how to create the business plan

Table of Contents

How to make a business plan

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

Plans and pricing.

• 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)

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

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

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

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

Let’s get started.

What Do You Need A Business Plan For?

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

1. Secure Funds

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

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

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

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

2. Monitor Business Growth

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

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

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

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

3. Measure Business Success

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

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

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

4. Document Your Marketing Strategies

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

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

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

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

How to Write a Business Plan Step-by-Step

1. create your executive summary.

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

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

A good executive summary should do the following:

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

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

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

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

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

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

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

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

2. Add Your Company Overview

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

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

Your company overview should contain the following:

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

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

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

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

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

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

• Mission Statement

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

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

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

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

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

Business Objectives

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

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

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

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

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

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

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

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

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

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

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

Market Analysis

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

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

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

• Market Research

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

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

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

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

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

How to Quantify Your Target Market

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

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

What Does a Good Market Analysis Entail?

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

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

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

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

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

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

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

Competitive Analysis

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

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

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

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

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

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

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

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

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

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

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

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

Direct vs Indirect Competition

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

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

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

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

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

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

Factors that Differentiate Your Business from the Competition

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

1. Cost Leadership

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

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

2. Product Differentiation

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

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

3. Market Segmentation

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

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

4. Define Your Business and Management Structure

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

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

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

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

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

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

Management Team

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

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

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

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

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

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

Key Questions to Answer When Structuring Your Management Team

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

Additional Tips for Writing the Management Structure Section

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

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

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

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

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

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

Organizational Chart

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

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

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

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

5. Describe Your Product and Service Offering

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1. Avoid Technical Descriptions and Industry Buzzwords

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

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

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

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

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

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

3. Long or Short Products or Services Section

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

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

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

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

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

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

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

4. Describe Your Relationships with Vendors or Suppliers

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

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

5. Your Primary Goal Is to Convince Your Readers

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

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

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

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

Key Questions to Answer When Writing your Products and Services Section

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

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

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

6. Show and Explain Your Marketing and Sales Plan

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

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

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

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

Outline Your Business’ Unique Selling Proposition (USP)

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

Target Market and Target Audience

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

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

Creating a Smart Marketing and Sales Plan

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

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

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

Your Positioning Statement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Basic Rules to Follow When Pricing Your Offering

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

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

Pricing Strategy

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

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

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

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

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

Advertising

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

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

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

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

Public Relations

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

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

Content Marketing

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

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

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

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

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

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

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

Social Media

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

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

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

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

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

Strategic Alliances

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

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

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

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

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

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

2. Evaluate Your Competition

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

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

These questions can help you know your competition.

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

3. Consider Your Brand

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

4. Focus on Benefits

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

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

5. Focus on Differentiation

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

Key Questions to Answer When Writing Your Marketing and Sales Plan

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

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

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

7. Clearly Show Your Funding Request

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

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

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

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

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

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

Funding Request: Debt or Equity?

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

Case for Equity

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

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

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

Case for Debt

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

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

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

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

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

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

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

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

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

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

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

8. Detail Your Financial Plan, Metrics, and Projections

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

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

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

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

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

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

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

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

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

Use Graphs and Charts

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

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

Address the Risk Factors and Show Realistic Financial Projections

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

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

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

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

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

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

1. Sales Forecast

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

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

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

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

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

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

2. Personnel Plan

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

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

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

3. Income Statement

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

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

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

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

4. Cash Flow Statement

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

5. Balance Sheet

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

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

6. Exit Strategy

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

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

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

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

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

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

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

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

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

9. Add an Appendix to Your Business Plan

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

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

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

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

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

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

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

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

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

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

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

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

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

Tips and Strategies for Writing a Convincing Business Plan

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

1. Know Your Audience

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

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

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

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

2. Get Inspiration from People

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

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

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

3. Avoid Being Over Optimistic

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

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

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

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

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

4. Keep it Simple and Short

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

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

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

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

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

5. Make an Outline and Follow Through

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

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

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

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

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

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

6. Ask a Professional to Proofread

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

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

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

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

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

1. hubspot's one-page business plan.

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

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

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

2. Bplan’s Free Business Plan Template

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

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

3. HubSpot's Downloadable Business Plan Template

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

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

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

4. Business Plan by My Own Business Institute

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

The comprehensive template consists of a whopping 15 sections.

