Writing a business plan is one of the most valuable things you can do for your business. If you’re a startup, your business plan will help you figure out your plan of attack and help you determine how much money you need to get things off the ground.
If your business is already up and running, a plan will help you manage your business better by honing your strategy and providing a financial roadmap that you can use to track performance.
If these reasons aren’t enough, study after study has proved that business planning significantly improves your chances of success—up to a 30 percent improvement. Writing a business plan is one of the only free things you can do that can have such a large impact on the success and growth of your business.
Start with a simpler business plan
It can be easy to procrastinate writing a business plan. Most people would prefer to work hands-on in their business rather than think about business strategy.
To make things easier, start with a simpler, shorter business plan. The first version of your business plan should be a one-page business plan. There’s no need to go into a lot of details or even dive too deep into financial projections initially—you just want to write down the fundamentals of your business and how it works. A one-page plan should cover:
- Value proposition
- Market need
- Your solution
- Target market
- Sales and marketing
- Budget and sales goals
- Team summary
- Key partners
- Funding needs
If you’re ready to jump in, check out our guide to writing a single-page business plan. It has detailed instructions, examples, and even a free downloadable template.
Writing a detailed business plan
A one-page business plan is a great jumping-off point in the planning process. It’ll give you an overview of your business and help you quickly refine your ideas without having to do a lot of work.
But a one-page plan can’t capture all the details that a complete plan can, and investors will often ask for a detailed plan. Even if they don’t ask, going through the more detailed process will help you be prepared to answer any questions that they come up with.
Here are the sections that you should cover in your business plan with instructions for each section:
Yes, the executive summary comes first in your plan, but you should write it last, once you know all the details of your business plan. It truly is just a summary of all the details in your plan, so be careful not to be too repetitive – just summarize and try and keep it to one or two pages at most.
Your executive summary should be able to stand alone as a document because it’s often useful to share just the summary with potential investors. When they’re ready for more detail, they’ll ask for the full business plan.
For existing businesses, write the executive summary for your audience—whether it’s investors, business partners, or employees. Think about what your audience will want to know and hit the highlights.
The key parts of your plan that you’ll want to highlight in your executive summary are:
- Your opportunity: This is a summary of what your business does, what problem it solves, and who your customers are going to be. This is where you want readers to get excited about your business
- Your team: For investors, your business’s team is often even more important than what the business is. Briefly highlight why your team is uniquely qualified to build the business and make it successful.
- Financials: What are the highlights of your forecasts? Summarize your sales goals, when you plan to be profitable and how much money you need to get your business off the ground.
The “opportunity” section of your business plan is all about the product or service that you are creating. The goal is to explain why your business is exciting and the problems that it solves for people. You’ll want to cover:
- Problem & Solution: Most successful businesses solve a problem for their customers. They make their lives easier or fill an unmet need in the marketplace. In this section, you’ll want to explain the problem that you solve, whom you solve it for, and what your solution is. This is where you go in-depth to describe what you do and how you improve the lives of your customers.
- Target Market: In the previous section, you summarized your target customer. Now you’ll want to describe them in much greater detail. You’ll want to cover things like your target market’s demographics (age, gender, location, etc.) and psychographics (hobbies and other behaviors). Ideally, you can also estimate the size of your target market so you know how many potential customers you might have.
- Competition: Every business has competition, so don’t leave this section out. You’ll need to explain what other companies are doing to serve your customers or if your customers have other options for solving the problem you are solving. Explain how your approach is different and better than your competitors, whether it’s better features, better pricing, or a better location. Explain why a customer would come to you instead of going to another company.
This section of your business plan dives into how you’re going to accomplish your goals. While the Opportunity section discussed what you’re doing, you now need to explain the specifics of how you’re going to do it.
- Marketing & Sales: What marketing tactics do you plan to use to get the word out about your business? You’ll want to explain how you get customers to your door and what the sales process looks like. For businesses that have a sales force, explain how the sales team gets leads and what the process is like for closing a sale.
- Operations: Depending on the type of business that you are starting, the operations section needs to be customized to meet your needs. If you are building a mail-order business you’ll want to cover how you source your products and how fulfillment will work. If you’re building a manufacturing business, explain the manufacturing process and the facilities you need to use. This is where you’ll talk about how your business “works,” meaning, you should explain what day-to-day functions and processes are needed to make your business successful.
- Milestones & Metrics: Until now, your business plan has mostly discussed what you’re doing and how you’re going to do it. The milestones and metrics section is all about timing. Your plan should highlight key dates and goals that you intend to hit. You don’t need extensive project planning in this section, just key milestones that you want to hit and when you plan to hit them. You should also discuss key metrics: the numbers you will track to determine your success.
Use the Company section of your business plan to explain the overall structure of your business and the team behind it.
- Overview & Structure: Describe your location, facilities, and anything else about your physical location that is relevant to your business. You’ll also want to explain the legal structure of your business—are you an S-corp, C-corp, or an LLC? What does company ownership look like?
- Team: Arguably one of the most important part of your plan if you are seeking investment is the Team section of the plan. This section should explain who you are and who else is helping you run the business. Focus on experience and qualifications for building the type of business that you want to build. It’s OK if you don’t have a complete team yet. Just highlight the key roles that you need to fill and the type of person you hope to hire for each role.
Your business plan has now covered the “what”, the “how”, and the “when” for your business. Now it’s time to talk about the money. What revenue do you plan on bringing in and when? What kind of expenses will you have?
- Forecast: Your sales forecast should cover at least the first 12 months of your business and ideally contain educated guesses at the following two years in annual totals. Some investors and lenders might want to see a five-year forecast, but three years is usually enough. You’ll want to cover sales, expenses, personnel costs, asset purchases and more. You’ll end up with three key financial statements: An Income Statement (also called Profit and Loss), a Cash Flow Statement, and a Balance Sheet.
- Financing: If you’re raising money for your business, the Financing section is where you describe how much you need. Whether you’re getting loans or investments, you should highlight what you need, and when you need it. Ideally, you’ll also want to summarize the specific ways that you’ll use the cash once you have it in hand.
The final section of your business plan is the appendix. Include detailed financial forecasts here as well as any other key documentation for your business. If you have product schematics, patent information, or any other details that aren’t appropriate for the main body of the plan but need to be included for reference.
If you’re ready to get started on your business plan, download our free business plan template and get started. We also have a complete library of sample business plans that you can review for inspiration.
You should also check out LivePlan to help you through the planning process. It includes detailed instructions, step-by-step advice, and a simple yet powerful financial forecasting tool. And if doing it yourself just sounds like too much, we have experts who can help you as well.
Using your plan to grow your business
Your business plan isn’t just a document that you produce to attract investors or close that bank loan. It’s a tool to help you manage your business better.
Once you’ve established your sales goals and your expense budget, put your plan to work by tracking your actual performance against those goals. Are you making the sales that you expected to? Are you sticking to your budget?
Most likely, things are going to go differently than you planned—that’s OK. Use the differences that you find between your spending and revenue goals and reality to make adjustments to your plan and your strategy. Maybe a marketing tactic that you had high hopes for isn’t performing the way you thought and you need to adjust your spending. Or, you might need to change your plan to invest more in personnel, sooner than you had originally planned.
Regardless of what happens, tracking your performance and putting your business plan to work for you will help you adjust as you go and make the changes in your business that you need to grow faster and more successfully.