

Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.

If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.

Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.

The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.

Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.

Management Team

The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.

Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.

A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.

Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.

Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.

If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.

Key Questions to Answer When Structuring Your Management Team

• Who are the key leaders?
• What experiences, skills, and educational backgrounds do you expect your key leaders to have?
• Do your key leaders have industry experience?
• What positions will they fill and what duties will they perform in those positions?
• What level of authority do the key leaders have and what are their responsibilities?
• What is the salary for the various management positions that will attract the ideal candidates?

Additional Tips for Writing the Management Structure Section

1. Avoid Adding ‘Ghost’ Names to Your Management Team

There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.

Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.

2. Focus on Credentials But Pay Extra Attention to the Roles

Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.

While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.

Organizational Chart

Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.

If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.

An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.

You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.

5. Describe Your Product and Service Offering

In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.

Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.

The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.

If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”

Your product and service section in your business plan should include the following:

• A detailed explanation that clearly shows how your product or service works.
• The pricing model for your product or service.
• Your business’ sales and distribution strategy.
• The ideal customers that want your product or service.
• The benefits of your products and services.
• Reason(s) why your product or service is a better alternative to what your competitors are currently offering in the market.
• Plans for filling the orders you receive
• If you have current or pending patents, copyrights, and trademarks for your product or service, you can also discuss them in this section.

What to Focus On When Describing the Benefits, Lifecycle, and Production Process of Your Products or Services

In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.

When describing the benefits of your products or services, here are some key factors to focus on.

• Unique features
• Translating the unique features into benefits
• The emotional, psychological, and practical payoffs to attract customers
• Intellectual property rights or any patents

When describing the product life cycle of your products or services, here are some key factors to focus on.

• Upsells, cross-sells, and down-sells
• Time between purchases
• Plans for research and development.

When describing the production process for your products or services, you need to think about the following:

• The creation of new or existing products and services.
• The sources for the raw materials or components you need for production.
• Assembling the products
• Maintaining quality control
• Supply-chain logistics (receiving the raw materials and delivering the finished products)
• The day-to-day management of the production processes, bookkeeping, and inventory.

Tips for Writing the Products or Services Section of Your Business Plan

1. Avoid Technical Descriptions and Industry Buzzwords

The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.

A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.

2. Describe How Your Products or Services Differ from Your Competitors

When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.

If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.

For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.

3. Long or Short Products or Services Section

Should your products or services section be short? Does the long products or services section attract more investors?

There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.

If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.

Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.

The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.

If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.

A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.

4. Describe Your Relationships with Vendors or Suppliers

Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.

Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.

5. Your Primary Goal Is to Convince Your Readers

The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.

When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.

While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.

Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.

Key Questions to Answer When Writing your Products and Services Section

Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.

• Are your products existing on the market or are they still in the development stage?
• What is your timeline for adding new products and services to the market?
• What are the positives that make your products and services different from your competitors?
• Do your products and services have any competitive advantage that your competitors’ products and services do not currently have?
• Do your products or services have any competitive disadvantages that you need to overcome to compete with your competitors? If your answer is yes, state how you plan to overcome them,
• How much does it cost to produce your products or services? How much do you plan to sell it for?
• What is the price for your products and services compared to your competitors? Is pricing an issue?
• What are your operating costs and will it be low enough for you to compete with your competitors and still take home a reasonable profit margin?
• What is your plan for acquiring your products? Are you involved in the production of your products or services?
• Are you the manufacturer and produce all the components you need to create your products? Do you assemble your products by using components supplied by other manufacturers? Do you purchase your products directly from suppliers or wholesalers?
• Do you have a steady supply of products that you need to start your business? (If your business is yet to kick-off)
• How do you plan to distribute your products or services to the market?

You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.

6. Show and Explain Your Marketing and Sales Plan

Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.

The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.

There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.

In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.

Outline Your Business’ Unique Selling Proposition (USP)

The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).

Target Market and Target Audience

Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.

Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.

Creating a Smart Marketing and Sales Plan

Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.

Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.

Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.

Your Positioning Statement

Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.

Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?

Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market

• What are the unique features or benefits that you offer that your competitors lack?
• What are your customers’ primary needs and wants?
• Why should a customer choose you over your competition? How do you plan to differentiate yourself from the competition?
• How does your company’s solution compare with other solutions in the market?

After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.

All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.

Here is a simple template you can use to develop a positioning statement.

For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].

For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.

“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”

You can edit this positioning statement sample and fill it with your business details.

After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.

Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.

You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.

Basic Rules to Follow When Pricing Your Offering

Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.

• Covering Your Costs: The price you set for your products or service should be more than it costs you to produce and deliver them. Every business has the same goal, to make a profit. Depending on the strategy you want to use, there are exceptions to this rule. However, the vast majority of businesses follow this rule.
• Primary and Secondary Profit Center Pricing: When a company sets its price above the cost of production, it is making that product its primary profit center. A company can also decide not to make its initial price its primary profit center by selling below or at even with its production cost. It rather depends on the support product or even maintenance that is associated with the initial purchase to make its profit. The initial price thus became its secondary profit center.
• Matching the Market Rate: A good rule to follow when pricing your products or services is to match your pricing with consumer demand and expectations. If you price your products or services beyond the price your customer perceives as the ideal price range, you may end up with no customers. Pricing your products too low below what your customer perceives as the ideal price range may lead to them undervaluing your offering.

Pricing Strategy

Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.

• Cost-plus Pricing: This strategy is one of the simplest and oldest pricing strategies. Here you consider the cost of producing a unit of your product and then add a profit to it to arrive at your market price. It is an effective pricing strategy for manufacturers because it helps them cover their initial costs. Another name for the cost-plus pricing strategy is the markup pricing strategy.
• Market-based Pricing: This pricing strategy analyses the market including competitors’ pricing and then sets a price based on what the market is expecting. With this pricing strategy, you can either set your price at the low-end or high-end of the market.
• Value Pricing: This pricing strategy involves setting a price based on the value you are providing to your customer. When adopting a value-based pricing strategy, you have to set a price that your customers are willing to pay. Service-based businesses such as small business insurance providers , luxury goods sellers, and the fashion industry use this pricing strategy.

After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.

As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.

There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.

Advertising

Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.

Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.

Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.

A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.

Public Relations

A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.

Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.

Content Marketing

Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,

Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.

Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.

If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.

Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.

When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.

• Is your choice of packaging consistent with your positioning strategy?
• What key value proposition does your packaging communicate? (It should reflect the key value proposition of your business)
• How does your packaging compare to that of your competitors?

Social Media

Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.

You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.

Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.

Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.

You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.

Strategic Alliances

If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.

Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.

The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.

Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.

2. Evaluate Your Competition

One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.

You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.

These questions can help you know your competition.

• What makes your competition successful?
• What are their weaknesses?
• What are customers saying about your competition?

3. Consider Your Brand

Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.

4. Focus on Benefits

The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.

Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.

5. Focus on Differentiation

Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.

Key Questions to Answer When Writing Your Marketing and Sales Plan

• What is your company’s budget for sales and marketing campaigns?
• What key metrics will you use to determine if your marketing plans are successful?
• What are your alternatives if your initial marketing efforts do not succeed?
• Who are the sales representatives you need to promote your products or services?
• What are the marketing and sales channels you plan to use? How do you plan to get your products in front of your ideal customers?
• Where will you sell your products?

You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.

The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.

7. Clearly Show Your Funding Request

If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’

A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.

Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.

In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.

Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.

If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.

Funding Request: Debt or Equity?

When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.

Case for Equity

If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.

Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.

Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.

Case for Debt

You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.

When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.

Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.

Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.

You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.

Additional Tips for Writing the Funding Request Section of your Business Plan

The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.

If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.

You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.

If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .

Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.

8. Detail Your Financial Plan, Metrics, and Projections

If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.

The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.

If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.

Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.

If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.

When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.

The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.

Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.

Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.

Use Graphs and Charts

The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.

Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.

Address the Risk Factors and Show Realistic Financial Projections

Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.

You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.

What You Should In The Financial Plan, Metrics, and Projection Section of Your Business Plan

The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.

A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.

Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.

1. Sales Forecast

Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.

One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.

For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.

Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.

Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.

For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.

2. Personnel Plan

The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.

However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.

The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.

3. Income Statement

The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.

Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.

The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.

• Sales refer to the revenue your business generates from selling its products or services. Other names for sales are income or revenue.
• Cost of Goods Sold (COGS) refers to the total cost of selling your products. Other names for COGS are direct costs or cost of sales. Manufacturing businesses use the Costs of Goods Manufactured (COGM) .
• Gross Margin is the figure you get when you subtract your COGS from your sales. In your income statement, you can express it as a percentage of total sales (Gross margin / Sales = Gross Margin Percent).
• Operating Expenses refer to all the expenses you incur from running your business. It exempts the COGS because it stands alone as a core part of your income statement. You also have to exclude taxes, depreciation, and amortization. Your operating expenses include salaries, marketing expenses, research and development (R&D) expenses, and other expenses.
• Total Operating Expenses refers to the sum of all your operating expenses including those exemptions named above under operating expenses.
• Operating Income refers to earnings before interest, taxes, depreciation, and amortization. It is simply known as the acronym EBITDA (earnings before interest, taxes, depreciation, and amortization). Calculating your operating income is simple, all you need to do is to subtract your COGS and total operating expenses from your sales.
• Total Expenses refer to the sum of your operating expenses and your business’ interest, taxes, depreciation, and amortization.
• Net profit shows whether your business has made a profit or taken a loss during a given timeframe.

4. Cash Flow Statement

The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.

5. Balance Sheet

The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.

You can get the net worth of your company by subtracting your company’s liabilities from its assets.

6. Exit Strategy

The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.

You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.

Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.

Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.

Key Questions to Answer with Your Financial Plan, Metrics, and Projection

Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.

You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.

Here are some key questions to answer to help you develop this section.

• What is your sales forecast for the next year?
• When will your company achieve a positive cash flow?
• What are the core expenses you need to operate?
• How much money do you need upfront to operate or grow your company?
• How will you use the loans or investments?

9. Add an Appendix to Your Business Plan

Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.

The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.

When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.

Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.

You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.

If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.

A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.

The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.

People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.

Common Items to Include in the Appendix Section of Your Business Plan

The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:

• Additional data about the process of manufacturing or creation
• Additional description of products or services such as product schematics
• Additional financial documents or projections
• Articles of incorporation and status
• Backup for market research or competitive analysis
• Bank statements
• Business registries
• Client testimonials (if your business is already running)
• Copies of insurances
• Credit histories (personal or/and business)
• Deeds and permits
• Equipment leases
• Examples of marketing and advertising collateral
• Industry associations and memberships
• Images of product
• Intellectual property
• Key customer contracts
• Legal documents and other contracts
• Letters of reference
• Links to references
• Market research data
• Organizational charts
• Photographs of potential facilities
• Professional licenses pertaining to your legal structure or type of business
• Purchase orders
• Resumes of the founder(s) and key managers
• State and federal identification numbers or codes
• Trademarks or patents’ registrations

Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.

Tips and Strategies for Writing a Convincing Business Plan

To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.

1. Know Your Audience

When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.

The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.

Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.

• A business plan used to address a company's board members will center on its employment schemes, internal affairs, projects, stakeholders, etc.
• A business plan for financial institutions will talk about the size of your market and the chances for you to pay back any loans you demand.
• A business plan for investors will show proof that you can return the investment capital within a specific time. In addition, it discusses your financial projections, tractions, and market size.

2. Get Inspiration from People

Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.

To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.

When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.

3. Avoid Being Over Optimistic

Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.

The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.

In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.

The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.

To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.

4. Keep it Simple and Short

When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.

One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.

Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.

You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.

To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.

5. Make an Outline and Follow Through

A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.

For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.

To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.

This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:

• Table of contents
• Introduction
• Product or service description
• Target audience
• Market size
• Competition analysis
• Financial projections

Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.

6. Ask a Professional to Proofread

When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.

You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.

In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.

Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.

Business Plan Examples and Templates That’ll Save You Tons of Time

1. hubspot's one-page business plan.

The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.

Hubspot’s one-page business plan template is divided into nine fields:

• Business opportunity
• Company description
• Industry analysis
• Target market
• Implementation timeline
• Marketing plan
• Financial summary
• Funding required

2. Bplan’s Free Business Plan Template

Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.

The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.

3. HubSpot's Downloadable Business Plan Template

HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.

The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.

There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.

4. Business Plan by My Own Business Institute

My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.

The comprehensive template consists of a whopping 15 sections.

• The Business Profile
• The Vision and the People
• Home-Based Business and Freelance Business Opportunities
• Organization
• Licenses and Permits
• Business Insurance
• Communication Tools
• Acquisitions
• Location and Leasing
• Accounting and Cash Flow
• Opening and Marketing
• Managing Employees
• Expanding and Handling Problems

There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.

5. Score's Business Plan Template for Startups

Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.

The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.

There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.

The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.

6. Minimalist Architecture Business Plan Template by Venngage

The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .

There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.

7. Small Business Administration Free Business Plan Template

The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.

There are five sections in the two SBA’s free business plan templates.

• Executive Summary
• Company Description
• Service Line
• Marketing and Sales

8. The $100 Startup's One-Page Business Plan

The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.

There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.

9. PandaDoc’s Free Business Plan Template

The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.

There are 11 sections in PandaDoc’s free business plan template.

• Executive summary
• Business description
• Products and services
• Operations plan
• Management organization
• Financial plan
• Conclusion / Call to action
• Confidentiality statement

You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)

PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.

10. Invoiceberry Templates for Word, Open Office, Excel, or PPT

InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.

Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.

Alternatives to the Traditional Business Plan

A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.

Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.

Business Model Canvas (BMC)

The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.

The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.

Segments of the Business Model Canvas

The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.

• Key Partners: Who will be occupying important executive positions in your business? What do they bring to the table? Will there be a third party involved with the company?
• Key Activities: What important activities will production entail? What activities will be carried out to ensure the smooth running of the company?
• The Product’s Value Propositions: What does your product do? How will it be different from other products?
• Customer Segments: What demography of consumers are you targeting? What are the habits of these consumers? Who are the MVPs of your target consumers?
• Customer Relationships: How will the team support and work with its customer base? How do you intend to build and maintain trust with the customer?
• Key Resources: What type of personnel and tools will be needed? What size of the budget will they need access to?
• Channels: How do you plan to create awareness of your products? How do you intend to transport your product to the customer?
• Cost Structure: What is the estimated cost of production? How much will distribution cost?
• Revenue Streams: For what value are customers willing to pay? How do they prefer to pay for the product? Are there any external revenues attached apart from the main source? How do the revenue streams contribute to the overall revenue?

Lean Canvas

The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.

Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:

• Problem: Simple and straightforward number of problems you have identified, ideally three.
• Solution: The solutions to each problem.
• Unfair Advantage: Something you possess that can't be easily bought or replicated.
• Key Metrics: Important numbers that will tell how your business is doing.

Startup Pitch Deck

While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.

Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.

Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.

Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.

Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.

• Cover/Introduction Slide: Here, you should include your company's name and mission statement. Your mission statement should be a very catchy tagline. Also, include personal information and contact details to provide an easy link for potential investors.
• Problem Slide: This slide requires you to create a connection with the audience or the investor that you are pitching. For example in their pitch, Airbnb summarized the most important problems it would solve in three brief points – pricing of hotels, disconnection from city culture, and connection problems for local bookings.
• Solution Slide: This slide includes your core value proposition. List simple and direct solutions to the problems you have mentioned
• Customer Analysis: Here you will provide information on the customers you will be offering your service to. The identity of your customers plays an important part in fundraising as well as the long-run viability of the business.
• Market Validation: Use competitive analysis to show numbers that prove the presence of a market for your product, industry behavior in the present and the long run, as well as the percentage of the market you aim to attract. It shows that you understand your competitors and customers and convinces investors of the opportunities presented in the market.
• Business Model: Your business model is the hook of your presentation. It may vary in complexity but it should generally include a pricing system informed by your market analysis. The goal of the slide is to confirm your business model is easy to implement.
• Marketing Strategy: This slide should summarize a few customer acquisition methods that you plan to use to grow the business.
• Competitive Advantage: What this slide will do is provide information on what will set you apart and make you a more attractive option to customers. It could be the possession of technology that is not widely known in the market.
• Team Slide: Here you will give a brief description of your team. Include your key management personnel here and their specific roles in the company. Include their educational background, job history, and skillsets. Also, talk about their accomplishments in their careers so far to build investors' confidence in members of your team.
• Traction Slide: This validates the company’s business model by showing growth through early sales and support. The slide aims to reduce any lingering fears in potential investors by showing realistic periodic milestones and profit margins. It can include current sales, growth, valuable customers, pre-orders, or data from surveys outlining current consumer interest.
• Funding Slide: This slide is popularly referred to as ‘the ask'. Here you will include important details like how much is needed to get your business off the ground and how the funding will be spent to help the company reach its goals.
• Appendix Slides: Your pitch deck appendix should always be included alongside a standard pitch presentation. It consists of additional slides you could not show in the pitch deck but you need to complement your presentation.

It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.

Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.

Advantages of the Business Model Canvas, Lean Canvas, and Startup Pitch Deck over the Traditional Business Plan

• Time-Saving: Writing a detailed traditional business plan could take weeks or months. On the other hand, all three alternatives can be done in a few days or even one night of brainstorming if you have a comprehensive understanding of your business.
• Easier to Understand: Since the information presented is almost entirely factual, it puts focus on what is most important in running the business. They cut away the excess pages of fillers in a traditional business plan and allow investors to see what is driving the business and what is getting in the way.
• Easy to Update: Businesses typically present their business plans to many potential investors before they secure funding. What this means is that you may regularly have to amend your presentation to update statistics or adjust to audience-specific needs. For a traditional business plan, this could mean rewriting a whole section of your plan. For the three alternatives, updating is much easier because they are not voluminous.
• Guide for a More In-depth Business Plan: All three alternatives have the added benefit of being able to double as a sketch of your business plan if the need to create one arises in the future.

Business Plan FAQ

Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time.  They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.

Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans.  A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.

A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs.  Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.

The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.

A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.

Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.

Exlore Further

• 12 Key Elements of a Business Plan (Top Components Explained)
• 13 Sources of Business Finance For Companies & Sole Traders
• 5 Common Types of Business Structures (+ Pros & Cons)
• How to Buy a Business in 8 Steps (+ Due Diligence Checklist)

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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.

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

Free business plan templates and examples

Kickstart your business plan writing with one of our free business plan templates or recommended tools.

Free business plan template

Download a free SBA-approved business plan template built for small businesses and startups.

Download Template

One-page plan template

Download a free one-page plan template to write a useful business plan in as little as 30-minutes.

Sample business plan library

Explore over 500 real-world business plan examples from a wide variety of industries.

View Sample Plans

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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Business plans might seem like an old-school stiff-collared practice, but they deserve a place in the startup realm, too. It’s probably not going to be the frame-worthy document you hang in the office—yet, it may one day be deserving of the privilege.

Whether you’re looking to win the heart of an angel investor or convince a bank to lend you money, you’ll need a business plan. And not just any ol’ notes and scribble on the back of a pizza box or napkin—you’ll need a professional, standardized report.

Bah. Sounds like homework, right?

Yes. Yes, it does.

However, just like bookkeeping, loan applications, and 404 redirects, business plans are an essential step in cementing your business foundation.

Don’t worry. We’ll show you how to write a business plan without boring you to tears. We’ve jam-packed this article with all the business plan examples, templates, and tips you need to take your non-existent proposal from concept to completion.

Table of Contents

What Is a Business Plan?

Tips to Make Your Small Business Plan Ironclad

How to Write a Business Plan in 6 Steps

Startup Business Plan Template

Business Plan Examples

Work on Making Your Business Plan

How to Write a Business Plan FAQs

What is a business plan why do you desperately need one.