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

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

5. Score's Business Plan Template for Startups

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

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

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

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

6. Minimalist Architecture Business Plan Template by Venngage

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

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

7. Small Business Administration Free Business Plan Template

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

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

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

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

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

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

9. PandaDoc’s Free Business Plan Template

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

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

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

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

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

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

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

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

Alternatives to the Traditional Business Plan

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

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

Business Model Canvas (BMC)

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

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

Segments of the Business Model Canvas

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

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

Lean Canvas

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

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

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

Startup Pitch Deck

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

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

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

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

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

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

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

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

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

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

Business Plan FAQ

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

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

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

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

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

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

Exlore Further

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

Was This Article Helpful?

Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

• Credit cards
• View all credit cards
• Banking guide
• Loans guide
• Insurance guide
• Personal finance
• View all personal finance
• Small business
• Small business guide
• View all taxes

You’re our first priority. Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners .

How to Write a Business Plan, Step by Step

Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

LLC Formation

A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

On a similar note...

LIMITED TIME OFFER

Ink Business Unlimited® Credit Card

Small Business Trends

How to create a business plan: examples & free template.

This is the ultimate guide to creating a comprehensive and effective plan to start a business . In today’s dynamic business landscape, having a well-crafted business plan is an important first step to securing funding, attracting partners, and navigating the challenges of entrepreneurship.

This guide has been designed to help you create a winning plan that stands out in the ever-evolving marketplace. U sing real-world examples and a free downloadable template, it will walk you through each step of the process.

Whether you’re a seasoned entrepreneur or launching your very first startup, the guide will give you the insights, tools, and confidence you need to create a solid foundation for your business.

Table of Contents

How to Write a Business Plan

Embarking on the journey of creating a successful business requires a solid foundation, and a well-crafted business plan is the cornerstone. Here is the process of writing a comprehensive business plan and the main parts of a winning business plan . From setting objectives to conducting market research, this guide will have everything you need.

Executive Summary

The Executive Summary serves as the gateway to your business plan, offering a snapshot of your venture’s core aspects. This section should captivate and inform, succinctly summarizing the essence of your plan.

It’s crucial to include a clear mission statement, a brief description of your primary products or services, an overview of your target market, and key financial projections or achievements.

Think of it as an elevator pitch in written form: it should be compelling enough to engage potential investors or stakeholders and provide them with a clear understanding of what your business is about, its goals, and why it’s a promising investment.

Example: EcoTech is a technology company specializing in eco-friendly and sustainable products designed to reduce energy consumption and minimize waste. Our mission is to create innovative solutions that contribute to a cleaner, greener environment.

Our target market includes environmentally conscious consumers and businesses seeking to reduce their carbon footprint. We project a 200% increase in revenue within the first three years of operation.

Overview and Business Objectives

In the Overview and Business Objectives section, outline your business’s core goals and the strategic approaches you plan to use to achieve them. This section should set forth clear, specific objectives that are attainable and time-bound, providing a roadmap for your business’s growth and success.

It’s important to detail how these objectives align with your company’s overall mission and vision. Discuss the milestones you aim to achieve and the timeframe you’ve set for these accomplishments.

This part of the plan demonstrates to investors and stakeholders your vision for growth and the practical steps you’ll take to get there.

Example: EcoTech’s primary objective is to become a market leader in sustainable technology products within the next five years. Our key objectives include:

• Introducing three new products within the first two years of operation.
• Achieving annual revenue growth of 30%.
• Expanding our customer base to over 10,000 clients by the end of the third year.

Company Description

The Company Description section is your opportunity to delve into the details of your business. Provide a comprehensive overview that includes your company’s history, its mission statement, and its vision for the future.

Highlight your unique selling proposition (USP) – what makes your business stand out in the market. Explain the problems your company solves and how it benefits your customers.

Include information about the company’s founders, their expertise, and why they are suited to lead the business to success. This section should paint a vivid picture of your business, its values, and its place in the industry.

Example: EcoTech is committed to developing cutting-edge sustainable technology products that benefit both the environment and our customers. Our unique combination of innovative solutions and eco-friendly design sets us apart from the competition. We envision a future where technology and sustainability go hand in hand, leading to a greener planet.

