Honoring Pride Month

0 results have been found for “”

 Return to blog home

15 Reasons Why You Need a Business Plan in 2024

Posted january 21, 2022 by noah parsons.

advantages of drawing up a business plan

As a small business owner or aspiring entrepreneur, a business plan can seem more like a hurdle you have to overcome than a useful tool. It’s a barrier that’s keeping you from moving forward with your business. Maybe the bank won’t review your loan application without a business plan or a potential investor has asked to see your business plan before they will meet with you. 

But, writing a business plan doesn’t have to feel like a homework assignment. Instead, think of writing a business plan as an investment in your business. It’s a tool to figure out a strong and financially viable strategy for growth. And, it’s even been scientifically proven that planning will increase your chances of success and help you grow faster. 

Still not convinced? Read on for our definitive list of reasons why you should write a plan for your business.

What is the key purpose of a business plan? 

Imagine you’re setting out on a journey. You know what your final destination is, but you haven’t figured out how to get there. While it might be fun to just start driving and figure things out as you go, your trip will most likely take longer than you anticipated and cost you more. If you instead take a look at a map and chart the best way to get to your destination, you’ll arrive on time and on budget. Planning for your business isn’t that much different. 

The primary purpose of a business plan is to help you figure out where you want to go with your business and how you’re going to get there. It helps you set your direction and determine a winning strategy. A solid business plan will set your business up for success and help you build an unbeatable company.

If you start off without a plan, you may go down some interesting detours, but you’re unlikely to grow quickly or stick to your budget.

Why do you need to write a business plan?

Establishing a strategic roadmap for your business is the primary benefit of writing a business plan. But what does that really look like for you and your business? Here are our top 15 reasons why you should write a business plan.

1. Reduce your risk

Writing a business plan takes some of the risk out of starting a business. It ensures that you’re thinking through every facet of your business to determine if it can truly be viable. 

Does your solution fit the market? Are your startup or operational costs manageable? Will your proposed business model actually generate sales? What sort of milestones would you need to hit to achieve profitability? These are all questions associated with business risk that you can answer with your plan.

For those already running a business, writing a plan can help you better manage ongoing risk. Should you bring on a new employee? What does cash flow look like for your next month, quarter, or even year? Are you on track to meet your milestones or do you need to change your focus? Keep your plan up to date, review it regularly and you can easily answer these questions and mitigate risk.

2. Uncover your business’s potential

Writing a business plan helps you think about the customers you are serving and what their needs are. Exploring those customer needs will help you uncover new opportunities for your business to serve them and potentially expose new products and services that you could offer. When you use your business plan to manage your business, you’ll be able to see the parts of your strategy that are working and those that aren’t. For example, you may have invested in new marketing efforts to sell one of your products, but that strategy just isn’t working out. With a business plan in hand, you’ll be able to see what’s going to plan and where you need to make adjustments to your strategy, pivoting to new opportunities that will drive profitability.

LivePlan Logo

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

3. Test a new business idea

When you have a new business idea, it really helps to spend a little time thinking through all the details. A business plan will help you think about your target market, your budget, how much money you’ll need to launch, and how your idea will actually work before you spend any real money. A business plan will also help you easily share your idea with other people to get input and feedback before you get started. 

We recommend using a one-page business plan to test ideas quickly and easily. 

4. Attract investors and get funding to start and grow your business

Sharing your business idea with investors requires a business plan. Now, you probably won’t share a long, detailed business plan to get investors interested, but you probably will share your executive summary — which is an overview of your business plan. Investors may never actually ask for your full business plan, but they will certainly ask you questions that you’ll only be able to answer if you’ve taken the time to write a plan. 

At the very least, they’ll want to see your financial forecasts , so you should be prepared for this. If you end up pitching your business to investors, whether in-person or remotely , having a business plan written makes it much easier to translate the right information into a pitch deck. In short, you’ll have all of the right information ready and available to show why your business is worth investing in.

5. Plan for different scenarios

Even if you have a plan in place, things rarely actually go to plan. The world is always changing, customer tastes change, and new competitors arrive on the scene. Having a plan allows you to experiment with different scenarios to see how changes to your business will impact your forecasts, budgets, profitability, and cash flow. 

6. Research shows that business plans definitely work

A Journal of Management Studies study found that businesses that take the time to plan grow 30% faster than those that don’t. Our own 2021 small business research study found that 58% of small business owners that have or are working on a plan feel confident in their business, even amidst a crisis. And a study in Small Business Economics found that entrepreneurs that write business plans for their ideas are 152% more likely to actually start their businesses. There’s plenty of additional research that links planning with success, so it’s a proven fact that you won’t be wasting your time when you write your plan.

7. Build a better budget and a financial forecast

A core component of any business plan is a financial forecast. When you take the time to plan, you’ll have to think through your expense budget, your sales goals, and the cash that it’s going to take to keep your doors open, purchase inventory, and more. 

The beauty of incorporating forecasts into your business plan is that you don’t need to have the exact numbers to start. You can work with general assumptions and compare against competitive benchmarks to set a baseline for your business. As you operate and collect financial data you can then begin to update your forecasts to generate a more accurate view of how your business will operate.

8. Determine your financial needs

Without a business plan, it’s impossible to really know how much money it’s going to take to start and run your business. You don’t just need money for your initial purchases. You need to have enough cash in the bank to keep your business afloat while you get fully up and running. A plan will help you determine exactly how much money you’ll need and help you keep track of your cash flow and runway .

9. Attract employees

Especially if you’re a young startup company, attracting employees can be hard. Without a proven track record, why should someone take a risk to work for you? Having a business plan can help solve that problem. Your plan can help a prospective employee understand your business strategy and plans for growth so that they can feel confident joining your team. It’s also incredibly useful in determining when and if it’s feasible for you to bring on more employees . 

10. Get your team all on the same page

A great strategy for your business can only be successful if your team understands it. By documenting your strategy with a business plan, you can easily get everyone on the same page, working towards the same goals. It’s even better if you regularly review your plan with members of your team. This ensures that everyone is consistently going back to the core strategy documentation, analyzing it, and exploring how it impacts individual and team goals .

11. Manage your business better 

A business plan is all about setting goals for your company — both financial goals and milestones you hope to accomplish. When you use your plan to regularly check in on your business to see how you’re doing and what your progress is, you’re managing your business. Regular review , ideally monthly, will help you build a strong, resilient business.

12. Understand your market and build a marketing plan

No matter how good your idea is, you have to figure out who your ideal customers are and how you’re going to get the word out to them. That’s where a marketing plan comes in. It can be an indispensable tool for figuring out how you get your first customers as well as your thousandth customer. 

13. It’s easier than you think

You may be procrastinating in writing a business plan because it sounds like a lot of work. The truth is that planning is much less complicated than you think. Start small with a one-page business plan that you complete in half an hour . From there, refine your plan until your idea is solid. At that point, you can invest a little more time in a more detailed business plan. Just start with the basics and expand from there.

14. You’ll sleep better at night

When you have a plan for your business, you have peace of mind. You know that you’ve invested the time to figure out a business model that actually works and you’ve considered different financial scenarios so you can handle the unexpected. And, you’ve got a management tool to run your business better than your competitors. 

15. Effectively navigate a crisis

Having a business plan not only helps you create a roadmap for your business but also helps you navigate unforeseen events. Large-scale economic downturns, supply shortages, payment delays, cash flow problems, and any number of other issues are bound to pop up. But, you can be prepared to face each crisis head-on by leveraging your business plan.

A plan helps you assess your current situation, determine how the crisis will alter your plan, and begin to explore what it will take to recover. With a little planning, you can even prepare your business for future downturns with this same process. It’ll make crisis planning easier and ideally recession-proof your business by having the right plan and processes in place.

Don’t wait, start writing your business plan today

There are plenty of reasons to write a business plan, but the real reason is about finding success for you and your business. Taking the time to plan is an investment in yourself and your business that will pay dividends, whether you’re starting a new business or taking your existing business to the next level. 

You can jump-start your business plan writing process with our article covering how to write a business plan in as little as 30-minutes .

If you’re looking for a tool to help you get more from your business plan, we recommend trying out LivePlan . Our business planning and management tool will guide you through the entire process, including all of your financial forecasts, without ever requiring that you open a spreadsheet.

Like this post? Share with a friend!

Noah Parsons

Noah Parsons

Posted in business plan writing, join over 1 million entrepreneurs who found success with liveplan, like this content sign up to receive more.

Subscribe for tips and guidance to help you grow a better, smarter business.

You're all set!

Exciting business insights and growth strategies will be coming your way each month.

We care about your privacy. See our privacy policy .

Do you REALLY need a business plan?

The top three questions that I get asked most frequently as a professional business plan writer will probably not surprise you:

  • What is the purpose of a business plan – why is it really required?
  • How is it going to benefit my business if I write a business plan?
  • Is a business plan really that important – how can I actually use it?

Keep reading to get my take on what the most essential advantages of preparing a business plan are—and why you may (not) need to prepare one.

Business Plan Purpose and Importance

The importance, purpose and benefit of a business plan is in that it enables you to validate a business idea, secure funding, set strategic goals – and then take organized action on those goals by making decisions, managing resources, risk and change, while effectively communicating with stakeholders.

Let’s take a closer look at how each of the important business planning benefits can catapult your business forward:

1. Validate Your Business Idea

The process of writing your business plan will force you to ask the difficult questions about the major components of your business, including:

  • External: industry, target market of prospective customers, competitive landscape
  • Internal: business model, unique selling proposition, operations, marketing, finance

Business planning connects the dots to draw a big picture of the entire business.

And imagine how much time and money you would save if working through a business plan revealed that your business idea is untenable. You would be surprised how often that happens – an idea that once sounded so very promising may easily fall apart after you actually write down all the facts, details and numbers.

While you may be tempted to jump directly into start-up mode, writing a business plan is an essential first step to check the feasibility of a business before investing too much time and money into it. Business plans help to confirm that the idea you are so passionate and convinced about is solid from business point of view.

Take the time to do the necessary research and work through a proper business plan. The more you know, the higher the likelihood that your business will succeed.

2. Set and Track Goals

Successful businesses are dynamic and continuously evolve. And so are good business plans that allow you to:

  • Priorities: Regularly set goals, targets (e.g., sales revenues reached), milestones (e.g. number of employees hired), performance indicators and metrics for short, mid and long term
  • Accountability: Track your progress toward goals and benchmarks
  • Course-correction: make changes to your business as you learn more about your market and what works and what does not
  • Mission: Refer to a clear set of values to help steer your business through any times of trouble

Essentially, business plan is a blueprint and an important strategic tool that keeps you focused, motivated and accountable to keep your business on track. When used properly and consulted regularly, it can help you measure and manage what you are working so hard to create – your long-term vision.

As humans, we work better when we have clear goals we can work towards. The everyday business hustle makes it challenging to keep an eye on the strategic priorities. The business planning process serves as a useful reminder.

3. Take Action

A business plan is also a plan of action . At its core, your plan identifies where you are now, where you want your business to go, and how you will get there.

Planning out exactly how you are going to turn your vision into a successful business is perhaps the most important step between an idea and reality. Success comes not only from having a vision but working towards that vision in a systematic and organized way.

A good business plan clearly outlines specific steps necessary to turn the business objectives into reality. Think of it as a roadmap to success. The strategy and tactics need to be in alignment to make sure that your day-to-day activities lead to the achievement of your business goals.

4. Manage Resources

A business plan also provides insight on how resources required for achieving your business goals will be structured and allocated according to their strategic priority. For example:

Large Spending Decisions

  • Assets: When and in what amount will the business commit resources to buy/lease new assets, such as computers or vehicles.
  • Human Resources: Objectives for hiring new employees, including not only their pay but how they will help the business grow and flourish.
  • Business Space: Information on costs of renting/buying space for offices, retail, manufacturing or other operations, for example when expanding to a new location.

Cash Flow It is essential that a business carefully plans and manages cash flows to ensure that there are optimal levels of cash in the bank at all times and avoid situations where the business could run out of cash and could not afford to pay its bills.

Revenues v. Expenses In addition, your business plan will compare your revenue forecasts to the budgeted costs to make sure that your financials are healthy and the business is set up for success.

5. Make Decisions

Whether you are starting a small business or expanding an existing one, a business plan is an important tool to help guide your decisions:

Sound decisions Gathering information for the business plan boosts your knowledge across many important areas of the business:

  • Industry, market, customers and competitors
  • Financial projections (e.g., revenue, expenses, assets, cash flow)
  • Operations, technology and logistics
  • Human resources (management and staff)
  • Creating value for your customer through products and services

Decision-making skills The business planning process involves thorough research and critical thinking about many intertwined and complex business issues. As a result, it solidifies the decision-making skills of the business owner and builds a solid foundation for strategic planning , prioritization and sound decision making in your business. The more you understand, the better your decisions will be.

Planning Thorough planning allows you to determine the answer to some of the most critical business decisions ahead of time , prepare for anticipate problems before they arise, and ensure that any tactical solutions are in line with the overall strategy and goals.

If you do not take time to plan, you risk becoming overwhelmed by countless options and conflicting directions because you are not unclear about the mission , vision and strategy for your business.

6. Manage Risk

Some level of uncertainty is inherent in every business, but there is a lot you can do to reduce and manage the risk, starting with a business plan to uncover your weak spots.

You will need to take a realistic and pragmatic look at the hard facts and identify:

  • Major risks , challenges and obstacles that you can expect on the way – so you can prepare to deal with them.
  • Weaknesses in your business idea, business model and strategy – so you can fix them.
  • Critical mistakes before they arise – so you can avoid them.

Essentially, the business plan is your safety net . Naturally, business plan cannot entirely eliminate risk, but it can significantly reduce it and prepare you for any challenges you may encounter.

7. Communicate Internally

Attract talent For a business to succeed, attracting talented workers and partners is of vital importance.

A business plan can be used as a communication tool to attract the right talent at all levels, from skilled staff to executive management, to work for your business by explaining the direction and growth potential of the business in a presentable format.

Align performance Sharing your business plan with all team members helps to ensure that everyone is on the same page when it comes to the long-term vision and strategy.

You need their buy-in from the beginning, because aligning your team with your priorities will increase the efficiency of your business as everyone is working towards a common goal .

If everyone on your team understands that their piece of work matters and how it fits into the big picture, they are more invested in achieving the objectives of the business.

It also makes it easier to track and communicate on your progress.

Share and explain business objectives with your management team, employees and new hires. Make selected portions of your business plan part of your new employee training.

8. Communicate Externally

Alliances If you are interested in partnerships or joint ventures, you may share selected sections of your plan with the potential business partners in order to develop new alliances.

Suppliers A business plan can play a part in attracting reliable suppliers and getting approved for business credit from suppliers. Suppliers who feel confident that your business will succeed (e.g., sales projections) will be much more likely to extend credit.

In addition, suppliers may want to ensure their products are being represented in the right way .

Professional Services Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, including attorneys, accountants, and other professional consultants as needed, to make sure that everyone is on the same page.

Advisors Share the plan with experts and professionals who are in a position to give you valuable advice.

Landlord Some landlords and property managers require businesses to submit a business plan to be considered for a lease to prove that your business will have sufficient cash flows to pay the rent.

Customers The business plan may also function as a prospectus for potential customers, especially when it comes to large corporate accounts and exclusive customer relationships.

9. Secure Funding

If you intend to seek outside financing for your business, you are likely going to need a business plan.

Whether you are seeking debt financing (e.g. loan or credit line) from a lender (e.g., bank or financial institution) or equity capital financing from investors (e.g., venture or angel capital), a business plan can make the difference between whether or not – and how much – someone decides to invest.

Investors and financiers are always looking at the risk of default and the earning potential based on facts and figures. Understandably, anyone who is interested in supporting your business will want to check that you know what you are doing, that their money is in good hands, and that the venture is viable in the long run.

Business plans tend to be the most effective ways of proving that. A presentation may pique their interest , but they will most probably request a well-written document they can study in detail before they will be prepared to make any financial commitment.

That is why a business plan can often be the single most important document you can present to potential investors/financiers that will provide the structure and confidence that they need to make decisions about funding and supporting your company.

Be prepared to have your business plan scrutinized . Investors and financiers will conduct extensive checks and analyses to be certain that what is written in your business plan faithful representation of the truth.

10. Grow and Change

It is a very common misconception that a business plan is a static document that a new business prepares once in the start-up phase and then happily forgets about.

But businesses are not static. And neither are business plans. The business plan for any business will change over time as the company evolves and expands .

In the growth phase, an updated business plan is particularly useful for:

Raising additional capital for expansion

  • Seeking financing for new assets , such as equipment or property
  • Securing financing to support steady cash flows (e.g., seasonality, market downturns, timing of sale/purchase invoices)
  • Forecasting to allocate resources according to strategic priority and operational needs
  • Valuation (e.g., mergers & acquisitions, tax issues, transactions related to divorce, inheritance, estate planning)

Keeping the business plan updated gives established businesses better chance of getting the money they need to grow or even keep operating.

Business plan is also an excellent tool for planning an exit as it would include the strategy and timelines for a transfer to new ownership or dissolution of the company.

Also, if you ever make the decision to sell your business or position yourself for a merger or an acquisition , a strong business plan in hand is going to help you to maximize the business valuation.

Valuation is the process of establishing the worth of a business by a valuation expert who will draw on professional experience as well as a business plan that will outline what you have, what it’s worth now and how much will it likely produce in the future.

Your business is likely to be worth more to a buyer if they clearly understand your business model, your market, your assets and your overall potential to grow and scale .

Related Questions

Business plan purpose: what is the purpose of a business plan.

The purpose of a business plan is to articulate a strategy for starting a new business or growing an existing one by identifying where the business is going and how it will get there to test the viability of a business idea and maximize the chances of securing funding and achieving business goals and success.

Business Plan Benefits: What are the benefits of a business plan?

A business plan benefits businesses by serving as a strategic tool outlining the steps and resources required to achieve goals and make business ideas succeed, as well as a communication tool allowing businesses to articulate their strategy to stakeholders that support the business.

Business Plan Importance: Why is business plan important?

The importance of a business plan lies in it being a roadmap that guides the decisions of a business on the road to success, providing clarity on all aspects of its operations. This blueprint outlines the goals of the business and what exactly is needed to achieve them through effective management.

Sign up for our Newsletter

Get more articles just like this straight into your mailbox.

Related Posts

Recent Posts

Sign up for our newsletter for product updates, new blog posts, and the chance to be featured in our Small Business Spotlight!

advantages of drawing up a business plan

The importance of a business plan

advantages of drawing up a business plan

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

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

What is a business plan?

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

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

Why is a business plan important?

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

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

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

What is the purpose of a business plan?

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

10 reasons why you need a business plan

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

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

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

1. To help you with critical decisions

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

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

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

Send invoices, estimates, and other docs:

  • via links or PDFs
  • automatically, via Wave

*While subscribed to Wave’s Pro Plan, get 2.9% + $0 (Visa, Mastercard, Discover) and 3.4% + $0 (Amex) per transaction for the first 10 transactions of each month of your subscription, then 2.9% + $0.60 (Visa, Mastercard, Discover) and 3.4% + $0.60 (Amex) per transaction. Discover processing is only available to US customers. See full terms and conditions for the US and Canada . See Wave’s Terms of Service for more information.

Send invoices, get paid, track expenses, pay your team, and balance your books with our financial management software.

2. To iron out the kinks

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

3. To avoid the big mistakes

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

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

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

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

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

4. To prove the viability of the business

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

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

A graphic showing you a “Business Plan Outline.” There are four sections on the left side: Executive Summary at the top, Company Description below it, followed by Market Analysis, and lastly Organization and Management. There was four sections on the right side. At the top: “Service or Product Line.” Below that, “Marketing and Sales.” Below that, “Funding Request.” And lastly: “Financial Projections.” At the very bottom below the left and right columns is a section that says “Appendix.

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

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

5. To set better objectives and benchmarks

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

6. To communicate objectives and benchmarks

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

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

7. To provide a guide for service providers

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

8. To secure financing

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

Learn what you need to get a small business loan.

9. To better understand the broader landscape

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

10. To reduce risk

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

Business plan FAQs

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

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

What industry-specific issues can business plans help tackle?

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

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

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

Understanding the importance of a business plan

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

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

Related Posts

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

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

advantages of drawing up a business plan

Hot Summer Savings ☀️ 60% Off for 4 Months. BUY NOW & SAVE

60% Off for 4 Months Buy Now & Save

Wow clients with professional invoices that take seconds to create

Quick and easy online, recurring, and invoice-free payment options

Automated, to accurately track time and easily log billable hours

Reports and tools to track money in and out, so you know where you stand

Easily log expenses and receipts to ensure your books are always tax-time ready

Tax time and business health reports keep you informed and tax-time ready

Automatically track your mileage and never miss a mileage deduction again

Time-saving all-in-one bookkeeping that your business can count on

Track project status and collaborate with clients and team members

Organized and professional, helping you stand out and win new clients

Set clear expectations with clients and organize your plans for each project

Client management made easy, with client info all in one place

Pay your employees and keep accurate books with Payroll software integrations

  • Team Management

FreshBooks integrates with over 100 partners to help you simplify your workflows

Send invoices, track time, manage payments, and more…from anywhere.

  • Freelancers
  • Self-Employed Professionals
  • Businesses With Employees
  • Businesses With Contractors
  • Marketing & Agencies
  • Construction & Trades
  • IT & Technology
  • Business & Prof. Services
  • Accounting Partner Program
  • Collaborative Accounting™
  • Accountant Hub
  • Reports Library
  • FreshBooks vs QuickBooks
  • FreshBooks vs HoneyBook
  • FreshBooks vs Harvest
  • FreshBooks vs Wave
  • FreshBooks vs Xero
  • Free Invoice Generator
  • Invoice Templates
  • Accounting Templates
  • Business Name Generator
  • Estimate Templates
  • Help Center
  • Business Loan Calculator
  • Mark Up Calculator

Call Toll Free: 1.866.303.6061

1-888-674-3175

  • All Articles
  • Productivity
  • Project Management
  • Bookkeeping

Resources for Your Growing Business

The importance of business plan: 5 key reasons.

The Importance of Business Plan: 5 Key Reasons

A key part of any business is its business plan. They can help define the goals of your business and help it reach success. A good business plan can also help you develop an adequate marketing strategy. There are a number of reasons all business owners need business plans, keep reading to learn more!

Here’s What We’ll Cover:

What Is a Business Plan?

5 reasons you need a well-written business plan, how do i make a business plan, key takeaways.

A business plan contains detailed information that can help determine its success. Some of this information can include the following:

  • Market analysis
  • Cash flow projection
  • Competitive analysis
  • Financial statements and financial projections
  • An operating plan

A solid business plan is a good way to attract potential investors. It can also help you display to business partners that you have a successful business growing. In a competitive landscape, a formal business plan is your key to success.

advantages of drawing up a business plan

Check out all of the biggest reasons you need a good business plan below.

1. To Secure Funding

Whether you’re seeking funding from a venture capitalist or a bank, you’ll need a business plan. Business plans are the foundation of a business. They tell the parties that you’re seeking funding from whether or not you’re worth investing in. If you need any sort of outside financing, you’ll need a good business plan to secure it.

2. Set and Communicate Goals

A business plan gives you a tangible way of reviewing your business goals. Business plans revolve around the present and the future. When you establish your goals and put them in writing, you’re more likely to reach them. A strong business plan includes these goals, and allows you to communicate them to investors and employees alike.

3. Prove Viability in the Market

While many businesses are born from passion, not many will last without an effective business plan. While a business concept may seem sound, things may change once the specifics are written down. Often, people who attempt to start a business without a plan will fail. This is because they don’t take into account all of the planning and funds needed to get a business off of the ground.

Market research is a large part of the business planning process. It lets you review your potential customers, as well as the competition, in your field. By understanding both you can set price points for products or services. Sometimes, it may not make sense to start a business based on the existing competition. Other times, market research can guide you to effective marketing strategies that others lack. To have a successful business, it has to be viable. A business plan will help you determine that.

4. They Help Owners Avoid Failure

Far too often, small businesses fail. Many times, this is due to the lack of a strong business plan. There are many reasons that small businesses fail, most of which can be avoided by developing a business plan. Some of them are listed below, which can be avoided by having a business plan:

  • The market doesn’t need the business’s product or service
  • The business didn’t take into account the amount of capital needed
  • The market is oversaturated
  • The prices set by the business are too high, pushing potential customers away

Any good business plan includes information to help business owners avoid these issues.

advantages of drawing up a business plan

5. Business Plans Reduce Risk

Related to the last reason, business plans help reduce risk. A well-thought-out business plan helps reduce risky decisions. They help business owners make informed decisions based on the research they conduct. Any business owner can tell you that the most important part of their job is making critical decisions. A business plan that factors in all possible situations helps make those decisions.

Luckily, there are plenty of tools available to help you create a business plan. A simple search can lead you to helpful tools, like a business plan template . These are helpful, as they let you fill in the information as you go. Many of them provide basic instructions on how to create the business plan, as well.

If you plan on starting a business, you’ll need a business plan. They’re good for a vast number of things. Business plans help owners make informed decisions, as well as set goals and secure funding. Don’t put off putting together your business plan!

If you’re in the planning stages of your business, be sure to check out our resource hub . We have plenty of valuable resources and articles for you when you’re just getting started. Check it out today!

RELATED ARTICLES

Comp Time Vs Overtime: What's the Difference?

Save Time Billing and Get Paid 2x Faster With FreshBooks

Want More Helpful Articles About Running a Business?

Get more great content in your Inbox.

By subscribing, you agree to receive communications from FreshBooks and acknowledge and agree to FreshBook’s Privacy Policy . You can unsubscribe at any time by contacting us at [email protected].

👋 Welcome to FreshBooks

To see our product designed specifically for your country, please visit the United States site.

How to make a business plan

Strategic planning in Miro

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.

Get on board in seconds

Join thousands of teams using Miro to do their best work yet.

