Everything starts with a plan—even a business. There is a long and twisted journey from a business idea to the launching party, so you must have everything sorted out and well-organized. And a business plan is the best way to build a strong foundation, outlining your goals, actions, and marketing strategies. Especially if you have a small business in mind with few employees, you need an efficient business plan to prove you are a strong competitor with achievable goals and innovative business methods.
We do offer a 10-step formula for writing a business plan and a free template you can use whenever needed.
A business plan is a comprehensive document that describes your business idea in detail. The business plan outlines these aspects of an idea:
It is a financial roadmap for the business' next few years. That's because you need to prove that your idea is economically viable, fits the market needs, brings something new, and has the potential to become a successful business.
Furthermore, the business plan includes details about your business methods, resources (e.g., employees, materials, equipment, office space, logistics, etc.), operating model, and expected revenue.
Overall, a business plan should cover the following elements:
If we must answer from the investor's point of view, a business plan should demonstrate the following:
Probably the first reason for writing a business plan is securing funding. Investors and potential business partners need to understand the value of your business and how you intend to pay back their investments. And the best way to win their trust is to present a clear and straightforward plan that addresses all their concerns and demonstrates you deserve the money. Moreover, they will ask for it if you don't initially present your business plan.
Another reason for focusing on a business plan is your own clarity. A good business plan doesn't guarantee success, but it's the best thing you can do in that direction. It helps you avoid failure by clarifying challenges and risks. When you put on paper all you need to make this business work, you have an overall perspective over how much capital you need, the expected price of your products or services, the market's receptivity, and so on. Your business becomes predictable and manageable.
Owners with a company plan see growth 30% more quickly than those without, and 71% of businesses that are scaling have business plans.
Source: Burke, A., Fraser, S., & Greene, F. J. (2010). The multiple effects of business planning on new venture performance. Journal of Management Studies, 47(3), 391-415.A business plan is a critical document that outlines a business's goals, strategies, and financial projections. While the exact timing can vary depending on the nature of the business and its stage of development, there are several key instances when having a business plan is essential:
Remember that a business plan isn't a static document; it should be periodically reviewed and updated to reflect changes in the market, your business goals, and other relevant factors.
To write an efficient business plan, you need structure. Start with the big picture and go into details step by step. Remember that your readers are busy and don't want to spend too much time reviewing introductions and non-essential paragraphs. A business plan is not literature but an informative document. Note that depending on the use of the business plan, the way it's structured might change: think that a traditional business is different than a non-profit, while a tech startup has different challenges than a franchise.
Therefore, start by drafting the business plan outline and write each section accordingly. Here are the most important sections of a business plan, with details on what each one of them should contain:
The title needs to be explicit and catchy. And it has to be on the first page. Alongside the title, you should give your contact information (e.g., title, name, address, telephone number, email address, etc.) and your brand's information if you already know them (e.g., company's name and logo). Don't crowd the first page with anything else.
The executive summary includes the essential information in your business plan and presents it concisely. The summary section is for the super-busy readers and needs to be catchy and informative. Include here
After reading the summary, the investors and potential business partners should know what you need from them, what is the operational model of your future business, and what they will gain from being part of this project.
In the realm of fast-growth startups, you might have heard about the business model canvas, where practically, on one page, you go through the key elements of how your business works.
Business model canvas by Strategyzer
Tip: If this is the first time you're writing such a document, this might be a bit overwhelming, so don't hesitate to ask for some help from a friend who is running a business successfully or someone who has graduated from a business school to help you to advance with these key sections.
Within the company overview, you can provide details such as a business description, the value proposition, the mission and vision statement, business goals, and company history if the company is already established. Let's discover each one of them:
The company description
A company description is an overview of your business. It should convey what you do, who you serve, and what makes you unique. The description helps set the stage for the rest of your business plan by introducing potential investors or lenders to your business at a high level.
Here's an example of a company description:
"NYStar LLC is a woman-owned small business based in New York City. We provide marketing, branding, and digital strategy services primarily to small businesses in the hospitality and retail industries. Our data-driven approach and customized solutions leveraging the latest digital tools differentiate us from larger agencies.
Founded in 2019 by Joanna Fitch, a marketing expert with over 15 years of experience serving small businesses, NYStar aims to empower entrepreneurs to build powerful brands. The founding team also includes Edward Klein, Director of Digital Strategy, a tech industry veteran. NYStar's mission is to help small businesses grow and thrive by developing marketing strategies that capture the power of storytelling."