A business plan is a roadmap that outlines:

• Who your business is, what it does, and who it serves
• Where your business is now
• Where you want it to go
• How you’re going to make it happen
• What might stop you from taking your business from Point A to Point B
• How you’ll overcome the predicted obstacles

While it’s not required when starting a business, having a business plan is helpful for a few reasons:

• Secure a Bank Loan: Before approving you for a business loan, banks will want to see that your business is legitimate and can repay the loan. They want to know how you’re going to use the loan and how you’ll make monthly payments on your debt. Lenders want to see a sound business strategy that doesn’t end in loan default.
• Win Over Investors: Like lenders, investors want to know they’re going to make a return on their investment. They need to see your business plan to have the confidence to hand you money.
• Stay Focused: It’s easy to get lost chasing the next big thing. Your business plan keeps you on track and focused on the big picture. Your business plan can prevent you from wasting time and resources on something that isn’t aligned with your business goals.

Beyond the reasoning, let’s look at what the data says:

• Simply writing a business plan can boost your average annual growth by 30%
• Entrepreneurs who create a formal business plan are 16% more likely to succeed than those who don’t
• A study looking at 65 fast-growth companies found that 71% had small business plans
• The process and output of creating a business plan have shown to improve business performance

Convinced yet? If those numbers and reasons don’t have you scrambling for pen and paper, who knows what will.

Don’t Skip: Business Startup Costs Checklist

Before we get into the nitty-gritty steps of how to write a business plan, let’s look at some high-level tips to get you started in the right direction:

Be Professional and Legit

You might be tempted to get cutesy or revolutionary with your business plan—resist the urge. While you should let your brand and creativity shine with everything you produce, business plans fall more into the realm of professional documents.

Think of your business plan the same way as your terms and conditions, employee contracts, or financial statements. You want your plan to be as uniform as possible so investors, lenders, partners, and prospective employees can find the information they need to make important decisions.

If you want to create a fun summary business plan for internal consumption, then, by all means, go right ahead. However, for the purpose of writing this external-facing document, keep it legit.

Know Your Audience

Your official business plan document is for lenders, investors, partners, and big-time prospective employees. Keep these names and faces in your mind as you draft your plan.

Think about what they might be interested in seeing, what questions they’ll ask, and what might convince (or scare) them. Cut the jargon and tailor your language so these individuals can understand.

Remember, these are busy people. They’re likely looking at hundreds of applicants and startup investments every month. Keep your business plan succinct and to the point. Include the most pertinent information and omit the sections that won’t impact their decision-making.

Invest Time Researching

You might not have answers to all the sections you should include in your business plan. Don’t skip over these!

Your audience will want:

• Detailed information about your customers
• Numbers and solid math to back up your financial claims and estimates
• Deep insights about your competitors and potential threats
• Data to support market opportunities and strategy

Your answers can’t be hypothetical or opinionated. You need research to back up your claims. If you don’t have that data yet, then invest time and money in collecting it. That information isn’t just critical for your business plan—it’s essential for owning, operating, and growing your company.

Stay Realistic

Your business may be ambitious, but reign in the enthusiasm just a teeny-tiny bit. The last thing you want to do is have an angel investor call BS and say “I’m out” before even giving you a chance.

The folks looking at your business and evaluating your plan have been around the block—they know a thing or two about fact and fiction. Your plan should be a blueprint for success. It should be the step-by-step roadmap for how you’re going from Point A to Point B.

How to Write a Business Plan—6 Essential Elements

Not every business plan looks the same, but most share a few common elements. Here’s what they typically include:

• Executive Summary
• Business Overview
• Products and Services
• Market Analysis
• Competitive Analysis
• Financial Strategy

Below, we’ll break down each of these sections in more detail.

1. Executive Summary

While your executive summary is the first page of your business plan, it’s the section you’ll write last. That’s because it summarizes your entire business plan into a succinct one-pager.

Begin with an executive summary that introduces the reader to your business and gives them an overview of what’s inside the business plan.

Your executive summary highlights key points of your plan. Consider this your elevator pitch. You want to put all your juiciest strengths and opportunities strategically in this section.

2. Business Overview

In this section, you can dive deeper into the elements of your business, including answering:

• What’s your business structure? Sole proprietorship, LLC, corporation, etc.
• Where is it located?
• Who owns the business? Does it have employees?
• What problem does it solve, and how?
• What’s your mission statement? Your mission statement briefly describes why you are in business. To write a proper mission statement, brainstorm your business’s core values and who you serve.

Don’t overlook your mission statement. This powerful sentence or paragraph could be the inspiration that drives an investor to take an interest in your business. Here are a few examples of powerful mission statements that just might give you the goosebumps:

• Patagonia: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.
• Tesla: To accelerate the world’s transition to sustainable energy.
• InvisionApp : Question Assumptions. Think Deeply. Iterate as a Lifestyle. Details, Details. Design is Everywhere. Integrity.
• TED : Spread ideas.
• Warby Parker : To offer designer eyewear at a revolutionary price while leading the way for socially conscious businesses.

3. Products and Services

As the owner, you know your business and the industry inside and out. However, whoever’s reading your document might not. You’re going to need to break down your products and services in minute detail.

For example, if you own a SaaS business, you’re going to need to explain how this business model works and what you’re selling.

You’ll need to include:

• What services you sell: Describe the services you provide and how these will help your target audience.
• What products you sell: Describe your products (and types if applicable) and how they will solve a need for your target and provide value.
• How much you charge: If you’re selling services, will you charge hourly, per project, retainer, or a mixture of all of these? If you’re selling products, what are the price ranges?

4. Market Analysis

Your market analysis essentially explains how your products and services address customer concerns and pain points. This section will include research and data on the state and direction of your industry and target market.

This research should reveal lucrative opportunities and how your business is uniquely positioned to seize the advantage. You’ll also want to touch on your marketing strategy and how it will (or does) work for your audience.

Include a detailed analysis of your target customers. This describes the people you serve and sell your product to. Be careful not to go too broad here—you don’t want to fall into the common entrepreneurial trap of trying to sell to everyone and thereby not differentiating yourself enough to survive the competition.

The market analysis section will include your unique value proposition. Your unique value proposition (UVP) is the thing that makes you stand out from your competitors. This is your key to success.

If you don’t have a UVP, you don’t have a way to take on competitors who are already in this space. Here’s an example of an ecommerce internet business plan outlining their competitive edge:

FireStarters’ competitive advantage is offering product lines that make a statement but won’t leave you broke. The major brands are expensive and not distinctive enough to satisfy the changing taste of our target customers. FireStarters offers products that are just ahead of the curve and so affordable that our customers will return to the website often to check out what’s new.

5. Competitive Analysis

Your competitive analysis examines the strengths and weaknesses of competing businesses in your market or industry. This will include direct and indirect competitors. It can also include threats and opportunities, like economic concerns or legal restraints.

The best way to sum up this section is with a classic SWOT analysis. This will explain your company’s position in relation to your competitors.

6. Financial Strategy

Your financial strategy will sum up your revenue, expenses, profit (or loss), and financial plan for the future. It’ll explain how you make money, where your cash flow goes, and how you’ll become profitable or stay profitable.

This is one of the most important sections for lenders and investors. Have you ever watched Shark Tank? They always ask about the company’s financial situation. How has it performed in the past? What’s the ongoing outlook moving forward? How does the business plan to make it happen?

Answer all of these questions in your financial strategy so that your audience doesn’t have to ask. Go ahead and include forecasts and graphs in your plan, too:

• Balance sheet: This includes your assets, liabilities, and equity.
• Profit & Loss (P&L) statement: This details your income and expenses over a given period.
• Cash flow statement: Similar to the P&L, this one will show all cash flowing into and out of the business each month.

It takes cash to change the world—lenders and investors get it. If you’re short on funding, explain how much money you’ll need and how you’ll use the capital. Where are you looking for financing? Are you looking to take out a business loan, or would you rather trade equity for capital instead?

Read More: 16 Financial Concepts Every Entrepreneur Needs to Know

Startup Business Plan Template (Copy/Paste Outline)

Ready to write your own business plan? Copy/paste the startup business plan template below and fill in the blanks.

Executive Summary Remember, do this last. Summarize who you are and your business plan in one page.

Business Overview Describe your business. What’s it do? Who owns it? How’s it structured? What’s the mission statement?

Products and Services Detail the products and services you offer. How do they work? What do you charge?

Market Analysis Write about the state of the market and opportunities. Use date. Describe your customers. Include your UVP.

Competitive Analysis Outline the competitors in your market and industry. Include threats and opportunities. Add a SWOT analysis of your business.

Financial Strategy Sum up your revenue, expenses, profit (or loss), and financial plan for the future. If you’re applying for a loan, include how you’ll use the funding to progress the business.

5 Frame-Worthy Business Plan Examples

Want to explore other templates and examples? We got you covered. Check out these 5 business plan examples you can use as inspiration when writing your plan:

• SBA Wooden Grain Toy Company
• SBA We Can Do It Consulting
• OrcaSmart Business Plan Sample
• Plum Business Plan Template
• PandaDoc Free Business Plan Templates

Get to Work on Making Your Business Plan

If you find you’re getting stuck on perfecting your document, opt for a simple one-page business plan —and then get to work. You can always polish up your official plan later as you learn more about your business and the industry.

Remember, business plans are not a requirement for starting a business—they’re only truly essential if a bank or investor is asking for it.

Ask others to review your business plan. Get feedback from other startups and successful business owners. They’ll likely be able to see holes in your planning or undetected opportunities—just make sure these individuals aren’t your competitors (or potential competitors).

Your business plan isn’t a one-and-done report—it’s a living, breathing document. You’ll make changes to it as you grow and evolve. When the market or your customers change, your plan will need to change to adapt.

That means when you’re finished with this exercise, it’s not time to print your plan out and stuff it in a file cabinet somewhere. No, it should sit on your desk as a day-to-day reference. Use it (and update it) as you make decisions about your product, customers, and financial plan.

Review your business plan frequently, update it routinely, and follow the path you’ve developed to the future you’re building.

Keep Learning: New Product Development Process in 8 Easy Steps

What financial information should be included in a business plan?

Be as detailed as you can without assuming too much. For example, include your expected revenue, expenses, profit, and growth for the future.

What are some common mistakes to avoid when writing a business plan?

The most common mistake is turning your business plan into a textbook. A business plan is an internal guide and an external pitching tool. Cut the fat and only include the most relevant information to start and run your business.

Who should review my business plan before I submit it?

Co-founders, investors, or a board of advisors. Otherwise, reach out to a trusted mentor, your local chamber of commerce, or someone you know that runs a business.

Ready to Write Your Business Plan?

Don’t let creating a business plan hold you back from starting your business. Writing documents might not be your thing—that doesn’t mean your business is a bad idea.

Let us help you get started.

Join our free training to learn how to start an online side hustle in 30 days or less. We’ll provide you with a proven roadmap for how to find, validate, and pursue a profitable business idea (even if you have zero entrepreneurial experience).

Stuck on the ideas part? No problem. When you attend the masterclass, we’ll send you a free ebook with 100 of the hottest side hustle trends right now. It’s chock full of brilliant business ideas to get you up and running in the right direction.

About Jesse Sumrak

Jesse Sumrak is a writing zealot focused on creating killer content. He’s spent almost a decade writing about startup, marketing, and entrepreneurship topics, having built and sold his own post-apocalyptic fitness bootstrapped business. A writer by day and a peak bagger by night (and early early morning), you can usually find Jesse preparing for the apocalypse on a precipitous peak somewhere in the Rocky Mountains of Colorado.

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Business Planning: Ultimate Guide to Writing a Business Plan for Investors

If you are planning to start, grow or sell a business, it is almost essential you have a plan of attack.

A traditional business plan is much more than a general list of things that you need to do.

An effective plan focuses on short-term and long-term business goals, with information that outlines how you intend to reach them.

A formal business plan will be one of the most valuable tools that you will use in raising capital from investors and for building and growing your business.

Like the businesses themselves, business plans come in many types and forms.

Oftentimes even established business owners and managers underestimate the effectiveness of a qualified business plan.

Some mistakenly think business plans are only used in the venture capital world of start-up finance.

This simply is not true. Enterprise planning is often required for anything from SBA lending and debt financing to internal planning and partnership qualification.

Many find they regularly refer to a previously-written business plan to ensure they stay on track and under budget.

A business plan can also help you establish a framework for your dream business, including structure and planning goals.

In addition, business planning is often a fluid process and a living document, with changes occurring mid-stream which means those best prepared have already done their homework and are prepared to pivot.

Crafting Your Business Plan(s)

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You will essentially create two plans. The first is known as the  internal or initial start-up business plan . This plan includes your company’s mission statement, product/service description, marketing strategy plan and initial start-up goals. Most importantly, the initial plan will also include a market analysis. Performing research on the market helps both internal managers understand whether the business concept or business idea is viable and worth pursuing and to attract investors.

If it is, the initial plan will morph into something suitable for angel investors, venture capitalists and private equity groups. Typically, your final secondary plan will incorporate the details in your initial start-up plan into a more finalized version ready for publication. InvestmentBank.com assists throughout this entire process.

How you go about your business plan process is dependent on the audience for which it will be created.

For example, if you will be seeking a business loan, you need to create  business plan for bank loans . Conversely, if you are seeking investment capital in equity financing, you’ll most likely need a  venture capital business plan . Regardless of the audience any typical business plan will generally include the following:

• A company description, including a description of your business and the products and/or services offered
• A detailed description of the target market and how they will best be served
• Information regarding the management team and key employees within the company
• Detailed information about cash flow and financial analysis, budget and market penetration
• An  Executive Summary  for a snapshot 30,000 foot view of all aspects of the business and how it will be successful

Discovering a business idea is the first step towards creating a business model hypothesis. Specifically, a business idea worth investigating further is a “proto-business model” – the embryo of a viable business model. The business idea is essentially your best guess that describes your Value Proposition (the thing you want to sell) and your Customer Segment(s) (the target customers you want to sell to). This is your initial pass at creating a viable Value Proposition – Customer Segment “fit”.

At a minimum, a business idea worth investigating further should have one or more Customer Segments and a corresponding Value Proposition to match each Customer Segment. Completing the following steps will validate that your business idea is worth investigating further.

• Identify Value Proposition – Customer Segment pairings.  This step involves pinpointing the type and number of Customer Segment(s) your business is going to serve and what your business’s Value Proposition will be for each of those Customer Segments. This will create one or more Value Proposition – Customer Segment pairings.
• What your Customer Segment is trying to do (i.e. eat dinner, find a date, get in shape…). What are your Customer Segment’s problems (they are hungry and don’t want to cook, they can’t find a suitable boyfriend/girlfriend, they are out of shape…). What does your Customer Segment expect to gain from accomplishing whatever they want to do (eat a tasty meal, find a pleasant date, loose a few pounds and feel better)?
• What your company can offer your Customer Segment (i.e. a good quick meal, a matchmaking service, a place to work out…). How will your offer solve your Customer Segment’s problems? What benefits will your offer create for your Customer Segment? The best business solves real-world problems.

Business Plan Outline

A business plan may contain many types of information depending on the nature, size, and financing needs of the company. One general business plan template can be developed with the help of our JDs, MBAs and expert business planning professionals. While various institutions like the Small Business Administration (SBA) help provide guidelines, it is often best to get your detailed business plan drafted by professionals who know what it takes to get funded and what investors are looking for when they sift through thousands of plans.

This is the title or cover page. This page will contain the information of the names and addresses of business enterprise and entrepreneurs, a paragraph describing the nature of business, and the vision and mission statement of the company.

An executive summary of the comprehensive business plan report should be presented within four pages, summarizing the whole report and emphasizing on business purpose, industry analysis, market opportunity, key elements of the business, revenue, and planning.

This segment of a viable business plan will show the present conditions of the industry, in which the entrepreneur desires to enter. This section should include present and future outlook and demographic developments, analysis of competitors, market segmentation, and industry financial forecasts.

In this segment of the business plan a detailed picture of the venture should be outlined with particular reference to products, services, office equipment, machinery, personnel, size of business, and background of entrepreneurs.

This portion of the business plan is indeed an operational plan. The operational activities of manufacturing, trading and service business are different. So the operational plans of different types of enterprises will be different. For example operational plan of a manufacturing business may cover unique aspects such as manufacturing process,equipment, names of the providers of the raw materials and other inputs of the production process, and so on.

It includes market condition, market strategy, and future market prospect. The pricing, promotion, distribution, product forecasts, and controls should be evaluated carefully for the business plan.

This section includes forms of the ownership, identification of partners or major shareholders, the authority of the managers, management-team background, and the duties and responsibilities of members of the organization.

It is very important for any business plan to assess all the possible risks that may affect the enterprise, prior to starting the business. Assessment of risk must include evaluation of the weaknesses of the enterprise, latest technologies, and contingency plans.

This section shows financial viability of the business plan, in which the entrepreneur must prepare forecasted income statement, cash flow estimates, forecasted balance sheet, break-even analysis, and sources and usages of funds. This section will be scrutinized to determine the profitability and sustainability of the enterprise by the investors, such as the bankers or venture capitalists.

It contains all the backup materials such as legal documents, market research data, lease contracts, and price forecasts from suppliers.

These are the general contents of a business plan that are suggested by the experts, but these contents may vary from business to business. A good business plan should be comprehensive enough to provide a complete picture and understanding of the venture regarding its present status and future growth potential to the prospective investors and other interest groups.

Business Plan Types

Traditional business plans come in many types. They include strategic plans, expansion plans, investment plans, growth plans, operational plans, internal plans, annual plans, feasibility plans, product plans, and many more.

The various types of business plans will always matche the specific business situation. For instance, it is not necessary to add all the background information that is known already, while preparing a plan to use internally and not circulating it to financial institutions or investors. Investors always look for information on the description of the management team, while bankers always look for financial background or history of the company.

The various types of business plans are due to the specific case differences:

Start-up plan is the most standard plan that explains the steps for a developing new business. Start-up plans often include standard topics such as the organization, product or service offering, market place, business forecasts, strategy, management team, implementation milestones, and financial analysis. Sales forecast, profit and loss statement, cash flow statements, balance sheet, and probably a few other tables are included in the financial analysis.

First year monthly projections are shown in the start-up plan, which usually begins with an abstract and ends with appendix.

Click on the following link to learn more about how we approach startup investing .

Business plans that are not usually intended for external investors, financial institutions, or any other third parties are called Internal plans. A detailed description of the organization or the management team may not be included in it. Detailed financial projections like budgets and forecasts may or may not get included in Internal plans. Instead of presenting the whole business plan in the form of paragraph text, Internal plans display the main points in the form of bullet points in slides.

Operations plan can be referred to as Internal plan, which is also known as an annual plan. More detailed information on specific dates, implementation milestones, deadlines, and teams and managers responsibilities are given in Operations plan.

Strategic planning usually does not focus on specific responsibilities and detailed dates, rather it focuses on setting high priorities and high-level options and is also referred to as an internal plan. Unlike most other internal plans, it includes data in the form of bullet points in slides. Organization or management team descriptions are not included in it. Also, some of the financial information is not explained in detail and left while preparing strategic plans.

Some business plans focuses on specific areas of the business or a subcategory of the business, and these plans are referred to as a growth plan or an expansion plan or a new product plan. Depending on whether these business plans are linked to new investments or loan applications, they could be classified as internal plans or not. For instance, like a start-up plan developed for investors, an expansion plan that requires new investment would also have detailed description of the company and its management teams background data. These details will also be required for loan applications. But, these descriptions are skipped in an internal business plan, which is used to design the steps for growth or expansion that is funded internally within the organisation. Although, detailed financial projections might not be given, forecast of the sales as well as the expenses for the new business venture is at least included in more detail.

A very simple start-up plan is the feasibility plan, which include an abstract, mission statement, market analysis, keys to long-term success, and initial cost analysis, pricing, and projected expenses. Feasibility plans helps to analyze whether it is good to continue with a plan or not, to find if the business plan is worth continuing.