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

Determined female African-American entrepreneur scaling a mountain while wearing a large backpack. Represents the journey to starting and growing a business and needi

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

Brought to you by

LivePlan Logo

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

  • 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.

advantages of drawing up a business plan

Free business plan template

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

Download Template

advantages of drawing up a business plan

One-page plan template

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

advantages of drawing up a business plan

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.

Content Author: Noah Parsons

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.

Check out LivePlan

Table of Contents

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

Related Articles

Overlapping files, folders, charts, graphs, and documents. Represents the information included in a business plan appendix.

3 Min. Read

What to Include in Your Business Plan Appendix

Female entrepreneur sitting at her desk doing manual calculations with a calculator trying to understand what her return on investment will be.

1 Min. Read

How to Calculate Return on Investment (ROI)

Owner of a life coaching business works on writing their business plan.

5 Min. Read

How To Write a Business Plan for a Life Coaching Business + Free Example

Bakery business owners look over their bakery business plan

7 Min. Read

How to Write a Bakery Business Plan + Sample

The Bplans Newsletter

The Bplans Weekly

Subscribe now for weekly advice and free downloadable resources to help start and grow your business.

We care about your privacy. See our privacy policy .

Garrett's Bike Shop

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

LivePlan pitch example

Discover the world’s #1 plan building software

advantages of drawing up a business plan

  • Sources of Business Finance
  • Small Business Loans
  • Small Business Grants
  • Crowdfunding Sites
  • How to Get a Business Loan
  • Small Business Insurance Providers
  • Best Factoring Companies
  • Types of Bank Accounts
  • Best Banks for Small Business
  • Best Business Bank Accounts
  • Open a Business Bank Account
  • Bank Accounts for Small Businesses
  • Free Business Checking Accounts
  • Best Business Credit Cards
  • Get a Business Credit Card
  • Business Credit Cards for Bad Credit
  • Build Business Credit Fast
  • Business Loan Eligibility Criteria
  • Small-Business Bookkeeping Basics
  • How to Set Financial Goals
  • Business Loan Calculators
  • How to Calculate ROI
  • Calculate Net Income
  • Calculate Working Capital
  • Calculate Operating Income
  • Calculate Net Present Value (NPV)
  • Calculate Payroll Tax

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

' src=

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?

Business Plan Infographic

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.

Executive Summary of the business plan

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.

It describes what your business does

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.

Market Analysis for Online Business

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.

Market Analysis Steps

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.

Four Steps to Create a Competitive Marketing Analysis

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.

How to Perform Competitive Analysis

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.

Create Management Team For Business Plan

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

Organizational chart Infographic

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)

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.

Target Market Vs Target Audience

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.

Pricing strategy influences the price of offering

  • 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,

The Benefits of Content Marketing

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.

Most popular social media platforms

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.

Choosing the right social media platform

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.

Benefits of Sales Forecasting

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.

Factors that affect sales forecasting

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.

True HR Cost Infographic

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.

The income statement section

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.

Cash Flow Statement Example

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.

Balance sheet Formula

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.

Exit Strategy Section of Business Plan Infographic

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.

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

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

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

The Business Profile

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'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

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

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 $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

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 Templates Business Concept

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.

Business Model Canvas (BMC) Infographic

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.

Segments of the Business Model Canvas

  • 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.

The lean canvas is a problem oriented alternative to the standard business model canvas

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.

Startup Pitch Deck Presentation

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.

Airbnb Pitch Deck

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)

Was This Article Helpful?

Martin luenendonk.

' src=

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.

  • Design for Business
  • Most Recent
  • Presentations
  • Infographics
  • Data Visualizations
  • Forms and Surveys
  • Video & Animation
  • Case Studies
  • Digital Marketing
  • Design Inspiration
  • Visual Thinking
  • Product Updates
  • Visme Webinars
  • Artificial Intelligence

How to Write a Business Plan: Beginner’s Guide (& Templates)

How to Write a Business Plan: Beginner’s Guide (& Templates)

Written by: Chloe West

An illustration showing a woman standing in front of a folder containing her business plan.

Thinking about starting a business? One of the first steps you’ll need to take is to write a business plan. A business plan can help guide you through your financial planning, marketing strategy, unique selling point and more.

Making sure you start your new business off on the right foot is key, and we’re here to help. We’ve put together this guide to help you write your first business plan. Or, you can skip the guide and dive right into a business plan template .

Ready to get started?

Here’s a short selection of 8 easy-to-edit business plan templates you can edit, share and download with Visme. View more templates below:

advantages of drawing up a business plan

8-Step Process for Writing a Business Plan

What is a business plan, why is a business plan important, step #1: write your executive summary, step #2: put together your company description, step #3: conduct your market analysis, step #4: research your competition, step #5: outline your products or services, step #6: summarize your financial plan, step #7: determine your marketing strategy, step #8: showcase your organizational chart, 14 business plan templates to help you get started.

A business plan is a document that helps potential new business owners flesh out their business idea and put together a bird’s eye view of their business. Writing a business plan is an essential step in any startup’s ideation process.

Business plans help determine demographics, market analysis, competitive analysis, financial projections, new products or services, and so much more.

Each of these bits of information are important to have on hand when you’re trying to start a business or pitching investors for funds.

Here’s an example of a business plan that you can customize to incorporate your own business information.

A business plan template available to customize with your own information in Visme.

We’re going to walk you through some of the most important parts of your business plan as well as how to write your own business plan in 8 easy steps.

If you’re in the beginning stages of starting a business , you might be wondering if it’s really worth your time to write out your business plan. 

We’re here to tell you that it is.

A business plan is important for a number of reasons, but mostly because it helps to set you up for success right from the start.

Here are four reasons to prove to you why you need to start your business off on the right foot with a plan.

Reason #1: Set Realistic Goals and Milestones

Putting together a business plan helps you to set your objectives for growth and make realistic goals while you begin your business. 

By laying out each of the steps you need to take in order to build a successful business, you’re able to be more reasonable about what your timeline is for achieving everything as well as what your financial projections are.

The best way to set goals is using the SMART goals guidelines, outlined below.

An infographic on creating smart goals.

Reason #2: Grow Your Business Faster

Having a business plan helps you be more organized and strategic, improving the overall performance of your business as you start out. In fact, one study found that businesses with a plan grow 30% faster than businesses that don’t.

Doesn’t that sound reason enough alone to start out your business venture with a solidified plan? We thought so too, but we’ve still got two more reasons.

Reason #3: Minimize Risk

Starting a new business is uncharted territory. However, when you start with a roadmap for your journey, it makes it easier to see success and minimize the risks that come with startups.

Minimize risk and maximize profitability by documenting the most important parts of your business planning.

Reason #4: Secure Funding

And finally, our last reason that business plans are so important is that if you plan to pitch investors for funding for your new venture, they’re almost always going to want to see a detailed business plan before deciding whether or not to invest.

You can easily create your business plan and investor pitch deck right here with Visme. Just sign up for a free account below to get started. 

Hey executives! Looking to cut design costs?

  • Spend less time on presentations and more time strategizing
  • Ensure your brand looks and feels visually consistent across all your organization's documents
  • Impress clients and stakeholders with boardroom ready presentations

Sign up. It’s free.

advantages of drawing up a business plan

The executive summary is a brief overview of your entire business plan, giving anyone who reads through your document a quick understanding of what they’re going to learn about your business idea.

However, you need to remember that some of the people who are going to read your business plan don’t want to or have time to read the entire thing. So your executive summary needs to incorporate all of the most important aspects of your plan.

Here’s an example of an executive summary from a business plan template you can customize and turn into your own.

An executive summary page from a business plan template.

Your executive summary should include:

  • Key objective(s)
  • Market research
  • Competitor information
  • Products/services
  • Value proposition
  • Overview of your financial plan
  • How you’re going to actually start your business

One thing to note is that you should actually write your executive summary after the rest of your business plan so that you can properly summarize everything you’ve already created.

So at this point, simply leave a page blank for your executive summary so you can come back to it at the end of your business plan.

An executive summary section of a business plan.

The next step is to write out a full description of your business and its core offerings. This section of your business plan should include your mission statement and objectives, along with your company history or overview.

In this section, you may also briefly describe your business formation details from a legal perspective.

Mission Statement

Don’t spend too much time trying to craft this. Your mission statement is a simple “why” you started this business. What are you trying to achieve? Or what does your business solve?

This can be anything from one single quote or a paragraph, but it doesn’t need to be much longer than that. In fact, this could be very similar to your value proposition.

A mission statement page from a business plan template.

What are your goals? What do you plan to achieve in the first 90 days or one year of your business? What kind of impact do you hope to make on the market?

These are all good points to include in your objectives section so anyone reading your business plan knows upfront what you hope to achieve.

History or Overview

If you’re not launching a brand new business or if you’ve previously worked on another iteration of this business, let potential investors know the history of your company.

If not, simply provide an overview of your business, sharing what it does or what it will do.

A business overview page from a business plan template.

Your third step is to conduct a market analysis so you know how your business will fit into its target market. This page in your business plan is simply meant to summarize your findings. Most of your time should be spent actually doing the research.

Your market analysis needs to look at things like:

  • Market size, and if it’s grown in recent years or shrinking
  • The segment of the market you plan to target
  • Demographics and behavior of your target audience
  • The demand for your product or service
  • Your competitive advantage or differentiation strategy
  • The average price of your product or service

Put together a summary of your market analysis and industry research in a 1-2 page format, like we see below.

A market analysis page in a business plan template.

Your next step is to conduct a competitive analysis. While you likely touched on this briefly during your market analysis, now is the time to do a deep dive so that you have a good grasp on what your competitors are doing and how they are generating customers.

Start by creating a profile of all your existing competitors, or at the very least, your closest competitors – the ones who are offering very similar products or services to you, or are in a similar vicinity (if you’re opening a brick and mortar store).

Focus on their strengths and what they’re doing really well so that you can emulate their best qualities in your own way. Then, look at their weaknesses and what your business can do better.

Take note of their current marketing strategy, including the outlets you see a presence, whether it’s on social media, you hear a radio ad, you see a TV ad, etc. You won’t always find all of their marketing channels, but see what you can find online and on their website.

A competitive analysis page in a business plan template.

After this, take a minute to identify potential competitors based on markets you might try out in the future, products or services you plan to add to your offerings, and more.

Then put together a page or two in your business plan that highlights your competitive advantage and how you’ll be successful breaking into the market.

Step five is to dedicate a page to the products or services that your business plans to offer.

Put together a quick list and explanation of what each of the initial product or service offerings will be, but steer clear of industry jargon or buzzwords. This should be written in plain language so anyone reading has a full understanding of what your business will do.

A products and services page in a business plan template.

You can have a simple list like we see in the sample page above, or you can dive a little deeper. Depending on your type of business, it might be a good idea to provide additional information about what each product or service entails.

The next step is to work on the financial data of your new business. What will your overhead be? How will your business make money? What are your estimated expenses and profits over the first few months to a year? The expenses should cover all the spending whether they are recurring costs or just one-time LLC filing fees .

There is so much that goes into your financial plan for a new business, so this is going to take some time to compile. Especially because this section of your business plan helps potential cofounders or investors understand if the idea is even viable.

A financial analysis page from a business plan template.

Your financial plan should include at least five major sections:

  • Sales Forecast: The first thing you want to include is a forecast or financial projection of how much you think your business can sell over the next year or so. Break this down into the different products, services or facets of your business.
  • Balance Sheet: This section is essentially a statement of your company’s financial position. It includes existing assets, liabilities and equity to demonstrate the company’s overall financial health.
  • Income Statement: Also known as a profit and loss statement (P&L), this covers your projected expenses and revenue, showcasing whether your business will be profitable or not.
  • Operating Budget: A detailed outline of your business’s income and expenses. This should showcase that your business is bringing in more than it’s spending.
  • Cash Flow Statements: This tracks how much cash your business has at any given point, regardless of whether customers or clients have paid their bills or have 30-60+ days to do so.

While these are the most common financial statements, you may discover that there are other sections that you want to include or that lenders may want to see from you.

You can automate the process of looking through your documents with an OCR API , which will collect the data from all your financial statements and invoices.

The next step is coming up with a successful marketing plan so that you can actually get the word out about your business. 

Throughout your business plan, you’ve already researched your competitors and your target market, both of which are major components of a good marketing strategy. You need to know who you’re marketing to, and you want to do it better than your competition.

A marketing plan page from a business plan template.

On this page or throughout this section of your business plan, you need to focus on your chosen marketing channels and the types of marketing content you plan to create.

Start by taking a look at the channels that your competitors are on and make sure you have a good understanding of the demographics of each channel as well. You don’t want to waste time on a marketing channel that your target audience doesn’t use.

Then, create a list of each of your planned marketing avenues. It might look something like:

  • Social media ( Facebook, Instagram, Pinterest)
  • Email newsletter
  • Digital ads

Depending on the type of business you’re starting, this list could change quite a bit — and that’s okay. There is no one-size-fits-all marketing strategy, and you need to find the one that brings in the highest number of potential customers.

Your last section will be all about your leadership and management team members. Showcasing that you have a solid team right from the start can make potential investors feel better about funding your venture.

You can easily put together an organizational chart like the one below, with the founder/CEO at the top and each of your team leaders underneath alongside the department they’re in charge of.

An organizational chart template available in Visme.

Simply add an organizational chart like this as a page into your overall business plan and make sure it matches the rest of your design to create a cohesive document.

If you want to create a good business plan that sets your new business up for success and attracts new investors, it’s a good idea to start with a template. 

We’ve got 14 options below from a variety of different industries for you to choose from. You can customize every aspect of each template to fit your business branding and design preferences.

Template #1: Photography Business Plan Template

A photography business plan template available in Visme.

This feminine and minimalistic business plan template is perfect for getting started with any kind of creative business. Utilize this template to help outline the step-by-step process of getting your new business idea up and running.

Template #2: Real Estate Business Plan Template

A real estate business plan template available in Visme.

Looking for a more modern business plan design? This template is perfect for plainly laying out each of your business plans in an easy-to-understand format. Adjust the red accents with your business’s colors to personalize this template.

Template #3: Nonprofit Business Plan Template

A nonprofit business plan template available in Visme.

Creating a business and marketing plan for your nonprofit is still an essential step when you’re just starting out. You need to get the word out to increase donations and awareness for your cause.

Template #4: Restaurant Business Plan Template

A restaurant business plan template available in Visme.

If your business plan needs to rely heavily on showcasing photos of your products (like food), this template is perfect for you. Get potential investors salivating at the sight of your business plan, and they’re sure to provide the capital you need.

Template #5: Fashion Business Plan Template

A fashion business plan template available to customize in Visme.

Serifs are in. Utilize this template with stunning serif as all the headers to create a contemporary and trendy business plan design that fits your business. Adjust the colors to match your brand and easily input your own content.

Template #6: Daycare Business Plan Template

A daycare business plan template available in Visme.

Creating a more kid-friendly or playful business? This business plan template has bold colors and design elements that will perfectly represent your business and its mission. 

Use the pages you need, and remove any that you don’t. You can also duplicate pages and move the elements around to add even more content to your business plan.

Template #7: Consulting Business Plan Template

A consulting business plan template available in Visme.

This classic business plan template is perfect for a consulting business that wants to use a stunning visual design to talk about its services.

Template #8: Coffee Shop Business Plan Template

A coffee shop business plan template available in Visme.

Customize this coffee shop business plan template to match your own business idea. Adjust the colors to fit your brand or industry, replace photos with your own photography or stock photos that represent your business, and insert your own logo, fonts and colors throughout.

Template #9: SaaS Business Plan Template

A SaaS business plan template available in Visme.

A SaaS or service-based company also needs a solid business plan that lays out its financials, list of services, target market and more. This template is the perfect starting point.

Template #10: Small Business Plan Template

A small business plan template available in Visme.

Every startup or small business needs to start out with a strong business plan in order to start off on the right foot and set yourself up for success. This template is an excellent starting point for any small business.

Template #11: Ecommerce Business Plan Template

An ecommerce business plan template available in Visme.

An ecommerce business plan is ideal for planning out your pricing strategy of all of your online products, as well as the site you plan to use for setting up your store, whether WordPress, Shopify, Wix or something else.

Template #12: Startup Business Plan Template

A startup business plan template available in Visme.

Customize this template and make it your own! Edit and Download  

This is another generic business plan template for any type of startup to customize. Switch out the content, fonts and colors to match your startup branding and increase brand equity.

Template #13: One-Page Business Plan Template

A single page business plan template available in Visme.

Want just a quick business plan to get your idea going before you bite the bullet and map out your entire plan? This one-page template is perfect for those just starting to flesh out a new business idea.

Template #14: Salon Business Plan Template

A salon business plan template available in Visme.

This salon business plan template is easy on the design and utilizes a light color scheme to put more focus on the actual content. You can use the design as is or keep it as a basis for your own design elements.

Create Your Own Business Plan Today

Ready to write your business plan? Once you’ve created all of the most important sections, get started with a business plan template to really wow your investors and organize your startup plan.

Design beautiful visual content you can be proud of.

advantages of drawing up a business plan

Trusted by leading brands

Capterra

Recommended content for you:

12 Customer Success Software to Help Your Business in 2024

Create Stunning Content!

Design visual brand experiences for your business whether you are a seasoned designer or a total novice.

advantages of drawing up a business plan

About the Author

Chloe West is the content marketing manager at Visme. Her experience in digital marketing includes everything from social media, blogging, email marketing to graphic design, strategy creation and implementation, and more. During her spare time, she enjoys exploring her home city of Charleston with her son.

advantages of drawing up a business plan

How to Write a Business Plan (Plus Examples & Templates)

May 24, 2021

How to Write a Business Plan (Plus Examples & Templates)

Have you ever wondered how to write a business plan step by step? Mike Andes, told us: 

This guide will help you write a business plan to impress investors.

Throughout this process, we’ll get information from Mike Andes, who started Augusta Lawn Care Services when he was 12 and turned it into a franchise with over 90 locations. He has gone on to help others learn how to write business plans and start businesses.  He knows a thing or two about writing  business plans!

We’ll start by discussing the definition of a business plan. Then we’ll discuss how to come up with the idea, how to do the market research, and then the important elements in the business plan format. Keep reading to start your journey!

What Is a Business Plan?

A business plan is simply a road map of what you are trying to achieve with your business and how you will go about achieving it. It should cover all elements of your business including: 

  • Finding customers
  • Plans for developing a team
  •  Competition
  • Legal structures
  • Key milestones you are pursuing

If you aren’t quite ready to create a business plan, consider starting by reading our business startup guide .

Get a Business Idea

Before you can write a business plan, you have to have a business idea. You may see a problem that needs to be solved and have an idea how to solve it, or you might start by evaluating your interests and skills. 

Mike told us, “The three things I suggest asking yourself when thinking about starting a business are:

  • What am I good at?
  • What would I enjoy doing?
  • What can I get paid for?”

Three adjoining circles about business opportunity

If all three of these questions don’t lead to at least one common answer, it will probably be a much harder road to success. Either there is not much market for it, you won’t be good at it, or you won’t enjoy doing it. 

As Mike told us, “There’s enough stress starting and running a business that if you don’t like it or aren’t good at it, it’s hard to succeed.”

If you’d like to hear more about Mike’s approach to starting a business, check out our YouTube video

Conduct Market Analysis

Market analysis is focused on establishing if there is a target market for your products and services, how large the target market is, and identifying the demographics of people or businesses that would be interested in the product or service. The goal here is to establish how much money your business concept can make.

Product and Service Demand

An image showing product service and demand

A search engine is your best friend when trying to figure out if there is demand for your products and services. Personally, I love using presearch.org because it lets you directly search on a ton of different platforms including Google, Youtube, Twitter, and more. Check out the screenshot for the full list of search options.

With quick web searches, you can find out how many competitors you have, look through their reviews, and see if there are common complaints about the competitors. Bad reviews are a great place to find opportunities to offer better products or services. 

If there are no similar products or services, you may have stumbled upon something new, or there may just be no demand for it. To find out, go talk to your most honest friend about the idea and see what they think. If they tell you it’s dumb or stare at you vacantly, there’s probably no market for it.

You can also conduct a survey through social media to get public opinion on your idea. Using Facebook Business Manager , you could get a feel for who would be interested in your product or service.

 I ran a quick test of how many people between 18-65  you could reach in the U.S. during a week. It returned an estimated 700-2,000 for the total number of leads, which is enough to do a fairly accurate statistical analysis.

Identify Demographics of Target Market

Depending on what type of business you want to run, your target market will be different. The narrower the demographic, the fewer potential customers you’ll have. If you did a survey, you’ll be able to use that data to help define your target audience. Some considerations you’ll want to consider are:

  • Other Interests
  • Marital Status
  • Do they have kids?

Once you have this information, it can help you narrow down your options for location and help define your marketing further. One resource that Mike recommended using is the Census Bureau’s Quick Facts Map . He told us,  

“It helps you quickly evaluate what the best areas are for your business to be located.”

How to Write a Business Plan

Business plan development

Now that you’ve developed your idea a little and established there is a market for it, you can begin writing a business plan. Getting started is easier with the business plan template we created for you to download. I strongly recommend using it as it is updated to make it easier to create an action plan. 

Each of the following should be a section of your business plan:

  • Business Plan Cover Page
  • Table of Contents
  • Executive Summary
  • Company Description
  • Description of Products and Services

SWOT Analysis

  • Competitor Data
  • Competitive Analysis
  • Marketing Expenses Strategy 

Pricing Strategy

  • Distribution Channel Assessment
  • Operational Plan
  • Management and Organizational Strategy
  • Financial Statements and/or Financial Projections

We’ll look into each of these. Don’t forget to download our free business plan template (mentioned just above) so you can follow along as we go. 

How to Write a Business Plan Step 1. Create a Cover Page

The first thing investors will see is the cover page for your business plan. Make sure it looks professional. A great cover page shows that you think about first impressions.

A good business plan should have the following elements on a cover page:

  • Professionally designed logo
  • Company name
  • Mission or Vision Statement
  • Contact Info

Basically, think of a cover page for your business plan like a giant business card. It is meant to capture people’s attention but be quickly processed.

How to Write a Business Plan Step 2. Create a Table of Contents

Most people are busy enough that they don’t have a lot of time. Providing a table of contents makes it easy for them to find the pages of your plan that are meaningful to them.

A table of contents will be immediately after the cover page, but you can include it after the executive summary. Including the table of contents immediately after the executive summary will help investors know what section of your business plan they want to review more thoroughly.

Check out Canva’s article about creating a  table of contents . It has a ton of great information about creating easy access to each section of your business plan. Just remember that you’ll want to use different strategies for digital and hard copy business plans.

How to Write a Business Plan Step 3. Write an Executive Summary

A notepad with a written executive summary for business plan writing

An executive summary is where your business plan should catch the readers interest.  It doesn’t need to be long, but should be quick and easy to read.

Mike told us,

How long should an executive summary bein an informal business plan?

For casual use, an executive summary should be similar to an elevator pitch, no more than 150-160 words, just enough to get them interested and wanting more. Indeed has a great article on elevator pitches .  This can also be used for the content of emails to get readers’ attention.

It consists of three basic parts:

  • An introduction to you and your business.
  • What your business is about.
  • A call to action

Example of an informal executive summary 

One of the best elevator pitches I’ve used is:

So far that pitch has achieved a 100% success rate in getting partnerships for the business.

What should I include in an executive summary for investors?

Investors are going to need a more detailed executive summary if you want to secure financing or sell equity. The executive summary should be a brief overview of your entire business plan and include:

  • Introduction of yourself and company.
  • An origin story (Recognition of a problem and how you came to solution)
  • An introduction to your products or services.
  • Your unique value proposition. Make sure to include intellectual property.
  • Where you are in the business life cycle
  • Request and why you need it.

Successful business plan examples

The owner of Urbanity told us he spent 2 months writing a 75-page business plan and received a $250,000 loan from the bank when he was 23. Make your business plan as detailed as possible when looking for financing. We’ve provided a template to help you prepare the portions of a business plan that banks expect.

Here’s the interview with the owner of Urbanity:

When to write an executive summary?

Even though the summary is near the beginning of a business plan, you should write it after you complete the rest of a business plan. You can’t talk about revenue, profits, and expected expenditures if you haven’t done the market research and created a financial plan.

What mistakes do people make when writing an executive summary?

Business owners commonly go into too much detail about the following items in an executive summary:

  • Marketing and sales processes
  • Financial statements
  • Organizational structure
  • Market analysis

These are things that people will want to know later, but they don’t hook the reader. They won’t spark interest in your small business, but they’ll close the deal.

How to Write a Business Plan Step 4. Company Description

Every business plan should include a company description. A great business plan will include the following elements while describing the company:

  • Mission statement
  • Philosophy and vision
  • Company goals

Target market

  • Legal structure

Let’s take a look at what each section includes in a good business plan.

Mission Statement

A mission statement is a brief explanation of why you started the company and what the company’s main focus is. It should be no more than one or two sentences. Check out HubSpot’s article 27 Inspiring Mission Statement for a great read on informative and inspiring mission and vision statements. 

Company Philosophy and Vision

Writing the company philosophy and vision

The company philosophy is what drives your company. You’ll normally hear them called core values.  These are the building blocks that make your company different. You want to communicate your values to customers, business owners, and investors as often as possible to build a company culture, but make sure to back them up.

What makes your company different?

Each company is different. Your new business should rise above the standard company lines of honesty, integrity, fun, innovation, and community when communicating your business values. The standard answers are corporate jargon and lack authenticity. 

Examples of core values

One of my clients decided to add a core values page to their website. As a tech company they emphasized the values:

  •  Prioritize communication.
  •  Never stop learning.
  •  Be transparent.
  •  Start small and grow incrementally.

These values communicate how the owner and the rest of the company operate. They also show a value proposition and competitive advantage because they specifically focus on delivering business value from the start. These values also genuinely show what the company is about and customers recognize the sincerity. Indeed has a great blog about how to identify your core values .

