The new generation of generative artificial intelligence(AI) tools, like OpenAI’s ChatGPT and Google’s Bard, are fundamentally changing how we create. They can competently write, generate ideas, develop recipes, and even help plan vacations.
I’ve been looking into how these tools can help with business tasks, specifically business planning. Can generative AI take an idea for a business and transform it into a comprehensive business plan? Can it be used as a business plan generator?
The answer is “yes”, but it’s not as simple as pushing a single button and getting everything you need. You have to follow a process. Even then, ChatGPT can’t do everything necessary to create a complete business plan. Even more importantly, these tools can’t help you implement the plan and manage your business (yet!).
In this article, I’ll guide you through using ChatGPT to help you write each section of your business plan. You’ll learn how to quickly create a business plan using AI, understand its limitations, and forever banish writer’s block.
What is ChatGPT?
ChatGPT is an advanced AI language model developed by OpenAI. It’s designed to simulate human-like conversations by processing text inputs, understanding the context, and generating appropriate responses. While not perfect, recent advancements have significantly improved its ability to provide accurate, relevant, and context-aware information—making it more effective in various personal and professional applications.
How to create a business plan with ChatGPT
1. Create a simple business plan outline
Don’t go straight to ChatGPT and ask it to write you a complete business plan. This task is a bit too big for it—at least right now—and you’ll end up with a simple, shallow, and generic overview of your business.
Instead, divide the business plan into bite-sized sections and use ChatGPT to help you write one section at a time. This approach generates far more detail and the combined results are much more impressive.
To divide your business plan into sections, or chapters, you need a business plan outline.
Not sure what sections you need? Ask ChatGPT to create a business plan outline.
Overall, the plan outline ChatGPT provides is decent. It includes most of the sections you should include in a business plan. However, it isn’t organized very well and places topics like “legal structure” and “ownership and management” in positions that are too prominent. If you’re trying to raise money, or just exploring your business strategy—your plan should highlight your idea and the market opportunity instead.
To see better results from your ChatGPT business plan, try using this business plan outline instead:
- Executive Summary
- Products & Services
- Target Market
- Marketing & Sales
- Milestones & Metrics
- Company Overview & Team
- Financial Plan
Need even more detail? Check out the complete, expanded business plan outline.
Using this outline will help you focus on defining what your business opportunity is and why your idea deserves funding.
I’ll be using this structure for the remainder of this guide to help influence my prompts in ChatGPT and better organize my plan.
A quick note: You should write your executive summary last, so I’m skipping that section for now and will tackle it at the end.
2. Write about your product or service
In this section of your plan, you describe your product or service and the problems that it solves for your customers. You’ll also describe any initial traction, intellectual property, and future products or services that you plan to offer.
To use ChatGPT effectively, start your prompt by describing what your business does. The more detail you can provide, the better. Then ask it to help write the products & services section of your business plan. You can see my prompt and part of the initial response here:
The initial output is honestly impressive, but also a bit generic (there’s a link to the full output at the end of this article). In this example, that’s caused by my generic prompt. I didn’t describe my business in much detail or explain what makes the business unique.
If I had added those details to my prompt, I may have received a more specific output. Regardless, the text from ChatGPT will almost never be a straight cut-and-paste for your business plan. You’ll have to review it carefully and customize it for your business and your product offering.
To get better results, I would add information to the product description in my prompt that includes the types of waterproofing technology my business is using and what makes my products stylish. I would also include some information about initial customer feedback that I’ve received on my prototypes.
As with all ChatGPT prompts, describing the output that you want is also important. I asked ChatGPT only to cover the problem that my business solves and future product offerings. I could have also asked it to describe our initial traction and intellectual property, assuming I’d provided that information in the product description.
Weakness: ChatGPT might not fully understand unique, niche, or complex products/services, leading to incomplete or inaccurate descriptions. As long as you’re aware of this, the text it generates is a good starting point.
3. Develop a market analysis
A market analysis provides an overview of your target market, total market size and segments, market trends, and an industry analysis.
To make the most of ChatGPT, provide a brief overview of your target market and any additional information you may have. If you’re unsure who your target market is, you can also ask ChatGPT for ideas.
This is a great starting point but lacks a lot of detail. It doesn’t provide any real market size numbers or specifics on the growth of the ski industry. If you were starting this business, you’d want to know what your potential market size is in order to make some educated guesses about the potential revenue you might generate.
Investors will also want to know these details and a generic plan without facts and numbers is not all that useful. ChatGPT will politely decline to answer if you ask for more details, citing its lack of capabilities in this area. These current limitations are likely to change soon thanks to additional plug-ins that grant up-to-date web access to gather information.
For now, what ChatGPT is good for is generating some decent writing and structure for the market analysis section of the plan. At this stage, you’ll have to do a little bit of work on your own and go find some facts to plug into the paragraphs that ChatGPT has written. Our market research guide can help you learn where you can find these numbers and plug them into your business plan.