Writing a business plan is a highly collaborative affair between the entrepreneur(s) and the business plan writer. The more complex the plan is, the more both the entrepreneur(s) and the business plan writer will need to communicate and collaborate in order to produce a professional, marketable business plan. The business plans we write fall into six general categories. We will discuss each in detail below.

These are business plans for new companies that are 1) trying to raise startup capital to launch the business and 2) the business will serve a clearly defined target market with a service or product that already exists. These business plans are usually the least complex to write because the business models

The hourly fee for work over the project’s estimated number of hours is $20 per hour.

Type 1 and Type 2 business plans are written in five distinct units. Each unit reflects a progressive step in putting the business plan together. Before we can begin writing each unit, we must receive feedback to specific questions that we will send you concerning the topics covered in each specific unit.  After we complete each of the first four units, we will send you a draft of that unit in a Microsoft Word document. You will then have the opportunity to review unit draft and critique or clarify it.

We will make any necessary changes needed for each unit draft. The fifth and final unit will be integrating the information in each of the previous four units into a final, complete business plan. You will then have the opportunity to review and critique that completed business plan draft. We will then correct any and all discrepancies in that final complete draft.

The entire business planning process of writing a Type 1 or Type 2 business plan depends upon our general workload and the speed with which you respond to our requests for information about your business. We estimate that either a Type 1 or Type 2 business plan will take generally 10 to 15 work days to complete (two to three weeks).

These are business plans for existing companies that are 1) trying to raise capital for a new business project or idea and 2) the business project is serving a clearly defined market with a service or product that already exists.

Type 3 and Type 4 business plans are written in six distinct units. Each unit reflects a progressive step in putting the business plan together. Before we can begin writing each unit, we must receive feedback to specific questions that we will send you concerning the topics covered in each specific unit.  After we complete each of the first five units, we will send you a draft of that unit in a Microsoft Word document. You will then have the opportunity to review the draft of each unit and critique or clarify it. We will change or modify any discrepancies you have with the drafts of each unit. The final unit will be integrating the information in each of the five units into a final, complete business plan. You will then have the opportunity to review and critique that completed business plan draft. We will then correct any and all discrepancies in that final complete draft.

The entire process of writing a Type 3 or Type 4 business plan depends upon our general workload and the speed with which you respond to our requests for information about your business. We estimate that either a Type 3 or Type 4 business plan will take generally 15 to 20 work days to complete (three to four weeks).

These are business plans for classic startup companies that are trying to create new products or services to serve new or reimagined markets. These companies are usually looking to raise equity capital from angel investors and venture capital firms. These business plans are far more difficult to write because their business models are largely unproven.

Type 5 business plans are written in five distinct units. Each unit reflects a progressive step in putting the business plan together. Before we can begin writing each unit, we must receive feedback to specific questions that we will send you concerning the topics covered in each specific unit.  After we complete each of the first four units, we will send you a draft of that unit in a Microsoft Word document. You will then have the opportunity to review unit draft and critique or clarify it. We will make any necessary changes needed for each unit draft. The fifth and final unit will be integrating the information in each of the previous four units into a final, complete business plan. You will then have the opportunity to review and critique that completed business plan draft. We will then correct any and all discrepancies in that final complete draft.

The entire process of writing a Type 5 business plan depends upon our general workload and the speed with which you respond to our requests for information about your business. Also, the novelty and newness of the industry you are entering and the market you will be serving are real wild card variables in terms of how much time the business plan will take to complete. We estimate that a Type 5 business plan will take generally 25 to 40 work days to complete (five to eight weeks).

These are business plans for existing companies that are attempting to create new products or services to serve new or reimagined markets. The markets these companies are trying to serve with their new products and services are either undefined or completely new. Usually these companies are seeking financing to raise equity capital (because these business projects are usually risky), but sometimes raising debt capital may be an options for them. These business plans are as difficult to write as Type 5 plans.

Type 6 business plans are written in six distinct units. Each unit reflects a progressive step in putting the business plan together. Before we can begin writing each unit, we must receive feedback to specific questions that we will send you concerning the topics covered in each specific unit.  After we complete each of the first five units, we will send you a draft of that unit in a Microsoft Word document. You will then have the opportunity to review the draft of each unit and critique or clarify it. We will change or modify any discrepancies you have with the drafts of each unit. The final unit will be integrating the information in each of the five units into a final, complete business plan. You will then have the opportunity to review and critique that completed business plan draft. We will then correct any and all discrepancies in that final complete draft.

The entire process of writing a Type 6 business plan depends upon our general workload and the speed with which you respond to our requests for information about your business. Also, the novelty and newness of the industry you are entering and the target market you will be serving are real wild card variables (in terms of how much time the business plan will take to complete). We estimate that a Type 6 business plan will take generally 25 to 40 work days to complete (five to eight weeks).

Running a Business Is Tough, Especially Without a Business Plan

If you are running a business, it’s very important to have a business plan made up and it’s just as important to stick to your business plan once you create it. When you have a business plan you are setting objectives for yourself and you are establishing the priorities you have for your business. It also makes it much easier to reach the goals that you set for yourself as well which is always crucial in a business.

Think of your business plan as a map for your business, without this map you and the way you run your business are traveling blindly which is very dangerous. You want to have a clear idea of where your business is headed and where you want it to go and a business plan outlines what will steer you in the right direction.

Looking for a Loan?

If you are looking to get a loan for your business, you’re going to need a definite business plan. Most banks won’t even consider giving you a loan until they see a business plan. If you don’t have a business plan they’ll think of you as a risk since you don’t truly know where you want your business to go. When you present your business plan to a bank to get the loan you desire be sure that you go over what your business is all about and why you started it. You will also want to list for them what you see in the future of your business as well.

Looking for a Business Investment?

Having a business plan doesn’t mean that you will surely get the investment you desire but not having a business plan will surely mean you will not get the investment you desire. Investors need to know what exactly they are investing in and they will look to your business plan to understand what the idea of the business is, your businesses track records, the technology behind your business and of course yourself. You will absolutely not get a business investment without having a business plan because the investors won’t have anything to help them understand what your business is all about.

Have Business Partners?

A business plan is what defines your agreements that you have made with your business partners which means you’ll have a lot of issues if you don’t have a business plan if you are in this business with more than just yourself. A business plan is the only way to keep everything between you and your partners fair and it ensures that everyone knows what the ground rules are for the business and where each and every one of you stand.

Communicating with a Management Team Won’t Work Without a Business Plan

How can you and your management team effectively run your business without being able to see where you all want it to go? The answer is, you can’t. You can’t steer your business down the right path if nobody knows exactly where it should be going and your management team will feel the exact same way. There will be a lot of different problems that will come up during the day-to-day work and it will be very challenging for you to face them and communicate all of these problems when you or your management team don’t truly know where the problem falls under in the business plan.

Do you need a business valuation?

Whether you need to place a value on your business to sell it or for taxes, a business plan is an essential part in this. It’s always important to know what your business is worth even if you don’t plan on selling it at all, you may need to know what it’s worth when it comes to planning an estate or an unexpected divorce could come up. You always should know what your business is worth an a business plan will help you understand that and keep track of it.

When it comes to developing a business plan, many people believe that it’s too difficult or it’s just too time consuming to do but what those people don’t realize is that putting together a business plan will save you in many ways and you it will help your business in more ways than you can imagine.

Developing a business plan is not that much of a challenge and it will very valuable to you in the future. Nobody should ever try to do something big without planning it first and this includes running a business. You have all these business plans in your head so just lay those plan out on paper so you have tangible evidence of your business and what you want to do with it.

A business plan a very crucial part in creating and owning a business so take the time and effort in creating one and you will benefit from it much more than you think and you’re business will run much more smoothly.

A business plan’s executive summary section provides a round-up of the main points of your business plan. Although the summary will appear at the top of the final printed piece, the majority of business plan developers do not write the executive summary until the last moment. The summary forms the gateway to the remainder of the plan. If you do not write a business plan executive summary it well, your target audience will not read beyond the executive summary.

What should be included in an executive summary?

When a regular business plan is being written, the following should usually be incorporated into the opening paragraph of the executive summary:

• The name of the business • The location of the business • The service or product being offered • The aim of the plan

A further paragraph should underline significant points, for example projected profits and sales, profitability, unit sales, and keys to success. Give the details you need everyone to notice. This is also a sensible point at which to include a highlights chart, a bar chart depicting gross margin, profits before taxes and interest, and sales for the three years to come. These numbers must be explained and cited in the text.

Different summaries are required for different plans

Internal plans, for example annual or strategic plans, or operations plans, do not need such formal executive summaries. With such a plan, make its purpose obvious, and be certain that all the highlights are mentioned, but other details – such as the description of your service or product, and location – may not need to be repeated.

Be concise with your summary

If investment is what you are seeking, mention this in your executive summary, specifying the amount of investment required and the level of equity ownership that will be provided in return. It is also a good idea to include some highlights regarding your competitive advantage and your management team.

If it is a loan that you are looking for, say so in the executive summary, specifying the sum required. Do not include details of the loan.

What is the right length for an executive summary? There are differing views from experts about the ideal length of an executive summary. Some recommend taking only one or two pages, while others suggest a more in-depth approach, with the summary lasting for anything up to ten pages and including sufficient information to be used instead of the full plan. Although it was once common to write business plans of 50 or more pages, today’s lenders and investors expect a more focused, concise plan.

A single page is the perfect length for an executive summary. Keep everything brief, emphasizing the major aspects of your plan. You are not trying to explain every last detail, simply piquing your readers’ interest about the rest of the plan and encouraging them to read further.

Be careful not to confuse a summary memo with an executive summary. The executive summary is the opening section of a business plan, while a summary memo is a distinct publication, usually running to no more than five or ten pages; this is intended as a substitute for the full plan for the benefit of those who are not yet in a position to read the full plan.

In general, a financial plan is a set of steps or goals put together for the business which is intended to help attain and accomplish a final financial goal. It shows the future and current financial state of a business by using known variables to forecast future cash flows, asset values and withdrawal plans. The plan shows financial viability of the business plan, in which the entrepreneur must prepare forecasted income statement, cash flow estimates, forecasted balance sheet, break-even analysis, and sources and usages of funds.

Why is a financial plan important? Investors and bankers must have an incentive to invest in your business. Profitability gives them an incentive to invest.  If your plan is weak and unorganized it will portray your business as unsustainable. Investors and banks will see you only as a risk and be unlikely to give the kind of capital needed for your business. For this reason you need to create a solid financial plan which will convince investors that your business is worth investing in.

Here at InvestmentBank.com we will design for you a financial plan intended to demonstrate to the bank and your investors that your business is sustainable and profitable.  We cannot guarantee you the investments you are hoping for, but we can guarantee that if you don’t have a plan, you will also not receive your hopeful investments. Let us guide you in the planning process.

One core component of market analysis is market forecasting and proforma financial statement drafting. The future trends, characteristics, and numbers in your target market are projected in market analysis. In a standard analysis process, the projected number of potential customers is divided into segments.

Generally, market size is not the only factor that is determined, but the market value is also very important. For instance, small business customers spend around 4 times as much as the home office customer, even though they are 2.5 times smaller than their high-end home segment in terms of customer size. So, in terms of dollar value, the small business market is often considered very important.

Market value is calculated through simple mathematics. The number of potential customers in the market is multiplied by the average purchase per customer. Market value is calculated by taking the average number of customers in each segment over a period of time and then multiplied that figure by the average purchase per customer. In market analysis table, the other items are only subjective qualities that help with marketing. These points are allotted to people who are assigned in preparing marketing information.

Reality Checks Reality checks are always important for market forecast. Finding a way to check reality, while performing a forecast is essential. If you are able to estimate your total market value, then you would relate that figure to the estimate sales of all their competitors to check if the 2 figures relate to each other. The import and export value and production values are checked in an international market to find whether the annual shipments estimates appear to be somewhere in the same range as the estimated figures. To check your results with the forecast, you might also check for some given years with the vendors, who sold products to this market. Macroeconomic data can also be overlooked to confirm the size of this market compared to other markets with same characteristics.

Target Focus Review

Market analysis should help in the development of strategic market focus, which means selecting the key target markets. This is considered the critical foundation of strategy. We speak on this as market positioning and segmentation.

Company will not try to address the needs of all market segments under normal circumstances. While selecting target market segments, understand the inherent market differences, competitive advantage, keys to success, and strengths and weaknesses (SWOT analysis) of your organization. Everyone wants to focus on the best market segment, but the market segment with the maximum growth or the largest market segments, might not be necessarily the best one to address. The best market segment to address would be the one that matches your own company profile.

It is not a good idea to use page count as a gauge to determine the length of a business plan. A business plan with 20 pages of text alone can be considered to be longer than a 35-page plan which is well laid out with bullet points, helpful images of products or locations and charts that highlight vital projections.

In fact, a plan should be measured by its readability as well as the summary provided. If the business plan is prepared keeping these aspects in mind, the reader will be able to get an overall idea in about 15 minutes by quickly browsing through the key points.

Illustrations, headings, format and white space contribute to improving the appeal of the business plan. The summary section is a very important aspect of any business plan. The salient points of the business plan must be clearly visible to the reader as it is done in a presentation.

It is unfortunate that many people still tend to measure the worth of a business plan by the number of pages in it. In this connection, some of the key aspects to be kept in mind are as follows:

• Practical business plans prepared for internal use only can have five to ten pages
• Business plans of large companies may have hundreds of pages

A standard expansion or start-up plan prepared for presentation to outsiders can have 20 to 40 pages. However, it should be easy to read with text well spaced and have bullet point formatting, illustrations in the form of business charts and financial tables in the condensed form. The details of financial aspects can be organized in appendices.

However, the  length of the business plan  is decided by its nature and the purpose for which it is prepared. Some of the questions that can be considered when drafting out a business plan in order to decide on its length are:

• Should descriptions about the company as well as the management team be included as outsiders are likely to read the business plan?
• Should a standalone executive summary be provided for the business plan?Is there a need to incorporate plans, blueprints, drawings and detailed research?Is it an investment proposal?
• Should it be worded in such a way as to clear legal scrutiny?

The form of the business plan is actually decided by the requirement for which it is to be prepared.

Often, venture contests specify a limit of 30 pages or 40 pages at times, but rarely 50 pages, including the appendices that contain detailed financial statements, for a business plan. Some contestants make very bad options because of page restrictions and cram the content using thick texts and bold typefaces, making it worse and not better.

Most often,  good plans have as many as 30 to 40 pages . The plans have 20 to 30 pages of text, excluding graphics to illustrate locations, menus, designs, etc. and appendices consisting of team leaders’ resumes, monthly financial projections, etc. Some pages may have to be included for standard financials. This calls for tables for sales, income and cash flow statement, balance sheet and personnel on a monthly basis. In the body of the plan, annual numbers may also have to be included.

It is not prudent to reduce the length of the plan by cutting down on helpful graphics. Readability is more important than the length. Making use of business charts to illustrate numbers makes it easier to understand. Make use of drawings and photographs to depict locations, sample menus and products. It is important to use as much illustration as possible. Finally, extra graphics such as clip art that are not relevant to the matter at hand may better be avoided.

Business Plan Market Forecast

Proper market forecasting helps provide budgetary allocation for coming market trends, innovative shifts and internal financial allocation. It is a key component of proforma financial statements and  professional market research . Intelligent estimates are best backed by quality, time-intensive research. That’s where we come in. Rather than producing a business plan based on educated guesswork, we use a litany of some of the industry’s best market research tools available to some of the most prestigious universities. Many a business plan software tools can also aid in your research work. Typically business plan software also includes industry-specific templates, which can help with how you approach your niche or even the broader market.

Today’s technology provides access to large data-sets for current and past information. Obtaining the data is not difficult. We help to analyze, interpret and make qualitative assumptions about future trends. By using both qualitative and quantitative approaches we work to derive parallel data forecasts for future trends within your business, your industry and the market as a whole. The future may be uncertain, but with the help of expert modeling, it can be simplified, understood and, in some cases, accurately predicted.

Many business planners lack the luxury of funding a previously-published market forecast from which to glean relevant data. In many cases, free published forecasts can help to paint a meaningful picture. However, when professional forecasts are not forthcoming on market size, supply/demand metrics and potential company penetration, it is usually left up to thoughtful opinion and expert “reverse engineering” to determine any meaningful dribble from the data.

Without free forecasts, a business owners may feel forced to purchase expensive data sets, market research reports and published articles to determine helpful data about the potential of a business idea. Where we can, we utilize past relationships and access to thousands of reports through expensive subscriptions to find the data-set that best fits your business goals for the plan you may be crafting.

Apart from the more obvious sources like the Internet, library references and popular publications, we provide access to industry-specific reports and paid-for research studies not accessible to would-be entrepreneurs. We fully recognize that data forecasting is part art and part science, but we prefer to adhere to more quantitative methods so as to make your business plan as convincing and relevant as possible for its particular audience.

Extrapolation of past data with large populations and data-sets helps to provide reliable predictions about future trends and outcomes. Understanding past growth, market saturation and the competing forces that can impact a company’s success in market entrance are absolutely vital components of the marketing portion of your business plan.  Past data is never a fail safe, but it can act as a healthy gauge of future trends in a marketplace.

When no relevant data on current conditions within your market can be found, we work with the available numbers to create plausible models that form convincing arguments for your particular plan goals.

Perhaps the greatest downfall of many potentially-successful business plans is the disconnect between gathered data, assumptions, external and internal market forces and projections. Without a common sense litmus test, many plans fail to deliver relevant metrics to help make business funding possible. Performing common sense tests often requires qualitative work outside the realms of the given data. Making phone calls to Chambers of Commerce, trade organizations and market reporting agencies to obtain a wider base and deeper foundation of information is extremely helpful when crafting assumptions.

Making wild guesses about targets, markets and industries without thoughtful research can be detrimental to fulfilling the goals of your particular business plan. BusinessPlanning.org helps to remove the guesswork and provide your business with relevant data from which to tell a compelling story.

Correctly identifying the structure and competitive dynamics of the industry you are proposing to enter will create a good general point of reference for judging whether you should enter it or not. If the general industry profile does not appear attractive to you, and you are planning to offer value propositions that have close industry substitutes, then this may be an important signal that your proposed venture may need to be reconsidered. But if the industry profile looks attractive, then this could be a sign that you are on to something.

A fantastic tool to analyze an industry that serves a Defined Existing Market is Porter’s Five Forces Model. Michael Porter is a professor at Harvard Business School and published this strategy model in his seminal work,  Competitive Strategy . Porter’s model is powerful. It demonstrates how an industry’s attractiveness to either its current competitors or a new entrant is an amalgam of disparate, and sometimes contradictory, factors.

To help determine if your business idea will be worth the investment of time, money and energy, you will conduct two sequential analyses using the Five Forces Model. The first Five Forces analysis will be of the overall industry that you are contemplating to enter. The second Five Forces analysis will be of the particular market segment(s) you would be choosing to serve with your Value Proposition(s).

The figure below illustrates how Porter’s model works by focusing on the five forces that shape competition within an industry: 1) the risk of entry by potential competitors, 2) the intensity of the rivalry among established companies within an industry, 3) the bargaining power of suppliers, 4) the bargaining power of buyers, and 5) the similarity of substitutes to an industry’s value propositions.[1]

The main point of Porter’s Five Forces Model is as follows. The stronger that one of the five competitive forces becomes, the greater the overall competitive rivalry becomes within the industry. The more intense the competitive rivalry becomes, the harder it is for ventures within the industry to raise prices or maintain high prices to reap greater profits. The less in average profits that a firm in the industry is able to earn, the more intense the rivalry for customer demand is among the industry’s rival competitors.

The opposite is true also. The weaker that one of the five competitive forces becomes, the less intense the overall competitive rivalry among the industry’s firms is. If rivalry amongst the industry’s firms decreases, the easier it becomes for the industry’s competitors to raise either raise prices or reduce their cost structure (by lowering their value propositions’ quality) and ultimately earn higher profits. The higher the average level of industry profits, the less intense the rivalry for customer demand will be among the industry’s rival competitors.