Define Your Target Market

Defining Your Target Market is critical for tailoring your business strategy effectively. This section should describe your ideal customer base in detail, including demographic information (such as age, gender, income level, and location) and psychographic data (like interests, values, and lifestyle).

Elucidate on the specific needs or pain points of your target audience and how your product or service addresses these. This information will help you know your target market and develop targeted marketing strategies.

Example: Our target market comprises environmentally conscious consumers and businesses looking for innovative solutions to reduce their carbon footprint. Our ideal customers are those who prioritize sustainability and are willing to invest in eco-friendly products.

Market Analysis

The Market Analysis section requires thorough research and a keen understanding of the industry. It involves examining the current trends within your industry, understanding the needs and preferences of your customers, and analyzing the strengths and weaknesses of your competitors.

This analysis will enable you to spot market opportunities and anticipate potential challenges. Include data and statistics to back up your claims, and use graphs or charts to illustrate market trends.

This section should demonstrate that you have a deep understanding of the market in which you operate and that your business is well-positioned to capitalize on its opportunities.

Example: The market for eco-friendly technology products has experienced significant growth in recent years, with an estimated annual growth rate of 10%. As consumers become increasingly aware of environmental issues, the demand for sustainable solutions continues to rise.

Our research indicates a gap in the market for high-quality, innovative eco-friendly technology products that cater to both individual and business clients.

SWOT Analysis

A SWOT analysis in your business plan offers a comprehensive examination of your company’s internal and external factors. By assessing Strengths, you showcase what your business does best and where your capabilities lie.

Weaknesses involve an honest introspection of areas where your business may be lacking or could improve. Opportunities can be external factors that your business could capitalize on, such as market gaps or emerging trends.

Threats include external challenges your business may face, like competition or market changes. This analysis is crucial for strategic planning, as it helps in recognizing and leveraging your strengths, addressing weaknesses, seizing opportunities, and preparing for potential threats.

Including a SWOT analysis demonstrates to stakeholders that you have a balanced and realistic understanding of your business in its operational context.

• Innovative and eco-friendly product offerings.
• Strong commitment to sustainability and environmental responsibility.
• Skilled and experienced team with expertise in technology and sustainability.

Weaknesses:

• Limited brand recognition compared to established competitors.
• Reliance on third-party manufacturers for product development.

Opportunities:

• Growing consumer interest in sustainable products.
• Partnerships with environmentally-focused organizations and influencers.
• Expansion into international markets.
• Intense competition from established technology companies.
• Regulatory changes could impact the sustainable technology market.

Competitive Analysis

In this section, you’ll analyze your competitors in-depth, examining their products, services, market positioning, and pricing strategies. Understanding your competition allows you to identify gaps in the market and tailor your offerings to outperform them.

By conducting a thorough competitive analysis, you can gain insights into your competitors’ strengths and weaknesses, enabling you to develop strategies to differentiate your business and gain a competitive advantage in the marketplace.

Example: Key competitors include:

GreenTech: A well-known brand offering eco-friendly technology products, but with a narrower focus on energy-saving devices.

EarthSolutions: A direct competitor specializing in sustainable technology, but with a limited product range and higher prices.

By offering a diverse product portfolio, competitive pricing, and continuous innovation, we believe we can capture a significant share of the growing sustainable technology market.

Organization and Management Team

Provide an overview of your company’s organizational structure, including key roles and responsibilities. Introduce your management team, highlighting their expertise and experience to demonstrate that your team is capable of executing the business plan successfully.

Showcasing your team’s background, skills, and accomplishments instills confidence in investors and other stakeholders, proving that your business has the leadership and talent necessary to achieve its objectives and manage growth effectively.

Example: EcoTech’s organizational structure comprises the following key roles: CEO, CTO, CFO, Sales Director, Marketing Director, and R&D Manager. Our management team has extensive experience in technology, sustainability, and business development, ensuring that we are well-equipped to execute our business plan successfully.

Products and Services Offered

Describe the products or services your business offers, focusing on their unique features and benefits. Explain how your offerings solve customer pain points and why they will choose your products or services over the competition.

This section should emphasize the value you provide to customers, demonstrating that your business has a deep understanding of customer needs and is well-positioned to deliver innovative solutions that address those needs and set your company apart from competitors.

Example: EcoTech offers a range of eco-friendly technology products, including energy-efficient lighting solutions, solar chargers, and smart home devices that optimize energy usage. Our products are designed to help customers reduce energy consumption, minimize waste, and contribute to a cleaner environment.