What is a vision statement?

A vision statement communicate the long lasting change a business pursues. The vision helps investors and customers understand what your company is trying to accomplish. The vision statement goes beyond a mission statement to provide something meaningful to the community, customer’s lives, or even the world.

Example vision statements

The Alzheimer’s Association is a great example of a vision statement:

A world without Alzheimer’s Disease and other dementia.

It clearly tells how they want to change the world. A world without Alzheimers might be unachievable, but that means they always have room for improvement.

Business Goals

You have to measure success against goals for a business plan to be meaningful. A business plan helps guide a company similar to how your GPS provides a road map to your favorite travel destination. A goal to make as much money as possible is not inspirational and sounds greedy.

Sure, business owners want to increase their profits and improve customer service, but they need to present an overview of what they consider success. The goals should help everyone prioritize their work.

How far in advance should a business plan?

Business planning should be done at least one year in advance, but many banks and investors prefer three to five year business plans. Longer plans show investors that the management team  understands the market and knows the business is operating in a constantly shifting market. In addition, a plan helps businesses to adjust to changes because they have already considered how to handle them.

Example of great business goals

My all time-favorite long-term company goals are included in Tesla’s Master Plan, Part Deux . These goals were written in 2016 and drive the company’s decisions through 2026. They are the reason that investors are so forgiving when Elon Musk continually fails to meet his quarterly and annual goals.

If the progress aligns with the business plan investors are likely to continue to believe in the company. Just make sure the goals are reasonable or you’ll be discredited (unless you’re Elon Musk).

A man holding an iPad with a cup of coffee on his desk

You did target market research before creating a business plan. Now it’s time to add it to the plan so others understand what your ideal customer looks like. As a new business owner, you may not be considered an expert in your field yet, so document everything. Make sure the references you use are from respectable sources. 

Use information from the specific lender when you are applying for lending. Most lenders provide industry research reports and using their data can strengthen the position of your business plan.

A small business plan should include a section on the external environment. Understanding the industry is crucial because we don’t plan a business in a vacuum. Make sure to research the industry trends, competitors, and forecasts. I personally prefer IBIS World for my business research. Make sure to answer questions like:

  • What is the industry outlook long-term and short-term?
  • How will your business take advantage of projected industry changes and trends?
  • What might happen to your competitors and how will your business successfully compete?

Industry resources

Some helpful resources to help you establish more about your industry are:

  • Trade Associations
  • Federal Reserve
  • Bureau of Labor Statistics

Legal Structure

There are five basic types of legal structures that most people will utilize:

  • Sole proprietorships
  • Limited Liability Companies (LLC)

Partnerships

Corporations.

  • Franchises.

Each business structure has their pros and cons. An LLC is the most common legal structure due to its protection of personal assets and ease of setting up. Make sure to specify how ownership is divided and what roles each owner plays when you have more than one business owner.

You’ll have to decide which structure is best for you, but we’ve gathered information on each to make it easier.

  • Sole Proprietorship

A sole proprietorship is the easiest legal structure to set up but doesn’t protect the owner’s personal assets from legal issues. That means if something goes wrong, you could lose both your company and your home.

To start a sole proprietorship, fill out a special tax form called a  Schedule C . Sole proprietors can also join the American Independent Business Alliance .

Limited Liability Company (LLC)

An LLC is the most common business structure used in the United States because an LLC protects the owner’s personal assets. It’s similar to partnerships and corporations, but can be a single-member LLC in most states. An LLC requires a document called an operating agreement.

Each state has different requirements. Here’s a link to find your state’s requirements . Delaware and Nevada are common states to file an LLC because they are really business-friendly. Here’s a blog on the top 10 states to get an LLC.

Partnerships are typically for legal firms. If you choose to use a partnership choose a Limited Liability Partnership. Alternatively, you can just use an LLC.

Corporations are typically for massive organizations. Corporations have taxes on both corporate and income tax so unless you plan on selling stock, you are better off considering an LLC with S-Corp status . Investopedia has good information corporations here .

An iPad with colored pens on a desk

There are several opportunities to purchase successful franchises. TopFranchise.com has a list of companies in a variety of industries that offer franchise opportunities. This makes it where an entrepreneur can benefit from the reputation of an established business that has already worked out many of the kinks of starting from scratch.

How to Write a Business Plan Step 5. Products and Services

This section of the business plan should focus on what you sell, how you source it, and how you sell it. You should include:

  • Unique features that differentiate your business products from competitors
  • Intellectual property
  • Your supply chain
  • Cost and pricing structure 

Questions to answer about your products and services

Mike gave us a list  of the most important questions to answer about your product and services:

  • How will you be selling the product? (in person, ecommerce, wholesale, direct to consumer)?
  • How do you let them know they need a product?
  • How do you communicate the message?
  • How will you do transactions?
  • How much will you be selling it for?
  • How many do you think you’ll sell and why?

Make sure to use the worksheet on our business plan template .

How to Write a Business Plan Step 6. Sales and Marketing Plan

The marketing and sales plan is focused on the strategy to bring awareness to your company and guides how you will get the product to the consumer.  It should contain the following sections:

SWOT Analysis stands for strengths, weaknesses, opportunities, and threats. Not only do you want to identify them, but you also want to document how the business plans to deal with them.

Business owners need to do a thorough job documenting how their service or product stacks up against the competition.

If proper research isn’t done, investors will be able to tell that the owner hasn’t researched the competition and is less likely to believe that the team can protect its service from threats by the more well-established competition. This is one of the most common parts of a presentation that trips up business owners presenting on Shark Tank .

SWOT Examples

Business plan SWOT analysis

Examples of strengths and weaknesses could be things like the lack of cash flow, intellectual property ownership, high costs of suppliers, and customers’ expectations on shipping times.

Opportunities could be ways to capitalize on your strengths or improve your weaknesses, but may also be gaps in the industry. This includes:

  • Adding offerings that fit with your current small business
  • Increase sales to current customers
  • Reducing costs through bulk ordering
  • Finding ways to reduce inventory
  •  And other areas you can improve

Threats will normally come from outside of the company but could also be things like losing a key member of the team. Threats normally come from competition, regulations, taxes, and unforeseen events.

The management team should use the SWOT analysis to guide other areas of business planning, but it absolutely has to be done before a business owner starts marketing. 

Include Competitor Data in Your Business Plan

When you plan a business, taking into consideration the strengths and weaknesses of the competition is key to navigating the field. Providing an overview of your competition and where they are headed shows that you are invested in understanding the industry.

For smaller businesses, you’ll want to search both the company and the owners names to see what they are working on. For publicly held corporations, you can find their quarterly and annual reports on the SEC website .

What another business plans to do can impact your business. Make sure to include things that might make it attractive for bigger companies to outsource to a small business.

Marketing Strategy

The marketing and sales part of business plans should be focused on how you are going to make potential customers aware of your business and then sell to them.

If you haven’t already included it, Mike recommends:

“They’ll want to know about Demographics, ages, and wealth of your target market.”

Make sure to include the Total addressable market .  The term refers to the value if you captured 100% of the market.

Advertising Strategy

You’ll explain what formats of advertising you’ll be using. Some possibilities are:

  • Online: Facebook and Google are the big names to work with here.
  • Print : Print can be used to reach broad groups or targeted markets. Check out this for tips .
  • Radio : iHeartMedia is one of the best ways to advertise on the radio
  • Cable television : High priced, hard to measure ROI, but here’s an explanation of the process
  • Billboards: Attracting customers with billboards can be beneficial in high traffic areas.

You’ll want to define how you’ll be using each including frequency, duration, and cost. If you have the materials already created, including pictures or links to the marketing to show creative assets.

Mike told us “Most businesses are marketing digitally now due to Covid, but that’s not always the right answer.”

Make sure the marketing strategy will help team members or external marketing agencies stay within the brand guidelines .

An iPad with graph about pricing strategy

This section of a business plan should be focused on pricing. There are a ton of pricing strategies that may work for different business plans. Which one will work for you depends on what kind of a business you run.

Some common pricing strategies are:

  • Value-based pricing – Commonly used with home buying and selling or other products that are status symbols.
  • Skimming pricing – Commonly seen in video game consoles, price starts off high to recoup expenses quickly, then reduces over time.
  • Competition-based pricing – Pricing based on competitors’ pricing is commonly seen at gas stations.
  • Freemium services –  Commonly used for software, where there is a free plan, then purchase options for more functionality.

HubSpot has a great calculator and blog on pricing strategies.

Beyond explaining what strategy your business plans to use, you should include references for how you came to this pricing strategy and how it will impact your cash flow.

Distribution Plan

This part of a business plan is focused on how the product or service is going to go through the supply chain. These may include multiple divisions or multiple companies. Make sure to include any parts of the workflow that are automated so investors can see where cost savings are expected and when.

Supply Chain Examples

For instance, lawn care companies  would need to cover aspects such as:

  • Suppliers for lawn care equipment and tools
  • Any chemicals or treatments needed
  • Repair parts for sprinkler systems
  • Vehicles to transport equipment and employees
  • Insurance to protect the company vehicles and people.

Examples of Supply Chains

These are fairly flat supply chains compared to something like a clothing designer where the clothes would go through multiple vendors. A clothing company might have the following supply chain:

  • Raw materials
  • Shipping of raw materials
  • Converting of raw materials to thread
  • Shipping thread to produce garments
  • Garment producer
  • Shipping to company
  • Company storage
  • Shipping to retail stores

There have been advances such as print on demand that eliminate many of these steps. If you are designing completely custom clothing, all of this would need to be planned to keep from having business disruptions.

The main thing to include in the business plan is the list of suppliers, the path the supply chain follows, the time from order to the customer’s home, and the costs associated with each step of the process.

According to BizPlanReview , a business plan without this information is likely to get rejected because they have failed to research the key elements necessary to make sales to the customer.

How to Write a Business Plan Step 7. Company Organization and Operational Plan

This part of the business plan is focused on how the business model will function while serving customers.  The business plan should provide an overview of  how the team will manage the following aspects:

Quality Control

  • Legal environment

Let’s look at each for some insight.

Production has already been discussed in previous sections so I won’t go into it much. When writing a business plan for investors, try to avoid repetition as it creates a more simple business plan.

If the organizational plan will be used by the team as an overview of how to perform the best services for the customer, then redundancy makes more sense as it communicates what is important to the business.

A wooden stamp with the words "quality control"

Quality control policies help to keep the team focused on how to verify that the company adheres to the business plan and meets or exceeds customer expectations.

Quality control can be anything from a standard that says “all labels on shirts can be no more than 1/16″ off center” to a defined checklist of steps that should be performed and filled out for every customer.

There are a variety of organizations that help define quality control including:

  • International Organization for Standardization – Quality standards for energy, technology, food, production environments, and cybersecurity
  • AICPA – Standard defined for accounting.
  • The Joint Commission – Healthcare
  • ASHRAE – HVAC best practices

You can find lists of the organizations that contribute most to the government regulation of industries on Open Secrets . Research what the leaders in your field are doing. Follow their example and implement it in your quality control plan.

For location, you should use information from the market research to establish where the location will be. Make sure to include the following in the location documentation.

  • The size of your location
  • The type of building (retail, industrial, commercial, etc.)
  • Zoning restrictions – Urban Wire has a good map on how zoning works in each state
  • Accessibility – Does it meet ADA requirements?
  • Costs including rent, maintenance, utilities, insurance and any buildout or remodeling costs
  • Utilities – b.e.f. has a good energy calculator .

Legal Environment

The legal requirement section is focused on defining how to meet the legal requirements for your industry. A good business plan should include all of the following:

  • Any licenses and/or permits that are needed and whether you’ve obtained them
  • Any trademarks, copyrights, or patents that you have or are in the process of applying for
  • The insurance coverage your business requires and how much it costs
  • Any environmental, health, or workplace regulations affecting your business
  • Any special regulations affecting your industry
  • Bonding requirements, if applicable

Your local SBA office can help you establish requirements in your area. I strongly recommend using them. They are a great resource.

Your business plan should include a plan for company organization and hiring. While you may be the only person with the company right now, down the road you’ll need more people. Make sure to consider and document the answers to the following questions:

  • What is the current leadership structure and what will it look like in the future?
  • What types of employees will you have? Are there any licensing or educational requirements?
  • How many employees will you need?
  • Will you ever hire freelancers or independent contractors?
  • What is each position’s job description?
  • What is the pay structure (hourly, salaried, base plus commission, etc.)?
  • How do you plan to find qualified employees and contractors?

One of the most crucial parts of a business plan is the organizational chart. This simply shows the positions the company will need, who is in charge of them and the relationship of each of them. It will look similar to this:

Organization chart

Our small business plan template has a much more in-depth organizational chart you can edit to include when you include the organizational chart in your business plan.

How to Write a Business Plan Step 8. Financial Statements 

No business plan is complete without financial statements or financial projections. The business plan format will be different based on whether you are writing a business plan to expand a business or a startup business plan. Let’s dig deeper into each.

Provide All Financial Income from an Existing Business

An existing business should use their past financial documents including the income statement, balance sheet, and cash flow statement to find trends to estimate the next 3-5 years.

You can create easy trendlines in excel to predict future revenue, profit and loss, cash flow, and other changes in year-over-year performance. This will show your expected performance assuming business continues as normal.

If you are seeking an investment, then the business is probably not going to continue as normal. Depending on the financial plan and the purpose of getting financing, adjustments may be needed to the following:

  • Higher Revenue if expanding business
  • Lower Cost of Goods Sold if purchasing inventory with bulk discounts
  • Adding interest if utilizing financing (not equity deal)
  • Changes in expenses
  • Addition of financing information to the cash flow statement
  • Changes in Earnings per Share on the balance sheet

Financial modeling is a challenging subject, but there are plenty of low-cost courses on the subject. If you need help planning your business financial documentation take some time to watch some of them.

Make it a point to document how you calculated all the changes to the income statement, balance sheet, and cash flow statement in your business plan so that key team members or investors can verify your research.

Financial Projections For A Startup Business Plan

Unlike an existing business, a startup doesn’t have previous success to model its future performance. In this scenario, you need to focus on how to make a business plan realistic through the use of industry research and averages.

Mike gave the following advice in his interview:

Financial Forecasting Mistakes

One of the things a lot of inexperienced people use is the argument, “If I get one percent of the market, it is worth $100 million.” If you use this, investors are likely to file the document under bad business plan examples.

Let’s use custom t-shirts as an example.

Credence Research estimated in 2018 there were 11,334,800,000 custom t-shirts sold for a total of $206.12 Billion, with a 6% compound annual growth rate.

With that data,  you can calculate that the industry will grow to $270 Billion in 2023 and that the average shirt sold creates $18.18 in revenue.

Combine that with an IBIS World estimate of 11,094 custom screen printers and that means even if you become an average seller, you’ll get .009% of the market.

Here’s a table for easier viewing of that information.

A table showing yearly revenue of a business

The point here is to make sure your business proposal examples make sense.

You’ll need to know industry averages such as cost of customer acquisition, revenue per customer, the average cost of goods sold, and admin costs to be able to create accurate estimates.

Our simple business plan templates walk you through most of these processes. If you follow them you’ll have a good idea of how to write a business proposal.

How to Write a Business Plan Step 9. Business Plan Example of Funding Requests

What is a business plan without a plan on how to obtain funding?

The Small Business Administration has an example for a pizza restaurant that theoretically needed nearly $20k to make it through their first month.

In our video, How to Start a $500K/Year T-Shirt Business (Pt. 1 ), Sanford Booth told us he needed about $200,000 to start his franchise and broke even after 4 months.

Freshbooks estimates it takes on average 2-3 years for a business to be profitable, which means the fictitious pizza company from the SBA could need up to $330k to make it through that time and still pay their bills for their home and pizza shop.

Not every business needs that much to start, but realistically it’s a good idea to assume that you need a fairly large cushion.

Ways to get funding for a small business

There are a variety of ways to cover this. the most common are:

  • Bootstrapping – Using your savings without external funding.
  • Taking out debt – loans, credit cards
  • Equity, Seed Funding – Ownership of a percentage of the company in exchange for current funds
  • Crowdsourcing – Promising a good for funding to create the product

Keep reading for more tips on how to write a business plan.

How funding will be used

When asking for business financing make sure to include:

  • How much to get started?
  • What is the minimum viable product and how soon can you make money?
  • How will the money be spent?

Mike emphasized two aspects that should be included in every plan, 

How to Write a Business Plan Resources

Here are some links to a business plan sample and business plan outline. 

  • Sample plan

It’s also helpful to follow some of the leading influencers in the business plan writing community. Here’s a list:

  • Wise Plans –  Shares a lot of information on starting businesses and is a business plan writing company.
  • Optimus Business Plans –  Another business plan writing company.
  • Venture Capital – A venture capital thread that can help give you ideas.

How to Write a Business Plan: What’s Next?

We hope this guide about how to write a simple business plan step by step has been helpful. We’ve covered:

  • The definition of a business plan
  • Coming up with a business idea
  • Performing market research
  • The critical components of a business plan
  • An example business plan

In addition, we provided you with a simple business plan template to assist you in the process of writing your startup business plan. The startup business plan template also includes a business model template that will be the key to your success.

Don’t forget to check out the rest of our business hub .

Have you written a business plan before? How did it impact your ability to achieve your goals?

80% of businesses fail... Learn how not to.

Learn from business failures and successes in 5 min or less. The stories, frameworks, and tactics that will make you a 10x better founder.

advantages of drawing up a business plan

Brandon Boushy

Related articles

advantages of drawing up a business plan

Starting a Cleaning Business Checklists (2024)

Every Great Cleaning Business Starts with a Plan 

Name your cleaning business checklist.

  •  Make the name easy to spell
  •  Purchase a domain
  •  Register and pay the DBA fee (if not included with the business structure)
  •  Trademark the business name and logo

Form the Cleaning Business Structure Checklist

  • Limited Liability Company
  • Corporation
  • Partnership
  • Get a DBA if you will operate under a different name.
  • Apply for an EIN on the IRS website.
  • Get county and city licenses.
  • Apply for the required insurance.
  • Get a seller’s permit (state tax ID).

Get the Financial Tools to Run Your Cleaning  Business Checklist

Girl working on payroll

  • Set up a business bank account.
  • Apply for a business credit card.
  • Consider getting business loans.
  • Find a payroll solutions provider.
  • Get a payment processor.
  • Choose and set up accounting software.
  • Decide whether you want to set up a 401K.

Cleaning Business Insurance Checklist

Cleaning business equipment checklist.

  • Company vehicle
  • Laptop or PC
  • Business phone number 
  • Point-of-Sale machine or credit card reader

Get the Software to Run Your Cleaning Services Checklist

  • Payroll solutions
  • Payment processor
  • Accounting solutions
  • Scheduling software
  • Professional website (domain from GoDaddy and hosting)
  • Online booking software
  • Marketing tools (We have a complete list for them.)

Marketing for a Cleaning Service Checklist

Young man make a marketing plan

  • Business cards
  • Signs on location (if you run a dry cleaner or another cleaning shop)
  • Signs on vehicles (for a mobile business model)
  • Click Funnels
  • Google My Business
  • Google Local Ads
  • Siri and Apple Maps
  • Yelp for Business

Cleaning Supplies Checklist

Cleaning checklist

  • Home Cleaning

Mobile Laundry Cleaning Services, Laundromat, Clothes Cleaning Business, Dry cleaning

Decluttering services or organizer, green cleaning services.

  • Airbnb, Vrbo  
  • Home or Commercial Construction Cleaning
  • Move-In, Move-Out Cleaning

Office Cleaning

Duct cleaning.

  • Carpet Cleaning
  • Window Washers
  • I.T. Cleaning
  • Property Cleaning,  Pressure Washing
  • Hazardous Waste Removal

Boat Cleaning

Home cleaning supplies checklist.

  • Glass cleaner (Windex or similar)
  • Vacuum cleaner
  • Wet floor signs
  • Microfiber mop (optional if you are just starting)
  • Regular mop
  • Toilet bowl brush
  • Bags for dirty rags
  • Bags to carry clean rags
  • Neutral floor cleaner (Bona or similar)
  • Disinfectant cleaner
  • Cleaning bucket
  • Mini grout brush

Laundry shop interior with counter and washing machines

  • Rolling baskets
  • Laundry soap
  • Cleaning chemicals for dry cleaning
  • Dryer sheets
  • Clothing racks
  • Washing machines
  • Garment covers
  • Spot cleaner
  • Information tags
  • Clothing conveyor
  • Cleaning materials
  • Storage bins of various sizes
  • 3D modeling software to model spaces
  • Carpentry tools for creating more storage space
  • Shelving units
  • Organic glass cleaner 
  • Aprons (from recycled materials)
  • Microfiber mop
  • Eco-friendly gloves
  • Reusable bags for dirty rags
  • Reusable bags to carry clean rags
  • Gas mileage-friendly, hybrid, or electric car
  • Natural floor cleaner
  • Natural disinfectant 

What do I need to start a cleaning business for Airbnb properties?

Group of cleaning items

  • Microfiber mop (Optional)
  • Booties for shoes
  • Spare sheets
  • A deal with a local laundromat
  • Conditioner

New Home Construction Cleaner or New Commercial Construction Cleaning

  • Indoor, outdoor vacuum
  • Neutral floor cleaner

Move-In and Move-Out Cleaning, Apartment Cleaning

  • Putty to help fill holes
  • Putty application tool

Woman cleaning computer monitor

  • All-purpose stain and spot remover
  • Baking soda
  • Toilet paper
  • Broom and dustpan
  • Clorox disinfecting wipes 
  • Facial tissue
  • Feather duster 
  • Floor cleaning solution or vinegar
  • Cleaner for glass and mirrors
  • Bulk supply of hand soap to refill dispenser
  • Disinfecting spray
  • Micro-fiber cleaning cloths 
  • Paper towels
  • Sponge mop and/or dry mop
  • Toilet cleaner
  • Trash bags 
  • Industrial mop bucket
  • Wood polish 
  • Floor polishing machine
  • Extension cords

Specialty Cleaning

  • Caution signs
  • Air compressor
  • HEPA vacuum
  • Duct restoration products
  • Parts for maintenance of equipment
  • HEPA filters and bags
  • Indoor air quality testing equipment
  • Safety goggles
  • Latex gloves
  • Electric shock prevention gloves
  • Masks to protect against dust in lungs (or chemicals in some industrial facilities)
  • Lockout, tagout system (a lock with a tag that specifies who locked the breaker)

Carpet Cleaning Business, Rug Cleaning

Young man cleaning the carpet

  • Carpet shampooer
  • Air scrubber
  • Carpet cleaning wand
  • Rubber gloves
  • Corner guards
  • Defoaming agent
  • Crevice tools
  • Carpet rake
  • furniture protectors 
  • Window Cleaning Business
  • Two 18” squeegees
  • Window cleaner with silicon (keeps dust from sticking to windows)
  • Rags to catch excess liquids
  • Replacement s-channels (the rubber part of a squeegee)
  • Sleeves (goes over squeegee to wash the window)
  • Hard hat (primarily for use on scaffold)
  • Safety harness (use with scaffold)
  • Scaffold (for larger windows)

IT Cleaning Business

  • Vacuums: Two Options
  • Preferred : ULPA (Ultra Low Particulate Air) filter with 99.999% efficiency at 0.12 microns
  • OK : HEPA (High-Efficiency Particulate Air) filter with 99.97% efficiency at 0.3 microns
  • Tools, Attachments, and Supplies: Requirements
  • Non-conductive 
  • Low-lint materials
  • Packaging specifies that it is designed to be used in cleanroom environments
  • Cleaning Chemicals
  • Floor surfaces
  • Non-ammoniated
  • Designated as safe for data center environments
  • Intended for HPL floor tiles
  • Equipment Surfaces
  • Anti-static cleaner 
  • Designed to be used in a data center environment

Property Cleaning Services, Power Washer Business

Man using pressure washer on concrete floor

  • Trash picker
  • White and yellow paint (maintain the parking lot lines)
  • Graffiti removal kit
  • Pressure washer
  • Towing hitch (if tank won’t fit in vehicle)

Hazardous Waste Removal, Mold Remediation

  • Portable air scrubbers
  • Negative air machines
  • Mobile containment tent
  • Meters to measure levels
  • Asbestos testing kit
  • Dehumidifiers
  • Disinfectants 
  • Kneeling mats
  • Ventilators
  • Hazmat suits (for some materials)
  • Special licensing based on type of removal
  • Rust remover 
  • Metal polish
  • Wood varnish
  • Fabric cleaner
  • Rubber cleaner

Hopefully, You Found the Cleaning Company Checklist You Need

advantages of drawing up a business plan

How to Start a $125K/Month Cleaning Business

Did you know that it costs less than $5K to start a cleaning business, but with the right strategies you can make more than $1.5M per year?

Join us as we discuss how to start a cleaning business from scratch. We’ll explore Cristobal Mondragon’s remarkable journey from starting Queen Bee Cleaning Services in 2015 to becoming a featured speaker at cleaning conventions.

We’ll share his story, the strategies and lessons Chris learned from starting a cleaning business from home, general information about the cleaning industry, and how you can start one of your own. Chris told us:

[su_quote] This is the best time to start a cleaning business. [/su_quote]

[su_note note_color="#dbeafc"] Get ready to learn how to open a cleaning business. Click on any link below to jump to that portion of the article, or just read on.

Case Study: Queen Bee Cleaning Services

Cleaning industry outlook, consider cleaning certifications, learn to run a new cleaning company successfully, step #1. choose your target market, step #2. choose the type of cleaning business to start, step #3. create a cleaning business plan, step #4. get funding, step #5. register the cleaning business, step #6. price your services, step #7. get cleaning clients, step #8. invest in advertising, step #9. hire a cleaning crew.