The importance of each of the five forces is situationally dependent upon the unique facts and circumstances of each industry. For example, the overall threat of new market entrants might be insignificant in determining whether an entrepreneur wants to enter an industry in its growth phase, but it may be a paramount factor in a mature industry.

I developed another diagram (below) to show how the five forces within Porter’s model interact with each other. As you can see, four of the forces (risk of entry by potential competitors, bargaining power of suppliers, bargaining power of buyers, and threat of new entrants) each act upon the fifth force – the intensity of rivalry among the industry’s competitors. This means that if the bargaining power an industry’s buyers increases, the intensity of rivalry among industry competitors will increase. This causal relationship works in only one direction – a change in any of the forces ultimately either increases or decreases the intensity of rivalry among the industry’s competitors. Therefore a change in the intensity of rivalry will not cause change in one of the other four forces.

[1] Charles W. L. Hill and Gareth R. Jones,  Strategic Management Theory , Eighth Edition, Houghton Mifflin Company, pg. 45, 2008.

Macroenvironmental forces are changes in the broader economic, political/legal, social, technological, demographic, and global forces beyond the industry being examined. Any one of these six forces can change or effect any one of an industry’s five internal competitive forces. In conducting an industry’s initial Five Forces analysis – which is a snapshot measurement of an industry’s present competitive environment – these macroenvironmental forces are automatically accounted for. They are already included because an industry’s competitive environment is an aggregate of these turbulent and often conflicting forces. But entrepreneurs and business owners must also make educated guesses about how macroenvironmental trends and forces will shape the industry’s attractiveness into the future, both in the short run and in the long run.

Below is a diagram that visually represents how each of these seven forces can affect an industry’s Five Forces as the future unfolds.

The Six Macroenvironmental Forces

The following is a detailed analysis of the seven macroenvironmental forces touched upon above.

Macroeconomic forces affect the general economic well-being of the nation or the region in which an industry operates. [1]  The following are the major macroeconomic forces that can affect an industry’s ability to deliver an adequate economic return.

• The rate of growth for the economy.  Economic expansions cause a general rise in aggregate consumer demand while recessions cause a general drop in aggregate consumer demand. Because aggregate demand for goods and services rises during economic expansions, an industry’s intensity of competitive rivalry, broadly speaking, will usually decline. The reason is that generally the market demand for an industry’s value propositions will cause an expansion in the industry’s revenue. Therefore its possible for the industry’s firms to generate revenue growth without fighting their competitive rivals for market share. Conversely, a decline in economic growth or a recession causes general aggregate demand to contract. This generally shrinks the amount of revenue an industry can earn and may cause price wars, consolidations and bankruptcies.
• Interest rates. Interest rates affect the cost of borrowing for consumers, thus affecting aggregate demand. Higher interest rates generally makes the cost of borrowing more expensive and can dampen demand for real estate and purchases of major assets (cars, durable goods). Ultimately, higher interest rates can lead to higher industry rivalry if the industry is directly or tangentially affected by borrowing costs. Higher interest rates also affect business’ cost of capital. High interest rates may restrict a business’s ability to invest in new equipment or facilities. On the other hand, low cost of capital makes it substantially easier for established businesses to borrow and invest into expanding their operations.
• Exchange rates.  Exchange rates either make imports more or less expensive for domestic consumers and exports more or less expensive for foreign consumers of domestically produced value propositions. A weak dollar makes imported value propositions more expensive and domestically produced value propositions comparatively less expensive. A strong dollar makes foreign value propositions less expensive and domestic value propositions comparatively more expensive.
• Inflation/Deflation.  Inflation is the decrease in the purchasing power of a nation’s currency over time. Inflation can destabilize an economy, slow economic growth, higher interest rates and increased currency volatility. [2]  Increasing inflation makes business planning very difficult because the future becomes less predictable. Uncertainty makes companies unwilling to invest in growing their operations. On other side of the coin is deflation. Deflation is even more potentially damaging than inflation is. If the purchasing power of currency is increasing over time, firms and consumers will hoard their cash. This will causes a self-reinforcing cycle of low or negative economic growth. Usually the best inflation formula for stable economic growth is a low, steady inflation rate.
• Wage Levels.  The price of labor from industry to industry can have a significant impacts on an industry’s costs of production. High or increasing industry labor costs can make substitute value propositions more attractive for the industry’s customers. Low or decreasing industry labor costs can make substitute value propositions less attractive for the industry’s customers.
• Level of Employment:  High unemployment levels give firms greater leverage over their employees in keeping wage increases down or in actually decreasing labor costs to the firms in an industry. This can reduce the industry’s cost structure and thus raise the industry’s average profitability.

Legal and political forces are the results of changes in laws and regulations within the country your business operates in. [3]  Political and legal developments can be both opportunities and threats. The following are the major legal and political changes that can impact the fortunes of industries.

• Current and Expected Levels of Taxation.  High tax rates can affect the decisions of entrepreneurs to engage in business activities or reduce the ability of companies to reinvest profits in expansion. But often the most important effect of taxes are not the levels of taxation, but the different effective tax rates for different activities. For example, the oil and gas industry, ecommerce businesses and the video game industry get significant tax breaks that reduces their effective tax rate. This can raise or lower the attractiveness of getting into certain industries.
• Import/Export Quotas and Tariffs.  Tariffs and import/export quotas affect the costs of value propositions imported into a country and those exported to other countries. Raising or lowering tariffs or trade quotas can cause demand for the value propositions of the industries affected to increase or decrease. An example of a broad change in trade quotas and tariffs was the implementation of the North American Free Trade Agreement (NAFTA).
• Government Grants.  Government grants are programs that can provide nascent industries with seed capital and resources. Governments (state, local and national) often provide businesses with financial support if the business pursues profit opportunities that align with a government’s policy goals. An example of a significant government grant program is the U.S. government’s Small Business Innovation Research grant (SBIR).
• War/Terrorism.  War and terrorism can increase regulations and transaction costs associated with global travel or insurance. Wars can also saddle nations with large medical costs to society. Wars and anti-terrorism efforts can also increase military related contracting opportunities.
• Quid Pro Quo.  Many industries try (and often succeed) in influencing politicians to enact laws that are favorable to their bottom line and create barriers of entry against potential competitors. A recent example of this was the influence the health care and pharmaceutical industries exerted upon the U.S. Congress during the passage of the Affordable Care Act in 2009.
• The Regulatory State.  In the U.S., most of the regulations that affect business and the general public are promulgated through various government agencies. Often, small changes in regulations can lead to desired or unintended consequences for a number of industries. Here is a small sample of legal and regulatory issues that are managed by various state and federal agencies: environmental protection, corporate governance, intellectual property rights, employment law, criminal law, tort law, food & drug regulation, public health… In the United States (and most other industrialized countries), virtually every area of commerce is affected by government regulations and laws. For any given industry, changes in these regulations and laws can be either threats or opportunities.

Social forces are changes in the social mores and values of a society and how they affect any particular industry. Social changes can create both opportunities and threats for any industry.

• Social and cultural forces specifically refer to changes in the tastes, habits and cultural norms within a significant segment of a country’s population. One example of a social trend is the growth of the organic and local food movements in the U.S. over the last thirty years. The local and organic food movements have created an opportunity for some small farmers near large population centers, but this movement has also created a potential threat to large mono-agriculture farms.
• Cultural attitudes can shift drastically over time, rendering once commonplace habits and activities to no longer be widely accepted or tolerated. An example is the decline of smoking in the U.S. Smoking used to be tolerated in most indoor spaces forty years ago. Now it is either banned or highly frowned upon and the public has become very aware of the health risks smoking causes. This has led to a significant decline in the percentage of adults in the U.S. who smoke. Conversely, marijuana use, which was highly frowned upon by the majority of U.S. society over forty years ago, has become more widely accepted among the public. As a result, many state laws are changing to reflect this increased tolerance of marijuana use.
• Changes in what society considers fashionable are in a constant state of flux. Various fads and crazes rise and fall, sparking opportunities and threats for the industries that capitalize on these trends. Examples of changes in fashion, fads or crazes are: rock n roll in the 1960s, disco music in the 1970s, the Pet Rock, the Hula Hoop, Cabbage Patch Dolls…

Technological change is a primary driver of Schumpeter’s “perennial gale of creative destruction” among business ventures. Technological forces can render established, profitable value propositions obsolete virtually overnight and usher into existence exiting new business ventures. Because of the dual role technological change (both creative and destructive) plays in our society, it can be both an opportunity and a threat.

• Technological forces can cause industries to move through their life cycles more quickly. They can also disrupt an industry in the beginning or middle of its life cycle, rendering it obsolete or changing it so radically that most of the industry’s competitors cannot keep up. Essentially, technological change makes the life cycles of industries more volatile and unpredictable.
• Technological change can lower the barriers of entry for many industries. An example is the internet made it much easier for a potential retailer to sell products to its customers through a virtual storefront versus acquiring, stocking and running a brick and mortar facility. The lowering of barriers of entry tends to increase an industry’s intensity of rivalry, leading to both lower prices and industry profits.
• Technological forces can also reduce transaction costs. Reducing transaction costs is often destructive to the industries that thrive on them (auction houses being replaced by eBay or newspaper classifieds being replaced by Craigslist). Within an industry, a reduction in transaction costs driven by technological change usually leads to an increase in the industry’s intensity of competitive rivalry.
• Technological change can either reduce or increase customer switching costs. An example of how technological forces can reduce customer switching costs are instant price comparison applications on mobile devices. These give the consumers the ability to identify which retailers offer the same value propositions at the lowest prices. Technological forces can also increase customer switching costs. An example is Facebook or eBay. Both of these websites lock in users due to their network effects – alternative market choices do not present as much value because they are not as big.
• Technological forces can unleash changes in industries far removed from the industry in which the technology originated. An example of this is the Internet. The Internet has caused massive sea changes in industries only tangentially related to it such as retail, the news industry, book publishing, and matchmaking services (online dating).

Demographic forces are changes in the characteristics of a population of people. These characteristics can be sex, age, education, race, national origin, social class… Changes in demographics can present businesses with both opportunities and threats.

• Changes in a population’s age distribution can present both opportunities and threats. For example, in the U.S., the population of elderly people is growing more rapidly than the population as a whole. This presents an opportunity for industries who provide long term assisted living, the financial industry (reverse mortgages and retirement planning), and both the health and pharmaceutical industries. It also presents a threat to certain industries like funeral and burial providers (if the general population is living longer, it means people are dying at a slower rate).
• The rapid increase of the Hispanic population in the U.S. has led to an increase in Spanish speaking music, television and news in the U.S. This represents a growing opportunity for food and media companies that market to Latinos.

Global forces are changes that occur within and beyond the borders of the country a business is operating within and affect how a company can operate on the international stage. Global forces can present both opportunities and threats to an industry.

• The economic growth rates of other countries can play important roles in determining the demand for imports and exports. As barriers to trade fall, national economies become more subject to the winds of international commerce and capital flows. This international liberalization of trading agreements can allow domestic firms greater access to foreign markets. An example of the liberalization of international trade is the outsourcing trend over the last two decades from industrial economies in the west to developing economies in Asia.
• Climate change is another example of a global force. The long term changes to the world’s climate will profoundly shape countless industries in the decades to come. Climate change can offer both opportunities and threats to different industries. For example, the wine industry in France may have to experiment with new varietals due to changes in temperature and rainfall expected by scientists in the coming decades. Climate change also presents some industries with opportunities. One example is the shipping industry. The rapidly dwindling polar ice cap in the Arctic Ocean presents the possibility that new, more efficient shipping routes might become available.

[1] Charles W. L. Hill and Gareth R. Jones,  Strategic Management Theory , Eighth Edition, Houghton Mifflin Company, pg. 66, 2008.

[2] Charles W. L. Hill and Gareth R. Jones,  Strategic Management Theory , Eighth Edition, Houghton Mifflin Company, pg. 68, 2008.

[3] Charles W. L. Hill and Gareth R. Jones,  Strategic Management Theory , Eighth Edition, Houghton Mifflin Company, pg. 70, 2008.

A good Five Forces analysis will cause you to sift through a lot of data, much of it conflicting and confusing. Below is a series of scorecards that try to condense the most important points from your Five Forces analysis and present them to you in an easily understandable format.

The scorecards rate the attractiveness of an industry’s five forces  from the perspective of a new venture attempting to enter the industry . Each force gets its own scorecard. Each scorecard has the main factors that help determine the strength the force exerts upon the industry. A factor’s attractiveness is rated on a five category scale that ranges from Highly Unattractive, Mildly Unattractive, Neutral, Mildly Attractive, to Highly Attractive. For each factors’ rating, the top line (yellow) indicates the level of the factor’s level of attractiveness at present. The bottom line (green) is the entrepreneur’s rating of what he or she thinks each factors’ level of attractiveness will be in the future. The level of future attractiveness for a factor is determined by analyzing how macroenvironmental forces will affect the industry in the future.

Directly below is a hypothetical example scorecard of an industry’s intensity of rivalry:

Remember, none of this is exact science. There is no mathematical formula that determines whether you should enter an industry or not. The purpose of this exercise is to ensure that you, the entrepreneur, have thoroughly thought about the nature and future of the competitive environment you are proposing to jump into.

Force One: Intensity of Rivalry among Industry Competitors

Force Two: Risk of Entry by Potential Competitors

Force Three: The Bargaining Power of Buyers

Force Four: The Bargaining Power of Suppliers

Force Five: The Availability and Similarity of Substitutes to an Industry’s Value Propositions

And finally, the table below is a final snapshot evaluation of the industry’s attractiveness. To fill out this table, you should look at your ratings in the tables above as guidelines. The importance of the forces, and the factors that comprise them, will change from industry to industry. It will ultimately depend upon the unique facts and circumstances of each industry being evaluated. Therefore you will have to use your best judgment.

Overall Evaluation of Industry’s Attractiveness

Porter’s Five Forces – Risk of Entry

Profitable industries are like chum in the water for new competitors. The smell of money to be made will attract potential competitors to circle an industry, try to enter it and look for an easy meal. The only thing stopping a myriad of potential competitors from entering an industry are  barriers to entry  – a business version of a steel shark cage.

Profitable industries attract new market entrants – potential competitors. Potential competitors are companies that are not currently competing in an industry, but possess the ability to do so if they choose. Theoretically, if it cost nothing to form a company and enter an industry serving a profitable market, new firms would flood into that industry until the industry’s average profit margin shrank to zero. But we don’t live in a frictionless, theoretical world and different industries have wildly different levels of profitability. Barriers of entry are what discourages new companies from entering a profitable market and making a killing.

Barriers of entry benefit established companies within an industry by protecting them from new competition and preserving their profit margins. Low barriers of entry leave an industry wide open to new market entrants. The results to an industry with low barriers of entry are lower profits for the companies within that industry will inevitably result.

Therefore, established firms within an industry have great incentive to erect barriers of entry to keep the number of potential rivals to a minimum. Some barriers of entry are passive and a natural result of the industry’s operations. An example of this is economies of scale. But companies often take active steps to discourage new companies from entering their industries. Examples of this are when companies create brand loyalty or try to purposely raise their customers’ switching costs. The reason is simple – the more companies that enter the industry, the more difficult it is for established companies to maintain their market share and protect their profits.

The risk of entry by potential competitors is a function of the industry’s profitability and the height of its barriers to entry. The higher an industry’s average profit margin, the more enticing it is for new competitors to jump into the fray and wrestle market share from the incumbent companies. High barriers to entry can deter potential competitors from trying to enter an industry and serve its market segments. The higher the cost of entry into an industry, the weaker the competitive force (the risk of entry by potential competitors) is and generally translates into higher average industry profits. Important barriers to entry include the following:

Capital Requirements  – If it takes a great amount of money or assets to enter the industry, this can be a significant barrier of entry for firms who wish to enter it. Usually industries with high fixed costs have high capital requirements (i.e. factories, warehouses, computing assets…).

Economies of Scale  – Economies of scale is where the companies in an industry enjoy diminishing per unit costs for their value propositions as the volume produced increases.

Brand Loyalty  – Consumers often have preferences for the value propositions offered by established companies due to familiarity and reputation.

Absolute Cost Advantages  – Other entrants cannot hope to match the established firms within the industry’s cost structure. Absolute cost advantages arise from three sources: 1) possessing unique and critical resources (patents, trade secrets, or accumulated experience), 2) control of particular inputs of production (i.e. fertile farm land, a prime piece of commercial real estate…), 3) access to cheaper funds because existing companies represent lower risks than new entrants.

Customer Switching Costs –  High customer switching costs occur when customers resist spending the time, money and energy to switch from the current supplier of a value proposition to one offered by a different company, even though that alternative value proposition may be of greater value.

Government Regulation –  Government regulations, and the lack of them, can be a significant barrier of entry for potential new entrants into an industry. An example of this would be environmental regulations placed on coal mining companies and their operations.

We will now dig deeper into how to identify and analyze these potential barriers of entry, and ultimately understand how they affect the competitive rivalry within an industry.

Capital costs mean the startup costs of your business idea that must be incurred before you can commence operations. Basically, this is the total amount of money you need to spend (on equipment, employees, facilities, legal, accounting….) before you can hang your “Were Open!” sign in your shop window. For some asset intensive businesses, such as a full service health club or a golf course, initial capital costs can be extensive. For other businesses that use relatively few assets, such as an internet marketing business or a hotdog stand, initial capital costs can be relatively small.

For many aspiring entrepreneurs without a lot of financial resources, capital costs can be the most daunting barrier of entry of all. Many industries are able to maintain decent profit margins simply because the capital costs required to enter the industry are significant and insurmountable for many. Also, your time can be thought of as a capital asset too. Your investment of time in pursuing a business endeavor represents an opportunity cost on your part – you are giving up time that you could be working for someone else (and the income that entails) in exchange for pursuing your entrepreneurial ambitions. For example, it may take $100,000 and one year of full time work to create and open a business. If you had to give up a $50,000 per year job in order to pursue the endeavor, the real capital cost for you to start your business would be $150,000, not $100,000.

Another example of this would be opening a law practice. Legal services, in the United States, is a fragmented industry that has an average industry profit of 19.5%. This is a very attractive profit margin. Furthermore, the capital cost required to start a legal practice – purely from creating the actual legal services business – is relatively small. A lawyer needs a laptop, access to research materials, a place to meet clients, and some office equipment. This may cost as little as $10,000 in initial startup capital. But this does not represent the actual capital cost to start a law firm. To actually open a law firm and practice law, a lawyer would have needed to: 1) obtain a law degree (lets estimate $120,000), not work for three years while going to law school (lets estimate $150,000 for three cumulative years), get a state bar card ($3,500 for the test and the study course), and not work for three months while studying for the bar (lets estimate $12,500). Then, an only then, a lawyer could spend $10,000 on opening a legal practice. The real cost of this venture, both in absolute capital costs and opportunity costs, would be $296,000.

So the real capital cost of opening a law firm and practicing law (and being in an industry with an attractive 19.5% profit margin) may be at least nearly $300,000. This capital cost represents a serious barrier of entry to many people who would want to enter this industry, but balk at the $300,000 price tag that it requires.

Key Questions:

• What are the average total capital costs for entering the industry you proposing to enter?
• Is the average profit margin for the industry you are proposing to enter enough to service the capital costs required from a typical new market entrant?

Economies of scale arise when unit costs fall as a firm expands its output. In other words, the more of a value proposition a company produces, the less per unit the company pays to produce those value propositions. Sources of scale economies include 1) cost reductions gained by efficiently creating a massed produced output, 2) discounts on bulk purchases of raw materials, and 3) cost benefits gained from spreading production costs and marketing and advertising over a large production volume. Some industries benefit greatly from economies of scale (i.e. the beer industry, the auto industry…). Other industries do not enjoy economies of scale much at all (i.e. nail salons, massage therapy, dry cleaners…).