Marketing and Sales Strategy

In this section, articulate your comprehensive strategy for reaching your target market and driving sales. Detail the specific marketing channels you plan to use, such as social media, email marketing, SEO, or traditional advertising.

Describe the nature of your advertising campaigns and promotional activities, explaining how they will capture the attention of your target audience and convey the value of your products or services. Outline your sales strategy, including your sales process, team structure, and sales targets.

Discuss how these marketing and sales efforts will work together to attract and retain customers, generate leads, and ultimately contribute to achieving your business’s revenue goals.

This section is critical to convey to investors and stakeholders that you have a well-thought-out approach to market your business effectively and drive sales growth.

Example: Our marketing strategy includes digital advertising, content marketing, social media promotion, and influencer partnerships. We will also attend trade shows and conferences to showcase our products and connect with potential clients. Our sales strategy involves both direct sales and partnerships with retail stores, as well as online sales through our website and e-commerce platforms.

Logistics and Operations Plan

The Logistics and Operations Plan is a critical component that outlines the inner workings of your business. It encompasses the management of your supply chain, detailing how you acquire raw materials and manage vendor relationships.

Inventory control is another crucial aspect, where you explain strategies for inventory management to ensure efficiency and reduce wastage. The section should also describe your production processes, emphasizing scalability and adaptability to meet changing market demands.

Quality control measures are essential to maintain product standards and customer satisfaction. This plan assures investors and stakeholders of your operational competency and readiness to meet business demands.

Highlighting your commitment to operational efficiency and customer satisfaction underlines your business’s capability to maintain smooth, effective operations even as it scales.

Example: EcoTech partners with reliable third-party manufacturers to produce our eco-friendly technology products. Our operations involve maintaining strong relationships with suppliers, ensuring quality control, and managing inventory.

We also prioritize efficient distribution through various channels, including online platforms and retail partners, to deliver products to our customers in a timely manner.

Financial Projections Plan

In the Financial Projections Plan, lay out a clear and realistic financial future for your business. This should include detailed projections for revenue, costs, and profitability over the next three to five years.

Ground these projections in solid assumptions based on your market analysis, industry benchmarks, and realistic growth scenarios. Break down revenue streams and include an analysis of the cost of goods sold, operating expenses, and potential investments.

This section should also discuss your break-even analysis, cash flow projections, and any assumptions about external funding requirements.

By presenting a thorough and data-backed financial forecast, you instill confidence in potential investors and lenders, showcasing your business’s potential for profitability and financial stability.

This forward-looking financial plan is crucial for demonstrating that you have a firm grasp of the financial nuances of your business and are prepared to manage its financial health effectively.

Example: Over the next three years, we expect to see significant growth in revenue, driven by new product launches and market expansion. Our financial projections include:

• Year 1: $1.5 million in revenue, with a net profit of $200,000.
• Year 2: $3 million in revenue, with a net profit of $500,000.
• Year 3: $4.5 million in revenue, with a net profit of $1 million.

These projections are based on realistic market analysis, growth rates, and product pricing.

Income Statement

The income statement , also known as the profit and loss statement, provides a summary of your company’s revenues and expenses over a specified period. It helps you track your business’s financial performance and identify trends, ensuring you stay on track to achieve your financial goals.

Regularly reviewing and analyzing your income statement allows you to monitor the health of your business, evaluate the effectiveness of your strategies, and make data-driven decisions to optimize profitability and growth.

Example: The income statement for EcoTech’s first year of operation is as follows:

• Revenue: $1,500,000
• Cost of Goods Sold: $800,000
• Gross Profit: $700,000
• Operating Expenses: $450,000
• Net Income: $250,000

This statement highlights our company’s profitability and overall financial health during the first year of operation.

Cash Flow Statement

A cash flow statement is a crucial part of a financial business plan that shows the inflows and outflows of cash within your business. It helps you monitor your company’s liquidity, ensuring you have enough cash on hand to cover operating expenses, pay debts, and invest in growth opportunities.

By including a cash flow statement in your business plan, you demonstrate your ability to manage your company’s finances effectively.