  • Ready to Start Your Own Cleaning Business? [/su_note]

This guide will show you exactly how to start a cleaning service. Let's start by discussing the Queen Bee Cleaning Services:

Cristobal Mondragon and his wife started Queen Bee Cleaning Services in 2015. Today, he makes over $1.5M annually and has opened a second location. He’s been recognized by industry organizations for his excellence, and he’s used his success to expand into courses, customer relationship management, and coaching.

But it hasn’t been without challenges. Chris made the costly mistake of misclassifying employees as subcontractors, leading to a hefty fine.

That might stop many business owners, but he overcame the $10K hit and is passing his knowledge on to you.

Check out our interview with him below.

Now, let's look at what you need to know about the industry before starting a cleaning business.

Janitorial workers cleaning an office space

According to IBIS World , the contract cleaning industry made over $90B in revenue in 2022 and will grow to nearly $100B by 2027.

There are 1,163,718 cleaning companies in the U.S., so considering the revenue figure above, that means they average $77,122.63 in annual revenue each. With wages being approximately 38.4% of revenue, that means it's pretty easy for cleaners who want to start their own business to take home around $45K after expenses.

Chris provided a spreadsheet of his accounts, which I modified to make his accounting match IBIS World's database for an easy comparison. His strategies help him earn nearly double the after-tax profit and nearly four times the take-home pay of the average cleaning business owner.

[su_table responsive="yes" alternate="no" fixed="yes"]

2022 Ind Revenue in Millions $89,749.00
Industry Revenue $89,749,000,000.00
Number of Businesses 1,163,718
Rev/Est $77,122.64 $1,130,896.00
COGS $30,463.44 $895,841.20
Gross Profit $46,659.19 $235,054.80
Salaries $11,876.89 $80,000.00
Other Expenses (Most likely rent, utilities, etc. that pertain specifically to running a home-based business) $31,157.55 $55,296.00
Net Income $3,624.76 $99,758.80
Approximated Owner's Earnings $46,659.19 $188,758.80
Net Income Percentage 4.70% 8.82%
Owners Income Percentage 60.50% 16.69%

[/su_table]

Get ready to find out the answers to these frequently asked cleaning company questions. We’ll answer questions like:

  • How much can a cleaning company owner make?
  • How much money do I need to start a cleaning company?
  • What is the easiest cleaning company to start?

How profitable is starting a cleaning business?

According to The BBQ Cleaner , cleaning services can earn between $20K and $100K in annual profit. A solopreneur cleaning business normally makes around $50K per year.

The Janitorial Store estimates the average profit margin for commercial cleaning businesses is between 10% and 15%. Profitability will vary based on your location, target market, pricing strategy, and the size of your business.

The factors below could make your cleaning business profitable:

  • High Demand: Most wealthy families and businesses need cleaning professionals.
  • Growth Potential: Cleaning businesses can grow from a one-person operation to cleaning business dynasties with locations across the country or world.
  • Low Overhead: Cleaning businesses have low startup costs and are commonly run from home.

How Much Does It Cost to Start a Cleaning Business?

Chris started Queen Bee with less than a $5K budget. He estimates you can start for less than $2.8K if you have a car. You can expect around 50% of earnings to go to payroll, including your wages. Another 30% of revenue will be spent on bookkeeping, advertising, overhead, and taxes.

Udemy offers inexpensive courses on budgeting that are worth checking out. Many cleaning companies love using Jobber as their cleaning business software to help lower costs.

What is the best type of cleaning business to start?

Residential cleaning is the easiest type of cleaning business to start because it requires less initial investment than business cleaning services or specialized cleaning services.

You might also consider starting the following:

  • Commercial Cleaning Company: Cleaning services for offices, manufacturing spaces, and commercial spaces make higher profits but have higher startup costs.
  • Specialized Cleaning: Upholstery cleaning, vehicle detailing, closet organization, mattress cleaning, and clothing cleaning services require additional knowledge to provide proper cleaning techniques, but they have less competition and a narrower target market.
  • Other cleaning services: Carpet cleaning, chimney cleaning, window cleaning, and crime scene cleaning are all high demand cleaning solutions in local markets.

Completing International Sanitary Supply Association (ISSA) certifications will land you on their database of certified professional cleaners. That's a high-authority link to your website!

Queen Bee has a certification from the Association of Residential Cleaning Services International (ARCSI) as well as the Institute of Inspection and Restoration Certification (IIRC). He told us:

[su_quote] ARCSI certification teaches you how to use chemicals properly and avoid creating toxic fumes. It basically comes down to teaching you the chemistry behind each product and how to clean each [surface] … and avoid damaging them. [An] IIRC certification is similar to the ARCSI certificate but focuses on carpet cleaning and tile cleaning. [/su_quote]

Find out about more than 45 cleaning certifications .

Get FREE training for building your cleaning business with Chris Mondragon's webinar, “How to Start a $125K Per Month Cleaning Business From Scratch.” During this FREE training, Chris will share his proven secrets for starting your own 7-figure cleaning business in just one week. You don't want to miss this rare opportunity to learn from this multi-million-dollar cleaning business entrepreneur for free!

How to Start a Cleaning Business

Home cleaner carrying a bucket of supplies

Starting a cleaning service company doesn’t have to be hard. We've outlined the process for starting a successful cleaning business in nine steps:

  • Choose a target market.
  • Choose your specialty.
  • Create a cleaning business plan.
  • Fund your business.
  • Register your business.
  • Price your services.
  • Find clients.
  • Invest in advertising.
  • Hire a cleaning crew.

Let's start by discussing what cleaning company customers to serve.

You need to understand who your target clients are to run the business successfully. Do some market research to find out where they are located.

A house cleaning business will normally do cleaning jobs for more affluent homeowners, while an office cleaning company will be looking for new business owners. Both groups can benefit from finding prospective clients who are unhappy with their current provider.

Take some time to do market research about how to align your brand and company values with the target market. Then choose a cleaning business name .

Next, you’ll learn what cleaning company services to provide.

advantages of drawing up a business plan

Research different types of cleaners and establish what is right for you. Specialized services tend to do particularly well. We created a list of cleaning company types and what they offer. Consider starting some of these cleaning businesses:

  • Airbnb Cleaning Business
  • Home Cleaning Business
  • Carpet Cleaning Business
  • Pressure Washing Business
  • Laundromats

Offering a variety of services can help you reach more clients. Queen Bee Cleaning Services provides house cleaning (including Airbnb and move-out cleaning), janitorial services, carpet cleaning, and hospital-grade disinfectant services. Chris told us:

[su_quote] Recurring house cleaning is our bread and butter. Move-in and move-out services can have some surprises. Airbnb can be really profitable when you get it right. [/su_quote]

Next, you’ll learn what goes into a business and marketing plan for a local cleaning company.

You need a business plan to help guide your decision-making. It keeps you focused. The plan will help define your vision, target market, objectives, startup costs, and strategy to get potential clients.

A business plan is a living document that will help you secure financing and help you manage logistics better than other small business owners. Make sure you write one!

Try out our business plan templates and resources below as you learn how to start a cleaning business.

Establish a Location

Most cleaning businesses operate from home for the following reasons:

  • Home-based businesses have lower startup costs.
  • Equipment and supplies can be stored at home.
  • A room in the home can be converted into an office.
  • Work is performed on an external job site.

Chris runs his small business from home, and when we interviewed him two years ago, his business expenses for rent and utilities were only $750 per month. He even told us most of those expenses actually helped the business from an accounting standpoint.

However you plan to do your bookkeeping, don't forget to check the Municode Library to find the local ordinances about starting a home-based cleaning business.

Keep in mind that running a cleaning business where children and pets live can be dangerous. Cleaning materials can be toxic, and some are explosive if combined. The EPA offers guidance on handling household hazardous waste.

Templates and Resources

These business plan templates and resources will help you prepare to get residential and commercial cleaning jobs. Want to know the best part? They're all free!

  • UpFlip: Business Plan Template
  • Fit Small Business: One-Page Business Plan
  • U.S. Small Business Administration (SBA): Business Guide
  • UpFlip: How to Write a Business Plan
  • SBA: How to Write a Business Plan
  • UpFlip: Our cleaning business checklist is an easy way to make sure you do everything you need for any business.

Also, check out our interview with Mike regarding business plans. Mike offers lawn care services, but his advice applies to commercial cleaning services. Plus, his small business is one of the fastest-growing franchises in the country.

Create Standard Workflows

Chris has tons of resources to help you start your own cleaning business. Check them out in his free training course .

He emphasizes the importance of getting every facet of your process documented to create workflows. His clients appreciate the transparency he provides with his pricing. You can be confident in your endeavors if you seek to model your business after Queen Bee.

Get Cleaning Supplies and Equipment

Your cleaning supplies depend on the services you provide, but you can start by purchasing equipment like a vacuum cleaner, window cleaner, and a few microfiber towels.

For more information about what cleaning equipment you'll need for a maid service, check out our guide . It's effectively a cleaning business starter kit!

Chris even offers a hospital-grade disinfecting service , which requires specific supplies. He told us:

[su_quote] We use an electrostatic sprayer to apply the disinfectant. The sprayer ‘loads’ the mist with a positive charge, making the disinfectant stick to all surfaces, killing 99% of the pathogens. Our hospital-grade disinfectant is an EPA-certified product safe to use around children and pets and safe on all surfaces. [/su_quote]

Next, we’ll discuss whether you need a business loan when you start your local cleaning company.

Ever wonder why so many people get into the cleaning business? It has a low barrier to entry. The initial investment to start a home cleaning business can be one shopping trip to a home improvement store.

Funds to start your cleaning service can come from:

  • Personal funds: People commonly pull from their savings and paychecks.
  • Loan from family or friends: Sometimes friends and family are willing to help people start a business. At the very least, they might hire you to clean their homes.
  • Business partners: It's easier to get twice as much done if you have a business partner. They can be an active or a silent investor.
  • Government programs: Some people will qualify for Small Business Administration loans or other government grants.
  • Crowdfunding: If your business idea is something that can be scaled to sell all over the country, crowdfunding is an option.
  • Credit cards: Your business may need credit cards to pay for expenses. Each business purchase could earn some cash back and help build business credit. Like personal credit scores, business credit scores impact loan rates.
  • Home equity loan: Refinancing your home loan is a great way to get startup cash.
  • Rollover for business startups (ROBS): If you start an S-Corp or C-Corp, you can move your 401(k) from your employer to your new corporation and buy the company stock with the 401(k), giving your business an influx of cash. During operations, you can reinvest dividends into the 401(k) to increase the funds in it.

Check out our article about business funding . We cover 17 ways of funding a business to help you decide which practices are best for you.

Alternatively, the SBA offers free courses on financing options and funding programs . The Hartford published the pros and cons of using personal funds to start a business.

Don't forget to check out our lending partners .

Once you’ve got the money, it’s time to register your business and get your cleaning business license.

Once you have a business plan, you'll want to come up with a memorable name. Considering each of these aspects will help you beat out your competition:

  • Does it state what you do? If you wash windows, does the name or logo indicate you perform window washing? Don't be too specific, though, because businesses evolve.
  • Is it easy to remember? Potential customers will need to search your business name.
  • Does it indicate the location you serve? Major cities can be too big to serve in their entirety. Using local terms can narrow the audience and improve ranks on Google.
  • Does it communicate the brand message? Queen Bee Cleaning Services’ company logo is a picture of a bee along with the name of the company. Simple, right?

Queen Bee does a great job as a brand because it is the hive leader (best of the local residential cleaning businesses), but it doesn't clarify for potential customers where the service is, widening its potential customers.

Register a Dot Com

Top-down shot of a woman using a tablet to search for available domain names

Once you have a name idea, run it by your friends and family. Test it on Google Trends. Our business name generator connects you directly to NameCheap when you click on one of the business names. There, you can buy the domain name and other services.

Pro Tip: Aid your brainstorming even more with our ultimate list of cleaning business names .

Establish a Legal Structure and Register With the State

When you have your name, you'll want to choose a legal structure. Legal structures include sole proprietorships, limited liability companies, and corporations.

To establish a legal business structure, work with an attorney, accountant, tax specialist, or government official for the best results. Then you can register your business with the necessary state and local agencies.

Next, you'll want to get your business licenses.

Licenses, Permits, and Tax Forms

Regardless of the business structure, determine if your cleaning company requires a business license, permit, or a specific set of tax forms to operate legally. We researched each state to create our guide to cleaning business licenses . Alternatively, you can use the SBA tool to find out which business licenses you need.

Get Cleaning Services Insurance

A local business owner should purchase general liability insurance, especially if they serve commercial clients, which require it. General liability insurance covers property damage and bodily injury.

Check out our blog about how to get business insurance for more information. We recommend using Simply Business to find the best business insurance rates.

How to Start a Cleaning Business Franchise

A franchise consists of a franchisor company and a franchisee in a joint venture to sell the franchisor's products and services. In essence, a franchise enables you to enter the market with a ready-made cleaning company.

Many franchise opportunities exist in the cleaning industry. Well-known franchises are The Maids, ChemDry, and PuroClean. Learn more about buying a franchise .

At this point, you know how to set up proper licensing, but a successful business needs to provide consistent services and pricing.

Cleaners meeting with a new client in her home

A small business owner will need to establish how much to charge for cleaning services. Research reasonable prices to stay competitive while still making a profit.

There are three typical ways house cleaning prices are calculated by a house cleaner:

  • Hourly: $25 to $90 per hour, per cleaner
  • Flat fee : $100 to $800 weekly or biweekly for standard cleaning of a single-family home
  • Room rate: $100 for 1 bed/1 bath + $10 to $20 for each additional bedroom and bathroom
  • Per square foot: $0.05 to $0.10 per square foot

Learn more in our house cleaning pricing guide .

Next we’ll discuss how to get commercial cleaning contracts.

Building customer relationships is crucial for starting a cleaning business. Some of the best digital and traditional marketing techniques when you start a cleaning business include:

  • Market your business: Identify your target audience and the cleaning services they need. Then use social media, flyers, and local associations to promote your brand. You’ll also want a website to show potential customers the services you offer.
  • Get reviews: Client testimonials on social media or Google Business Profile help attract new customers. Make sure to ask for them and make them easy to provide.
  • Build a network: Local business and trade associations are great places for business networking and referral groups.
  • Use online marketplaces: Let people know about your services on marketplaces to help get low-cost leads.
  • Get referrals: Ask clients to refer their friends. Starting a cleaning company is easier when satisfied customers, friends, and family recommend your business to other people.
  • Offer discounts: First-time customer discounts often attract new clients. You can also provide subscription-based discounts for routine cleaning.
  • Optimize your website: Make sure your website directly answers customer searches.

Learn more about how to get clients for your cleaning business .

Chris reveals all these incredible tactics, plus his pricing structure, in his 7-Figure Cleaning Business Blueprint course. You get to see how Chris executes all the most important techniques from the course live.

It’s time to implement your marketing plan next.

Advertising and promotion marketing are important for starting any business, especially a cleaning service. In fact, marketing is one of Chris’s biggest expenses in his budget.

His marketing budget is an average of $4,212.50 per month. He spends primarily on Google Local Ads , but he also spends a portion on Yelp, Craigslist, and Facebook. He told us:

[su_quote] Craigslist ads are low-cost and have done really well. You should definitely include them [in the list of places you run ads]. [/su_quote]

Chris has become highly ranked on Google, Yelp, Nextdoor, Houzz, Thumbtack, HomeAdvisor, and Porch. Focusing on building your business presence on highly ranked websites helps increase your site's authority.

He shares his Facebook ad strategy in our master course . It's surprisingly simple but gets a return on ad spend of 16-41X.

You'll want to use a combination of:

  • Digital marketing: This includes email newsletters, social media, and search engine optimization. Neil Patel is a renowned authority in this area. Check out his website .
  • Printed materials: This includes business cards, flyers, brochures, T-shirts, and even car magnets. Canva is an excellent tool for designing your own business cards. And here's our guide for getting them cheap .
  • SMS marketing: Sending text messages is a highly successful digital marketing strategy.
  • Branding: Uniforms, vehicles, and customer service are all crucial aspects of marketing for residential cleaning businesses.

One of Chris's marketing strategies is putting door hangers on three houses in each direction after each cleaning. These fliers give first-time customers discounts. Many customers who took advantage of this sale were so impressed with the service they happily joined his subscription plans.

Pro Tip: Check out our article on how to get cleaning contracts .

As a business owner, you might have a goal for your house cleaning services to create jobs and make more profit. If you do, check out this next section.

Imagine what it would be like to have so many referrals and so much business that you can't handle it all yourself!

While many cleaning businesses are one-person operations, owners often find that it helps to have employees for practical and profit-based reasons. After all, you might want to take a vacation!

Before you hire employees, you must address the following:

  • Employer Identification Number (EIN): Get your business an EIN from the IRS. Apply for one online or call 800-829-4933.
  • Tax Filing and Withholding: The IRS publishes a handy guide for employers that is available here
  • Unemployment Insurance Tax: You will need to pay Unemployment Insurance Tax through the UI Program under the Social Security Tax for employers.
  • Federal Employment and Labor Laws: All employers must display workplace posters that are downloadable on the U.S. Department of Labor website.

Other requirements include:

  • Employment Eligibility Verification (Form I-9)
  • Reporting to your state's new hire program
  • Worker's compensation insurance
  • Disability insurance, as required by some states
  • Occupational Safety and Health Administration (OSHA) training

Compensating employees is probably going to be your most significant expense. It is for Chris. You can either pay employees an hourly rate or per task. Chris pays an hourly rate of about $19, but local businesses can choose which works best.

If you're a busy house cleaning company with lots of customers near each other, both you and the employees can benefit from performance-based pay.

Ready to Start Your Own Cleaning Business?

Now you have the tools and knowledge to embark on your path to success in the cleaning industry.

Remember, it's crucial to understand your target audience, choose the right type of cleaning services, and create a solid business plan. Proper funding, registration, and pricing strategies will lay a strong foundation for your business.

Once your business formation is complete, build a loyal client base through effective marketing and excellent service. Don’t forget to ask for reviews to ensure long-term success.

As your business grows, don't forget the importance of hiring and managing a reliable cleaning crew.

Whether you're dreaming of starting a small residential cleaning service or building a multi-million-dollar empire like Queen Bee Cleaning Services, the journey begins with a single step. Take the knowledge and insights gained from this guide and start your journey to entrepreneurial success in the cleaning industry today.

What's stopping you from starting a cleaning business?

advantages of drawing up a business plan

The 15 Best HR Outsourcing Companies (2024)

Which HR Tasks Can Be Outsourced?

  • HR Consulting
  • Benefits Administration
  • Time Tracking
  • Insurance Services
  • Performance Management
  • Payroll Administration
  • Bookkeeping
  • Client Management
  • Policy Compliance Management
  • Unemployment Claims
  • Policy Development
  • Staff Training and Coaching
  • Labor Law Compliance
  • Employee Termination
  • Audit and Wage-Claim Assistance
  • Talent Management

SaaS Providers

Business process outsourcing, single source outsourcing, shared services, professional employer organizations.

  • BambooHR - Primarily concerned with hiring, compensation, and analyzing performance. Includes payroll as an additional service.
  • Deputy - Scheduling, time tracking, and labor law compliance. Has a free edition.
  • Gusto - Gusto was PC Mag's 2021 Best HR software payroll selection, but they have software to help with other processes as well.

A white sketchpad and a black pen on a desk

What are the benefits of HR Outsourcing For Small Businesses?

  • Better compliance with federal, state, and local regulations.

Increased growth of the business

  • Potentially reduced cost of administrative services
  • Ability to offer better benefits.

Outsourced HR helps small businesses comply with regulations

Outsourced hr reduces the cost of administrative services.

A group of people at a desk planning on cost reductioin

  • Hire internal HR staff
  • Outsourced human resources

Ability to offer better benefits

IBM Institute of Business Value graph

The cons of HR outsourcing

Hr services do things their way, you might pay for hr tasks you don't need..

  • Outsourcing staff gives you less control of the hiring process

HR companies have consistently poor communication reviews

Questions to ask when talking to hr service companies.

A brown cork board with a torn white paper on top

  • Does your payroll service include time tracking apps to help collect employees' hours and reimbursable expenses?
  • Does your HR technology easily integrate with my current HR systems?
  • Is workers' compensation included in your full-service HR package?
  • What will I need to do to make sure your HR systems and HR department can handle my payroll in the future without me being actively involved?
  • If I have HR-related compliance requests, what process do we have to go through?

Outsourcing HR staff gives you less control of the hiring process

Reviewing hr outsourcing services.

  • Gathered a list of the 16 companies that have been reviewed by top-ranking blogs.
  • Reviewed each company's website and compared it to the 15 services typically offered by HR outsourcing companies (If they offer the service, they get a 100. If unsure, or no, they get a 0).
  • Compared the number of plans they offered with a maximum of 10, then multiplied by 10 get scores ranging from 10-100.
  • As long as the website did not have a major issue, they got an extra 100 points for their website. CPE HR (given a zero for broken links) and G&A Partners (80 because there wasn't additional information where I wanted it) were the only ones penalized.
  • Then I compared reviews on Capterra and Trust Pilot and took whichever had more reviews. I used the calculation, (# of reviews* stars given)/100=Score from 0-100. This step is for purpose of giving extra weight to ones with more reviews.
  • Multiplied average stars by 20 to get a score from zero to 100. This step was to reward the strength of reviews.
  • Added all scores up and divided by 19 to create a score that will range between 0 and 100.

The Best Small Business HR Outsourcing Companies & Services

A lady holding a white card

ADP is the top-ranked company

Hr tasks adp offers:, what makes adp the best hr outsourcing organization:, what is adp the best at.

ADP website and the services they offer

ADP Features, Pricing, and Reviews:

Paychex comes in at number 2, hr tasks paychex offers:, what makes paychex one of the best hr outsourcing organizations, what is paychex the best at.

Paychex website showing their services

Paychex Features, Pricing, and Reviews:

The third best hr outsourcing service is gusto, hr tasks gusto offers:, what makes gusto one of the best hr outsourcing organizations:, what is gusto the best at.

Gusto website and the services they offer

Gusto Features, Pricing, and Reviews:

Insperity takes 4th place, hr services insperity offers:, what is insperity the best at.

Insperity website and the services they offer

Insperity Features, Pricing, and Reviews:

Zenefits rounds out the top 5 hr service businesses, hr services zenefits offers:, what is zenefits the best at.

Zenefit website and the services they offer

Zenefit Features, Pricing, and Reviews:

  • Essentials: $10/mo/employee
  • Growth: $18/mo/employee
  • Zen: $27/mo/employee

The rest of the list

  • G&A Partners - With a score of 88.4, G&A Partners offers all the services as a PEO or mix and match. Lack of reviews on common review sites harmed their rating. If you work in construction or other safety fields they might be best. They also carry the liability for HR decisions, which is great for risk management.
  • CoAdvantage PEO - With a score of 88.4, CoAdvantage is another PEO that appears to offer all the services, but some were hinted at more than specifically covered. They also didn't have any ratings, but a nice referral program.
  • TriNet - TriNet Scored an 85 due to an average of 2.7 stars on 97 ratings, poor disclosure of whether they offer services separately, and only offering some types of insurance. One of the things I liked about TriNet is they claim that when the SSI cap is reached, you pay less. They don't charge more when wages go up though.
  • Oasis Advantage - At a score of 84.7, Oasis Advantage has the 8th best outsourcing services. They are a subsidiary of Paychex so I would just go with Paychex. Once again, ratings were missing and you have to request a quote.-
  • Engage PEO - At a score of 84.7, Engage is another PEO without ratings on common sites. They were middle of the pack when it comes to their options as they primarily offer PEO services with 6 optional benefit plans.
  • Workday - Workday scored an 80.3 with demerits due to lack of insurance, lack of clarity on whether they consult, and numerous reviews saying that people will not work for companies that use Workday. They came in 9th cause their overall ratings are a 4.5, but you have to take care of your employees. Trust Pilot Capterra
  • BambooHR - Bamboo is primarily focused on the hiring process and payments. That's why it received a score of 73.5. It has great reviews though.
  • Bambee - Bambee is a consultant to make sure you follow legal procedures. At $99/mo it is a reasonable price and has great reviews, but you can get this included in other packages. Best if you just want someone to consult with you so you can expand your skills. Their total score was 73.2
  • CPEhr - I honestly don't even want to give you their link because they annoyed me. They have no reviews, they have broken links, and places where there isn't a link that there should be. They scored a 68.4
  • Accenture HR - I feel like Accenture HR scored way lower than it should (36.1), but that's because it is specialized in analytics. If you want better data to manage your HR, use them. You'll need your team or another service though.

Upwork Freelancers

Upwork website for clients and freelancers

HR tasks they will take:

What makes hr freelancers great:, what are hr freelancers the best at, features, pricing, and reviews:.

advantages of drawing up a business plan

nice work https://binarychemist.com/

advantages of drawing up a business plan

My Name is PRETTY NGOMANE. A south African female. Aspiring to do farming. And finding a home away from home for the differently abled persons in their daily needs.

Become a business owner in less than 90 days

Start your 10-day free trial of the UpFlip Academy and learn how to start your own business from scratch.

Get business advice straight to your   Inbox 

advantages of drawing up a business plan

What Are the Benefits of Preparing a Business Plan?

  • Small Business
  • Business Planning & Strategy
  • Preparing Business Plans
  • ')" data-event="social share" data-info="Pinterest" aria-label="Share on Pinterest">
  • ')" data-event="social share" data-info="Reddit" aria-label="Share on Reddit">
  • ')" data-event="social share" data-info="Flipboard" aria-label="Share on Flipboard">

Difference Between Business Plan & Strategic Plan

What is a dehydrated business plan, what does a business plan consist of.

  • How to Create a New Business Plan
  • Examples of Liquor Store Business Plans

Running a business with detailed plans and clearly defined strategies will help you forecast your growth and deal with unforeseen business developments. A business plan is not just a document about your business; it is an effective business tool that comes with many benefits. Using any number of business plan templates or how-articles, like the ones provided by the U.S. Small Business Administration, will help you create a winning business plan.