The following are examples of economies of scale: 1) when the creator of a product gets bulk discounts on the purchases of raw materials for their products, 2) spreading fixed production costs over a large production volume, 3) cost reductions through mass-producing a standardized output, 4) cost savings associated with spreading marketing and advertising costs over a large volume of output. Most manufacturing industries, such as pulp and paper products or textiles, are examples of industries with economies of scale. If economies of scale are a factor in an industry, then many small producers are at a disadvantage because their per-unit costs will be higher than that of their larger competitors.

An industry whose rivals have significant economies of scale creates powerful barriers to entry for an aspiring new entrant to overcome. First, the established firms will have a substantial cost advantage over a new rival. Second, because high economies of scale imply high fixed costs (equipment, facilities), it is critical that these companies protect their market share at all costs. If their sales volumes decrease, this can render them incapable of sustaining their high fixed costs.

Companies, who try to match the existing industry competitors’ economies of scale, must enter the industry as a large producer to overcome this problem. But to do so, it must raise enough capital (to purchase the necessary assets and facilities) to match its competitors’ economies of scale. This becomes another barrier of entry in itself. Furthermore, if a new company enters an industry with a large capital investment (to match current industry competitors’ economies of scale), the increased supply of products the new company brings to the market risks depressing prices and may trigger a price war with established industry competitors.

• Does the industry you propose to enter have significant economies of scale (where the per-unit costs for producing a good or service decrease significantly as the volume of production increases)?
• Does the industry you propose to enter have high fixed costs (equipment, facilities, or significant R&D requirements)?
• Do the suppliers of the industry you propose to enter give significant volume discounts and payment terms to large-volume buyers?
• Within the industry you are proposing to enter, do its company’s marketing and sales budgets increase, on a per unit basis, proportionally to sales of its value propositions, or do the costs of its company’s sales and marketing budgets decrease, on a per unit basis, with an increase in the sales volume of its value propositions?

Brand loyalty is when consumers develop and hold a preference for a particular company’s brand of value propositions. Significant brand loyalty makes it difficult for new market entrants to wrestle market share away from established industry brands. Examples of value propositions with strong brand loyalty are mass consumer products such as beer (Budweiser, Coors and Miller), soft drinks (Coca Cola and Pepsi), or tobacco products (Marlborough and Winston-Salem’s).

A company can also cultivate brand loyalty by developing innovative value propositions. Probably the most successful major company over the last decade that has leveraged innovative value propositions into brand loyalty has been Apple.

A venture may be able to sidestep an industry’s brand loyalty barriers of entry by entering the premium category of product markets. An example would be Dry Soda or small craft micro-brewers.

Significant brand loyalty makes it difficult for new entrants to take market share away from established industry brands. A company faces the daunting task of not only convincing consumers to buy its value propositions, but also to choose not to buy value propositions they already like and feel comfortable with.

• Are the value propositions in the industry you propose to enter highly branded?
• How strong is the brand loyalty in the industry you are proposing to enter?

Absolute Cost Advantages are when an established venture has an insurmountable cost advantage, meaning that new entrants cannot possibly hope to match the incumbent companies’ lower cost structure. Absolute cost advantages can arise from: 1) superior production operations and processes due to access to unique assets (i.e. patents, copyrights, or fertile farmland), 2) accumulated skill and expertise, 3) exclusive or relatively favorable control of their value propositions’ inputs (labor, materials, equipment, or management skill), and 4) access to cheaper capital due to their lower business risk when compared to a new market entrant. Also, access to superior distribution channels could be considered an absolute cost advantage. If established companies have absolute cost advantages, then the threat of entry as a competitive force will be weaker.

A new market entrant must be especially careful in attempting to directly compete with entrenched industry competitors that have absolute cost advantages. If a new entrant enters an industry where there are established competitors who have lower cost structures, the established firms can lower the price of their value propositions to eliminate the new entrant. This could erase any ability for the new market entrant to ever earn a profit. If this threat is credible, it can be a barrier of entry for new market entrants.

• Do the major competitors in the industry you are proposing to enter possess absolute cost advantages? If so, will you be able to acquire these absolute cost advantages before you begin directly competing with them?
• If the major competitors within the industry you are proposing to enter possess absolute cost advantages over your business idea, are there any steps or actions you can take to mitigate those absolute cost advantages?

Customer switching costs are the time, energy, and money necessary for them to switch from the value propositions offered by an established company to those of a new market entrant. If switching costs are high, customers will be unlikely to change even if the new product is superior to other market substitutes and alternatives. An example would be the switching costs associated with leaving the Microsoft Windows operating system or the QWERTY keyboard. Other value propositions in the market may be better/faster, but consumers often find themselves resistant to change because the time or hassle of switching to a better product or service proves prohibitive.

 K ey Questions:

• In the industry you are proposing to enter, do the value propositions the industry produces have high switching costs? If they do, can you think of a way your business idea can mitigate this obstacle?
• If the industry you are proposing to enter doesn’t typically have high switching costs, can you think of a way for your business to raise the switching costs for your proposed value propositions?

Government regulations create politically and legally defined barriers of entry for many industries. Government regulations can increase barriers of entry for market entrants and potentially reduce competition. An example would be food safety regulations or anti-pollution laws. Also, in industries where economies of scale are a powerful force, the absence of regulations can lead to an intense concentration of market share in the hands of a few firms. This can create barriers of entry that are extremely difficult for a new market entrant to overcome. To sum up, high regulation within an industry usually leads to higher barriers of entry, but not always.

• Does the industry you propose to enter require government licenses or strict adherence to statutory codes (construction, health care, lending money, real estate rental, restaurant & food preparation…)?
• To what degree are the industry’s regulations beneficial to the incumbent industry competitors?

Below is a chart that summarizes how the six types of barriers of entry affects industry attractiveness from both the perspective of a new market entrant and an industry incumbent.

Estimating Market Size

Estimating the size of the market you want to enter is the first critical step in testing the feasibility of your business idea. This is a lot like cliff diving. If you are going to jump off a cliff into a pool of water far below, it’s a really good idea to know beforehand just how deep the water is. If you jump without finding out (or at least making an educated guess based on objective facts), you run the very real risk of getting hurt. Bad.

The first order of business in determining the sizes of the various market types for your business idea’s value proposition(s) is to correctly define the parameters of the market types you are trying to measure.  This may sound rather simple, but it is honestly the hardest and most frustrating part of this process. Estimating a market size is the epitome of the phrase “garbage in – garbage out.” If you incorrectly define the boundaries of the type of market you are trying to size up, your entire estimate (and the basis for all of your future financial projections) won’t really be worth the paper it is printed on.

So, creating a quality market size estimate that’s based upon good, logical assumptions, is the first step in determining if your business idea can support a potentially successful business model. To make a quality market size estimate, you should roughly measure the size of each relevant market type for your business idea’s value propositions. By understanding the rough size of each of these market types, you can roughly gauge how much revenue (based upon your market share assumptions) your business idea could generate in the present and going forward into the future. Determining which market types to estimate the size of depends upon the type of market your business idea is attempting to serve. These general market types are Defined Exiting Markets, Cloned Markets, Re-segmented Markets, or a New Markets.

A market is a group of customers that have the willingness to buy a particular type of value proposition. When determining the size of the markets for your proposed business idea’s value proposition(s), you may use all or some combination of the following market type definitions.

• Examples: the car market (supplied by the car industry), the personal computer market (supplied by the personal computer industry), and the athletic shoe market (supplied by the athletic shoe industry).
• Examples: the total market for electric cars, the total market for tablet computers, the total market for running shoes.
• Examples: the market for electric cars in the United States sold through dealerships, the market for android compatible tablet computers sold through big box stores, the market for athletic shoes sold through e-commerce websites .
• The TM is comprised of one or more customer segments , each of which are offered a unique value proposition by your proposed business idea. For a comprehensive explanation of what comprises a customer segment, please refer to the following section.
• The TM is a measurement dependent upon the definition and size of the SAM (because it is a portion of the SAM), but independent of the SOM. Both the TM and the SOM are portions of the SAM that measure different things.
• Examples: Upper-middle class, educated, ecologically conscious automobile customers, early adopter electronics consumers who use their personal computers and laptops mostly for entertainment and not work, high school and college athletes who buy high performance running shoes to gain an edge on their competition.
• Like the TM, the SOM is dependent upon the definition and size of the SAM, but is independent of the TM. Both the TM and the SOM are portions of the SAM that measure different things.
• Examples: the portion of the market for electric cars sold in the United States through dealerships that your business idea can realistically capture, the portion of the android compatible tablet computer market in the United States sold though big box stores that your business idea can realistically capture, the portion of the market for high performance running shoes for athletes in the United States that are sold through ecommerce websites that your business idea can realistically capture.

For practical purposes, you can think of both the SOM and TM as a portions of the SAM, the SAM as a portion of the TAM, and the TAM as a portion of the TID. Both the SOM and TM are separate business concepts that measure different things. The SOM estimates your proposed value proposition’s penetration of the SAM. The TM estimates the size of the group of people for whom your proposed value proposition is specifically designed for.

I know, it’s a lot of acronyms to keep straight. But estimating the sizes of the TIM, TAM, SAM, TM and SOM are important for determining if the market size for your business idea’s value proposition(s) can support your entrepreneurial ambitions and business goals. The following are three generalizations – rule-of-thumb explanations – of what market sizes are necessary to support a particular business type, development path and outcome.

This type of company is usually entering a cloned, re-segmented, blue ocean or new market, or a defined existing market with a new product. They usually seek traditional angel investor and venture capital funding. Rapid scalability an achieving high market share is the key to this type of company. Often the founders of scalable, high growth companies have either an Initial Public Offering (IPO) or the sale of the company to a Fortune 500 corporation as their exit strategy .

These companies require a SAM large enough to support potential company EBITDA (after the company has successfully scaled its operations) of at least somewhere between $10 million to $20 million per year. Publically traded companies, on average, often trade for 10x their annual EBITDA or greater. This, depending upon the company’s industry and whether or not its founders and investors want it to have an IPO, would probably put the company’s valuation at greater than $100 million. A $100 million valuation is a safe rough estimate for whether a company will be able to both afford to go public and financially benefit from an IPO.

So, armed with these rough guidelines, to create a scalable, high growth company that proposes to enter an industry with a 10 percent average EBITDA and capture 10 percent of that industry’s market share, would need to at least generate $100 million per year in revenue ($10 million per year in EBITDA divided by the industry EBITDA average of 10 percent). To achieve this annual EBITDA target and a 10 percent SAM penetration, the overall SAM size would need to be $1 billion ($100 million per year in revenue divided by a 10 percent penetration of the market by the company).

This type of company can be entering a Defined Existing Market, Cloned Market, Re-segmented Market, or Blue Ocean Market. They do not enter New Markets with New Products due to the incredible amount of time, business risk and resources that would be required. These businesses usually seek capital from the founders, founders’ friends and family, non-bank lenders, bank and institutional lenders, and some angel investors. Rapid scalability is usually not a primary goal for these business ventures. They often prioritize strong, stable profits and cash flow for their owners above all else. Exit strategies for these companies’ founders include selling the company to a third party such as another privately held business or private equity group, passing on the business to heirs, or simply holding on to the business. These types of businesses often make excellent cash cows.

Successful, mid-sized privately held businesses are usually valued between $5 million and $50 million. These businesses, as a rough rule of thumb and depending upon the industry, are usually valued at 3x to 5x their average yearly EBITDA. So, a $30 million dollar privately held business would need an average yearly EBITDA of between $6 and $10 million per year ($6 million per year if the business valuation ratio would be 5x; $10 million if the business valuation ratio would be 3x).

Lifestyle businesses are undertaken by entrepreneurs who want to create their own jobs and/or to support the conscious lifestyle choices of the entrepreneur (hobbies, schedules, living location…). This type of company usually solely enters Defined Existing Markets. Many, if not most, of the entrepreneurs who start lifestyle businesses do not begin their business ventures with any particular exit strategy in mind. Instead, the primary financial goal of these entrepreneurs is usually to generate enough cash flow to support their lifestyle needs. These businesses usually seek capital from the founders, bootstrap financing, and the founders’ friends and family. Rapid scalability is usually not a primary goal for these business ventures.

The market size necessary to support a lifestyle business really depends upon the needs and wants of each individual entrepreneur. The variables used to determine a rough estimate of the minimum market size needed to support a lifestyle business are: 1) the entrepreneurs’ desired minimum yearly EBITDA (include the entrepreneurs’ salaries in with EBITDA), 2) the average EBITDA ratio for a firm competing within the industry you are proposing to enter, and 3) the entrepreneurs’ assumption of how much of their proposed business idea’s SAM they will be able to capture.

For example, if an entrepreneur’s goal is to earn at least $120,000 (in EBITDA and salary) from the lifestyle business per year, the average EBITDA ratio for the proposed business idea’s industry is 15 percent of annual revenue, and the entrepreneur assumes she can capture 10 percent of the SAM she proposes to enter, then the minimum necessary SAM size needed to support the business venture would be $8 million ($120,000 divided by a 15 percent EBITDA ratio divided by a 10 percent SAM penetration equals $8,000,000).

The following chart summarizes the rule-of-thumb market size needs of the business types analyzed above:

Targeting a specific audience is most effective strategy when creating a marketing campaign. The more specific of a customer base a campaign can reach, the more dollars per potential customer a campaign will make. This is why companies will allocate a large amount of resources in order to find the audience that they are looking for. By doing this, you can create a marketing budget as effectively as possible and maximize your results. Knowing or choosing exactly who you are getting your message to has proven to be the most effective method of forming a marketing campaign. Once you have identified your target audience, the hard part is figuring out how to reach it. Below, we will discuss ways to do so.

The goal of any marketing campaign is to give the most amount of information about a product or service to the prospective customer possible. The more the customer knows, the more likely they are to take action. The more that is known about that customer, the more likely it is that you can communicate that information effectively. Using information about your customer base will help you make connections that they can relate to and in turn, they will be more likely to respond to your campaigns call to action.

There are four main ways that are commonly used in identifying targeted markets.

Geographic:  This includes the location, the geographical size and makeup of the area and other environmental factors such as climate.

Demographics:  This includes age, gender, income, average family size, average education, and the types of jobs that are in the geographic area.

Psychographics:  This involves factors such as the personality that you area tends to take on, what and how people behave that live in that area and also factors that will affect the way your potential customers will use your product or service. Will they use it often not so often? Is it a necessity or luxury?

Behaviors:  This has more to do with how your potential customers will react to things such as price changes and price points, how they will react based on what information is given to them, and what types of marketing campaigns they are most likely to respond favorably to. All of these factors can be used to help determine how a population will respond to a specific marketing campaign. Likewise, you can a marketing campaign that will increase conversions based on the information gathered above.

One of the fundamentals of marketing focuses on the benefits to cost trade-off. Understanding how customers will weigh the potential benefits of a product or service versus the costs to obtain that product or service is critical when designing a marketing campaign. Ask yourself, how will your customer gain monetarily or in other ways from purchasing your product or service? Though it is not always achievable, satisfying this is the most effective ways to create sales.

To better understand how they will you this trade-off, ask yourself the following questions.

• How much will it save them? Is this a product that can potentially pay for itself?
• Are there any intangible benefits to this particular product or service that a customer may ignore or find appealing?
• Will this product or service save the customer money, time, effort, or resources?
• Will it increase the customer’s income, investments, future, or personal relationship will it reduce a customer’s expenses, taxes, liabilities, or work?
• Will it improve that customer’s abilities, productivity, appearance, confidence or peace of mind?

Understanding the effect that your product or service will have on the customer will serve as an invaluable tool when designing an effective marketing campaign.

As mentioned in the beginning, understanding, identifying and reaching a target audience is the most effective way creating a marketing campaign that will give you the best results possible relative to the budget and time you are allotted. Ignoring these factors can costs you money and can be the difference between a successful and unsuccessful marketing campaign.

It’s important to define the nature of your involvement, in both depth and scope, in the business you are founding.  An entrepreneur’s involvement in his own business can range from being a full-time manager/employee (active ownership) to that of a hands-off investor (passive ownership).

An active owner materially participates in the day-to-day activities of the business. Most business owners and entrepreneurs actively participate in their businesses in some way, shape or form. Many work full-time in their businesses as employee/managers, drawing both a paycheck and profits (if there are any).

The definition of a passive owner is a little trickier to nail down. A passive business owner does not participate in the day-to-day activities of the business he or she owns. The IRS states that passive income can only come from two possible sources: rental activities or “ trade or business activities in which you do not materially participate .” Within the context of entrepreneurial endeavors some examples of passive income are:

• Earnings from a business from which you, an owner, are not required to be directly involved with (neither labor nor day-to-day management)
• Rent from either tangible personal property or real estate
• Royalties from intellectual property (patent, copyright, trademark…)

Receiving passive income is delightful. The hard part is usually accumulating enough assets in the first place to begin receiving passive income from them (rents or passive business activities). Examples, where an entrepreneur can derive passive income from her investments, are:

• A landlord rents an apartment building to tenants and uses a real estate management company to collect rents and make repairs.
• A passive investor invests capital into a partnership where others manage the business, and in return for his contribution of capital, the passive investor receives a portion of the business’s profits.
• An entrepreneur builds a successful business from scratch. She then hires a manager to manage the day-to-day affairs of the business. She then receives the profits from her business even though she is no longer actively involved in it.

Most entrepreneurs who start businesses have one of two basic plans for their involvement in their enterprises.

1. The entrepreneur(s) plan to be heavily involved in the lean startup plan and operations over a period of a couple of years. Then, at some undetermined point in the future, they plan to hire a manager and then run the company as a passive investment.

2. The entrepreneur(s) are essentially creating a job for themselves. They plan on working in the enterprise as an open-ended, long-term committment.

Starting and/or running a business is a complex and daunting task. Identifying both potential roadblocks and opportunities well in advance is essential for businesses of any size to outmaneuver the competition and gain a foothold as a dominant market leader. But over one-half of all new businesses will fail within five years of their founding. The vast majority of all new businesses never achieve the financial success originally envisioned by the founders. These new businesses and start-ups begin with energetic enthusiasm, but unfortunately, many business plans fall short due to various reasons: lack of capital, a flawed business strategy, unrealistic expectations, or they lack the people with the required skills and expertise to succeed.

Business plans may be required for any number of reasons. Here are a few of the most common business plan needs.

• To Obtain Debt Financing . A company may be required by a bank or other financial institution to provide a detailed, professional business plan in order to secure debt financing. Examples would be bank business loans or a line of credit.
• To Obtain Equity Financing . Start-ups and other new businesses often must sell equity (stock or membership units) to investors to raise capital for new business ventures. Investors can range from friends and family to angel investors to venture capital firms.
• For Internal Company Planning . Companies often need business plans to compare the relative viability between competing potential business projects. This can give those companies a clearer perspective on where to invest limited resources within the organization.
• Joint Ventures and Partnerships . When entering a strategic JV or partnership with another firm, a business plan works to outline the objectives of the two firms working in tangent.
• Mergers, Acquisitions and Corporate Divestiture . Detailed plans are needed when businesses change hands in order to help new owners see details in the industry and the enterprise itself. An expert plan can also serve as part of the marketing material to get the business sold.

The reasons for creating a business plan can be as varied as the businesses themselves. Each plan requires a unique approach to the industry you are in, the market you intend to serve, and your financial needs. That’s where we come in.

Creating a professional business plan can help mitigate these risks, raise capital from potential investors and put the company on the path to success. A good business plan helps to focus an entrepreneur’s mind on accomplishing the tasks necessary to make his or her business succeed. A business plan is not a static document. It is a logical series of informed assumptions that are relevant at the time the plan is written. As soon as market and industry conditions begin to change (which usually happens about five minutes after the plan is written), the plan begins becoming obsolete. For the entrepreneur, the value in the business plan isn’t necessarily the plan itself. Instead, its real value lies in the process – the research, thought and inquiry – in creating it.