Business goals
Business goals in a business plan context refer to the specific, measurable targets a business aims to achieve within a certain time frame. They should be SMART (Specific, Measurable, Achievable, Realistic, and Time-bound). Learn the essential details about SMART goals.
Some examples of common business goals in a plan are:
Business goals in a plan should be:
Mission statement
This is a short statement that defines the overall purpose and goals of the business. It clarifies the organization's objectives and primary functions. A good mission statement is clear, concise, and focuses on the present - what the business does now to achieve its goals.
Example: "To provide customers with high-quality, eco-friendly clothing at affordable prices."
Vision statement
The vision statement describes the desired future state of the company. It outlines what the business aspires to become or achieve in the long run. A vision statement is broader, forward-looking, and more inspirational. It provides direction and guides strategic planning.
Example: "To become the world's most sustainable and socially responsible fashion brand."
Check our article on the topic for more examples of mission and vision.
Company history
For the company history, reflect on the major milestones, changes in the headcount, and product releases. You can present the company history in a visual format using a timeline. In this way, this section will be more compelling, and you will make your document more alive removing the monotonous text blocks.
Show you know the market by providing a well-researched market analysis with business indicators and predictors. Your business plan should demonstrate a thorough analysis of the business environment and how your business will flourish. Don't forget to refer to your main competitors and customers. This section answers questions such as:
You can have a single section for market analysis, competition, and customers or smaller individual sections for each. Try to include relevant statistics and data that support your market research.
In this section, you can provide a brief overview of the industry your business operates in. It covers key trends, drivers, size, and industry growth prospects. It identifies the major players and competitors as well as the threats and opportunities in the industry landscape.
For a complete market analysis, you should reflect on writing a SWOT analysis where you look at your competitors' strengths, weaknesses, and threats and the opportunities your business has in the market. Conducting competitive research will answer questions such as: where do your competitors promote their business, what customers are saying about their products, and what are their key channels for driving sales? What do their pricing strategies look like? Such information will help to create a more compelling offer and distinguish yourself in a competitive market.
When creating the business plan, you can also reflect on a go-to-marketing strategy, where you clarify the possible risks and make your proposal more engaging. You must enter a validated market that is not oversaturated and seek the right amount of financing to get things going. In the following section, we will expand on these details.
Tip: If your target market is too broad, it might signal to your investors that you haven't done your analysis correctly.
This section is dedicated to your products or services. List all of them and provide brief descriptions outlining why your products are better than the competition's and what unique features they have.
Key elements covered in this product description:
Tip: You might use the Value Proposition Canvas as a model that will help in positioning a product or service around what the customer values and needs. The tool created by Alexander Osterwalder, Yves Pigneur, and Alan Smith, is used extensively in startup workshops by coaches and mentors to help founders better define their products, and adjust towards solving real needs in the market.
Value Proposition Canvas by Strategyzer
Here is an example of how you can describe a product or service within a business plan:
"Our main offering is high-quality educational toys and games for children ages 3 to 8. We specialize in Montessori-inspired products that foster creative, hands-on learning in a self-directed manner.
Our flagship product is the Geoblock Building Set, an 82-piece wood block construction set. The interlocking blocks are designed to teach children geometry, spatial reasoning, and physics concepts through free play. The blocks come in different shapes, sizes, and colors, with shapes like circles, triangles, rectangles, and cubes. Children can use their imagination to build anything from buildings and vehicles to abstract structures.
We also offer a Nature Discovery Kitwhich includes Jr. Botanist kits, bug viewers, magnifying lenses, and guidebooks to help children explore the natural world through collecting, observing, and identifying plants, insects, and small animals.
In addition, we sell puzzles, arts and crafts sets, science experiment kits, and storytelling toys that develop skills like cognitive thinking, creativity, fine motor skills, and language development in an entertaining way.
By fulfilling the innate drive-in children to explore, experiment and construct, our products aim to nurture inquisitive minds and foster a lifelong love of learning."
The operations plan briefly describes the practical aspects of your business. In this section, you describe your resources (staff, materials, equipment, etc.), suppliers, the production process, logistics and delivery procedures, safety, and security procedures, etc. Don't forget to outline what you already have and what you need to acquire. Investors will want to know your starting point and what you bring to the table, such as industry experience and previous achievements, a dedicated team, office spaces, equipment, or a list of interested clients.
The operations plan may also include standard procedures, HR processes, risk management, reporting methods, and any other practical aspect of your business. You can also show what hardware and software you intend to use for project and people management.