Provides You With Direction

One of the main benefits of developing a business plan is that it provides your company with direction. The research and preparation that goes into developing the plan helps to broaden your understanding of your business, its operations and its industry. A business plan allows you to clearly compare the business’s expenses against its customer demand, available finances and competition. Understanding this information makes it easier for you to develop appropriate strategies to generate successful outcomes, making clarity an important benefit of your business plan.

Helps You Set Goals

Another advantage of business plan writing is that it helps you clearly identify the success and failure of your business strategies. The business plan provides a broad snapshot of the business’s details and often includes one- and five-year projections. By comparing your business's current figures, receipts and totals against those presented in the business plan, you can determine if your business has achieved or exceeded its goals.

Comparison of the business plan's current and previous marketing efforts can also help you to improve or refine your business’s best practices. This process of benchmarking is also quite beneficial because it allows you keep your business in line with the industry’s standards.

Helps You Secure Financing

Finding sources of funding is one of the most critical business plan topics in any plan. Along with savings and personal investments, business funding options can include loans, grants and lines of credit. When applying for outside funding, institutions and investors often require a business plan to accompany the loan application.

Even government grant and procurement opportunities require a business plan to be submitted with the application. In addition, a complete business plan includes an appendix which holds copies of supporting documents, such as tax returns, payroll information and bank statements. These addendum items are often the documents required by lending institutions during the lending process. The business plan provides a convenient and well-organized location for these supporting items

Help With Contracts

During your process of developing business relationships and completing contract negotiations, you may be required to show and prove your business ideas and forecasts to other businesses. Your business plan provides a clear display of your business’s missions, objectives and goals, both short- and long-term. The business plan can also assist you in placing executive positions within your business because it assists these individuals in ascertaining the viability and potential success of your business. Furthermore, the business plan helps you to clearly communicate your business’s missions and goals to your staff, as well as explain how those goals will be attained.

Basics of a Business Plan

In order for your business plan to be beneficial to your business, it must be thoroughly researched, thoughtfully written and well-organized. Additionally, the plan must be regularly updated. Entrepreneur magazine recommends that you analyze, review and update your business plan at least once each year. However, periodic monthly and quarterly reviews are just as effective.

  • Entrepreneur: Updating Your Business Plan

Writing professionally since 2004, Charmayne Smith focuses on corporate materials such as training manuals, business plans, grant applications and technical manuals. Smith's articles have appeared in the "Houston Chronicle" and on various websites, drawing on her extensive experience in corporate management and property/casualty insurance.

Related Articles

The importance of business plans, what is the difference between a marketing & business plan, define a business plan, key tools for planning finances, business plan vs. business strategy, why is it important to have a business plan, what does "abridged" mean on a business plan, why does a business need a business plan, the importance of a business plan, most popular.

  • 1 The Importance of Business Plans
  • 2 What Is the Difference Between a Marketing & Business Plan?
  • 3 Define a Business Plan
  • 4 Key Tools for Planning Finances

Logo

Empowering you to make good money decisions

An ASISA initiative

Search Results

advantages of drawing up a business plan

Planning for life

A good financial footing, settling down, your own small business, getting financial advice, estate planning.

Where can I get funding to start a business?

Should I use my own money to start a business?

How and why to draw up a business plan

How do i calculate how much money i need to start a business, how do i plan and manage my small business cash flow, how can i protect myself from my life partner’s business debt.

How can I manage financially on an irregular income?

How can I fill the employee benefits gap as a freelancer, contractor or small business owner?

How do i declare business income for tax, can my small business pay some of my personal expenses, what expenses can i deduct from my business, what is keyman insurance, does my business need keyman insurance, does my business need a buy-and-sell agreement, why should i not rely on my business to fund my retirement, why and how should i draw up a business plan.

Share on Facebook

Key takeaways

  • A business plan is a valuable tool in planning your business, and crucial when applying for funding.
  • A business plan should outline your mission, goals and how you plan to achieve them.
  • Your product or service description and how it solves a problem;
  • Your target market;
  • An analysis of the competition and your competitive advantage;
  • How you plan to finance the business;
  • The marketing plan; and
  • The risks and how you will mitigate them.
  • Enlist the services of a professional business consultant if you are stuck with documenting any part of it.
  • Review and update your business plan if anything changes, or at least annually.

If you’re starting a new venture, a business plan is a highly effective way to refine your thoughts.

advantages of drawing up a business plan

You will have to consider all aspects of the business including finance, marketing, operations and sales, and how these will work together to achieve your goals.

You will also need to set milestones to track your progress, and by identifying possible obstacles, you will be able to pro-actively address them. 

Your business plan can be one page or longer, depending on your needs. You can also prepare it as a presentation combined with a document providing more detail.

Benefits all round

Your business plan serves many purposes:

advantages of drawing up a business plan

  • A business plan will ensure that everyone working in your business is on the same page, working towards the same goals.
  • In future, when you recruit key people, it will help determine whether they’re a good fit for the business.

What to include

No two business plans are alike, but all business plans should include:

  • An executive summary with the key points in your business plan, including your mission. It may help to write this section last.

advantages of drawing up a business plan

  • Problem and solution – why there is a need for your product or service and what solution you will provide.
  • Market analysis – your target market and how it is segmented.
  • Competition – an analysis of your competitors and what competitive advantage you have.
  • Marketing strategy – how you plan to promote the business and generate sales.
  • Goals, milestones and key performance metrics – how you will monitor and track progress.
  • Financial projections – how the business will be funded together with projections including sales, cash flow and profits.

Mistakes to avoid

Be careful of becoming a slave to the business plan – it’s a tool and shouldn’t have a life of its own.

advantages of drawing up a business plan

Also, putting in a huge amount of effort only to find that your business plan isn’t being taken seriously can be demoralising.

Some common mistakes to avoid:

  • An incomplete plan . If you leave out important aspects, anyone who reads your plan will be left with questions.
  • Sloppy presentation . Make sure the contents page is perfect, the charts and tables have headings and are consistent. Proofread the documents or have it proofread to ensure there are no spelling mistakes or grammatical errors. A sloppy document will not be taken seriously.
  • Including too much detail, particularly if it’s technical. Keep your plan concise and rather append technical information that you refer to in the main body of the document.
  • Making unrealistic assumptions . Check your assumptions and provide sources as far as possible. Fact check all your information, as this can impact on your credibility.
  • There’s actually no plan . Presenting the market, opportunity and goals is wonderful but without listing the actions you will take and milestones you plan to achieve, you have no plan.
  • Stating there’s zero risk . No venture is risk free, so don’t make false statements about this. Rather mention the risks and discuss how you’ll minimise them.

Lean business plan

If you don’t need funding or you want to get a better understanding of your business before you apply for funding, draw up a shorter and simpler version.

advantages of drawing up a business plan

  • A business overview including a mission statement and description of the product or service provided;
  • Team members’ details, experience and intellectual property;
  • The target market and marketing plan;
  • Your business goals and success metrics; and
  • Finances – the sources of revenue and how profits will be generated.

This can be a good first step in defining the business. If you need funding though, you’ll need a more comprehensive business plan.

What could go wrong?

Writing a successful business plan isn’t always easy.  While you may be the driver of the business and know a lot about your product or service or an aspect of it, you may find yourself stuck when trying to document it all. Some challenges may include:

  • Just getting started;

advantages of drawing up a business plan

  • Identifying and understanding your target market;
  • Being realistic about business growth;
  • Making it interesting to read;
  • Creating a practical strategy; and
  • Proving that the idea is worthwhile.

As so much hinges on your business plan, it may be worth engaging a business consultant who can draft a professional document for you. It really is in your best interest to get it right from the beginning.  

A living document

Your business plan will be a constant reminder of your goals and will keep you focussed. But even the most beautifully written business plan cannot ensure business success.

advantages of drawing up a business plan

If market conditions change, or there are other circumstances which you never anticipated, ring in the changes.

The ability to be flexible and adapt your plan is crucial in ensuring success. Revise and amend it at least annually.

Download a template for a one page business plan here (provided by SME advisers and developers Edge Growth).

Download a template for a business plan here (provided by SME advisers and developers Edge Growth).

advantages of drawing up a business plan

Related topics

Related hot topics.

10 tips for a bullet-proof business plan

Cash flow is the key to keeping small businesses afloat

team table smiling scaled

What are the advantages of business plans?

Whether you’re set to refresh your business or explore new ways to grow, make sure you first understand the advantages of a business plan.

It’s the key to several ‘end goals’, as well as supporting financial planning or offering clarity. That also includes all aspects of your business strategy, from marketing and finance to operations, products, services, and people - or even gain a competitive advantage.

In this piece, we’ll take a look at what a business plan could bring to your operations, what to expect, and how Time Finance can help you take the next step. 

Our finance solutions can alleviate some of the issues that arise from poor cash flow by injecting working capital back into your business, providing cash flow financing around your key investments or aiding growth.

To find out more, get in touch with our dedicated team today.

What is a business plan?

At a glance.

In a nutshell, a business plan is a document that plots out a company's goals and how it intends to achieve them. For both start-ups and well-established businesses, these plans can be used to evidence your ideas, helping to win over investment, funding - or simply give other people on your team a better understanding over a set timeframe.

Writing a business plan can also be useful for staying on track and not losing sight of your goals, as well as laying out objectives for:

  • Overall structure
  • New employees
  • New or ongoing products and services
  • Promotion 

And much more.

What’s the purpose of a business plan?

When it comes to expanding into new markets, product launches, or general growth plans, a business plan can help you map its viability - especially when used as part of a wider business strategy . This is crucial when providing insights into your next steps, resources, timescales, and whether a financial solution could move things along.

Ed Rimmer, CEO of Time Finance, said: “For existing businesses, providing forecasts and business plans are typically a very key part of securing finance - for example, an invoice finance facility . 

“It helps us understand future growth plans, obstacles or opportunities..”

Time Finance has many years of experience structuring and securing invoice and asset-based solutions , as well as business loans for several different clients, helping them achieve their goals. 

Our flexible solutions not only meet your needs now, but can also scale to meet demand over time, so your business and services can develop naturally.

The advantages of a business plan 

Businesses should update their business plans annually to guide growth, through explicit objectives for hiring new employees, establishing a structure, supplying products and services, and marketing activities. 

With this, you’re more likely to enjoy the benefits outlined in the following sections.

Help with funding

Whether you’re seeking alternative business finance to help support cash flow or want to explore asset-based lending, which uses your existing assets to help secure vital funds, a business plan is essential. 

It can paint a better picture for your finance broker or advisor while answering questions about profitability and revenue generation. This helps us tailor a better solution to suit you.

Structuring support

A business plan provides structure and defines business management objectives. Usually, a plan can become a useful ‘guide stick’ when it comes to keeping things on track, helping you set realistic targets and milestones over the 12 months. 

As your business grows and changes, regular consultations can also help you manage and measure your priorities - suggesting new areas of focus where required. 

Clear and concise planning

A business plan can bring clarity to the decision-making process regarding key aspects of the business - like investments, resourcing, and more. 

When it comes to identifying critical business milestones, a business plan makes it easier to spot what needs changing. This is especially useful for continual or seasonal forecasting .  

Bringing in new people

Businesses are nothing without their people. 

One of the main benefits of business plans is that they can help ‘define’ benefits and help you better understand how new personnel can help you secure long-term goals. 

As such, these are all key to bringing in new people who understand your vision.

To ensure the right talent is brought on board at the right time, a business plan plays an important role.

Support marketing efforts

A business plan can help consolidate a marketing roadmap, which defines your target markets, ideal customers, and how you will promote your offering.

From here, you know exactly what - and who - you are investing in, helping you better place and promote your business. 

Why should you choose Time Finance?

By implementing these best practices, businesses can harness the advantages of business plans, helping them make informed decisions for growth, plot milestones more accurately and protect their cash flow over time.

While a business plan is not always needed for our experts, it can help us get a better understanding of what you need. It can also give us a more thorough picture of which finance solutions will work best for your end goals, so it's certainly worth spending some time on.

But no matter what industry your business operates in, Time Finance has an impressive range of products to help you navigate changing markets, tap into new avenues, or get the most out of your existing assets. 

This includes invoice finance options and asset finance solutions - which have all helped our clients achieve their goals.

To find out more about how Time Finance can support you and your business with leading financial solutions, get in touch .

We use cookies to enhance your user experience on our website. By clicking accept you are agreeing to our use of cookies. Learn more about our cookies here.

advantages of drawing up a business plan

Business Agility Pty Ltd

Your partners in business and leadership success.

Call: +61 448 101 507

  • Oct 24, 2020

The Top 5 Benefits of Having a Business Plan

Whether you’re starting a small business or exploring ways to expand an existing business, a Business Plan is an important tool to help guide your decisions. An effective Business Plan is a roadmap to success, providing clarity on all aspects of your business, from marketing and finance, through to operations, products, services, people and how you will be better than your competitors.

advantages of drawing up a business plan

The purpose of a business plan is to help articulate a strategy for starting or changing your business. It defines how you will achieve your most important business objectives. A good Business Plan should help you to sleep at night if you are a business owner.

For existing businesses, a business plan should be updated annually as a way to guide growth and navigate expansion into new markets. Your plan should include explicit objectives for hiring new employees, what structure you will have, what products and services your business will provide, how you will promote them and how you will finance business operations.

If you are considering starting a business, a Business Plan can help you to check the viability of a business before investing too much time or money in it. It also provides insight on steps to be taken, resources required for achieving your business goals and a timeline of anticipated results.

The Benefits of Having a Business Plan:​

1. Increased Clarity

A business plan can bring clarity to the decision-making process regarding key aspects of the business such as capital investments, leases, resourcing, etc. You can't do everything. A good Business Plan will help you identify business critical priorities and milestones to focus on.

2. Creation of a Marketing Roadmap

Marketing is an important aspect of a business plan. It helps to define your target market(s), target customers and how you will promote and place your product / service to these markets / customers.

3. Support for Funding

Whether you’re seeking credit from a bank or capital from investors, a business plan that answers questions about profitability and revenue generation is often required.

4. Helps to Secure Talent

For a business to succeed, attracting talented workers and partners is vital. Part of a business plan’s purpose is to help bring in the right talent, at the right time. Staff want to understand the vision, how the business will achieve its goals, and how they can contribute to this in their own roles.

5. Provides Structure

A business plan provides structure and defines business management objectives. It becomes a reference tool to keep the business on track with sales targets and operational milestones. When used properly and consulted regularly, it can help measure and manage your priority areas of focus.

Download your Business Plan template for $49.99 + GST here.

Many people engage us as business coaches to take a weekly / fortnightly step-by-step approach to the development of their own Business Plans, with the added benefit of our expertise and guidance throughout the process. In this way, you learn the essential aspects of running a successful business, while crafting your very own business plan over 8-12 weeks.

If you would like more information about how to create an effective Business Plan for your business, with our guidance, then please don't hesitate to contact Business Agility. We are business coaches who are former CEOs and MDs. We know what it takes to be successful in business.

advantages of drawing up a business plan

Recent Posts

Round 2 of the Boosting Female Founders Initiative is Now Open

The Top 5 Benefits of Having a Marketing Plan

Lottery West COVID-19 Relief Fund: 'Strengthening & Adapting Organisations' Grant Now Open!

advantages of drawing up a business plan

advantages of drawing up a business plan

Please note that the contents of this site are not being updated since October 1, 2023.

As of October 2, 2023, Acclr Business Information Services (Info entrepreneurs) will be delivered directly by CED’s Business Information Services . To find out more about CCMM’s other Acclr services, please visit this page: Acclr – Business Services | CCMM.

Info-Entrepreneurs

  • Advice and guidance
  • Starting a business
  • Personalized Guidance
  • Seminars on Business Opportunities
  • Certification of Export Documents
  • Market Studies
  • Export Financing
  • International Trade Training
  • Connection with the World Bank
  • Trade Missions
  • SME Passport
  • Export Resources
  • Import Resources
  • Networking Activities
  • Networking Training
  • CCMM Member Directory
  • Market Studies and Research Services
  • Business plan
  • Registration and legal structures
  • Guidance for Drafting a Business Plan
  • Help in Seeking Funding
  • News, Grants, and Competitions
  • Funding Meet-and-Greet
  • Resources for Drafting a Business Plan
  • Regulations / Permits / Licences
  • Personalized Market Information Research
  • Personalized Meetings with Guest Experts
  • Government Subsidies and Programs
  • Training for your employees
  • Employee Management
  • Interconnection Program
  • Wage Subsidies
  • French courses
  • Merchant-Student Pairing
  • Intellectual property
  • Marketing and sales
  • Operations management
  • Hiring and managing human resources
  • Growth and innovation
  • Importing and exporting
  • Calls for tenders
  • Support organizations
  • Sale / Closure / Bankruptcy
  • Business intelligence
  • Business lists and profiles
  • Market data
  • Market trends
  • Business advice
  • Business plan management consultant
  • Legal structures consultant
  • Accounting consultant
  • Legal consultant
  • Export certification
  • Resource centre

Budgeting and business planning

Once your business is operational, it's essential to plan and tightly manage its financial performance. Creating a budgeting process is the most effective way to keep your business - and its finances - on track.

This guide outlines the advantages of business planning and budgeting and explains how to go about it. It suggests action points to help you manage your business' financial position more effectively and ensure your plans are practical.

Planning for business success

The benefits, what to include in your annual plan, a typical business planning cycle, budgets and business planning, benefits of a business budget, creating a budget, key steps in drawing up a budget, what your budget should cover, what your budget will need to include, use your budget to measure performance, review your budget regularly.

When you're running a business, it's easy to get bogged down in day-to-day problems and forget the bigger picture. However, successful businesses invest time to create and manage budgets, prepare and review business plans and regularly monitor finance and performance.

Structured planning can make all the difference to the growth of your business. It will enable you to concentrate resources on improving profits, reducing costs and increasing returns on investment.

In fact, even without a formal process, many businesses carry out the majority of the activities associated with business planning, such as thinking about growth areas, competitors, cashflow and profit.

Converting this into a cohesive process to manage your business' development doesn't have to be difficult or time-consuming. The most important thing is that plans are made, they are dynamic and are communicated to everyone involved. See the page in this guide on what to include in your annual plan.

The key benefit of business planning is that it allows you to create a focus for the direction of your business and provides targets that will help your business grow. It will also give you the opportunity to stand back and review your performance and the factors affecting your business. Business planning can give you:

  • a greater ability to make continuous improvements and anticipate problems
  • sound financial information on which to base decisions
  • improved clarity and focus
  • a greater confidence in your decision-making

The main aim of your annual business plan is to set out the strategy and action plan for your business. This should include a clear financial picture of where you stand - and expect to stand - over the coming year. Your annual business plan should include:

  • an outline of changes that you want to make to your business
  • potential changes to your market, customers and competition
  • your objectives and goals for the year
  • your key performance indicators
  • any issues or problems
  • any operational changes
  • information about your management and people
  • your financial performance and forecasts
  • details of investment in the business

Business planning is most effective when it's an ongoing process. This allows you to act quickly where necessary, rather than simply reacting to events after they've happened.

  • Review your current performance against last year/current year targets.
  • Work out your opportunities and threats.
  • Analyse your successes and failures during the previous year.
  • Look at your key objectives for the coming year and change or re-establish your longer-term planning.
  • Identify and refine the resource implications of your review and build a budget.
  • Define the new financial year's profit-and-loss and balance-sheet targets.
  • Conclude the plan.
  • Review it regularly - for example, on a monthly basis - by monitoring performance, reviewing progress and achieving objectives.
  • Go back to 1.

New small business owners may run their businesses in a relaxed way and may not see the need to budget. However, if you are planning for your business' future, you will need to fund your plans. Budgeting is the most effective way to control your cashflow, allowing you to invest in new opportunities at the appropriate time.

If your business is growing, you may not always be able to be hands-on with every part of it. You may have to split your budget up between different areas such as sales, production, marketing etc. You'll find that money starts to move in many different directions through your organisation - budgets are a vital tool in ensuring that you stay in control of expenditure.

A budget is a plan to:

  • control your finances
  • ensure you can continue to fund your current commitments
  • enable you to make confident financial decisions and meet your objectives
  • ensure you have enough money for your future projects

It outlines what you will spend your money on and how that spending will be financed. However, it is not a forecast. A forecast is a prediction of the future whereas a budget is a planned outcome of the future - defined by your plan that your business wants to achieve.

There are a number of benefits of drawing up a business budget, including being better able to:

  • manage your money effectively
  • allocate appropriate resources to projects
  • monitor performance
  • meet your objectives
  • improve decision-making
  • identify problems before they occur - such as the need to raise finance or cash flow difficulties
  • plan for the future
  • increase staff motivation

Creating, monitoring and managing a budget is key to business success. It should help you allocate resources where they are needed, so that your business remains profitable and successful. It need not be complicated. You simply need to work out what you are likely to earn and spend in the budget period.

Begin by asking these questions:

  • What are the projected sales for the budget period? Be realistic - if you overestimate, it will cause you problems in the future.
  • What are the direct costs of sales – i.e. costs of materials, components or subcontractors to make the product or supply the service?
  • What are the fixed costs or overheads?

You should break down the fixed costs and overheads by type, e.g.:

  • cost of premises, including rent, municipal taxes and service charges
  • staff costs –e.g. wages, benefits, Québec Parental Insurance Plan (QPIP) premiums, contributions to the Québec Pension Plan (QPP) and to the financing of the Commission des normes du travail (CNT)
  • utilities – e.g. heating, lighting, telephone
  • printing, postage and stationery
  • vehicle expenses
  • equipment costs
  • advertising and promotion
  • travel and subsistence expenses
  • legal and professional costs, including insurance

Your business may have different types of expenses, and you may need to divide up the budget by department. Don't forget to add in how much you need to pay yourself, and include an allowance for tax.

Your business plan should help in establishing projected sales, cost of sales, fixed costs and overheads, so it would be worthwhile preparing this first. See the page in this guide on planning for business success.

Once you've got figures for income and expenditure, you can work out how much money you're making. You can look at costs and work out ways to reduce them. You can see if you are likely to have cash flow problems, giving yourself time to do something about them.

When you've made a budget, you should stick to it as far as possible, but review and revise it as needed. Successful businesses often have a rolling budget, so that they are continually budgeting, e.g. for a year in advance.

There are a number of key steps you should follow to make sure your budgets and plans are as realistic and useful as possible.

Make time for budgeting

If you invest some time in creating a comprehensive and realistic budget, it will be easier to manage and ultimately more effective.

Use last year's figures - but only as a guide

Collect historical information on sales and costs if they are available - these could give you a good indication of likely sales and costs. But it's also essential to consider what your sales plans are, how your sales resources will be used and any changes in the competitive environment.

Create realistic budgets

Use historical information, your business plan and any changes in operations or priorities to budget for overheads and other fixed costs.

It's useful to work out the relationship between variable costs and sales and then use your sales forecast to project variable costs. For example, if your unit costs reduce by 10 per cent for each additional 20 per cent of sales, how much will your unit costs decrease if you have a 33 per cent rise in sales?

Make sure your budgets contain enough information for you to easily monitor the key drivers of your business such as sales, costs and working capital. Accounting software can help you manage your accounts.

Involve the right people

It's best to ask staff with financial responsibilities to provide you with estimates of figures for your budget - for example, sales targets, production costs or specific project control. If you balance their estimates against your own, you will achieve a more realistic budget. This involvement will also give them greater commitment to meeting the budget.

Decide how many budgets you really need. Many small businesses have one overall operating budget which sets out how much money is needed to run the business over the coming period - usually a year. As your business grows, your total operating budget is likely to be made up of several individual budgets such as your marketing or sales budgets.

Projected cash flow  -your cash budget projects your future cash position on a month-by-month basis. Budgeting in this way is vital for small businesses as it can pinpoint any difficulties you might be having. It should be reviewed at least monthly.

Costs  - typically, your business will have three kinds of costs:

  • fixed costs - items such as rent, salaries and financing costs
  • variable costs - including raw materials and overtime
  • one-off capital costs - purchases of computer equipment or premises, for example

To forecast your costs, it can help to look at last year's records and contact your suppliers for quotes.

Revenues  - sales or revenue forecasts are typically based on a combination of your sales history and how effective you expect your future efforts to be.

Using your sales and expenditure forecasts, you can prepare projected profits for the next 12 months. This will enable you to analyse your margins and other key ratios such as your return on investment.

If you base your budget on your business plan, you will be creating a financial action plan. This can serve several useful functions, particularly if you review your budgets regularly as part of your annual planning cycle.

Your budget can serve as:

  • an indicator of the costs and revenues linked to each of your activities
  • a way of providing information and supporting management decisions throughout the year
  • a means of monitoring and controlling your business, particularly if you analyse the differences between your actual and budgeted income

Benchmarking performance

Comparing your budget year on year can be an excellent way of benchmarking your business' performance - you can compare your projected figures, for example, with previous years to measure your performance.

You can also compare your figures for projected margins and growth with those of other companies in the same sector, or across different parts of your business.

Key performance indicators

To boost your business' performance you need to understand and monitor the key "drivers" of your business - a driver is something that has a major impact on your business. There are many factors affecting every business' performance, so it is vital to focus on a handful of these and monitor them carefully.

The three key drivers for most businesses are:

  • working capital

Any trends towards cash flow problems or falling profitability will show up in these figures when measured against your budgets and forecasts. They can help you spot problems early on if they are calculated on a consistent basis.

To use your budgets effectively, you will need to review and revise them frequently. This is particularly true if your business is growing and you are planning to move into new areas.

Using up to date budgets enables you to be flexible and also lets you manage your cash flow and identify what needs to be achieved in the next budgeting period.

Two main areas to consider

Your actual income  - each month compare your actual income with your sales budget, by:

  • analysing the reasons for any shortfall - for example lower sales volumes, flat markets, underperforming products
  • considering the reasons for a particularly high turnover - for example whether your targets were too low
  • comparing the timing of your income with your projections and checking that they fit

Analysing these variations will help you to set future budgets more accurately and also allow you to take action where needed.