We will work with you from start to finish to create a professional business plan that will help you accomplish your objectives. We will ask the necessary questions, help you find the answers, and organize your ideas into a coherent plan. From researching your market and industry to producing realistic, justifiable pro forma financial statements (cash flow, income statements & balance sheet), we will craft a document that can help you accomplish your business objectives.

So your business needs a plan. The question is, what kind of plan does it need? Please check out our business plan menu options and pricing here.

Business Plan Review & Evaluation

If you already have a business plan and would like to have it reviewed by a professional business plan consultant, then this is the right service for you. We will review and critique your business plan with an investor’s eye, scrutinizing it for financial errors, grammatical errors, and weak or unrealistic assumptions. We will also point out what you did right. Our business plan review service is an efficient and affordable way to ensure that your business plan is as good as it can be. Our business plan review services are provided at a substantial discount to our normal hourly rates. Depending on your needs and budget, we offer three levels of business plan review services:

– We will spend 2 and 1/2 hours reviewing your materials. We will then provide a written evaluation and critique your plan and financial model.

– We will spend 30 minutes consulting with you on the telephone, answering any questions you may have and offering additional guidance.

– Optional: if you have made any changes to your business plan, based upon the evaluations and critiques we made in our first examination of your materials, we can offer subsequent reviews of the improvements you have made to your plan. In these subsequent reviews, we will spend up to 2 hours examining your materials again.

–  Flat Rate Price:  $297 for first review; $147 for subsequent reviews

• Once you place your order, we will provide instructions for sending us your business plan. Your plan must be sent to us in Microsoft Word format so we can use the Track Changes feature).
• Your review will generally take place within 3-5 business days of you sending us your business plan.
• When our review of your business plan is complete, we will send you the redlined/track changes version of your business plan with our critiques and suggestions.
• After you receive your reviewed/critiqued version of your business plan, we will work with you to schedule a mutually convenient time for the telephone portion of the review service.
• Optional Subsequent Reviews: After you make changes to the critiqued version of your business plan that we sent you, you may send us your new version for further critiques/comments. Please allow 3-5 business days to complete the evaluation.

– All information you provide will be treated confidentially.

– Fees are payable in advance and are non-refundable. If you decide you no longer want a business plan review after you have made payment, we will provide an equivalent amount of consulting firm services of your choosing (3 hours for the Standard Evaluation and Review).

– Once you submit your plan for review, please allow two business days to schedule an initial discussion so that we can understand your needs and tailor our review for your specific situation. This allows us to make sure you get the most out of this process.

– Depending on our existing workload, please allow up to 5 business days for us to complete the review following this initial discussion.

– All reviews are provided on a best efforts basis. You are ultimately responsible for the accuracy of the information in your business plan (and related materials).

– You agree to defend, indemnify, and hold us harmless from and against all third party claims, losses, or damage which we incur and which arise from or are attributable to our role in this business plan review.

We believe that we have the most transparent and customer friendly pricing strategy on the market.

For someone writing their first business plan, even for simple small businesses, the process can take upwards of 100 hours of time. Often, it takes more than 200 hours . For complex business plans (business plans for unproven business models and undefined markets), the process can often take more than 400 hours. Because we have considerable experience and skill at writing plans, we estimate that, on average, that we can complete an average business plan (depending upon its type, audience and complexity) in the range of 30 to 120 hours.

The range between 30 and 120 hours depends upon three general factors that contribute to a business plan’s complexity. The first factor is whether the plan is for a new business or a business already in existence, The second factor is whether the business’s industry and market are well defined (for example: dry cleaners, dollar stores, organic vegetable farms, family restaurants…) or if the market or industry is new and untested. The third factor is who is the audience for the business plan: equity investors, debt lenders or the internal management of an existing business.

Note:  unless your business idea is exploiting a new market or market niche, or offering customers a product or service that is radically different from what is currently offered to the market, then only on rare occasions will your business plan require longer than 70 hours to complete.

From three factors above, we can generally estimate the average number of hours the plan will take to complete, and therefore we can charge a base flat fee for the project. We Our base flat fee rates are the product of our estimated number of hours times our business plan writing hourly rate. For our business plan writing, we charge $75 per hour.

The business plans we produce fall into the following six general categories:

But often, due to unseen factors (a change in the business plan format scope and direction), a plan may take longer than the anticipated range. Often project extensions occur when it becomes necessary to modify or change the focus of the business plan due to unforeseeable factors (i.e. new market research, assumptions are proven wrong, the founders choose to shift or expand the scope of the business…). So, if your business plan takes longer than the anticipated number of hours to produce, we will charge you at only $20 per hour beyond the original estimated time frame.

This ensures the following:

– By using our pricing formula (flat fee plus $20 per hour beyond the estimated project timeframe) versus using only a fixed billable hour rate, we mitigate any incentive to “run the meter” and unnecessarily inflate the price of your solid business plan. Our goal is to maximize our income per hour for each plan that we produce. Therefore, if we end up going beyond the project’s estimated timeframe, this means we will be working at a significant discount ($20 per hour after the end of the project’s initial timeframe estimate).

– We use our pricing formula also gives us some measure of protection against unforeseen changes to the project’s scope or direction. Creating a lean business plan is a dynamic process. Information discovered or uncovered during the plan writing process can change the focus, scope and goals of the project. Also, by charging a modest hourly rate beyond a predetermined period, helps to focus and frame exactly what you want in your business plan.

– Ultimately, our system encourages both you and us to remain disciplined, efficient and to maximize the value of each other’s time.

For example:  You task us with writing a Type 1 business plan. The project takes 50 hours to complete because the scope changed in the middle of the project. Under these circumstances, the final price for the project would be the Type 1 business plan flat fee ($2,250) plus $20 per hour for every hour spent on the project over 30 hours (20 hours x $20/hour = $400). Therefore, the final complete price for the project would be $2,650 ($2,250 + $400 = $2,650).

• One half (50%) of the project’s flat fee price is required to be paid up front.
• 30% of the project flat fee is due upon completion of the business plan’s Executive Summary (the last plan component to be completed).
• Upon completion of the business plan’s final draft and its approval by the client, the remaining 20% of the project’s flat fee is due  plus  any extra hourly charges if the project goes beyond its initially estimated time.

Preparing an expert business plan can be extremely time-consuming. While the process of mastering and completing your plan may be helpful in understanding the business dynamics, corporate strategy and overall financial and marketing model, it can take you away from operational support that is vital for day-to-day operations. That is where our business planning services come into play. We help business owners in crafting expert MBA-level business plans for internal management buy-in as well as external business funding needs.

Companies often create business plans to obtain financing from venture capitalists, private equity groups and angel investors. Your particular plan will be dependent on the industry you play in, the financing you are seeking to obtain and your overall strategy for execution. Finding the key strengths, knowing potential flaws and being conversant with competitive forces in the industry are only a few of the necessary components of your completed plan. In other words, a full SWOT analysis may be necessary.

Regardless of whether you write a business plan yourself or outsource it to one of the expert members of our qualified MBA team, it is helpful to have a second pair of eyes to edit and provide constructive feedback. You plan and pitch will help to make or break your financing efforts. Don’t skimp on quality. You need to show off your financial health.

Being conversant in finance is certainly not a requirement to operate or be successful in business. Having great financials, including thoughtful projected and proforma financial statements is a must for any entrepreneur seeking to secure funding or internal management buy-in. We help to craft properly-structured financial plans for your business using historical data and realistic assumptions.

Obtain financing for your business with an professionally crafted financial plan as part of your overall strategy.

Business plans are great, but execution is the name of the game. Without a proper marketing plan coupled with flawless execution, your business may eventually disappear.

We work directly with the entrepreneurs themselves to craft detailed, specific and attainable goals and strategies to take your product or service to market. For the seasoned entrepreneur, this may be “old hat,” but having an expert business plan consultant in your corner is helpful to the proper execution of your overall strategy. While there are many business plan software providers on the market, you will still need the human-touch element to really make business plan sing.

If you are seeking funding from any number of sources or simply need help crafting a plan to help you take your business to the next level, we can help. Contact us today to find out more.

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How to make a business plan

Table of Contents

How to make a good business plan: step-by-step guide.

A business plan is a strategic roadmap used to navigate the challenging journey of entrepreneurship. It's the foundation upon which you build a successful business.

A well-crafted business plan can help you define your vision, clarify your goals, and identify potential problems before they arise.

But where do you start? How do you create a business plan that sets you up for success?

This article will explore the step-by-step process of creating a comprehensive business plan.

What is a business plan?

A business plan is a formal document that outlines a business's objectives, strategies, and operational procedures. It typically includes the following information about a company:

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

A business plan serves as a roadmap for a company's success and provides a blueprint for its growth and development. It helps entrepreneurs and business owners organize their ideas, evaluate the feasibility, and identify potential challenges and opportunities.

As well as serving as a guide for business owners, a business plan can attract investors and secure funding. It demonstrates the company's understanding of the market, its ability to generate revenue and profits, and its strategy for managing risks and achieving success.

Business plan vs. business model canvas

A business plan may seem similar to a business model canvas, but each document serves a different purpose.

A business model canvas is a high-level overview that helps entrepreneurs and business owners quickly test and iterate their ideas. It is often a one-page document that briefly outlines the following:

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

On the other hand, a Business Plan Template provides a more in-depth analysis of a company's strategy and operations. It is typically a lengthy document and requires significant time and effort to develop.

A business model shouldn’t replace a business plan, and vice versa. Business owners should lay the foundations and visually capture the most important information with a Business Model Canvas Template . Because this is a fast and efficient way to communicate a business idea, a business model canvas is a good starting point before developing a more comprehensive business plan.

A business plan can aim to secure funding from investors or lenders, while a business model canvas communicates a business idea to potential customers or partners.

Why is a business plan important?

A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success.

Here are some of the many benefits of having a thorough business plan.

Helps to define the business goals and objectives

A business plan encourages you to think critically about your goals and objectives. Doing so lets you clearly understand what you want to achieve and how you plan to get there.

A well-defined set of goals, objectives, and key results also provides a sense of direction and purpose, which helps keep business owners focused and motivated.

Guides decision-making

A business plan requires you to consider different scenarios and potential problems that may arise in your business. This awareness allows you to devise strategies to deal with these issues and avoid pitfalls.

With a clear plan, entrepreneurs can make informed decisions aligning with their overall business goals and objectives. This helps reduce the risk of making costly mistakes and ensures they make decisions with long-term success in mind.

Attracts investors and secures funding

Investors and lenders often require a business plan before considering investing in your business. A document that outlines the company's goals, objectives, and financial forecasts can help instill confidence in potential investors and lenders.

A well-written business plan demonstrates that you have thoroughly thought through your business idea and have a solid plan for success.

Identifies potential challenges and risks

A business plan requires entrepreneurs to consider potential challenges and risks that could impact their business. For example:

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

By identifying these potential challenges, entrepreneurs can develop strategies to mitigate risks and overcome challenges. This can reduce the likelihood of costly mistakes and ensure the business is well-positioned to take on any challenges.

Provides a basis for measuring success

A business plan serves as a framework for measuring success by providing clear goals and financial projections . Entrepreneurs can regularly refer to the original business plan as a benchmark to measure progress. By comparing the current business position to initial forecasts, business owners can answer questions such as:

Are we where we want to be at this point?

Did we achieve our goals?

If not, why not, and what do we need to do?

After assessing whether the business is meeting its objectives or falling short, business owners can adjust their strategies as needed.

How to make a business plan step by step

The steps below will guide you through the process of creating a business plan and what key components you need to include.

1. Create an executive summary

Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.

Keep your executive summary concise and clear with the Executive Summary Template . The simple design helps readers understand the crux of your business plan without reading the entire document.

2. Write your company description

Provide a detailed explanation of your company. Include information on what your company does, the mission statement, and your vision for the future.

Provide additional background information on the history of your company, the founders, and any notable achievements or milestones.

3. Conduct a market analysis

Conduct an in-depth analysis of your industry, competitors, and target market. This is best done with a SWOT analysis to identify your strengths, weaknesses, opportunities, and threats. Next, identify your target market's needs, demographics, and behaviors.

Use the Competitive Analysis Template to brainstorm answers to simple questions like:

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

These questions should give you valuable insights into the current market and where your business stands.

4. Describe your products and services

Provide detailed information about your products and services. This includes pricing information, product features, and any unique selling points.

Use the Product/Market Fit Template to explain how your products meet the needs of your target market. Describe what sets them apart from the competition.

5. Design a marketing and sales strategy

Outline how you plan to promote and sell your products. Your marketing strategy and sales strategy should include information about your:

Pricing strategy

Advertising and promotional tactics

Sales channels

The Go to Market Strategy Template is a great way to visually map how you plan to launch your product or service in a new or existing market.

6. Determine budget and financial projections

Document detailed information on your business’ finances. Describe the current financial position of the company and how you expect the finances to play out.

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

Define how your company is structured and who will be responsible for each aspect of the business. Use the Business Organizational Chart Template to visually map the company’s teams, roles, and hierarchy.

As well as the organization and management structure, discuss the legal structure of your business. Clarify whether your business is a corporation, partnership, sole proprietorship, or LLC.

8. Make an action plan

At this point in your business plan, you’ve described what you’re aiming for. But how are you going to get there? The Action Plan Template describes the following steps to move your business plan forward. Outline the next steps you plan to take to bring your business plan to fruition.

Types of business plans

Several types of business plans cater to different purposes and stages of a company's lifecycle. Here are some of the most common types of business plans.

Startup business plan

A startup business plan is typically an entrepreneur's first business plan. This document helps entrepreneurs articulate their business idea when starting a new business.

Not sure how to make a business plan for a startup? It’s pretty similar to a regular business plan, except the primary purpose of a startup business plan is to convince investors to provide funding for the business. A startup business plan also outlines the potential target market, product/service offering, marketing plan, and financial projections.

Strategic business plan

A strategic business plan is a long-term plan that outlines a company's overall strategy, objectives, and tactics. This type of strategic plan focuses on the big picture and helps business owners set goals and priorities and measure progress.

The primary purpose of a strategic business plan is to provide direction and guidance to the company's management team and stakeholders. The plan typically covers a period of three to five years.

Operational business plan

An operational business plan is a detailed document that outlines the day-to-day operations of a business. It focuses on the specific activities and processes required to run the business, such as:

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

The primary purpose of an operational business plan is to ensure that the business runs efficiently and effectively. It helps business owners manage their resources, track their performance, and identify areas for improvement.

Growth-business plan

A growth-business plan is a strategic plan that outlines how a company plans to expand its business. It helps business owners identify new market opportunities and increase revenue and profitability. The primary purpose of a growth-business plan is to provide a roadmap for the company's expansion and growth.

The 3 Horizons of Growth Template is a great tool to identify new areas of growth. This framework categorizes growth opportunities into three categories: Horizon 1 (core business), Horizon 2 (emerging business), and Horizon 3 (potential business).

One-page business plan

A one-page business plan is a condensed version of a full business plan that focuses on the most critical aspects of a business. It’s a great tool for entrepreneurs who want to quickly communicate their business idea to potential investors, partners, or employees.

A one-page business plan typically includes sections such as business concept, value proposition, revenue streams, and cost structure.

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

A template can help you organize your thoughts and effectively communicate your business ideas and strategies. Starting with a template can also save you time and effort when formatting your plan.

Miro’s extensive library of customizable templates includes all the necessary sections for a comprehensive business plan. With our templates, you can confidently present your business plans to stakeholders and investors.

Be practical

Avoid overestimating revenue projections or underestimating expenses. Your business plan should be grounded in practical realities like your budget, resources, and capabilities.

Be specific

Provide as much detail as possible in your business plan. A specific plan is easier to execute because it provides clear guidance on what needs to be done and how. Without specific details, your plan may be too broad or vague, making it difficult to know where to start or how to measure success.

Be thorough with your research

Conduct thorough research to fully understand the market, your competitors, and your target audience . By conducting thorough research, you can identify potential risks and challenges your business may face and develop strategies to mitigate them.

Get input from others

It can be easy to become overly focused on your vision and ideas, leading to tunnel vision and a lack of objectivity. By seeking input from others, you can identify potential opportunities you may have overlooked.

Review and revise regularly

A business plan is a living document. You should update it regularly to reflect market, industry, and business changes. Set aside time for regular reviews and revisions to ensure your plan remains relevant and effective.

Create a winning business plan to chart your path to success

Starting or growing a business can be challenging, but it doesn't have to be. Whether you're a seasoned entrepreneur or just starting, a well-written business plan can make or break your business’ success.

The purpose of a business plan is more than just to secure funding and attract investors. It also serves as a roadmap for achieving your business goals and realizing your vision. With the right mindset, tools, and strategies, you can develop a visually appealing, persuasive business plan.

Ready to make an effective business plan that works for you? Check out our library of ready-made strategy and planning templates and chart your path to success.

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How to Write Up a Business Plan for Investors: Everything You Need to Know

If you need to learn how to write up a business plan for investors, you must ensure that you have a sound business plan and a good business idea that you’re passionate about. 3 min read updated on February 01, 2023

How to Write Up a Business Plan for Investors

If you need to learn how to write up a business plan for investors, you must ensure that you have a sound business plan and a good business idea that you’re passionate about. A business plan is an essential element for entrepreneurs seeking to raise funding for their businesses. Further, business owners tend to solely tailor the plan to investors. However, where they go wrong is overlooking the management benefits associated with planning. With that, entrepreneurs seeking funding can accomplish several key things. First, a business plan presents a solid plan to potential investors while helping small business owners crystalize their goals and plans.

In addition, it allows investors to hold entrepreneurs accountable for any financial benchmarks that would need to be met. In a way, business plans are a solid way to get introduced to the world of finance. Having a plan alone would not secure funding, but drafting one increases your changes of attracting investors. Also, such a plan helps you obtain funds in a quicker fashion. Before reaching out to investors, however, you must know what you’re after and where the money would be utilized.

• Note: You must justify the amounts you’re requesting and you must include specifics.

Key Planning Measures

Investors will not simply issue money with no notion of where the money will go. Therefore, you must make all your plans concrete and present them in a professional manner. You may also ask for more than needed in hopes that negotiations would bring down the amount you truly need, or at least something that’s close to your desired amount.

• Note: You must maintain credibility since you’ll need additional funding in the future as your business expands.

If you fail to use the money wisely, you would not get additional funding going forward, and you could damage your wider credibly with the investment community. The last thing you want is a spurned investor spreading bad word-of-mouth about your finance endeavors. The goal is to provide a reason why your plan is crucial, and that increases your chances of getting more investors interested.

• Note: Avoid random ideas in your business plans. Include well-thought ideas so investors will take you seriously.

Moreover, you should take some time to ensure your company can succeed before seeking investment funds . For most people, desires on where they would like to go are not as vital as a company’s ability to take you there.

In other words, choosing the wrong business will take you in the wrong direction, and investors will see that you’re heading down the wrong path. Before drafting a business plan, make sure that your business idea and model inspires your passions, and you must leave no stone unturned when it comes to crafting a good plan. One of the most valuable aims of a business plan is to assist in deciding if the venture is the right course for you.

Many business owners fail to get beyond the planning stages. To move above the planning step, you must test your idea against the following two factors:

• The plan must make economic sense.
• The plan must conform to your lifestyle, and you must be passionate about the issue.

Assessing Potential

Before drafting a business plan, ask yourself the following questions to see if your business model has potential. The goal is to help you decide how your proposal matches your objectives and goals. There are no right or wrong answers.

• What type of initial investment does my business mandate?
• How much control would I be willing to allow investors to have?
• When could investors, including myself, expect a decent return on the investment?
• When will the company produce profit?
• Could I devote myself to the company full-time and produce the necessary financial resources when necessary?
• What would the projected profits be over time as the company operates?
• What are my chances of failure?
• What happens if my company fails?
• Do I have an alternate plan in place in case the company fails?