Weakness: ChatGPT’s knowledge is limited to information available up to September 2021 (as of March 2023), so it may not recognize recent market changes or emerging trends. You’ll need to fill in the details with your own research.
4. Provide an overview of your competition
A good competitive analysis reviews the current alternatives on the market and describes your advantages. You should also review any barriers that your company can create to prevent competitors from seizing your opportunity.
If you know who your competition is, provide ChatGPT with that information as well as a summary of why your business is superior. If you don’t know who your competitors are, you can ask ChatGPT for ideas.
But, be careful to double-check the output that ChatGPT provides. It sometimes will invent information and confidently present that information as facts. Be sure to double-check everything and don’t assume that it’s true.
ChatGPT does an admirable job of comparing our product to the competition as well as summarizing the competitive advantages. Of course, it’s a bit generic and should be edited to add more specifics, but it’s a solid place to start.
Weakness: ChatGPT isn’t a full-blown competitive research tool at this point. You’ll need to do some of your own research to understand who your competitors are and what their value proposition is in the market.
5. Develop a marketing and sales plan
A good marketing and sales plan will explain your market positioning, and unique value proposition, as well as outline your marketing, sales, and pricing strategies.
Again, providing ChatGPT with as much detail as you can yields the best results. The more you can describe the business you’re building and the type of marketing and sales strategy you plan on using, the better writing it will do for you.
If you’re short of marketing ideas, you can ask ChatGPT to list marketing and sales ideas tailored to your business. Provide your target market, product/service offering, and desired marketing channels, then ask the AI for suggestions. If you like the ideas, you can incorporate them into your prompt when you ask the AI to help write the marketing and sales strategy section of your business plan.
In your prompt for ChatGPT, be sure to ask that your marketing and sales strategy section includes:
- Market positioning
- Unique value proposition
- Pricing strategy
- Marketing plan
- Sales plan
As a useful follow-up, you can ask the AI to generate some advertising copy, social media posts, or promotional materials based on the marketing plan that it generated.
Weakness: The AI-generated strategies may lack creativity or industry-specific insights, potentially limiting their effectiveness.
The operations section of your business plan describes how your business functions. If you have physical stores or manufacturing facilities, you’ll describe them here. If your products are manufactured in a different country, you’ll describe that process.
Once again, to get the most out of ChatGPT, describe as much as you know about your operational plan and then ask the AI to flesh it out. Describe your location, manufacturing process, customer service, sales channels, fulfillment, and any other aspects of how your business runs on a day-to-day basis. From there, ChatGPT can craft the operations section of your business plan.
If you’re not sure about what your operations should look like, you can ask ChatGPT for ideas. Ask it, “How should I operate my [ski clothing] business?” and it will give you ideas based on your specific business. It might have suggestions around supply chain, customer service, sales, and more.
That said, every business is unique. Your location will be unique and how you choose to do your manufacturing and customer service will likely be different from your competitors. Use ChatGPT for ideas, but then fill in the details that you know specifically.
Weakness: You’ll get out what you put into this section. There’s not a lot of creativity that ChatGPT can add, so you’re really just using it as a writing assistant. Make sure to include as much detail in your prompts as possible.
7. Company overview & team
This section offers a detailed description of your company, including its history and ownership. To use ChatGPT for this section, summarize your company’s background and ask the AI to expand on it, focusing on aspects such as the business structure and core values.
You’ll also want to define your company’s organizational structure and management team. To use ChatGPT, briefly describe your management team’s roles and responsibilities, and ask the AI to create an organizational chart and expand on each role’s duties. You can even ask it to list out any role gaps that you should be aware of.
Weakness: The AI may generate generic content or fail to portray your company’s unique characteristics accurately. The AI may also not grasp the specific intricacies of your company’s hierarchy or be able to recommend the ideal structure for your business. Again, you know your company better than ChatGPT does, so make sure your prompt is detailed and you follow up with additional editing.
8. Financial plan
Using ChatGPT for this section was the real test. Investors and lenders need to understand your company’s potential for growth and profitability, so a detailed financial plan is important.
Even if you’re not raising money, working on the financial projections is crucial. You need to understand how your business works from a financial perspective and what it’s going to take to be successful. While ChatGPT did a fairly good job at writing the strategy sections of the business plan, producing a viable financial model turned out to be a challenge.
To test it out, I provided a brief overview of what I thought my revenue forecast might look like and asked the AI to generate financial statement projections for the next five years.
It turns out that ChatGPT just isn’t capable of helping very much with this section of the business plan, and it says as much in its response.
I was hoping for a detailed financial forecast, with at least 12 months of detailed statements, followed by 4 years of annual detail. I was also hoping for a detailed expense budget and calculations on profit and cash flow over time, all formatted as standard financial statements.