Your actual expenditure  - regularly review your actual expenditure against your budget. This will help you to predict future costs with better reliability. You should:

  • look at how your fixed costs differed from your budget
  • check that your variable costs were in line with your budget - normally variable costs adjust in line with your sales volume
  • analyse any reasons for changes in the relationship between costs and turnover
  • analyse any differences in the timing of your expenditure, for example by checking suppliers' payment terms

Original document, Budgeting and business planning , © Crown copyright 2009 Source: Business Link UK (now GOV.UK/Business ) Adapted for Québec by Info entrepreneurs

Our information is provided free of charge and is intended to be helpful to a large range of UK-based (gov.uk/business) and Québec-based (infoentrepreneurs.org) businesses. Because of its general nature the information cannot be taken as comprehensive and should never be used as a substitute for legal or professional advice. We cannot guarantee that the information applies to the individual circumstances of your business. Despite our best efforts it is possible that some information may be out of date.

  • The websites operators cannot take any responsibility for the consequences of errors or omissions.
  • You should always follow the links to more detailed information from the relevant government department or agency.
  • Any reliance you place on our information or linked to on other websites will be at your own risk. You should consider seeking the advice of independent advisors, and should always check your decisions against your normal business methods and best practice in your field of business.
  • The websites operators, their agents and employees, are not liable for any losses or damages arising from your use of our websites, other than in respect of death or personal injury caused by their negligence or in respect of fraud.

Need help? Our qualified agents can help you. Contact us!

  • Create my account

advantages of drawing up a business plan

The address of this page is: https://www.infoentrepreneurs.org/en/guides/budgeting-and-business-planning/

INFO ENTREPRENEURS

380 St-Antoine West Suite W204 (mezzanine level) Montréal, Québec, Canada H2Y 3X7

www.infoentrepreneurs.org

514-496-4636 | 888-576-4444 [email protected]

advantages of drawing up a business plan

Consent to Cookies

This website uses necessary cookies to ensure its proper functioning and security. Other cookies and optional technologies make it possible to facilitate, improve or personalize your navigation on our website. If you click "Refuse", some portions of our website may not function properly. Learn more about our privacy policy.

Click on one of the two buttons to access the content you wish to view.

advantages of drawing up a business plan

BENEFITS OF A BUSINESS PLAN: Benefits and Drawbacks

  • by Folakemi Adegbaju
  • August 15, 2023
  • No comments
  • 7 minute read

benefits of a business plan drawbacks entrepreneur writing

Table of Contents Hide

#1. you gain an understanding of your market, #2. evaluate risk, #3. you can get outside funding, #4. you can check the financial numbers, #5. you focus your strategies, #6. it will help you steer your business as you start and grow, #1. a great business plan requires great implementation practices, #2. a business plan can turn out to be inaccurate, #3. it creates an environment of false certainty, benefits of a business plan for an entrepreneur, final thoughts, what is the main purpose of a business plan, what needs to be in a business plan, who reads a business plan and what information are they looking for.

A good business plan can be said to be a road map to success, outlining all parts of your company, from marketing and finance to operations, products, services, and people, as well as how you will outperform your competitor. However, does the thought of writing your first business plan seem intimidating? Well, you’re not alone. Many entrepreneurs deal with this crucial phase of starting a business. This article will outline and explain the benefits and drawbacks of writing a business plan for you as an entrepreneur.

Are you ready? Enjoy the ride with us.

Benefits of a Business Plan

A business plan can assist you in determining the profitability of a  business before putting too much time or money into it if you are thinking of starting one. It also includes information on the procedures to take, the resources needed to achieve your business objectives, and a schedule for potential results. The style and content of a business plan can vary significantly. 

You’ll be reactive rather than proactive if you don’t have a business plan, and growth will be much more difficult. More importantly, the lack of a business plan would discourage potential investors and creditors, making it incredibly difficult to raise funds. Finally, if you don’t have a business plan, you won’t have anything to fall back on if things don’t go your way, so even a minor problem might quickly escalate.

If you’re starting a business, there are a couple of things that come first, including; registration of your business name, getting a tax ID, choosing a business structure, applying for the necessary permissions and licenses, and so on. For example, let’s say you need to start up a jewelry business. These and more are what you’d have to consider. However, just to take the stress off your plate, we already have a comprehensive jewelry business plan with a 3-year financial projection in place. All you’d need at this point is a business name.

So, what can a good business plan help you achieve?  Here are six benefits of writing a business plan:

Knowing how to conduct a market analysis is one of the benefits of writing a business plan. You examine your industry, target market, and rivals when conducting this research. You can spot patterns in decisions that may benefit or hurt your business.

One of the benefits of writing a business plan is the ability to learn from other people’s mistakes. Learning from the mistakes of others takes less time and money than learning from your own mistakes. The better prepared you are to cope with the many components of your market, the easier it will be to deal with problems later on.

A business plan can also assist you in evaluating the risks involved with your business. To avoid failure, you must first identify and manage risks. A business plan will require you to consider the risks you’re taking and decide whether they’re worth taking or if you should change your plan.

A business plan is required to obtain funds from lenders or investors. Lenders want to know they’re putting their money into a business that will stay and flourish. You must present a business plan to lenders that outlines the steps you will follow as a business owner. It’s a good idea to structure your ideas, even if your lenders are friends and relatives.

A business plan aids others in comprehending your passion and determining where their money will be spent. Clearly communicating your ideas to investors can help you demonstrate that you can get your business off the ground and grow it. You’ll also need to know how to construct a business plan’s exit strategy. A successful business is useless to your investors if they can’t get their money back at some point.

Financial estimates for your organization are included in business plans. While the forecasts aren’t a look into the future, they do reflect a prediction of your financial situation. It will be critical to plan for expenses in order to keep operations running smoothly. Cash flow estimates allow you to understand if your objectives are realistic. They also point out patterns that could be detrimental to your company. The quicker you recognize potential problems, the faster you can fix them.

Make sure your estimates are in line with your expectations. Have you set aside sufficient funds to complete the job at hand? Check your figures again to make sure you’re ready to handle your finances in the future.

The entrepreneur in you is itching to get started right away. A business plan, on the other hand, can assist you in determining the ideal methods for your business. Work on all the crucial aspects before venturing into ownership.

This benefit of a business plan also aids in work prioritization. You can determine which difficulties to handle first by examining the big vision of your business. A business plan might also assist you in deciding which activities to tackle later.

Consider a business plan to be a GPS to get your business up and running. Another one of the benefits of writing a good business plan is that it will walk you through each step of beginning and running a business. Your business plan will serve as a road map for how to establish, run, and grow your new business. It’s a technique to think about and outline all of the important aspects of how your business will operate.

Drawbacks of a Business Plan

A business plan has its own benefits and drawbacks, one of which is the stress involved in putting together all you need. So, as an entrepreneur, you’d always need to talk to a professional to make it easier for you to write a business plan.

And guess what? We have a team here at BusinessYield Consult to provide you with the necessary information you’d need starting out.

Meanwhile, here are other drawbacks you need to consider in writing a business plan:

Many businesses make a plan that sits on a bookshelf or on a storage device since it was created for one specific reason: to raise funds. A great business plan should become an inherent part of the organization once it has allocated particular responsibilities to specific job categories and laid the groundwork for data collection and metric production. Unfortunately, over the years, bad implementation has ruined many outstanding business plans.

Involving the “proper” people in the business planning process is critical. These are the people who will have an impact on the long-term plan of your business. Most business owners believe they can avoid these drawbacks by writing their own business plan, but this takes skill in a variety of sectors to be effective. For the greatest possible business plan, a diverse variety of perspectives and input is normally required, because otherwise, blind spots of inaccuracy can lead to plenty of unforeseen effects.

This basically means you’d need professionals like BusinessYield Consult for more optimal results.

It’s crucial to remember that a business plan is nothing more than a forecast based on current plans and data. We live in an ever-changing world where nothing is guaranteed. If a business plan has too much predictability, it may be unable to adjust to the changes that the world forces upon it. It might cause a business to miss out on an intriguing new opportunity because they are so focused on achieving one particular objective.

The benefits and drawbacks of a business plan illustrate that it is an important component of a good business but a thorough plan may not be required in all situations. The purpose of a business plan should be apparent to assess the current in order to make the best prediction of future results.  You’ll be able to boost your chances of success if you can plan for disruptions as well. For example, if you want to start a car detailing business and you feel there might be a disruption or crisis, in the long run, a good business plan can help you fix any issues. But either way, you may also need to speak with professionals to help you out.

Every entrepreneur needs a business to build and develop their business. A business plan comes with a lot of benefits for you as an entrepreneur.

Here are some of the benefits of a business plan for an entrepreneur:

  • Provides guidance for opening new or expanding existing business /adaptability
  • It acts as a management tool for the business/monitoring tool / identifies strengths
  • It’s a tool for evaluating business performance
  • It lays the strategy to be used in marketing the products
  • Facilitates acquisition of loans from financial institutions and other financiers

The benefits of a business plan are more than the drawbacks and you can see why it is necessary for you to get a business plan as soon as possible. It is compulsory for you to know the benefits and drawbacks of a business plan so as to know how to fix things right in your business plan as an entrepreneur.

The main purpose of a Business Plan is to evaluate, characterize, and analyze a business opportunity or an existing business, as well as to assess its technological, economic, and financial viability.

An executive overview, products and services, marketing strategy and analysis, financial planning, and a budget should all be included in a good business plan.

It’s the lenders. A financial institution will want to examine a well-written business plan before approving a business loan. This assists the lender in determining whether the business objectives are reasonable and whether you’ve accurately forecasted various expenses and potential earnings.

Related Articles

  • 4 MAIN PARTS OF A BUSINESS PLAN: 4 Necessary Business Plan Components
  • Advantages of a Business Plan: Definition and What It Entails

' src=

Folakemi Adegbaju

She is a passionate copywriter and a good listener

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Best Cheap Car Insurance for New Drivers in the UK

Scottish widows life insurance reviews.

We noticed you're visiting from Netherlands. We've updated our prices to Euro for your shopping convenience. Use Pound sterling instead. Dismiss

  • Privacy Policy

Advantages and Disadvantages of Business Plan

Every business starts with a business plan because starting a business without a plan is like going on a chilled winter night without warm clothes and since starting a business involves money and where there is money one cannot take chances of going ahead without a plan. In order to understand it better let’s look at some of the advantages and disadvantages of business plan –

Advantages of Business Plan

  • The first and foremost advantage of business plans is that once the company has business plan ready then only it can take it forward and present it to prospective investors who in turn if they like the plan will finance the business plan and we all know how important capital is for starting a business because without capital no business can start.
  • Another benefit of business plans is that it helps the promoter in getting things right because if plans are in mind only then it can lead to confusion as mind has dozen of ideas but once the plan in mind is put into paper in the form of business plan than it gets more clarity and the owner can concentrate on one plan only rather than thinking about dozen of plans.
  • Another advantage of the business plans is that it helps in prioritizing the work and also putting the right people for right job which in turn increases the possibility of the business plan being a success as the owner can keep track of milestones of business as envisaged in the business plan.

Disadvantages of Business Plan

  • The biggest disadvantage of the business plans is that it involves time and expenses and as far as small businesses are concerned they neither have money and expertise to make a proper business plan which in turn can lead to business suffering more rather than gaining from the business plan.
  • Another drawback of it is that due to the presence of business plans the owners may lose flexibility and become rigid also they will keep sticking to the business plan even if it detrimental to the interests of the business. So for example, if business plan has envisaged 10000 units of production but due to change in consumer taste sales of only 5000 units can be done and if the owner sticks to the business plan then it will be a loss making the decision. Hence a good business plan is one which has the scope of flexibility in it.
  • Another disadvantage of business plans is that though plans are good to see and hear but execution of those plans has many problems and uncertainties right from procurement of finance, production related uncertainty, marketing and selling challenges and many other problems and it is next to impossible that plans are carried out in exact fashion as set out by the top management or the owner of the company.
  • Company Profiles and Job Related
  • Finance Abbreviations and Management
  • Finance Questions and Answers
  • Finance Words and Examples
  • Financial Markets
  • Financial Products and Marketing
  • Multiple Choice Questions and Offbeat

Lets Learn Finance

You might be using an unsupported or outdated browser. To get the best possible experience please use the latest version of Chrome, Firefox, Safari, or Microsoft Edge to view this website.

How To Start A Business In 11 Steps (2024 Guide)

Katherine Haan

Updated: Apr 7, 2024, 1:44pm

How To Start A Business In 11 Steps (2024 Guide)

Table of Contents

Before you begin: get in the right mindset, 1. determine your business concept, 2. research your competitors and market, 3. create your business plan, 4. choose your business structure, 5. register your business and get licenses, 6. get your finances in order, 7. fund your business, 8. apply for business insurance, 9. get the right business tools, 10. market your business, 11. scale your business, what are the best states to start a business, bottom line, frequently asked questions (faqs).

Starting a business is one of the most exciting and rewarding experiences you can have. But where do you begin? There are several ways to approach creating a business, along with many important considerations. To help take the guesswork out of the process and improve your chances of success, follow our comprehensive guide on how to start a business. We’ll walk you through each step of the process, from defining your business idea to registering, launching and growing your business.

Featured Partners

ZenBusiness

$0 + State Fees

Varies By State & Package

ZenBusiness

On ZenBusiness' Website

LegalZoom

On LegalZoom's Website

Northwest Registered Agent

$39 + State Fees

Northwest Registered Agent

On Northwest Registered Agent's Website

The public often hears about overnight successes because they make for a great headline. However, it’s rarely that simple—they don’t see the years of dreaming, building and positioning before a big public launch. For this reason, remember to focus on your business journey and don’t measure your success against someone else’s.

Consistency Is Key

New business owners tend to feed off their motivation initially but get frustrated when that motivation wanes. This is why it’s essential to create habits and follow routines that power you through when motivation goes away.

Take the Next Step

Some business owners dive in headfirst without looking and make things up as they go along. Then, there are business owners who stay stuck in analysis paralysis and never start. Perhaps you’re a mixture of the two—and that’s right where you need to be. The best way to accomplish any business or personal goal is to write out every possible step it takes to achieve the goal. Then, order those steps by what needs to happen first. Some steps may take minutes while others take a long time. The point is to always take the next step.

Most business advice tells you to monetize what you love, but it misses two other very important elements: it needs to be profitable and something you’re good at. For example, you may love music, but how viable is your business idea if you’re not a great singer or songwriter? Maybe you love making soap and want to open a soap shop in your small town that already has three close by—it won’t be easy to corner the market when you’re creating the same product as other nearby stores.

If you don’t have a firm idea of what your business will entail, ask yourself the following questions:

  • What do you love to do?
  • What do you hate to do?
  • Can you think of something that would make those things easier?
  • What are you good at?
  • What do others come to you for advice about?
  • If you were given ten minutes to give a five-minute speech on any topic, what would it be?
  • What’s something you’ve always wanted to do, but lacked resources for?

These questions can lead you to an idea for your business. If you already have an idea, they might help you expand it. Once you have your idea, measure it against whether you’re good at it and if it’s profitable.

Your business idea also doesn’t have to be the next Scrub Daddy or Squatty Potty. Instead, you can take an existing product and improve upon it. You can also sell a digital product so there’s little overhead.

What Kind of Business Should You Start?

Before you choose the type of business to start, there are some key things to consider:

  • What type of funding do you have?
  • How much time do you have to invest in your business?
  • Do you prefer to work from home or at an office or workshop?
  • What interests and passions do you have?
  • Can you sell information (such as a course), rather than a product?
  • What skills or expertise do you have?
  • How fast do you need to scale your business?
  • What kind of support do you have to start your business?
  • Are you partnering with someone else?
  • Does the franchise model make more sense to you?

Consider Popular Business Ideas

Not sure what business to start? Consider one of these popular business ideas:

  • Start a Franchise
  • Start a Blog
  • Start an Online Store
  • Start a Dropshipping Business
  • Start a Cleaning Business
  • Start a Bookkeeping Business
  • Start a Clothing Business
  • Start a Landscaping Business
  • Start a Consulting Business
  • Start a Photography Business
  • Start a Vending Machine Business

Most entrepreneurs spend more time on their products than they do getting to know the competition. If you ever apply for outside funding, the potential lender or partner wants to know: what sets you (or your business idea) apart? If market analysis indicates your product or service is saturated in your area, see if you can think of a different approach. Take housekeeping, for example—rather than general cleaning services, you might specialize in homes with pets or focus on garage cleanups.

Primary Research

The first stage of any competition study is primary research, which entails obtaining data directly from potential customers rather than basing your conclusions on past data. You can use questionnaires, surveys and interviews to learn what consumers want. Surveying friends and family isn’t recommended unless they’re your target market. People who say they’d buy something and people who do are very different. The last thing you want is to take so much stock in what they say, create the product and flop when you try to sell it because all of the people who said they’d buy it don’t because the product isn’t something they’d buy.

Secondary Research

Utilize existing sources of information, such as census data, to gather information when you do secondary research. The current data may be studied, compiled and analyzed in various ways that are appropriate for your needs but it may not be as detailed as primary research.

Conduct a SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities and threats. Conducting a SWOT analysis allows you to look at the facts about how your product or idea might perform if taken to market, and it can also help you make decisions about the direction of your idea. Your business idea might have some weaknesses that you hadn’t considered or there may be some opportunities to improve on a competitor’s product.

advantages of drawing up a business plan

Asking pertinent questions during a SWOT analysis can help you identify and address weaknesses before they tank your new business.

A business plan is a dynamic document that serves as a roadmap for establishing a new business. This document makes it simple for potential investors, financial institutions and company management to understand and absorb. Even if you intend to self-finance, a business plan can help you flesh out your idea and spot potential problems. When writing a well-rounded business plan, include the following sections:

  • Executive summary: The executive summary should be the first item in the business plan, but it should be written last. It describes the proposed new business and highlights the goals of the company and the methods to achieve them.
  • Company description: The company description covers what problems your product or service solves and why your business or idea is best. For example, maybe your background is in molecular engineering, and you’ve used that background to create a new type of athletic wear—you have the proper credentials to make the best material.
  • Market analysis: This section of the business plan analyzes how well a company is positioned against its competitors. The market analysis should include target market, segmentation analysis, market size, growth rate, trends and a competitive environment assessment.
  • Organization and structure: Write about the type of business organization you expect, what risk management strategies you propose and who will staff the management team. What are their qualifications? Will your business be a single-member limited liability company (LLC) or a corporation ?
  • Mission and goals: This section should contain a brief mission statement and detail what the business wishes to accomplish and the steps to get there. These goals should be SMART (specific, measurable, action-orientated, realistic and time-bound).
  • Products or services: This section describes how your business will operate. It includes what products you’ll offer to consumers at the beginning of the business, how they compare to existing competitors, how much your products cost, who will be responsible for creating the products, how you’ll source materials and how much they cost to make.
  • Background summary: This portion of the business plan is the most time-consuming to write. Compile and summarize any data, articles and research studies on trends that could positively and negatively affect your business or industry.
  • Marketing plan: The marketing plan identifies the characteristics of your product or service, summarizes the SWOT analysis and analyzes competitors. It also discusses how you’ll promote your business, how much money will be spent on marketing and how long the campaign is expected to last.
  • Financial plan: The financial plan is perhaps the core of the business plan because, without money, the business will not move forward. Include a proposed budget in your financial plan along with projected financial statements, such as an income statement, a balance sheet and a statement of cash flows. Usually, five years of projected financial statements are acceptable. This section is also where you should include your funding request if you’re looking for outside funding.

Learn more: Download our free simple business plan template .

Come Up With an Exit Strategy

An exit strategy is important for any business that is seeking funding because it outlines how you’ll sell the company or transfer ownership if you decide to retire or move on to other projects. An exit strategy also allows you to get the most value out of your business when it’s time to sell. There are a few different options for exiting a business, and the best option for you depends on your goals and circumstances.

The most common exit strategies are:

  • Selling the business to another party
  • Passing the business down to family members
  • Liquidating the business assets
  • Closing the doors and walking away

Develop a Scalable Business Model

As your small business grows, it’s important to have a scalable business model so that you can accommodate additional customers without incurring additional costs. A scalable business model is one that can be replicated easily to serve more customers without a significant increase in expenses.

Some common scalable business models are:

  • Subscription-based businesses
  • Businesses that sell digital products
  • Franchise businesses
  • Network marketing businesses

Start Planning for Taxes

One of the most important things to do when starting a small business is to start planning for taxes. Taxes can be complex, and there are several different types of taxes you may be liable for, including income tax, self-employment tax, sales tax and property tax. Depending on the type of business you’re operating, you may also be required to pay other taxes, such as payroll tax or unemployment tax.

Start A Limited Liability Company Online Today with ZenBusiness

Click to get started.

When structuring your business, it’s essential to consider how each structure impacts the amount of taxes you owe, daily operations and whether your personal assets are at risk.

An LLC limits your personal liability for business debts. LLCs can be owned by one or more people or companies and must include a registered agent . These owners are referred to as members.

  • LLCs offer liability protection for the owners
  • They’re one of the easiest business entities to set up
  • You can have a single-member LLC
  • You may be required to file additional paperwork with your state on a regular basis
  • LLCs can’t issue stock
  • You’ll need to pay annual filing fees to your state

Limited Liability Partnership (LLP)

An LLP is similar to an LLC but is typically used for licensed business professionals such as an attorney or accountant. These arrangements require a partnership agreement.

  • Partners have limited liability for the debts and actions of the LLP
  • LLPs are easy to form and don’t require much paperwork
  • There’s no limit to the number of partners in an LLP
  • Partners are required to actively take part in the business
  • LLPs can’t issue stock
  • All partners are personally liable for any malpractice claims against the business

Sole Proprietorship

If you start a solo business, you might consider a sole proprietorship . The company and the owner, for legal and tax purposes, are considered the same. The business owner assumes liability for the business. So, if the business fails, the owner is personally and financially responsible for all business debts.

  • Sole proprietorships are easy to form
  • There’s no need to file additional paperwork with your state
  • You’re in complete control of the business
  • You’re personally liable for all business debts
  • It can be difficult to raise money for a sole proprietorship
  • The business may have a limited lifespan

Corporation

A corporation limits your personal liability for business debts just as an LLC does. A corporation can be taxed as a C corporation (C-corp) or an S corporation (S-corp). S-corp status offers pass-through taxation to small corporations that meet certain IRS requirements. Larger companies and startups hoping to attract venture capital are usually taxed as C-corps.

  • Corporations offer liability protection for the owners
  • The life span of a corporation is not limited
  • A corporation can have an unlimited number of shareholders
  • Corporations are subject to double taxation
  • They’re more expensive and complicated to set up than other business structures
  • The shareholders may have limited liability

Before you decide on a business structure, discuss your situation with a small business accountant and possibly an attorney, as each business type has different tax treatments that could affect your bottom line.

Helpful Resources

  • How To Set Up an LLC in 7 Steps
  • How To Start a Sole Proprietorship
  • How To Start a Corporation
  • How To Start a Nonprofit
  • How To Start a 501(c)(3)

There are several legal issues to address when starting a business after choosing the business structure. The following is a good checklist of items to consider when establishing your business:

Choose Your Business Name

Make it memorable but not too difficult. Choose the same domain name, if available, to establish your internet presence. A business name cannot be the same as another registered company in your state, nor can it infringe on another trademark or service mark that is already registered with the United States Patent and Trademark Office (USPTO).

Business Name vs. DBA

There are business names, and then there are fictitious business names known as “Doing Business As” or DBA. You may need to file a DBA if you’re operating under a name that’s different from the legal name of your business. For example, “Mike’s Bike Shop” is doing business as “Mike’s Bikes.” The legal name of the business is “Mike’s Bike Shop,” and “Mike’s Bikes” is the DBA.

You may need to file a DBA with your state, county or city government offices. The benefits of a DBA include:

  • It can help you open a business bank account under your business name
  • A DBA can be used as a “trade name” to brand your products or services
  • A DBA can be used to get a business license

Register Your Business and Obtain an EIN

You’ll officially create a corporation, LLC or other business entity by filing forms with your state’s business agency―usually the Secretary of State. As part of this process, you’ll need to choose a registered agent to accept legal documents on behalf of your business. You’ll also pay a filing fee. The state will send you a certificate that you can use to apply for licenses, a tax identification number (TIN) and business bank accounts.

Next, apply for an employer identification number (EIN) . All businesses, other than sole proprietorships with no employees, must have a federal employer identification number. Submit your application to the IRS and you’ll typically receive your number in minutes.

Get Appropriate Licenses and Permits

Legal requirements are determined by your industry and jurisdiction. Most businesses need a mixture of local, state and federal licenses to operate. Check with your local government office (and even an attorney) for licensing information tailored to your area.

  • Best LLC Services
  • How To Register a Business Name
  • How To Register a DBA
  • How To Get an EIN for an LLC
  • How To Get a Business License

Start an LLC Online Today With ZenBusiness

Click on the state below to get started.

Open a Business Bank Account

Keep your business and personal finances separate. Here’s how to choose a business checking account —and why separate business accounts are essential. When you open a business bank account, you’ll need to provide your business name and your business tax identification number (EIN). This business bank account can be used for your business transactions, such as paying suppliers or invoicing customers. Most times, a bank will require a separate business bank account to issue a business loan or line of credit.

Hire a Bookkeeper or Get Accounting Software

If you sell a product, you need an inventory function in your accounting software to manage and track inventory. The software should have ledger and journal entries and the ability to generate financial statements.

Some software programs double as bookkeeping tools. These often include features such as check writing and managing receivables and payables. You can also use this software to track your income and expenses, generate invoices, run reports and calculate taxes.

There are many bookkeeping services available that can do all of this for you, and more. These services can be accessed online from any computer or mobile device and often include features such as bank reconciliation and invoicing. Check out the best accounting software for small business, or see if you want to handle the bookkeeping yourself.