Executive Summary

When trying to win funding, spend some additional time on your executive summary . Since investors and bankers receive a great deal of business plans, they may refer to the executive summary for an over-arching idea of what you’re presenting. If you fail to seize their interest in the summary, start over and draft another one.

To learn how to write up a business plan for investors, you can post your job on UpCounsel’s website. UpCounsel’s attorneys will offer more information on drafting a suitable business plan, and they will review any documents you have on file that require the eyes of a legal expert. In addition, they will guide you through the proper registration and maintenance procedures if you are registering a business entity for the first time.

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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.

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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• Mar 30, 2023

What You Need to Know to Write a Business Plan for Investors

Hey there, ambitious entrepreneurs! As a startup expert and professional business plan writer, I've helped numerous individuals like you attract investors by crafting persuasive and comprehensive business plans. In this article, we'll dive deep into the ins and outs of writing an investor-worthy business plan. So, grab a cup of coffee, get comfortable, and let's get started!

Key Highlights:

Understand the Purpose of Your Business Plan

Craft a killer executive summary, describe your business and its structure, showcase your market analysis, detail your marketing and sales strategy, explain your operations and management structure, highlight your team's expertise, develop a robust financial plan, describe your funding needs and use of funds, outline your exit strategy, prepare a compelling appendix, edit, revise, and polish, embrace the journey.

First and foremost, your business plan is your company's roadmap to success. It's a strategic document that outlines your vision, goals, and strategies for achieving them. Potential investors will scrutinize your plan, looking for a clear vision, attainable objectives, and a solid plan of action. Your business plan should demonstrate that you're serious about your venture and have a well-thought-out plan to achieve success.

Your executive summary is like the movie trailer for your business plan—it should be engaging, informative, and leave your audience wanting more. An effective executive summary should be concise, typically one to two pages, and provide an overview of your business, its goals, and how you plan to achieve them. It's the first thing potential investors will read, so make sure it's impactful and leaves a lasting impression.

In this section, you'll provide detailed information about your business, including:

Business name, address, and contact information

Legal structure (e.g., sole proprietorship, partnership, LLC, or corporation)

Ownership information

Description of your products or services

Business history, if applicable

Current business status (e.g., startup, existing business, or expansion)

Keep it concise and informative while showcasing your passion for your business.

A thorough market analysis demonstrates that you understand your industry, competitors, and target customers. To create a persuasive market analysis, be sure to:

Define your target market and customer segments

Analyze your competitors, their strengths and weaknesses, and your competitive advantages

Discuss market trends and how your business will capitalize on them

Provide data on your target market's size, demographics, and growth potential

Your marketing and sales strategy should illustrate how you'll attract customers, make sales, and grow your business. Include information on:

Your pricing strategy

Distribution channels

Advertising and promotion methods

Sales projections

Customer retention strategies

Online marketing efforts, including social media and content marketing

Here, you'll outline the day-to-day operations of your business and its management structure, covering:

Key personnel, their qualifications, and roles

Employee training and development programs

Facilities and equipment

Inventory management

Quality control measures

Supplier relationships

Investors often invest in people as much as they invest in ideas. Showcase your team's expertise, including:

Backgrounds and qualifications of your founders and key team members

Relevant industry experience

Past successes and lessons learned from failures

How your team's skills complement each other

A strong financial plan is critical to attracting investors. You'll need to provide financial projections, including:

Profit and Loss statements (for at least three years)

Cash flow projections (for at least three years)

Balance sheets (for at least three years)

Breakeven analysis

A list of assumptions and explanations for your financial projections

If you're not a numbers person, consider enlisting the help of an accountant or financial advisor to ensure accuracy and credibility.

This is where you make your case for the investment. Clearly state how much funding you need, how you plan to use the funds, and how the investment will contribute to your business's growth and success. Be specific about how the investment will help you achieve your goals, whether it's to develop a new product, hire key personnel, or expand into new markets.

Investors want to know how they'll eventually cash out and get a return on their investment. Be transparent about your exit strategy, whether it's through an initial public offering (IPO), acquisition, or other means. Include a timeline and potential valuation of the company at the time of the exit.

The appendix is your opportunity to provide additional information that supports your business plan. This might include:

Resumes of key personnel

Letters of intent from suppliers or customers

Licenses, permits, or patents

Detailed market research data

Product specifications or designs

Marketing materials

Organize your appendix so that it's easy for potential investors to find and review the supporting documents.

A well-written business plan should be clear, concise, and free of errors. Take the time to edit and revise your plan, ensuring that it's easy to read and understand. Don't be afraid to seek feedback from mentors, colleagues, or even potential customers to help refine your plan. Remember that your business plan is a living document that should evolve as your business grows and changes. Regularly review and update your plan to ensure it remains accurate and relevant.

Writing a business plan for investors can be a challenging but rewarding experience. It forces you to think critically about your business, its goals, and its strategies. Embrace the process and enjoy the journey. After all, as Tim Ferris would say, "Life is not about finding yourself. Life is about creating yourself."

Writing a business plan for investors may seem daunting, but with the right approach and attention to detail, you can create a persuasive and informative plan that will captivate potential investors. Keep the unique requirements of investors in mind and make sure your plan addresses their concerns. By following these steps, you'll be well on your way to securing the funding you need to make your entrepreneurial dreams a reality. So, what are you waiting for? Start writing, and go conquer the world!

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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.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

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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How to Build a Detailed Business Plan That Stands Out [Free Template]

Updated: March 29, 2022

Published: March 11, 2022

While starting a company may seem easier now than ever before, entrepreneurs have an uphill battle from the moment they start a business. And without a clear, actionable business plan for selling, marketing, finances, and operations, you're almost destined to face significant challenges.

This is why crafting a business plan is an essential step in the entrepreneurial process.

In this post, we'll walk you through the process of filling out your business plan template, like this free, editable version :

Download a free, editable one-page business plan template.

We know that when looking at a blank page on a laptop screen, the idea of writing your business plan can seem impossible. However, it's a mandatory step to take if you want to turn your business dreams into a reality.

That's why we've crafted a business plan template for you to download and use to build your new company. You can download it here for free . It contains prompts for all of the essential parts of a business plan, all of which are elaborated on, below.

This way, you'll be able to show them how organized and well-thought-out your business idea is, and provide them with answers to whatever questions they may have.

Free Business Plan Template

The essential document for starting a business -- custom built for your needs.

• Outline your idea.
• Pitch to investors.
• Secure funding.
• Get to work!

You're all set!

Click this link to access this resource at any time.

Building a Successful Business Plan

In the next section, we'll cover the components of a business plan , such as an executive summary and company description. But before we get to that, let's talk about key elements that should serve as building blocks for your plan.

For some entrepreneurs, the thought of writing a business plan sounds like a chore — a necessary means to an end. But that's a bad take.

A solid business plan is a blueprint for success . It's key to securing financing, presenting your business, outlining your financial projections, and turning that nugget of a business idea into a reality.

At the core, your business plan should answer two questions: why your business and why now?

Investors want to know why your business is entering the market, i.e. what problem it's solving and how it's different from what's currently out there. They also want to know why now is the right time for your type of product or service.

At a minimum, your plan should:

• Be more realistic than idealistic: Too often, business plans focus too much on how things could be instead of how they are. While having a vision is important, your plan needs to be rooted in research and data.
• Legitimize your business idea : If an idea fails on paper, it's a signal to go back to the drawing board. In doing so, you avoid losing precious time or money chasing an unrealistic idea.
• Position your business for funding: To get your business off the ground, chances are you'll need financial backing. Even with a solid business idea, investors, lenders, and banks still need convincing. An effective business plan will outline how much money you need, where it's going, what targets you will hit, and how you plan to repay any debts.
• Lay the foundation: Investors focus on risk – if anything looks shaky, it could be a dealbreaker. Ideally, your business plan will lay down the foundation for how you'll operate your business — from operational needs to financial projections and goals.
• Communicate your needs: It's nearly impossible to communicate your needs if you don't know what they are first. Of course, a business’ needs are always changing — but your plan should give you a well-rounded view of how your business will work in the short and long term.

So back to the question of why and why now – consider three things:

• Your industry – How does your product or service fit within your industry? Are you targeting a specific niche? Where do you see the industry going in the next five to 10 years?
• Your target audience – Who are you targeting? What challenges are they facing? How will your product or service help them in their daily lives?
• Your unique selling proposition (USP) – What sets you apart from your competitors? Is it your product/service features? Your company values? Price?

Once you know the answers to these questions, you'll be equipped to answer the question: why your business and why now.

How to Build a Business Plan

• Executive Summary
• Company and Business Description
• Product and Services Line
• Market Analysis
• Marketing Plan
• Legal Notes
• Financial Considerations

Featured Resource: Free Business Plan Template

1. cover page.

Your business plan should be prefaced with an eye-catching cover page. This means including a high-resolution image of your company logo, followed by your company's name, address, and phone number.

Since this business plan will likely change hands and be seen by multiple investors, you should also provide your own name, role in the business, and email address on the cover page.

At the bottom of this page, you can also add a confidentiality statement to protect against the disclosure of your business details.

The statement can read as follows: " This document contains confidential and proprietary information created by [your company name]. When receiving this document, you agree to keep its content confidential and may only reproduce and/or share it with express written permission of [your company name] ."

Remember to keep your cover page simple and concise — and save the important details for other sections.

Why it matters: First impressions are everything, and a clean cover page is the first step in the right direction.

Example of a Cover Page

2. Executive Summary

The executive summary of your business plan provides a one- to two-page overview of your business and highlights the most crucial pieces of your plan, such as your short-term and long-term goals.

The executive summary is essentially a boiled-down version of your entire business plan, so remember to keep this section to the point and filled only with essential information.

Typically, this brief section includes:

• A mission statement.
• The company's history and leadership model.
• An overview of competitive advantage(s).
• Financial projections.
• Company goals.
• An ask from potential investors.

Why it matters: The executive summary is known as the make-or-break section of a business plan. It influences whether investors turn the page or not — so effectively summarizing your business and the problem it hopes to solve is a must.

Think of the Summary as a written elevator pitch (with more detail). While your business plan provides the nitty-gritty details, your Summary describes — in a compelling but matter-of-fact language — the highlights of your plan. If it's too vague, complicated, or fuzzy, you may need to scrap it and start again.

Example of an Executive Summary Introduction

"The future looks bright for North Side Chicago, particularly the Rock Hill Neighborhood. A number of high-end commercial and residential developments are well on their way, along with two new condo developments in nearby neighborhoods.

While the completion of these developments will increase the population within the neighborhood and stimulate the economy, the area lacks an upscale restaurant where residents and visitors can enjoy fine food and drink. Jay Street Lounge and Restaurant will provide such a place."

3. Company & Business Description

In this section, provide a more thorough description of what your company is and why it exists.

The bulk of the writing in this section should be about your company's purpose – covering what the business will be selling, identifying the target market, and laying out a path to success.

In this portion of your business plan, you can also elaborate on your company's:

• Mission statement
• Core values
• Team and organizational structure

Why it matters: Investors look for great structures and teams in addition to great ideas. This section gives an overview of your businesses' ethos. It's the perfect opportunity to set your business apart from the competition — such as your team's expertise, your unique work culture, and your competitive advantage.

Example of a Values/Mission Statement

"Jay Street Lounge and Restaurant will be the go-to place for people to get a drink or bite in an elegant, upscale atmosphere. The mission is to be North Side's leading restaurant, with the best tasting food and the highest quality service."

3. Product & Services Line

Here's where you'll cover the makeup of your business's product and/or services line. You should provide each product or service's name, its purpose, and a description of how it works (if appropriate). If you own any patents, copyrights, or trademarks, it's essential to include this info too.

Next, add some color to your sales strategy by outlining your pricing model and mark-up amounts.

If you're selling tangible products, you should also explain production and costs, and how you expect these factors to change as you scale.

Why it matters: This section contains the real meat of your business plan. It sets the stage for the problem you hope to solve, your solution, and how your said solution fits in the market.

There's no one-size-fits-all formula for this section. For instance, one plan may delve into its ability to market in a more cost-effective way than the competition, whereas another plan focuses on its key products and their unique features and benefits.

Regardless of your angle, it's critical to convey how your offerings will differ from the competition.

Example of a Product/Service Offering

"The menu at Jay Street Lounge and Restaurant will focus on Moroccan cuisine. The stars of the menu (our specialties) are the Moroccan dishes, such as eggplant zaalouk, seafood bastilla, tagine, and chickpea stew. For those who enjoy American dishes, there will also be a variety of options, from burger sliders and flatbread pizza to grilled steak and salads.

The food at Jay Street will have premium pricing to match its upscale atmosphere. During the summer months, the restaurant will have extra seating on the patio where clients can enjoy a special summer menu. We will be open on all days of the week."

4. Market Analysis

It helps to reference your market research documentation in this section, like a Porter's Five Forces Analysis or a SWOT Analysis ( templates for those are available here ). You can also include them in your appendix.

If your company already has buyer personas, you should include them here as well. If not, you can create them right now using the Make My Persona Tool .

Why it matters: Having an awesome product is, well, awesome — but it isn't enough. Just as important, there must be a market for it.

This section allows you to dig deeper into your market, which segments you want to target, and why. The "why" here is important, since targeting the right segment is critical for the success and growth of your business.

It's easy to get lost (or overwhelmed) in a sea of endless data. For your business plan, narrow your focus by answering the following questions:

• What is my market? In other words, who are my customers?
• What segments of the market do I want to target?
• What's the size of my target market?
• Is my market likely to grow?
• How can I increase my market share over time?

Example of a Market Analysis

"Jay Street Lounge and Restaurant will target locals who live and work within the Rock Hill Neighborhood and the greater North Side Chicago area. We will also target the tourists who flock to the many tourist attractions and colleges on the North Side.

We will specifically focus on young to middle-aged adults with an income of $40,000 to $80,000 who are looking for an upscale experience. The general demographics of our target market are women between 20 to 50 years old.

A unique and varied Moroccan-American menu, along with our unique upscale atmosphere, differentiates us from competitors in the area. Jay Street will also set itself apart through its commitment to high-quality food, service, design, and atmosphere."

5. Marketing Plan

Unlike the market analysis section, your marketing plan section should be an explanation of the tactical approach to reaching your aforementioned target audience. List your advertising channels, organic marketing methods, messaging, budget, and any relevant promotional tactics.

If your company has a fully fleshed-out marketing plan, you can attach it in the appendix of your business plan. If not, download this free marketing plan template to outline your strategy.

Free Marketing Plan Template

Outline your company's marketing strategy in one simple, coherent plan.

• Pre-Sectioned Template
• Completely Customizable
• Example Prompts
• Professionally Designed

Why it matters: Marketing is what puts your product in front of your customers. It's not just advertising — it's an investment in your business.

Throwing money into random marketing channels is a haphazard approach, which is why it's essential to do the legwork to create a solid marketing plan.

Here's some good news — by this point, you should have a solid understanding of your target market. Now, it's time to determine how you'll reach them.

Example of a Marketing Plan Overview

"Our marketing strategy will focus on three main initiatives:

• Social media marketing. We will grow and expand our Facebook and Instagram following through targeted social media ads.
• Website initiatives. Our website will attract potential visitors by offering updated menus and a calendar of events.
• Promotional events. Jay Street will have one special theme night per week to attract new clients."

6. Sales Plan

It doesn't matter if your sales department is an office full of business development representatives (BDR) or a dozen stores with your products on their shelves.

The point is: All sales plans are different, so you should clearly outline yours here. Common talking points include your:

• Sales team structure, and why this structure was chosen.
• Sales channels.
• Sales tools, software, and resources.
• Prospecting strategy.
• Sales goals and budget.

Like with your marketing plan, it might make sense to attach your completed sales plan to the appendix of your business plan. You can download a template for building your sales plan here .

Why it matters: Among other things, investors are interested in the scalability of your business — which is why growth strategies are a critical part of your business plan.

Your sales plan should describe your plan to attract customers, retain them (if applicable), and, ultimately, grow your business. Be sure to outline what you plan to do given your existing resources and what results you expect from your work.

Example of a Sales Plan Overview

"The most important goal is to ensure financial success for Jay Street Lounge and Restaurant. We believe we can achieve this by offering excellent food, entertainment, and service to our clients.

We are not a low-cost dining option in the area. Instead, the food will have premium pricing to match its upscale feel. The strategy is to give Jay Street a perception of elegance through its food, entertainment, and excellent service."

7. Legal Notes

Your investors may want to know the legal structure of your business, as that could directly impact the risk of their investments. For example, if you're looking for business partners to engage in a non-corporation or LLC partnership, this means they could be on the line for more than their actual investment.

Because this clarification is often needed, explain if you are and/or plan to become a sole proprietor, partnership, corporation, LLC, or other.

You should also outline the steps you have taken (or will need to take) to operate legally. This includes licenses, permits, registrations, and insurance.

The last thing your investor wants to hear after they've sent you a big chunk of change is that you're operating without proper approval from the local, state, or federal government.

Why it matters: The last thing your investor wants to hear after they've sent you a big chunk of change is that you're operating without proper approval from the local, state, or federal government.

Example of Legal Notes

"Jay Street Lounge and Restaurant is up-to-date on all restaurant licenses and health permits. Our business name and logo are registered trademarks, presenting the possibility of expanding locally."

8. Financial Considerations

Ultimately, investors want to know two things:

• When they will earn their money back.
• When they will start seeing returns on their initial investment.

That said, be clear, calculated, and convincing in this section. It should cover:

• Startup costs.
• Sales forecasts for the next several months/quarters.
• Break-even analysis for time and dollars.
• Projected profit and loss (P&L) statement.

Facts and figures are key here, so be as specific as possible with each line item and projection. In addition, explain the "why" behind each of these sections.

However, keep in mind that information overload is a risk, especially when it comes to data. So, if you have pages upon pages of charts and spreadsheets for this section, distill them into a page or two and include the rest of the sheets in the appendix. This section should only focus on key data points.

Why it matters: One of the most important aspects of becoming "investor ready" is knowing your numbers. More importantly, you need to understand how those numbers will enhance your business.

While it's easy to write a number down on paper, it's more important to understand (and communicate) why you need capital, where it's going, and that your evaluation makes sense.

Example of Financial Projections

"Based on our knowledge and experience in the restaurant industry, we have come up with projections for the business.

Starting with an expenditure of $400,000 in year 1, we forecast sales of $1,500,000 and $2,800,000 for years two and three. We expect to achieve a net profit of 15% by year three."

9. Appendix

A detailed and well-developed business plan can range anywhere from 20 to 50 pages, with some even reaching upward of 80.

In many cases, the appendix is the longest section. Why? Because it includes the supportive materials mentioned in previous sections. To avoid disrupting the flow of the business plan with visuals, charts, and spreadsheets, business owners usually add them in the last section, i.e. the appendix.

Aside from what we've already mentioned – marketing plan, sales plan, department budgets, financial documents – you may also want to attach the following in the appendix:

• Marketing materials
• Market research data
• Licensing documentation
• Branding assets
• Floor plans for your location
• Mockups of your product
• Renderings of your office space or location design

Adding these pieces to the appendix enriches the reader's understanding of your business and proves you've put the work into your business plan without distracting from the main points throughout the plan.

Why it matters: An appendix helps the reader do their due diligence. It contains everything they need to support your business plan.

Keep in mind, however, that an appendix is typically necessary only if you're seeking financing or looking to attract business partners.

Use a Business Plan Template to Get Started

Writing a business plan shouldn't be an insurmountable roadblock to starting a business. Unfortunately, for all too many, it is.

That's why we recommend using our free business plan template. Pre-filled with detailed section prompts for all of the topics in this blog post, we're confident this template will get your business plan started in the right direction.