Unfortunately, ChatGPT just is not ready to do that quite yet. In part, this is because the tool is a generative text tool and is not designed to create financial models in Excel or any other spreadsheet format.
That’s likely to change in the future as AI gets integrated into Excel, Google Sheets, and other spreadsheets. But, for now, it’s just not ready.
That said, ChatGPT can help you come up with ideas to help you flesh out your financial plan. I asked it to suggest some ideas for revenue streams and it provided ideas I hadn’t thought of. I would do the same—ask for suggestions—for the expense forecast to make sure I didn’t miss anything when building my financial model.
Your business plan needs a full financial plan. It helps you determine how much money you need to start the business and keep the business afloat as you grow. You’ll also want to be able to easily change the numbers and see how that impacts your profitability and cash flow.
A good Excel spreadsheet or a business planning tool like LivePlan is likely a better option than ChatGPT for your financial plan. However, ChatGPT can help you think about how you’ll make money and what your key expenses will be.
Check out this article for a more detailed step-by-step guide for using ChatGPT to create useful financial forecasts.
Weakness: ChatGPT does not have the expertise to produce accurate financial projections or offer nuanced financial advice. The AI can also not currently produce a financial model that can be easily adjusted to help determine the key information you need to start and run your business successfully.
9. Simplify your plan into an executive summary
Wait until you’ve completed your business plan to have ChatGPT help you with your executive summary. You’ll get a much better result by asking the AI to summarize your plan rather than going the other way around and asking it to write the summary first before you’ve fleshed out the details.
Once you’ve completed your plan, you can cut & paste it into ChatGPT and ask it to create the summary. Or, if you’ve been getting help with your plan in a single chat session, you can just ask ChatGPT to summarize what you’ve created so far. You can even ask it to limit the summary to a certain number of words.
Another tip is to tell ChatGPT to write in a certain style. For example, if your business plan is for a complex medical device, you might want your executive summary to be simple and jargon-free. In that case, you can ask ChatGPT to write in a simple, non-scientific style.
Be aware of ChatGPT’s weaknesses
ChatGPT can be a valuable tool for drafting a business plan but it’s essential to be aware of its limitations and weaknesses before you delegate your business planning task to AI.
- It can lack creativity
- Industry-specific insights may be hard to get
- You’ll need to do your own market research
- Only you have an understanding of your business’s unique position in the market.
- It may produce inaccurate information about people, places, or facts.
- As of March 20, 2023, it only knows about the world up until 2021.
But, these weaknesses don’t mean that it’s not a useful tool. ChatGPT is a great writing assistant and it can help brainstorm ideas, even giving you new perspectives on your business that you may not have thought of. And, if you’re in need of a business name, it can do that too:
Should you use ChatGPT to help you with your business plan?
A business plan helps entrepreneurs in three core areas:
- Figure out your strategy
- Understand the numbers behind your business
- Run a better business
ChatGPT can really only help with your strategy.
It can take your ideas and expand on them, even providing new ideas that you might want to incorporate into your strategy. However, it cannot develop a full financial plan or assist you with ongoing analysis. A dedicated tool, like LivePlan, is really the better choice for these tasks.
Understanding the numbers that drive your business is crucial
A business can only be a business if it eventually makes money. The planning process helps you figure out the sales that you’ll need to make to cover expenses and what kind of cash you’ll need to get your business off the ground and keep it running.
Without this knowledge, failure is a real possibility. ChatGPT can’t develop a full financial plan, but it can help you think through your revenue streams and key expenses. It can’t really do the numbers for you, but it can certainly help you get started.
Planning helps you run a better business
As you get up and running, tracking your results compared to your financial plan is an important part of running a responsible business. Using your accounting data, you can compare your actual spending to your budget and see where you’re on track and where you need to make adjustments. You’ll also see which sales channels are working well and which you’ll need to grow further.
The process of using your plan to track your progress and refine your strategy is called growth planning. Turning your plan from a static document into a tool to run your business is one of the most important things you can do to improve your chances of success. In fact, businesses that track their growth against their plan grow 30% faster than those that don’t.
Unfortunately, ChatGPT isn’t really set up to help with this kind of detailed, ongoing analysis. A dedicated tool, like LivePlan, is really the better choice here.
The bottom line, ChatGPT can be a valuable helper in the business planning process. It’s like having a smart assistant at your side that can take your ideas and flesh out the details. But, it does have limitations, especially with the financial plan, and can’t help with the entire planning and business management processes just yet.
So, it’s not quite an AI business plan generator. But, when used correctly and with the right prompting it can help you break past writer’s block, think through each section, and ultimately write a solid plan.
Here’s the complete Ski and Snowboard Clothing Company business plan that ChatGPT helped write.