Determine Your Break-Even Point

Before you fund your business, you must get an idea of your startup costs. To determine these, make a list of all the physical supplies you need, estimate the cost of any professional services you will require, determine the price of any licenses or permits required to operate and calculate the cost of office space or other real estate. Add in the costs of payroll and benefits, if applicable.

Businesses can take years to turn a profit, so it’s better to overestimate the startup costs and have too much money than too little. Many experts recommend having enough cash on hand to cover six months of operating expenses.

When you know how much you need to get started with your business, you need to know the point at which your business makes money. This figure is your break-even point.

In contrast, the contribution margin = total sales revenue – cost to make product

For example, let’s say you’re starting a small business that sells miniature birdhouses for fairy gardens. You have determined that it will cost you $500 in startup costs. Your variable costs are $0.40 per birdhouse produced, and you sell them for $1.50 each.

Let’s write these out so it’s easy to follow:

This means that you need to sell at least 456 units just to cover your costs. If you can sell more than 456 units in your first month, you will make a profit.

  • The Best Business Checking Accounts
  • The Best Accounting Software for Small Business
  • How To Open a Bank Account

There are many different ways to fund your business—some require considerable effort, while others are easier to obtain. Two categories of funding exist: internal and external.

Internal funding includes:

  • Personal savings
  • Credit cards
  • Funds from friends and family

If you finance the business with your own funds or with credit cards, you have to pay the debt on the credit cards and you’ve lost a chunk of your wealth if the business fails. By allowing your family members or friends to invest in your business, you are risking hard feelings and strained relationships if the company goes under. Business owners who want to minimize these risks may consider external funding.

External funding includes:

  • Small business loans
  • Small business grants
  • Angel investors
  • Venture capital
  • Crowdfunding

Small businesses may have to use a combination of several sources of capital. Consider how much money is needed, how long it will take before the company can repay it and how risk-tolerant you are. No matter which source you use, plan for profit. It’s far better to take home six figures than make seven figures and only keep $80,000 of it.

Funding ideas include:

  • Invoice factoring: With invoice factoring , you can sell your unpaid invoices to a third party at a discount.
  • Business lines of credit: Apply for a business line of credit , which is similar to a personal line of credit. The credit limit and interest rate will be based on your business’s revenue, credit score and financial history.
  • Equipment financing: If you need to purchase expensive equipment for your business, you can finance it with a loan or lease.
  • Small Business Administration (SBA) microloans: Microloans are up to $50,000 loans that can be used for working capital, inventory or supplies and machinery or equipment.
  • Grants: The federal government offers grants for businesses that promote innovation, export growth or are located in historically disadvantaged areas. You can also find grants through local and regional organizations.
  • Crowdfunding: With crowdfunding , you can raise money from a large group of people by soliciting donations or selling equity in your company.

Choose the right funding source for your business by considering the amount of money you need, the time frame for repayment and your tolerance for risk.

  • Best Small Business Loans
  • Best Startup Business Loans
  • Best Business Loans for Bad Credit
  • Business Loan Calculator
  • Average Business Loan Rates
  • How To Get a Business Loan

You need to have insurance for your business , even if it’s a home-based business or you don’t have any employees. The type of insurance you need depends on your business model and what risks you face. You might need more than one type of policy, and you might need additional coverage as your business grows. In most states, workers’ compensation insurance is required by law if you have employees.

Work With an Agent To Get Insured

An insurance agent can help determine what coverages are appropriate for your business and find policies from insurers that offer the best rates. An independent insurance agent represents several different insurers, so they can shop around for the best rates and coverage options.

Basic Types of Business Insurance Coverage

  • Liability insurance protects your business against third-party claims of bodily injury, property damage and personal injury such as defamation or false advertising.
  • Property insurance covers the physical assets of your business, including your office space, equipment and inventory.
  • Business interruption insurance pays for the loss of income if your business is forced to close temporarily due to a covered event such as a natural disaster.
  • Product liability insurance protects against claims that your products caused bodily injury or property damage.
  • Employee practices liability insurance covers claims from employees alleging discrimination, sexual harassment or other wrongful termination.
  • Workers’ compensation insurance covers medical expenses and income replacement for employees who are injured on the job.
  • Best Small Business Insurance
  • Best Commercial Auto Insurance
  • How To Get Product Liability Insurance
  • Your Guide to General Liability Insurance
  • 13 Types of Small Business Insurance

Business tools can help make your life easier and make your business run more smoothly. The right tools can help you save time, automate tasks and make better decisions.

Consider the following tools in your arsenal:

  • Accounting software : Track your business income and expenses, prepare financial statements and file taxes. Examples include QuickBooks and FreshBooks.
  • Customer relationship management (CRM) software : This will help you manage your customer relationships, track sales and marketing data and automate tasks like customer service and follow-ups. Examples include Zoho CRM and monday.com.
  • Project management software : Plan, execute and track projects. It can also be used to manage employee tasks and allocate resources. Examples include Airtable and ClickUp.
  • Credit card processor : This will allow you to accept credit card payments from customers. Examples include Stripe and PayPal.
  • Point of sale (POS) : A system that allows you to process customer payments. Some accounting software and CRM software have POS features built-in. Examples include Clover and Lightspeed.
  • Virtual private network (VPN) : Provides a secure, private connection between your computer and the internet. This is important for businesses that handle sensitive data. Examples include NordVPN and ExpressVPN.
  • Merchant services : When customers make a purchase, the money is deposited into your business account. You can also use merchant services to set up recurring billing or subscription payments. Examples include Square and Stripe.
  • Email hosting : This allows you to create a professional email address with your own domain name. Examples include G Suite and Microsoft Office 365.

Many business owners spend so much money creating their products that there isn’t a marketing budget by the time they’ve launched. Alternatively, they’ve spent so much time developing the product that marketing is an afterthought.

Create a Website

Even if you’re a brick-and-mortar business, a web presence is essential. Creating a website doesn’t take long, either—you can have one done in as little as a weekend. You can make a standard informational website or an e-commerce site where you sell products online. If you sell products or services offline, include a page on your site where customers can find your locations and hours. Other pages to add include an “About Us” page, product or service pages, frequently asked questions (FAQs), a blog and contact information.

Optimize Your Site for SEO

After getting a website or e-commerce store, focus on optimizing it for search engines (SEO). This way, when a potential customer searches for specific keywords for your products, the search engine can point them to your site. SEO is a long-term strategy, so don’t expect a ton of traffic from search engines initially—even if you’re using all the right keywords.

Create Relevant Content

Provide quality digital content on your site that makes it easy for customers to find the correct answers to their questions. Content marketing ideas include videos, customer testimonials, blog posts and demos. Consider content marketing one of the most critical tasks on your daily to-do list. This is used in conjunction with posting on social media.

Get Listed in Online Directories

Customers use online directories like Yelp, Google My Business and Facebook to find local businesses. Some city halls and chambers of commerce have business directories too. Include your business in as many relevant directories as possible. You can also create listings for your business on specific directories that focus on your industry.

Develop a Social Media Strategy

Your potential customers are using social media every day—you need to be there too. Post content that’s interesting and relevant to your audience. Use social media to drive traffic back to your website where customers can learn more about what you do and buy your products or services.

You don’t necessarily need to be on every social media platform available. However, you should have a presence on Facebook and Instagram because they offer e-commerce features that allow you to sell directly from your social media accounts. Both of these platforms have free ad training to help you market your business.

  • Best Website Builders
  • How To Make a Website for Your Business
  • The Best E-Commerce Platforms
  • Best Blogging Platforms
  • Best Web Hosting Services

To scale your business, you need to grow your customer base and revenue. This can be done by expanding your marketing efforts, improving your product or service, collaborating with other creators or adding new products or services that complement what you already offer.

Think about ways you can automate or outsource certain tasks so you can focus on scaling the business. For example, if social media marketing is taking up too much of your time, consider using a platform such as Hootsuite to help you manage your accounts more efficiently. You can also consider outsourcing the time-consumer completely.

You can also use technology to automate certain business processes, including accounting, email marketing and lead generation. Doing this will give you more time to focus on other aspects of your business.

When scaling your business, it’s important to keep an eye on your finances and make sure you’re still profitable. If you’re not making enough money to cover your costs, you need to either reduce your expenses or find ways to increase your revenue.

Build a Team

As your business grows, you’ll need to delegate tasks and put together a team of people who can help you run the day-to-day operations. This might include hiring additional staff, contractors or freelancers.

Resources for building a team include:

  • Hiring platforms: To find the right candidates, hiring platforms, such as Indeed and Glassdoor, can help you post job descriptions, screen résumés and conduct video interviews.
  • Job boards: Job boards such as Craigslist and Indeed allow you to post open positions for free.
  • Social media: You can also use social media platforms such as LinkedIn and Facebook to find potential employees.
  • Freelance platforms: Using Upwork, Freelancer and Fiverr can help you find talented freelancers for one-time or short-term projects. You can also outsource certain tasks, such as customer service, social media marketing or bookkeeping.

You might also consider partnering with other businesses in your industry. For example, if you’re a wedding planner, you could partner with a florist, photographer, catering company or venue. This way, you can offer your customers a one-stop shop for all their wedding needs. Another example is an e-commerce store that partners with a fulfillment center. This type of partnership can help you save money on shipping and storage costs, and it can also help you get your products to your customers faster.

To find potential partnerships, search for businesses in your industry that complement what you do. For example, if you’re a web designer, you could partner with a digital marketing agency.

You can also search for businesses that serve the same target market as you but offer different products or services. For example, if you sell women’s clothing, you could partner with a jewelry store or a hair salon.

  • Best Recruiting Software
  • How To Hire Employees
  • Where To Post Jobs
  • Best Applicant Tracking Systems

To rank the best states to start a business in 2024, Forbes Advisor analyzed 18 key metrics across five categories to determine which states are the best and worst to start a business in. Our ranking takes into consideration factors that impact businesses and their ability to succeed, such as business costs, business climate, economy, workforce and financial accessibility in each state. Check out the full report .

Starting a small business takes time, effort and perseverance. But if you’re willing to put in the work, it can be a great way to achieve your dreams and goals. Be sure to do your research, create a solid business plan and pivot along the way. Once you’re operational, don’t forget to stay focused and organized so you can continue to grow your business.

How do I start a small business with no money?

There are several funding sources for brand-new businesses and most require a business plan to secure it. These include the SBA , private grants, angel investors, crowdfunding and venture capital.

What is the best business structure?

The best business structure for your business will depend entirely on what kind of company you form, your industry and what you want to accomplish. But any successful business structure will be one that will help your company set realistic goals and follow through on set tasks.

Do I need a business credit card?

You don’t need one, but a business credit card can be helpful for new small businesses. It allows you to start building business credit, which can help you down the road when you need to take out a loan or line of credit. Additionally, business credit cards often come with rewards and perks that can save you money on business expenses.

Do I need a special license or permit to start a small business?

The answer to this question will depend on the type of business you want to start and where you’re located. Some businesses, such as restaurants, will require a special permit or license to operate. Others, such as home daycare providers, may need to register with the state.

How much does it cost to create a business?

The cost of starting a business will vary depending on the size and type of company you want to create. For example, a home-based business will be less expensive to start than a brick-and-mortar store. Additionally, the cost of starting a business will increase if you need to rent or buy commercial space, hire employees or purchase inventory. You could potentially get started for free by dropshipping or selling digital goods.

How do I get a loan for a new business?

The best way to get a loan for a new business is to approach banks or other financial institutions and provide them with a business plan and your financial history. You can also look into government-backed loans, such as those offered by the SBA. Startups may also be able to get loans from alternative lenders, including online platforms such as Kiva.

Do I need a business degree to start a business?

No, you don’t need a business degree to start a business. However, acquiring a degree in business or a related field can provide you with the understanding and ability to run an effective company. Additionally, you may want to consider taking some business courses if you don’t have a degree to learn more about starting and running a business. You can find these online and at your local Small Business Administration office.

What are some easy businesses to start?

One of the easiest businesses to start also has the lowest overhead: selling digital goods. This can include items such as e-books, online courses, audio files or software. If you have expertise in a particular area or niche, this is a great option for you. Dropshipping is also a great option because you don’t have to keep inventory. You could also buy wholesale products or create your own. Once you create your product, you can sell it through your own website or third-party platforms such as Amazon or Etsy.

What is the most profitable type of business?

There is no one answer to this question because the most profitable type of business will vary depending on a number of factors, such as your industry, location, target market and business model. However, some businesses tend to be more profitable than others, such as luxury goods, high-end services, business-to-business companies and subscription-based businesses. If you’re not sure what type of business to start, consider your strengths and interests, as well as the needs of your target market, to help you choose a profitable business idea.

  • Best Registered Agent Services
  • Best Trademark Registration Services
  • Top LegalZoom Competitors
  • Best Business Loans
  • Best Business Plan Software
  • ZenBusiness Review
  • LegalZoom LLC Review
  • Northwest Registered Agent Review
  • Rocket Lawyer Review
  • Inc. Authority Review
  • Rocket Lawyer vs. LegalZoom
  • Bizee Review (Formerly Incfile)
  • Swyft Filings Review
  • Harbor Compliance Review
  • Sole Proprietorship vs. LLC
  • LLC vs. Corporation
  • LLC vs. S Corp
  • LLP vs. LLC
  • DBA vs. LLC
  • LegalZoom vs. Incfile
  • LegalZoom vs. ZenBusiness
  • LegalZoom vs. Rocket Lawyer
  • ZenBusiness vs. Incfile
  • How to Set Up an LLC
  • How to Get a Business License
  • LLC Operating Agreement Template
  • 501(c)(3) Application Guide
  • What is a Business License?
  • What is an LLC?
  • What is an S Corp?
  • What is a C Corp?
  • What is a DBA?
  • What is a Sole Proprietorship?
  • What is a Registered Agent?
  • How to Dissolve an LLC
  • How to File a DBA
  • What Are Articles Of Incorporation?
  • Types Of Business Ownership

Next Up In Business

  • Best Online Legal Services
  • How To Write A Business Plan
  • How To Start A Candle Business
  • Starting An S-Corp
  • LLC Vs. C-Corp
  • How Much Does It Cost To Start An LLC?
  • How To Start An Online Boutique
  • Most Recession-Proof Businesses In 2024

How To Start A Print On Demand Business In 2024

How To Start A Print On Demand Business In 2024

Katherine Haan

HR For Small Businesses: The Ultimate Guide

Anna Baluch

How One Company Is Using AI To Transform Manufacturing

Rae Hartley Beck

Not-For-Profit Vs. Nonprofit: What’s The Difference?

Natalie Cusson

How To Develop an SEO Strategy in 2024

Jennifer Simonson

How To Make Money On Social Media in 2024

Katherine Haan is a small business owner with nearly two decades of experience helping other business owners increase their incomes.

  • Start free trial

Start selling with Shopify today

Start your free trial with Shopify today—then use these resources to guide you through every step of the process.

advantages of drawing up a business plan

Free Business Plan Template for Small Businesses (2024)

Use this free business plan template to write your business plan quickly and efficiently.

A stack of books against a gradient background

A good business plan is essential to successfully starting your business —  and the easiest way to simplify the work of writing a business plan is to start with a business plan template.

You’re already investing time and energy in refining your business model and planning your launch—there’s no need to reinvent the wheel when it comes to writing a business plan. Instead, to help build a complete and effective plan, lean on time-tested structures created by other  entrepreneurs and startups. 

Ahead, learn what it takes to create a solid business plan and download Shopify's free business plan template to get started on your dream today. 

What this free business plan template includes

  • Executive summary
  • Company overview
  • Products or services offered
  • Market analysis
  • Marketing plan
  • Logistics and operations plan
  • Financial plan

This business plan outline is designed to ensure you’re thinking through all of the important facets of starting a new business. It’s intended to help new business owners and entrepreneurs consider the full scope of running a business and identify functional areas they may not have considered or where they may need to level up their skills as they grow.

That said, it may not include the specific details or structure preferred by a potential investor or lender. If your goal with a business plan is to secure funding , check with your target organizations—typically banks or investors—to see if they have business plan templates you can follow to maximize your chances of success.

Our free business plan template includes seven key elements typically found in the traditional business plan format:

1. Executive summary

This is a one-page summary of your whole plan, typically written after the rest of the plan is completed. The description section of your executive summary will also cover your management team, business objectives and strategy, and other background information about the brand. 

2. Company overview

This section of your business plan will answer two fundamental questions: “Who are you?” and “What do you plan to do?” Answering these questions clarifies why your company exists, what sets it apart from others, and why it’s a good investment opportunity. This section will detail the reasons for your business’s existence, its goals, and its guiding principles.

3. Products or services offered

What you sell and the most important features of your products or services. It also includes any plans for intellectual property, like patent filings or copyright. If you do market research for new product lines, it will show up in this section of your business plan.

4. Market analysis

This section includes everything from estimated market size to your target markets and competitive advantage. It’ll include a competitive analysis of your industry to address competitors’ strengths and weaknesses. Market research is an important part of ensuring you have a viable idea.

5. Marketing plan

How you intend to get the word out about your business, and what strategic decisions you’ve made about things like your pricing strategy. It also covers potential customers’ demographics, your sales plan, and your metrics and milestones for success.

6. Logistics and operations plan

Everything that needs to happen to turn your raw materials into products and get them into the hands of your customers.

7. Financial plan

It’s important to include a look at your financial projections, including both revenue and expense projections. This section includes templates for three key financial statements: an income statement, a balance sheet, and a cash-flow statement . You can also include whether or not you need a business loan and how much you’ll need.

Business plan examples

What do financial projections look like on paper? How do you write an executive summary? What should your company description include?  Business plan examples  can help answer some of these questions and transform your business idea into an actionable plan.

Professional business plan example

Inside our template, we’ve filled out a sample business plan featuring a fictional ecommerce business . 

The sample is set up to help you get a sense of each section and understand how they apply to the planning and evaluation stages of a business plan. If you’re looking for funding, this example won’t be a complete or formal look at business plans, but it will give you a great place to start and notes about where to expand.

Example text in a business plan company overview section

Lean business plan example

A lean business plan format is a shortened version of your more detailed business plan. It’s helpful when modifying your plan for a specific audience, like investors or new hires. 

Also known as a one-page business plan, it includes only the most important, need-to-know information, such as:

  • Company description
  • Key members of your team
  • Customer segments

💡 Tip: For a step-by-step guide to creating a lean business plan (including a sample business plan), read our guide on how to create a lean business plan .

Example text in a business plan's marketing plan section

Benefits of writing a solid business plan

It’s tempting to dive right into execution when you’re excited about a new business or side project, but taking the time to write a thorough business plan and get your thoughts on paper allows you to do a number of beneficial things:

  • Test the viability of your business idea. Whether you’ve got one business idea or many, business plans can make an idea more tangible, helping you see if it’s truly viable and ensure you’ve found a target market. 
  • Plan for your next phase. Whether your goal is to start a new business or scale an existing business to the next level, a business plan can help you understand what needs to happen and identify gaps to address.
  • Clarify marketing strategy, goals, and tactics. Writing a business plan can show you the actionable next steps to take on a big, abstract idea. It can also help you narrow your strategy and identify clear-cut tactics that will support it.
  • Scope the necessary work. Without a concrete plan, cost overruns and delays are all but certain. A business plan can help you see the full scope of work to be done and adjust your investment of time and money accordingly.
  • Hire and build partnerships. When you need buy-in from potential employees and business partners, especially in the early stages of your business, a clearly written business plan is one of the best tools at your disposal. A business plan provides a refined look at your goals for the business, letting partners judge for themselves whether or not they agree with your vision.
  • Secure funds. Seeking financing for your business—whether from venture capital, financial institutions, or Shopify Capital —is one of the most common reasons to create a business plan.

Why you should you use a template for a business plan

A business plan can be as informal or formal as your situation calls for, but even if you’re a fan of the back-of-the-napkin approach to planning, there are some key benefits to starting your plan from an existing outline or simple business plan template.

No blank-page paralysis

A blank page can be intimidating to even the most seasoned writers. Using an established business planning process and template can help you get past the inertia of starting your business plan, and it allows you to skip the work of building an outline from scratch. You can always adjust a template to suit your needs.

Guidance on what to include in each section

If you’ve never sat through a business class, you might never have created a SWOT analysis or financial projections. Templates that offer guidance—in plain language—about how to fill in each section can help you navigate sometimes-daunting business jargon and create a complete and effective plan.

Knowing you’ve considered every section

In some cases, you may not need to complete every section of a startup business plan template, but its initial structure shows you you’re choosing to omit a section as opposed to forgetting to include it in the first place.

Tips for creating a successful business plan

There are some high-level strategic guidelines beyond the advice included in this free business plan template that can help you write an effective, complete plan while minimizing busywork.

Understand the audience for your plan

If you’re writing a business plan for yourself in order to get clarity on your ideas and your industry as a whole, you may not need to include the same level of detail or polish you would with a business plan you want to send to potential investors. Knowing who will read your plan will help you decide how much time to spend on it.

Know your goals

Understanding the goals of your plan can help you set the right scope. If your goal is to use the plan as a roadmap for growth, you may invest more time in it than if your goal is to understand the competitive landscape of a new industry.

Take it step by step

Writing a 10- to 15-page document can feel daunting, so try to tackle one section at a time. Select a couple of sections you feel most confident writing and start there—you can start on the next few sections once those are complete. Jot down bullet-point notes in each section before you start writing to organize your thoughts and streamline the writing process.

Maximize your business planning efforts

Planning is key to the financial success of any type of business , whether you’re a startup, non-profit, or corporation.

To make sure your efforts are focused on the highest-value parts of your own business planning, like clarifying your goals, setting a strategy, and understanding the target market and competitive landscape, lean on a business plan outline to handle the structure and format for you. Even if you eventually omit sections, you’ll save yourself time and energy by starting with a framework already in place.

  • How to Start an Online Boutique- A Complete Playbook
  • How To Source Products To Sell Online
  • The Ultimate Guide To Dropshipping (2024)
  • How to Start a Dropshipping Business- A Complete Playbook for 2024
  • 6 Creative Ways to Start a Business With No Money in 2024
  • What is Shopify and How Does it Work?
  • What Is Affiliate Marketing and How to Get Started
  • How to Price Your Products in 3 Simple Steps
  • 10 Common Small Business Mistakes to Avoid
  • How to Turn a Hobby into a Business in 8 Steps

Business plan template FAQ

What is the purpose of a business plan.

The purpose of your business plan is to describe a new business opportunity or an existing one. It clarifies the business strategy, marketing plan, financial forecasts, potential providers, and more information about the company.

How do I write a simple business plan?

  • Choose a business plan format, such as a traditional or a one-page business plan. 
  • Find a business plan template.
  • Read through a business plan sample.
  • Fill in the sections of your business plan.

What is the best business plan template?

If you need help writing a business plan, Shopify’s template is one of the most beginner-friendly options you’ll find. It’s comprehensive, well-written, and helps you fill out every section.

What are the 5 essential parts of a business plan?

The five essential parts of a traditional business plan include:

  • Executive summary: This is a brief overview of the business plan, summarizing the key points and highlighting the main points of the plan.
  • Business description: This section outlines the business concept and how it will be executed.
  • Market analysis: This section provides an in-depth look at the target market and how the business will compete in the marketplace.
  • Financial plan: This section details the financial projections for the business, including sales forecasts, capital requirements, and a break-even analysis.
  • Management and organization: This section describes the management team and the organizational structure of the business.

Are there any free business plan templates?

There are several free templates for business plans for small business owners available online, including Shopify’s own version. Download a copy for your business.

Keep up with the latest from Shopify

Get free ecommerce tips, inspiration, and resources delivered directly to your inbox.

By entering your email, you agree to receive marketing emails from Shopify.

popular posts

start-free-trial

The point of sale for every sale.

Graphic of a mobile phone with heart shapes bubbles floating around it

Subscribe to our blog and get free ecommerce tips, inspiration, and resources delivered directly to your inbox.

Unsubscribe anytime. By entering your email, you agree to receive marketing emails from Shopify.

Latest from Shopify

Jun 8, 2024

Jun 7, 2024

Learn on the go. Try Shopify for free, and explore all the tools you need to start, run, and grow your business.

Try Shopify for free, no credit card required.

Social Security

Starting your retirement benefits early ( en español ).

You can start receiving your Social Security retirement benefits as early as age 62. However, you are entitled to full benefits when you reach your full retirement age. If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase.

If you start receiving benefits early, your benefits are reduced a small percent for each month before your full retirement age .

To find out how much your benefit will be reduced if you begin receiving benefits from age 62 up to your full retirement age, use the chart below and select your year of birth. This example is based on an estimated monthly benefit of $1000 at full retirement age.

Full Retirement and Age 62 Benefit By Year Of Birth

$500 for the first month
40 cents per birdhouse
$1.50
$500/($1.50 - 40 cents)
Year of Birth Full (normal) Retirement Age Months between age 62 and full retirement age At Age 62
A $1000 retirement benefit would be reduced to The retirement benefit is reduced by A $500 spouse's benefit would be reduced to The spouse's benefit is reduced by
66 48 $750 25.00% $350 30.00%
66 and 2 months 50 $741 25.83% $345 30.83%
66 and 4 months 52 $733 26.67% $341 31.67%
66 and 6 months 54 $725 27.50% $337 32.50%
66 and 8 months 56 $716 28.33% $333 33.33%
66 and 10 months 58 $708 29.17% $329 34.17%
67 60 $700 30.00% $325 35.00%
, you should refer to the previous year. of the month, we figure your benefit (and your full retirement age) as if your birthday was in the previous month. If you were born on January 1 , we figure your benefit (and your full retirement age) as if your birthday was in December of the previous year.