This section details how you plan to attract customers, promote, and sell your products/services. It covers your pricing strategy, sales targets, marketing channels (digital, inbound, outbound, etc.), tactics (SEO, content, social media, events, etc.), and the budgets for each. The objectives are customer acquisition, lead generation, and revenue growth.
In this section, you can expand on your growth tactics, pricing strategy, and sales forecast and rationale for these assumptions.
Find below an example of a marketing strategy for a business plan:
"Our marketing strategy will focus on generating brand awareness, building an engaged audience, and driving qualified leads to foster long-term customer relationships.
We will develop using a mix of online and offline tactics, including:
Our first-year marketing budget is $25,000, allocated as follows: content creation - 30%, social media - 25%, SEO - 20%, trade shows - 15%, and email marketing - 10%."
The above mentioned example covers the key elements of an effective marketing strategy:
When you're going to an investor seeking funding, and you're about to launch your business (new venture), you need to prove that you have an idea about how much capital you need and how you will be using it, this is why a budget and a financial plan is needed.
If your business has been already in business for some years now (established business), and you're looking for expansion capital, then you will need to prove it is financially viable and will return its investment. It is also your chance to show you are trustworthy and have no unmet financial obligations. You can add:
A financial outlook for the next 3-5 years would be very important. Remember that your business operations costs play a significant role in your financial operations, so have a clear monthly and annual spending budget, plus other costs such as marketing and sales.
The management section includes a short presentation of the company, outlining its legal structure, organizational chart, team structures, and ongoing HR processes. It's your chance to prove you are reliable and have excellent management skills. If you use external experts or subcontract other companies, here is the place to mention them, define their relationship with the company, and state how they will be involved in the management process.
The management section should include a list of the executive team, stakeholders, advisory board, and any other management team. You must highlight the expertise of your executive team and the roles you plan to hire.
Tip: This section is the place where you can explain who you are, why you exist, and what makes you different. Also, in our experience in working with investors, the team is probably the most important part of your business plan, so put extra effort into assembling a balanced team.
The funding request of the investment needs is a crucial section of a business plan where you outline the amount of money you need to start or grow your business and explain how you plan to use the funds. This section is particularly important when seeking financing from investors, lenders, or potential partners.
In the funding request section, you should include the following key elements:
It's essential to be realistic and specific in your funding request, providing a clear and well-justified explanation of how the funds will be utilized to drive the growth and success of your business. Remember that investors and lenders will carefully evaluate your funding request, so backing it up with solid data, market research, and a compelling business case is crucial.
Here is how you could explain your funding needs in a business plan:
Based on our financial projections and operating expenses, we will require initial funding of $350,000 to launch the business and cover costs for the first 12 months of operations.
The breakdown of funding requirements is as follows:
Product development - $100,000
Inventory - $50,000
Operating expenses - $100,000
Contingency fund - $50,000
Working capital - $50,000
The funding will be used as an equity investment in exchange for 15% ownership of the company. We have identified several angel investors and venture capital firms interested in participating in our seed funding round.
Optional: We are seeking $350,000 in the current funding round. However, based on our 3-year financial projections, we anticipate requiring an additional $1 million in Series A funding within 18-24 months to support our growth plans."
By writing in this way the financial need section, you outline:
A business plan's appendix contains supplementary information supporting the plans and projections outlined in the main document. Though optional, an appendix can be important to provide additional details and evidence to back up your business idea.
Some common items you may include in an appendix are:
The appendix allows you to provide further depth and substantiate claims you make in the main document without distracting from the core narrative. Investors and lenders often review the appendix for additional details and reassurance about your business prospects.
While the appendix is not mandatory, including relevant supporting materials can strengthen your business plan by:
In summary, an appendix gives you a place to include valuable supplementary materials that can validate key elements of your business plan and give stakeholders more confidence in your venture.
Suppose you don't want to start your business plan from zero (and we understand why). Download our free business plan template and customize it to match your idea and investors. It doesn't matter if you plan a small or big business. The template is versatile and easily adjustable.
Download our Business Plan Template
Conclusion
Knowing how to communicate your ideas and plans is essential as an entrepreneur. You deal with investors, business partners, managers, and customers daily. You can't afford to create confusion and misunderstandings. So set up templates for important documents and tailor them for each situation. When drafting your business plan, make the reader feel at the center of attention, and remember your first draft will be wrong; however, after the fifth edit, your document will be much more credible, accurate, and correct. Good luck!
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