Editor's note: This post was originally published in June 2017 and has been updated for comprehensiveness.

Don't forget to share this post!

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A millennial couple invested in a $143,000 vacation home in Bali. It's become the crux of their early-retirement strategy.

• Rory and Casey Jones built a villa in Bali for 2.287 billion Indonesian rupiah, or about $143,000.
• They wanted to invest in a tangible asset that would earn income and double as a retirement home.
• Prior to this, they'd never traveled to Indonesia before.

For Rory Jones and his wife, Casey, building a house in Bali seemed like a good idea — even though they'd never been to Indonesia.

The couple, from Tasmania, Australia, dreamed of retiring early , so they spent a lot of time investing in the stock market.

"We got a little bit, I guess, down on the fact that we were putting this money away, but we had nothing to show for it apart from numbers on a bit of paper," Jones, 37, told Business Insider.

They wanted a tangible asset, and after some research, they settled on the idea of building investment property overseas.

"We decided it gave us the ability to earn a good income, but also, a place that we could potentially retire to, in a country that was less expensive than Australia," Jones, a photographer and videographer, said.

The couple had considered Thailand , the Philippines , and even Portugal, but they ultimately chose Bali because their research showed that it had the highest return on investment and that it was relatively easy for foreigners to build a home there.

According to ILA Global Consulting , it's possible for short-term rentals in Bali to yield a 15% annual return on investment, while other markets offer 5% to 10%.

Although the couple had never been to the island before, they'd spent a lot of time in Southeast Asia.

"So we knew that we liked the climate. We knew that we would probably like the culture and the food too," Jones said.

First time in Bali

In 2022, the couple hopped on a plane to Bali for the first time .

They were there for about three weeks, exploring the island and speaking to different legal professionals and builders for more insights on how they could get started with their project.

"We spent a good chunk of time in different areas to make sure that we liked the area and that we had a good understanding of what that area gave to the tourists," Jones said.

He said that since traffic in Bali could be difficult to navigate, it was important that the area they chose had good infrastructure and was easy to get to.

"Other than that, we were looking for a place that we could see ourselves retiring to as well," Jones said.

Related stories

While looking for a peaceful but up-and-coming neighborhood that travelers would be drawn to, they eventually found a piece of land in the Bingin area near Uluwatu, a region on the southwestern tip of Bali.

"The best success that we had was actually just posting in the local Facebook groups to say that we were looking for land, and then people would reach out to us and let us know what they had available," Jones said. "With the land that we ended up getting, it was a local guy that showed us the land. He didn't own the land, but he knew the owners."

Since foreigners aren't allowed to own land in Bali, the piece of land they have is on a 30-year lease, with the option to renew for another 30 years. They paid 720 million Indonesian rupiah, or about $44,700, for it.

A modern tropical villa

The two-story villa, which sits on a 3,300-square-foot plot, has two bedrooms and two bathrooms. The entire build, including furniture and permits, cost 2.287 billion Indonesian rupiah, or about $143,000.

Jones said he chose to build a house from scratch because it was cheaper than buying one.

According to the property website Propertia Bali , a new two-bedroom villa near Bingin can cost from 3.525 to 5.575 billion Indonesian rupiah, depending on the size, the complexity of the build, and the lease left on the land.

"If there was anything wrong with the building that was already existing, we wouldn't be able to tell," he added. "But by building ourselves, we could dictate the standards that went into that building."

Safety standards aside, it also meant they could design the building the way they wanted it. Jones described it as a mix between modern industrial and boho, with a touch of Balinese influence.

The building looks modern on the outside, thanks to the black steel window frames, a mezzanine-style design, and vaulted ceilings. In contrast, the interiors are cozy, with lots of wood accents and furniture.

"We knew that the building itself was quite modern, so we wanted to bring a lot of the tropics and a lot of Bali into it with the interior design," Jones said.

Everything in the villa was crafted locally, he added.

The only major issue the couple encountered during the build was a particularly bad rainy season that delayed their project by a few weeks.

"Towards the end of the build, they were running quite late with everything, and it's fine that they were running late, but they didn't tell us that they were running late," Jones said. "There were some communication issues rather than issues with construction, which caused a bit of friction toward the end."

Retiring in Bali

The villa can be rented on Airbnb for a minimum of two nights. At press time, it has a 4.58-star rating based on 26 reviews.

"Initially, we planned to spend a couple of months a year in Bali, but with the way that things have gone, with how popular it is, I think it would make more financial sense to leave it rented out on Airbnb all the time," Jones said.

That said, Jones hopes to be able to retire in that villa in Bali in the next five to six years.

"We're working hard at saving and investing as much money as we can to hopefully get to a point where we can retire in my early forties," he said. "But plans can also change, so it would be great to retire to Bali, but I mean, maybe we'll stay in Australia. Who knows? It's still a long way away."

That said, the couple has plans to build more investment properties in Bali in the future.

Jones has a piece of advice for those who are thinking of building a house in Bali: manage expectations.

"Go into it knowing that the standards you may expect from your home country might not be the same in Bali. Expect things to run behind time and expect things to be done in a different way than what you might be used to," he said.

That way, he said, things would be less stressful.

Have you recently built or renovated your dream home in Asia? If you've got a story to share, get in touch with me at  [email protected] .

Watch: Inside the floating tin mines that host one of the most dangerous jobs

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Nickel-Rich Indonesia Pitches EV Battery Plant Plan to Elon Musk

Indonesia’s top investment official says the government has proposed building an electric vehicle battery plant to Tesla CEO Elon Musk

Firdia Lisnawati

Elon Musk, center, arrives for the 10th World Water Forum in Nusa Dua, Bali, Indonesia on Monday, May 20, 2024. (AP Photo/Firdia Lisnawati)

DENPASAR, Indonesia (AP) — Indonesia’s top investment official said Monday that the government has proposed to Tesla CEO Elon Musk the construction of an electric vehicle battery plant in the nickel-rich country.

The official spoke after Musk met with Indonesian President Joko Widodo while attending a water conference on the island of Bali.

“We made an offer, is it possible to build an EV battery factory, precursor to cathodes, here. And he said he will consider it,” Coordinating Maritime Affairs and Investment Luhut Binsar Pandjaitan, told reporters.

Indonesia is keen to build up industries to exploit is rich natural resources, which include the world’s largest nickel reserves. Nickel is an important material for EV batteries and solar panels.

The billionaire head of Tesla and SpaceX and owner of social platform X was visiting the Indonesian resort island to launch a Starlink satellite internet service there.

He also spoke to officials and experts attending the conference on global water challenges, saying he believed that desalination could solve water shortages if enough energy was provided.

Indonesia supplies 40% of the world’s nickel and has the potential to increase this to 75% by 2030, according to the government data. The government has set a goal of producing 600,000 electric vehicles by 2030, and will require EVs and related components produced in Indonesia to contain of 60% local content by 2027.

The country has been trying for years to secure deals with Musk’s Tesla on battery investment and for Musk’s SpaceX to provide fast internet access for remote areas of the sprawling archipelago.

Pandjaitan, a powerful cabinet minister and close ally of Widodo, said the president also asked the billionaire to invest in an AI center and for SpaceX to build a launchpad in Biak, an island in Indonesia’s easternmost Papua province.

Musk did not make any formal announcements related to his investment plans in Southeast Asia’s largest economy.

“Well, I think it’s likely that we will be investing,” Musk said in replying to a journalist's question about his plans for Indonesia at a news conference on Sunday after the ceremonial launch of the Starlink service alongside Indonesian government dignitaries. “But I think it’s quite likely that my company will invest in Indonesia.”

Back in the United States, federal highway safety investigators are asking Tesla to explain how and why it developed a fix in a recall of more than 2 million vehicles equipped with the company’s Autopilot partially automated driving system.

Investigators with the U.S. National Highway Traffic Safety Administration have concerns about whether the recall remedy worked because Tesla has reported 20 crashes since the remedy was sent out as an online software update in December.

Karmini reported from Jakarta, Indonesia

Copyright 2024 The  Associated Press . All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Photos You Should See - May 2024

Tags: Associated Press , politics , business , electric vehicles , world news , technology

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Nickel-rich Indonesia pitches EV battery plant plan to Elon Musk

Indonesia’s top investment official says the government has proposed building an electric vehicle battery plant to Tesla CEO Elon Musk

DENPASAR, Indonesia -- Indonesia’s top investment official said Monday that the government has proposed to Tesla CEO Elon Musk the construction of an electric vehicle battery plant in the nickel-rich country.

The official spoke after Musk met with Indonesian President Joko Widodo while attending a water conference on the island of Bali.

“We made an offer, is it possible to build an EV battery factory, precursor to cathodes, here. And he said he will consider it,” Coordinating Maritime Affairs and Investment Luhut Binsar Pandjaitan, told reporters.

Indonesia is keen to build up industries to exploit is rich natural resources, which include the world’s largest nickel reserves. Nickel is an important material for EV batteries and solar panels.

The billionaire head of Tesla and SpaceX and owner of social platform X was visiting the Indonesian resort island to launch a Starlink satellite internet service there.

He also spoke to officials and experts attending the conference on global water challenges, saying he believed that desalination could solve water shortages if enough energy was provided.

Indonesia supplies 40% of the world’s nickel and has the potential to increase this to 75% by 2030, according to the government data. The government has set a goal of producing 600,000 electric vehicles by 2030, and will require EVs and related components produced in Indonesia to contain of 60% local content by 2027.

The country has been trying for years to secure deals with Musk’s Tesla on battery investment and for Musk’s SpaceX to provide fast internet access for remote areas of the sprawling archipelago.

Pandjaitan, a powerful cabinet minister and close ally of Widodo, said the president also asked the billionaire to invest in an AI center and for SpaceX to build a launchpad in Biak, an island in Indonesia’s easternmost Papua province.

Musk did not make any formal announcements related to his investment plans in Southeast Asia’s largest economy.

“Well, I think it’s likely that we will be investing,” Musk said in replying to a journalist's question about his plans for Indonesia at a news conference on Sunday after the ceremonial launch of the Starlink service alongside Indonesian government dignitaries. “But I think it’s quite likely that my company will invest in Indonesia.”

Back in the United States, federal highway safety investigators are asking Tesla to explain how and why it developed a fix in a recall of more than 2 million vehicles equipped with the company’s Autopilot partially automated driving system.

Investigators with the U.S. National Highway Traffic Safety Administration have concerns about whether the recall remedy worked because Tesla has reported 20 crashes since the remedy was sent out as an online software update in December.

Karmini reported from Jakarta, Indonesia

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Nickel-rich Indonesia pitches EV battery plant plan to Elon Musk

Elon Musk met with Indonesia’s President Joko Widodo Monday, while attending a water conference on the island of Bali. Indonesia’s top investment official said that the government has proposed to Tesla CEO the construction of an electric vehicle battery plant in the nickel-rich country.

Elon Musk, center, arrives for the 10th World Water Forum in Nusa Dua, Bali, Indonesia on Monday, May 20, 2024. (AP Photo/Firdia Lisnawati)

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Elon Musk en Denpasar, Bali, Indonesia, el 19 de mayo de 2024. (Foto AP/Firdia Lisnawati)

Indonesian military officers walk at a venue of the 10th World Water Forum in Nusa Dua, Bali, Indonesia on Monday, May 20, 2024. (AP Photo/Firdia Lisnawati)

Indonesian presidential guard of honor line up as they prepare for the opening ceremony of the 10th World Water Forum in Nusa Dua, Bali, Indonesia on Monday, May 20, 2024. (AP Photo/Firdia Lisnawati)

A participant walks at a venue of the 10th World Water Forum in Nusa Dua, Bali, Indonesia on Monday, May 20, 2024. (AP Photo/Firdia Lisnawati)

Fijian President Wiliame Katonivere, center, walks upon his arrival of the 10th World Water Forum in Nusa Dua, Bali, Indonesia on Monday, May 20, 2024. (AP Photo/Firdia Lisnawati)

Moroccan Prime Minister Aziz Akhannouch, center, walks upon his arrival of the 10th World Water Forum in Nusa Dua, Bali, Indonesia on Monday, May 20, 2024. (AP Photo/Firdia Lisnawati)

Participants walk at a venue of the 10th World Water Forum in Nusa Dua, Bali, Indonesia on Monday, May 20, 2024. (AP Photo/Firdia Lisnawati)

Elon Musk, center, attend the 10th World Water Forum in Nusa Dua, Bali, Indonesia on Monday, May 20, 2024. (AP Photo/Firdia Lisnawati)

Janos Ader, a former Hungarian president, walks upon his arrival of the 10th World Water Forum in Nusa Dua, Bali, Indonesia on Monday, May 20, 2024. (AP Photo/Firdia Lisnawati)

DENPASAR, Indonesia (AP) — Indonesia’s top investment official said Monday that the government has proposed to Tesla CEO Elon Musk the construction of an electric vehicle battery plant in the nickel-rich country.

The official spoke after Musk met with Indonesian President Joko Widodo while attending a water conference on the island of Bali.

“We made an offer, is it possible to build an EV battery factory, precursor to cathodes, here. And he said he will consider it,” Coordinating Maritime Affairs and Investment Luhut Binsar Pandjaitan, told reporters.

Indonesia is keen to build up industries to exploit is rich natural resources, which include the world’s largest nickel reserves. Nickel is an important material for EV batteries and solar panels.

The billionaire head of Tesla and SpaceX and owner of social platform X was visiting the Indonesian resort island to launch a Starlink satellite internet service there.

He also spoke to officials and experts attending the conference on global water challenges, saying he believed that desalination could solve water shortages if enough energy was provided.

Indonesia supplies 40% of the world’s nickel and has the potential to increase this to 75% by 2030, according to the government data. The government has set a goal of producing 600,000 electric vehicles by 2030, and will require EVs and related components produced in Indonesia to contain of 60% local content by 2027.

The country has been trying for years to secure deals with Musk’s Tesla on battery investment and for Musk’s SpaceX to provide fast internet access for remote areas of the sprawling archipelago.

Pandjaitan, a powerful cabinet minister and close ally of Widodo, said the president also asked the billionaire to invest in an AI center and for SpaceX to build a launchpad in Biak, an island in Indonesia’s easternmost Papua province.

Musk did not make any formal announcements related to his investment plans in Southeast Asia’s largest economy.

“Well, I think it’s likely that we will be investing,” Musk said in replying to a journalist’s question about his plans for Indonesia at a news conference on Sunday after the ceremonial launch of the Starlink service alongside Indonesian government dignitaries. “But I think it’s quite likely that my company will invest in Indonesia.”

Back in the United States, federal highway safety investigators are asking Tesla to explain how and why it developed a fix in a recall of more than 2 million vehicles equipped with the company’s Autopilot partially automated driving system.

Investigators with the U.S. National Highway Traffic Safety Administration have concerns about whether the recall remedy worked because Tesla has reported 20 crashes since the remedy was sent out as an online software update in December.

Karmini reported from Jakarta, Indonesia

Plan to build hundreds of low-income housing units on former Ritz-Carlton site in downtown San Diego reaches critical milestone

City of San Diego and affordable housing developer Chelsea Investment Corp. have reached an agreement to begin negotiating specific terms for redeveloping a downtown San Diego site at Seventh and Market that had previously been intended for a $700 million mixed-use project by Cisterra.

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An ambitious plan by a local affordable housing developer to build more than 400 low-income units in downtown San Diego has reached a key milestone that will allow the city to start negotiating terms for redeveloping a site once intended for a five-star Ritz-Carlton hotel.

The city’s Economic Development Department will ask members of a City Council committee on Wednesday to authorize entering into exclusive negotiations with Carlsbad-based Chelsea Investment Corp. to redevelop the publicly owned block at Seventh Avenue and Market Street. If approved by the full City Council at a subsequent hearing, Chelsea would have 180 days to firm up its development and financing plans and undertake more detailed inspections of the East Village site to ensure that its affordable housing project is in fact doable.

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This latest milestone comes nine months after the city agreed to begin initial talks with Chelsea about redeveloping the downtown parcel, currently being used as a surface parking lot. Chelsea was among four developers that responded to a formal solicitation by the city following years of delays by San Diego-based Cisterra to transform the site into a Ritz-Carlton hotel, Ritz-branded condos, a gourmet grocer, offices and housing.

“ We’re really excited,” said Chelsea Chief Development Officer Jim Andersen. “We’ve been working very cooperatively with the city to put together the language associated with this exclusive negotiating agreement that allows us to continue the process and gives us access to the site to do due diligence on the site so we can move the development to the next step that will result ultimately in a negotiated (development) agreement with the city of San Diego.

“We’ll be able to refine the project based on what we find and work through all the elements of development.”

Chelsea has extensive experience building housing for lower-income households, having developed more than 100 affordable communities costing more than $2 billion. Its proposal for redeveloping the Seventh and Market parcel was guided by the state Surplus Land Act, which is designed to encourage the construction of housing affordable to lower-income households. At the very least, Chelsea and others that bid on the site were required to set aside 25 percent of their proposed units as affordable.

Chelsea, however, went beyond that, proposing to make all 402 units affordable to lower-income households earning from 30 percent to 80 percent of area median income in San Diego County, which is $119,500 for a family of four.

“Chelsea’s vision is to transform the Seventh and Market site into a vibrant and high-quality inter-generational affordable housing community ... by providing the most units of high-quality affordable housing in an efficient time frame,” the developer wrote in its project proposal, which the city’s Economic Development Department released this week.

Toward that end, a mix of studios and one-, two- and three-bedroom units have been proposed. Chelsea is proposing to divvy up the overall project into three components that would be independently financed and constructed to cater to the needs of low-income families, seniors and the workforce population.

The developer is working with San Diego architect Doug Austin of AVRP Studios, which has proposed spreading the housing units among three eight-story buildings that would include underground parking and community rooms with computer labs.

The agreement to be considered next week by the council’s Economic Development and Intergovernmental Relations Committee means that San Diego “won’t negotiate with any other entities, and that will give Chelsea the opportunity to look at the project’s feasibility and the terms that would dictate a Disposition and Development Agreement,” explained Christina Bibler, Economic Development director.

Such terms would include the precise number of affordable housing units, income levels of those renting units in the project, and timelines for securing financing and completing the development, Bibler said. She’s hopeful that a final development agreement could reach the council by December.

“We understand that the project could change depending on what’s uncovered,” Bibler said. “We continue to support affordable housing on this site, and it’s now down to the nuances of the timing. Chelsea has been doing some of the due diligence on their side so that way, the next six months should be really productive in terms of site due diligence and financing. The city is fully committed to executing a high-quality development on this site and we’re excited to work with Chelsea on the next steps to achieve that vision.”

Once the exclusive negotiating period begins, Chelsea will be obligated to pay the city a good faith deposit of $50,000 and a negotiation payment of $25,000, plus provide periodic status reports on financial feasibility and construction cost estimates. It will also need to provide the city with its development and financing plan. In its proposal to the city, Chelsea said it plans to tap several financing sources, including low-income tax credits and tax-exempt bonds.

“All sources of financing for affordable housing are fiercely competitive, and many projects are vying for precious dollars,” Anderson said. “So it is challenging but we’ve managed to thrive in many periods of time throughout California’s ups and downs, so we’re confident that this is a project that will find a great home in downtown San Diego. At the end of the day, we’ll find the sources to consummate the project, and we know our state and local leaders are very committed to making this happen.”

Also still to be worked out is a purchase price for the 50,000-square-foot site. Under the city’s previous agreement with Cisterra, the developer was to eventually pay $20 million to acquire the parcel. A new appraisal will now be needed, and that process should start once the exclusive negotiation agreement is approved, Bibler said.

The focus on developing the Seventh and Market site with affordable housing moved into high gear more than a year ago, when the city decided to terminate its original deal with Cisterra “because of the developer’s inability to carry out the project or otherwise perform its material obligations.”

The $700 million project had faced multiple obstacles, including litigation, the intrusion of a pandemic and challenges getting financing.

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