Before You Make Your Decision

There are advantages and disadvantages to taking your benefit before your full retirement age. The advantage is that you collect benefits for a longer period of time. The disadvantage is your benefit will be reduced. Each person's situation is different. It is important to remember:

  • If you delay your benefits until after full retirement age, you will be eligible for delayed retirement credits that would increase your monthly benefit.
  • That there are other things to consider when making the decision about when to begin receiving your retirement benefits.

Innovation in business: Importance, benefits, & examples

For companies willing to embrace innovation during uncertain times, the rewards can be transformative , both during a crisis and in its aftermath.

In this article, we demystify the concept of business innovation , offering actionable steps and tangible examples to help ignite a culture of innovation within your organization. We delve into the many benefits of embracing business innovation and draw inspiration from real-world examples where innovation has been a game changer.

Whether you’re an entrepreneur kickstarting your business, a small business owner seeking growth, or a business leader in a larger corporation eyeing enhanced competitiveness, we believe this guide will provide valuable insights. The aim? To help you shape a robust innovation strategy that can propel your business to new heights in any environment.

What is the definition of innovation?

What benefits does business innovation bring for you, what are the different types of innovation, real-world examples of successful innovation, 10 tips for business innovation.

  • How to drive strategic innovation with IMD?

In short, innovation is doing something different to create value . Business innovation refers to the process of introducing new ideas, methods, products, or services that result in significant improvements or advancements within an organization. 

Innovation often involves transforming creative ideas into new solutions that drive business growth, improve efficiency, and meet customers’ changing needs while improving decision-making and problem-solving across the organization. 

Think about Tesla’s commitment to putting the first electric vehicle on the road in 2008, or Google’s introduction of a search engine in 1998. Each innovation was unheard of at the time and represented a major paradigm shift. 

Even if modern businesses don’t innovate at this same level, innovation is still crucial in today’s world. Not only does it offer the potential for increased profit, but it can also create new jobs and increase customer trust. Your brand may develop better public recognition, and current workers may discover increased efficiency or productivity. 

In an era characterized by rapid technological advancements and a constantly shifting economic landscape, business innovation is more than just a buzzword—it’s a critical path to success.

While this isn’t an exhaustive list, we wanted to give you a better idea of how innovation can impact your organization. A few benefits of innovation for both old and new business models include:

  • Gain a competitive advantage. Innovation can help you develop unique products and services that set you apart from competitors. Over 80% of digitally mature companies cite innovation as one of their core strengths .
  • Meet customer demands. Sixty-five percent of fast-growing companies say they collaborate with their customers on potential innovations. Businesses that try to better understand and respond to customer needs through ongoing innovation do a better job attracting new customers and retaining existing clients.
  • Drive business growth. You’ll position your company to better identify and seize new opportunities. You may also create opportunities to diversify revenue streams or expand into new markets.
  • Increase efficiency and productivity. Innovation can result in increased productivity as you find ways to improve existing processes, streamline operations, and implement new forms of technology. 
  • Better equipped to deal with changes. Rather than reacting to changes that catch you off guard, you’ll be better prepared to identify emerging trends and anticipate shifts in the market in advance. 
  • Attract and retain talent. You can create an environment that engages your workers and results in higher levels of job satisfaction and employee retention. Many top companies give their employees a designated amount of time each week to work on product innovations .
  • Promote resilience and sustainability. Your business will be equipped to navigate economic downturns and changing consumer behavior. 

Even if your innovation doesn’t produce each of these potential effects, even two or three outcomes can provide a boost to your business. As we continue, we’ll discuss different types of innovation and their specific benefits.

Not all innovation processes are identical. Innovation can take on different forms, and we dive into a few of the most common examples.

  • Incremental innovation : Incremental innovation involves making small, incremental improvements to existing products, services, or processes. While it may not result in the creation of a new product or fresh concept, it can enhance value creation and produce a positive impact.  The shaving company Gillette understands the importance of incremental improvement . While major product overhauls are uncommon, the company is always looking for ways to improve its razors. When the company finds ways to make incremental product improvements that produce slightly better razors, it becomes slightly more profitable at the same time.  A great example is when the company switched from the Mach3 razor to the Fusion razor by proposing the new product as a better shaving solution.
  • Radical innovation : Radical innovation usually involves making a major breakthrough or invention that creates a new market or significantly changes an existing market. These innovations are more noticeable and represent a higher-risk, higher-return pursuit.  Apple’s decision to bring the iPhone to the market in 2007 is a great example of radical innovation. At the time, the iPhone represented the combination of three unique products: a mobile phone, a touch-screen iPod, and a portable connective device enabling users to access email, web browsing, and navigation while on the go.  Fast-forward to today, when over 120 million Americans own an iPhone .
  • Disruptive innovation : Disruptive innovation creates a new market or value network that displaces an existing market or value network. Rather than introducing a new product to serve an existing market, disruptive innovation represents the creation of an entirely new market that disrupts the status quo.  Netflix introduced a disruptive innovation when it decided to take its DVD-by-mail business to the next level by providing online streaming . At the time, people received DVDs by mail or picked them up from a local service.  Everything changed when Netflix decided to pivot to online streaming. Now, the video streaming market is projected to grow to over $100 billion within the next five years. 
  • Architectural innovation : Architectural innovations make major changes to a product or service’s architecture to attract new markets and consumers. In other words, it repackages an existing product, service, or idea to fill a new need or attract a fresh clientele.  Although smartwatches existed in different forms prior to the Apple Watch, September 2014 represented a major development in the industry as Apple brought its first wearable technology to the market.  Since its inception, the Apple Watch has surpassed giants like Rolex in the watch industry. The Apple Watch represents an architectural innovation because it incorporates existing smartphone technology into a different form. 

“Innovation is anything, but business as usual.” – Anonymous

We’ve discussed a few examples of successful innovation in the business world, but here are a few more noteworthy examples of innovation:

  • WhatsApp : Expensive SMS services once dominated electronic communication. WhatsApp changed the game by introducing a secure messaging platform for anyone with a smartphone and an internet connection. This is a great example of radical innovation.
  • Gavi : Exists to save children’s lives through broader access to essential immunizations. By targeting product innovations and a single improved framework , Gavi drove its incremental innovation efforts forward and achieved a deeper level of impact. 
  • Mercedes-Benz : Made the decision to prioritize digital product development in its manufacturing efforts. The incremental innovation resulted in a significantly shorter innovation cycle and a rise in the company’s overall efficiency rate.
  • Discovery Group : This international insurance company made the decision to offer incentives to company leaders. The organization used a semiannual divisional scorecard to incorporate multiple forms of innovation into its culture and heartbeat and mobilize the entire company around the same goal.
  • Salesforce : came to market in 1999 as an internet customer relationship management (CRM) service. The company foresaw the future by establishing a cloud-based system that could operate at a minimal cost with businesses of all sizes. Salesforce’s radical innovation continues to produce a positive impact to this day.

You now understand the importance of business innovation, but you may still have questions about how to make innovation a reality within your organization. We offer some tips that can help make your innovation more effective and beneficial.

1. Create a culture of innovation

Businesses should create a culture where employees feel empowered to share ideas, experiment, and take calculated risks. Team leaders should talk openly and regularly about the value of continual improvement.  It may help to shift conversations about new ideas away from potential roadblocks and financial sacrifices. Instead, innovative conversations should focus on potential possibilities and the impact of innovative ideas on the organization.

2. Understand customer needs

Better understanding your customers’ needs (and desires) can equip you to serve them better and longer. You can best understand customer needs by making a habit of collecting regular feedback, conducting market research, and engaging with customers to uncover insights and identify innovation opportunities. 

Consider crafting a customer needs statement that concisely defines your ideal client’s exact needs.

3. Encourage cross-functional collaboration

Encourage diverse perspectives and interdisciplinary collaboration to promote fresh ideas. Take steps to break down silos and create channels for cross-functional knowledge. 

As you do this, establish a centralized communication method or standard and encourage regular dialogue so all team members are on the same page.

4. Allocate resources for innovation

In addition to money, time is a great resource to invest. Along with research and development budgets, set a predetermined amount of time for employees to pursue new ideas and methodologies. You must also decide which tools and technologies are necessary for your team to reach the next level. 

5. Embrace continuous learning

Employees who continue to grow and stretch are better positioned to contribute to the company’s ongoing innovation and development. Provide opportunities for employees to gain new skills, attend training programs, and participate in workshops or conferences. 

Encourage employees to stay updated on industry trends and best practices. Consider setting aside time to ask employees what they’re learning and how it might benefit the organization as a whole. 

6. Promote risk-taking and accept failure

Innovation often doesn’t happen without risk. Major innovations like the iPhone and Netflix’s streaming service could have easily failed, but these organizations didn’t let the potential danger keep them from moving forward. 

Foster an environment where employees feel safe to take risks without the fear of harsh consequences. Celebrate successes and failures, and consider what you can learn from each event. 

7. Seek external perspectives

If you never take time to listen to outside voices and perspectives, you’ll miss out on a wealth of helpful information. Collaborate with external stakeholders, industry experts, consultants, or startups to gain new perspectives. 

Explore partnerships, joint ventures, or acquisitions. Adopt a humble posture in conversations, and be willing to challenge your preexisting beliefs. 

8. Set clear innovation goals

Align goals and objectives with the overall business strategy and communicate them throughout the organization. Consider using the SMART goal framework to create measurable and actionable goals. 

Another best practice is to choose key performance indicators (KPIs) or specific metrics that reflect the type of progress you hope to make.  

9. Encourage idea generation and evaluation

If you want your employees to develop new ideas, give them the time and space necessary to cultivate new thoughts. Promote idea generation by holding brainstorming sessions, innovation workshops, or suggestion boxes. 

Have a platform for employees to submit and collaborate on ideas, and ensure each team member feels comfortable and safe when it’s time to share their perspectives or thoughts. 

10. Celebrate and recognize innovation

Reward innovative achievements, highlight the individuals and teams behind them, and showcase their impact on the organization. This will encourage future collaboration and participation among your team and allow your organization to mark progress and reflect on the company’s growth and development.

How to drive strategic innovation with IMD ?

Innovation in business can sometimes feel like a complex puzzle, but when the pieces fall into place, it can propel your company to new heights. It helps redefine your product and service value, strengthen customer relationships, and create a distinctive space for you in the market.

The benefits of innovation extend to all business models, enabling companies to stand out with unique offerings. By understanding customer needs and fostering a culture of continuous innovation, companies can attract new customers and deepen relationships with existing ones. Innovation, in turn, drives growth by opening new opportunities and diversifying revenue streams.

In today’s dynamic and competitive business landscape, embracing innovation is not just an option, but a necessity.

If you’re looking to further embrace innovation, IMD’s innovation programs are here to guide you. Our programs are tailored to strengthen your leadership skills, enhance your ability to innovate strategically, and provide you with practical knowledge to drive successful innovation.

With IMD, you get more than just access to world-class faculty and personal coaching. We believe in real-world learning, ensuring that all of our participants can apply their newly acquired knowledge from day one. We are here to give you the tools you need to lead your business into an innovative future.

Discover more about IMD’s Innovation programs here!

Subscribe for more great innovation content 💌

Subscribe now for exclusive content from imd.

 - IMD Business School

Are you curious how certain new businesses can completely reshape industries and leave established companies struggling to keep up? In the ever-changing business world, staying ahead of the competition requires constant innovation. While there have been many ideas and strategies over time, few have been as impactful and enduring as disruptive innovation. This article will […]

 - IMD Business School

Picture this — you have a new startup or large business operating in a highly competitive market. A constant shift in trends makes it hard to keep up with your competitors and offer products people want. How will your organization keep up with those changes, thrive in the market, and set the pace for the […]

 - IMD Business School

For companies willing to embrace innovation during uncertain times, the rewards can be transformative, both during a crisis and in its aftermath. In this article, we demystify the concept of business innovation, offering actionable steps and tangible examples to help ignite a culture of innovation within your organization. We delve into the many benefits of […]

  • Top products
  • BIM Collaborate Pro
  • Fusion extensions
  • Flow Capture
  • Flow Production Tracking
  • View all products
  • View Mobile Apps
  • Collections
  • Architecture, Engineering & Construction
  • Product Design & Manufacturing
  • Media & Entertainment
  • Buying with Autodesk
  • Pay as you go with Flex
  • Special offers
  • Industry solutions
  • Educational access
  • Product support
  • System requirements
  • Download your software
  • File viewers
  • Students and educators
  • Installation
  • Account management support
  • Educational support
  • Partner Finder
  • Autodesk consulting
  • Contact support
  • Certification
  • Autodesk University
  • Conferences and events
  • Success planning
  • Autodesk Community
  • Developer Network
  • Autodesk Customer Value
  • ASEAN (English)
  • Canada (English)
  • Canada (Français)
  • Deutschland
  • Europe (English)
  • Hong Kong (English)
  • India (English)
  • Latinoamérica
  • Magyarország
  • Middle East (English)
  • New Zealand
  • Singapore (English)
  • South Africa (English)
  • United Kingdom
  • United States

architecture engineering and construction collection logo

Integrated BIM tools, including Revit, AutoCAD, and Civil 3D

product design manufacturing collection logo

Professional CAD/CAM tools built on Inventor and AutoCAD

media and entertainment collection logo

Entertainment content creation tools, including 3ds Max and Maya

  • Certification overview
  • Architecture, engineering, and construction
  • Design and manufacturing
  • Media and entertainment
  • Support & policies
  • My dashboard

Looking for Autodesk Learning?  Browse here .

Show off your skills

Autodesk certification.

Autodesk certifications highlight advanced skills in your industry. Get hired, stand out in your career, and add your digital badge to your public profiles. 

Autodesk certification benefits

Validate design and make skills to get hired, advance your career, and accelerate your business. 

Industry validated

Deeply researched with industry partners, Autodesk certifications measure the skills required for design and make workflows​. 

Career advantage

Whether starting out or looking to expand to new roles, Autodesk certifications provide recognition of expertise to accelerate careers.

Business growth

Future-focused certifications help organizations differentiate talent and innovate with new technologies, skills, and productivity.

person working with AEC

Architecture, engineering, and construction certifications

AEC professionals and students can earn Autodesk certifications to highlight their knowledge and skills in CAD and BIM tools.

person working on manufacturing

Product design and manufacturing certifications

Product design and manufacturing professionals and students can earn Autodesk certifications to showcase their skills in CAD, CAM, design-to-manufacture workflows, and more.

person working on M&E products

Media and entertainment certifications

Media and entertainment professionals and students can earn certifications demonstrating their knowledge and take their careers to the next level.

Four levels of Autodesk certification

certified user badge

Autodesk Certified User

Developed for secondary students and non-English speakers in all industries, this certification validates and highlights foundational Autodesk software skills and knowledge.

certified associate badge

Autodesk Certified Associate

Designed for students in higher education and others with essential knowledge and skills in Autodesk software who are ready to enter the job market or pursue a new career path. 

certified professional badge

Autodesk Certified Professional

For candidates with advanced skills and can solve complex challenges, this certification helps candidates stand out and succeed in a competitive job market.

certified expert badge

Autodesk Certified Expert

For candidates to showcase their in-depth knowledge, the expert-level certification signals leadership and commitment to mastering skills in leading-edge workflows.

people and Autodesk Certification badge display

Earn badges and source talent

Autodesk partners with Credly to offer digital credentials to showcase your achievement or discover and verify talent for your organization.

Be the first to access our newest certification exams

When you participate in a beta exam, you become an early adopter of industry-validated certifications and enjoy exclusive benefits.

Additional certification resources

Build, validate, and showcase in-demand skills to succeed in today’s evolving industries. Whether you’re starting your career or expanding your skillset, take immediate steps toward your goals with Autodesk certification resources.

Certification prep courses

Set yourself up for success by taking a prep course with practice tests. Courses cover the core skills and knowledge you need to succeed in the exam.

Autodesk learning

Find the learning content that’s right for you, track your progress, and discover the next steps on your learning journey.

Autodesk Learning Partners

Autodesk Learning Partners (ALPs) are available to help provide vouchers for certification exams in bulk and prepare groups for certification success.

FAQ: Autodesk Certification

For more FAQs, visit our Support & Policies page.

How long is my certification valid for?

Certifications are valid for 2 or 3 years, depending on which certification you earn. For example, Fusion 360 certifications are valid for 2 years, while other certifications are valid for three years. See the certification details for each of the certifying validity periods and other information.

How much does an exam cost?

Autodesk is pleased to offer ACA, ACP and ACE certifications. Standard Retail Prices for each of our exam tiers are as follows: 

 

Autodesk Certified Associate (ACA) 

$150.00 (USD) 

Autodesk Certified Professional (ACP) 

$200.00 (USD) 

Autodesk Certified Expert (ACE) 

$250.00 (USD) 

*All exams are priced according to currency values in specific countries and regions. Exam prices are subject to change. In some countries and regions, additional taxes may apply. 

How do I get certification from Autodesk?

Choose which Autodesk Certification you would like to earn from the available certifications by industry above.

For Autodesk Certified User exams:

Selecting an ACU exam will transfer you to our testing partner Certiport. You can complete the sign up and scheduling process from Certiport's site.

For Autodesk Certified Associate, Professional, and Expert exams:

Select a certification to find out details and select the "Get certified" button to start your exam application. If you haven't already, you will be asked to sign in to your Autodesk Account. Fill out the exam application and submit it. From there you will be able to select from your Certification Dashboard an action to sign up for an exam appointment either in-person at a Pearson Vue testing center or for an online exam. Note you will need to provide proof of identity at exam time.

Ready for your exam?

For more information, please see our Support and Policies page. 

Privacy | Do not sell or share my personal information | Cookie preferences | Report noncompliance | Terms of use | Legal  |  © 2024 Autodesk Inc. All rights reserved

IMAGES

  1. How to Create the Best Business Plan for a Startup Company

    advantages of drawing up a business plan

  2. Image result for competitive advantage

    advantages of drawing up a business plan

  3. Creating a Business Plan: Why it Matters and Where to Start

    advantages of drawing up a business plan

  4. How to Build a Good Business Plan

    advantages of drawing up a business plan

  5. Easy-to-use one-page business plan template

    advantages of drawing up a business plan

  6. advantages and disadvantages of photographs in geography

    advantages of drawing up a business plan

VIDEO

  1. 1.2 Why create a business plan?

  2. Poultry Farm Business Plan // Business Plan Form Fill Up // মুৰ্গী পোহাৰ বাবে

  3. Fixing & Optimizing your Business

  4. Goatery Business Plan Form Fill Up // ছাগলী পালনৰ বাবে Business Plan // MMUA

  5. fishery farming business plan // mmua form fill up // মাছ পালন ব্যৱসায় পৰিকল্পনা // কেনেকৈ কৰিব

  6. Business plan গৰু পালন // business plan cow farming form fill up // MMUA গৰু পালনৰ বাবে

COMMENTS

  1. 14 Critical Reasons Why You Need a Business Plan

    Build a strategy. 4. Crafts a roadmap to achieve important milestones. A business plan is like a roadmap for your business. It helps you set, track and reach business milestones. For your plan to function in this way, your business plan should first outline your company's short- and long-term goals.

  2. 15 Reasons Why You Need a Business Plan in 2024

    15. Effectively navigate a crisis. Having a business plan not only helps you create a roadmap for your business but also helps you navigate unforeseen events. Large-scale economic downturns, supply shortages, payment delays, cash flow problems, and any number of other issues are bound to pop up.

  3. 11 Important Business Plan Benefits & Purposes

    Let's take a closer look at how each of the important business planning benefits can catapult your business forward: 1. Validate Your Business Idea. The process of writing your business plan will force you to ask the difficult questions about the major components of your business, including: External: industry, target market of prospective ...

  4. 5 reasons you need a business plan

    While these are all very important steps to take, a business plan will be central to how you start, grow and develop your business. Here are 5 reasons why you need a business plan: 1. It will help you steer your business as you start and grow. Think of a business plan as a GPS to get your business going. A good business plan guides you through ...

  5. How To Write A Business Plan (2024 Guide)

    Describe Your Services or Products. The business plan should have a section that explains the services or products that you're offering. This is the part where you can also describe how they fit ...

  6. The importance of a business plan

    To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business. 1. To help you with critical decisions. The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and ...

  7. Write your business plan

    Common items to include are credit histories, resumes, product pictures, letters of reference, licenses, permits, patents, legal documents, and other contracts. Example traditional business plans. Before you write your business plan, read the following example business plans written by fictional business owners.

  8. The Importance of Business Plan: 5 Key Reasons

    A business plan contains detailed information that can help determine its success. Some of this information can include the following: Market analysis. Cash flow projection. Competitive analysis. Financial statements and financial projections. An operating plan. A solid business plan is a good way to attract potential investors.

  9. How To Make A Business Plan: Step By Step Guide

    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.

  10. How to Write a Business Plan: Guide + Examples

    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 ...

  11. Advantages of a Business Plan: Definition and What It Entails

    Increased Clarity. A business plan helps you make decisions about important aspects of your business, including capital investments, leasing, and resourcing. A strong business plan helps you determine the most important business priorities and goals to concentrate on. #10. Helps to Secure Talent.

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

    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.

  13. How to Write a Business Plan: Beginner's Guide (& Templates)

    Step #3: Conduct Your Market Analysis. Step #4: Research Your Competition. Step #5: Outline Your Products or Services. Step #6: Summarize Your Financial Plan. Step #7: Determine Your Marketing Strategy. Step #8: Showcase Your Organizational Chart. 14 Business Plan Templates to Help You Get Started.

  14. How to Write a Business Plan (Plus Examples & Templates)

    How to Write a Business Plan Step 1. Create a Cover Page. The first thing investors will see is the cover page for your business plan. Make sure it looks professional. A great cover page shows that you think about first impressions. A good business plan should have the following elements on a cover page:

  15. What Are the Benefits of Preparing a Business Plan?

    Provides You With Direction. One of the main benefits of developing a business plan is that it provides your company with direction. The research and preparation that goes into developing the plan ...

  16. Why and how should I draw up a business plan?

    A business plan is a valuable tool in planning your business, and crucial when applying for funding. A business plan should outline your mission, goals and how you plan to achieve them. Your business plan should include: Your product or service description and how it solves a problem; Your target market; An analysis of the competition and your ...

  17. The Importance of a Business Plan for Entrepreneurs: 18 ...

    13. To share your business plans with coworkers and family. When you open a business, you will likely get a lot of questions about what you do from previous coworkers and family members. Drafting a business plan can help you answer these questions, sharing your goals and plans with them.

  18. What are the advantages of business plans?

    The advantages of a business plan . Businesses should update their business plans annually to guide growth, through explicit objectives for hiring new employees, establishing a structure, supplying products and services, and marketing activities. With this, you're more likely to enjoy the benefits outlined in the following sections. Help with ...

  19. The Top 5 Benefits of Having a Business Plan

    The Benefits of Having a Business Plan: . 1. Increased Clarity. A business plan can bring clarity to the decision-making process regarding key aspects of the business such as capital investments, leases, resourcing, etc. You can't do everything. A good Business Plan will help you identify business critical priorities and milestones to focus on. 2.

  20. The benefits and limitations of business plans

    Potential limitations or challenges of creating and implementing a business plan include changing market conditions, unforeseen obstacles, inaccurate assumptions, lack of flexibility, and the need for regular updates and revisions. Previous. 181.

  21. Budgeting and business planning

    Budgeting and business planning. Once your business is operational, it's essential to plan and tightly manage its financial performance. Creating a budgeting process is the most effective way to keep your business - and its finances - on track. This guide outlines the advantages of business planning and budgeting and explains how to go about it.

  22. BENEFITS OF A BUSINESS PLAN: Benefits and Drawbacks

    It Will Help You Steer Your Business as You Start and Grow. Drawbacks of a Business Plan. #1. A Great Business Plan Requires Great Implementation Practices. #2. A Business Plan Can Turn Out to Be Inaccurate. #3. It Creates an Environment of False Certainty. Benefits of a Business Plan for an Entrepreneur.

  23. Advantages and Disadvantages of Business Plan

    Hence a good business plan is one which has the scope of flexibility in it. Another disadvantage of business plans is that though plans are good to see and hear but execution of those plans has many problems and uncertainties right from procurement of finance, production related uncertainty, marketing and selling challenges and many other ...

  24. How To Start A Business In 11 Steps (2024 Guide)

    Learn more: Download our free simple business plan template. Come Up With an Exit Strategy. ... The benefits of a DBA include: It can help you open a business bank account under your business name;

  25. Free Business Plan Template for Small Businesses (2024)

    A lean business plan format is a shortened version of your more detailed business plan. It's helpful when modifying your plan for a specific audience, like investors or new hires. Also known as a one-page business plan, it includes only the most important, need-to-know information, such as: Company description; Suppliers; Key members of your team

  26. How to Start a Business (2024 Guide)

    2. Research the market. Market research is important when you're starting a business because it helps you determine if your idea can succeed. Researching the market for your business will give you insights into who your customers will be, what they are looking for, and how you'll need to sell to them.

  27. Benefits Planner: Retirement

    However, you are entitled to full benefits when you reach your full retirement age. If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase. If you start receiving benefits early, your benefits are reduced a small percent for each month before your full retirement age.

  28. Innovation in business: Importance, benefits, & examples

    For companies willing to embrace innovation during uncertain times, the rewards can be transformative, both during a crisis and in its aftermath. In this article, we demystify the concept of business innovation, offering actionable steps and tangible examples to help ignite a culture of innovation within your organization.We delve into the many benefits of embracing business innovation and ...

  29. How to Start a Tax Preparation Business From Home

    Business registration: Small tax preparation businesses typically file a "doing business as" (DBA) with their state or form a Limited Liability Company (LLC). EIN: If your business needs an EIN, apply for one. Electronic Filing Identification Number: If you file more than 11 returns, you'll need to do so electronically.

  30. Autodesk Certification

    Validate skills, advance your career, and accelerate business growth with Autodesk Certifications. Explore certifications in your industry and earn badges. ... Set yourself up for success by taking a prep course with practice tests. Courses cover the core skills and knowledge you need to succeed in the exam. ... Choose your subscription plan ...