Example:  The cash flow statement for EcoTech’s first year of operation is as follows:

Operating Activities:

• Depreciation: $10,000
• Changes in Working Capital: -$50,000
• Net Cash from Operating Activities: $210,000

Investing Activities:

•  Capital Expenditures: -$100,000
• Net Cash from Investing Activities: -$100,000

Financing Activities:

• Proceeds from Loans: $150,000
• Loan Repayments: -$50,000
• Net Cash from Financing Activities: $100,000
• Net Increase in Cash: $210,000

This statement demonstrates EcoTech’s ability to generate positive cash flow from operations, maintain sufficient liquidity, and invest in growth opportunities.

Tips on Writing a Business Plan

1. Be clear and concise: Keep your language simple and straightforward. Avoid jargon and overly technical terms. A clear and concise business plan is easier for investors and stakeholders to understand and demonstrates your ability to communicate effectively.

2. Conduct thorough research: Before writing your business plan, gather as much information as possible about your industry, competitors, and target market. Use reliable sources and industry reports to inform your analysis and make data-driven decisions.

3. Set realistic goals: Your business plan should outline achievable objectives that are specific, measurable, attainable, relevant, and time-bound (SMART). Setting realistic goals demonstrates your understanding of the market and increases the likelihood of success.

4. Focus on your unique selling proposition (USP): Clearly articulate what sets your business apart from the competition. Emphasize your USP throughout your business plan to showcase your company’s value and potential for success.

5. Be flexible and adaptable: A business plan is a living document that should evolve as your business grows and changes. Be prepared to update and revise your plan as you gather new information and learn from your experiences.

6. Use visuals to enhance understanding: Include charts, graphs, and other visuals to help convey complex data and ideas. Visuals can make your business plan more engaging and easier to digest, especially for those who prefer visual learning.

7. Seek feedback from trusted sources: Share your business plan with mentors, industry experts, or colleagues and ask for their feedback. Their insights can help you identify areas for improvement and strengthen your plan before presenting it to potential investors or partners.

FREE Business Plan Template

To help you get started on your business plan, we have created a template that includes all the essential components discussed in the “How to Write a Business Plan” section. This easy-to-use template will guide you through each step of the process, ensuring you don’t miss any critical details.

The template is divided into the following sections:

• Mission statement
• Business Overview
• Key products or services
• Target market
• Financial highlights
• Company goals
• Strategies to achieve goals
• Measurable, time-bound objectives
• Company History
• Mission and vision
• Unique selling proposition
• Demographics
• Psychographics
• Pain points
• Industry trends
• Customer needs
• Competitor strengths and weaknesses
• Opportunities
• Competitor products and services
• Market positioning
• Pricing strategies
• Organizational structure
• Key roles and responsibilities
• Management team backgrounds
• Product or service features
• Competitive advantages
• Marketing channels
• Advertising campaigns
• Promotional activities
• Sales strategies
• Supply chain management
• Inventory control
• Production processes
• Quality control measures
• Projected revenue
• Assumptions
• Cash inflows
• Cash outflows
• Net cash flow

What is a Business Plan?

A business plan is a strategic document that outlines an organization’s goals, objectives, and the steps required to achieve them. It serves as a roadmap as you start a business , guiding the company’s direction and growth while identifying potential obstacles and opportunities.

Typically, a business plan covers areas such as market analysis, financial projections, marketing strategies, and organizational structure. It not only helps in securing funding from investors and lenders but also provides clarity and focus to the management team.

A well-crafted business plan is a very important part of your business startup checklist because it fosters informed decision-making and long-term success.

Why You Should Write a Business Plan

Understanding the importance of a business plan in today’s competitive environment is crucial for entrepreneurs and business owners. Here are five compelling reasons to write a business plan:

• Attract Investors and Secure Funding : A well-written business plan demonstrates your venture’s potential and profitability, making it easier to attract investors and secure the necessary funding for growth and development. It provides a detailed overview of your business model, target market, financial projections, and growth strategies, instilling confidence in potential investors and lenders that your company is a worthy investment.
• Clarify Business Objectives and Strategies : Crafting a business plan forces you to think critically about your goals and the strategies you’ll employ to achieve them, providing a clear roadmap for success. This process helps you refine your vision and prioritize the most critical objectives, ensuring that your efforts are focused on achieving the desired results.
• Identify Potential Risks and Opportunities : Analyzing the market, competition, and industry trends within your business plan helps identify potential risks and uncover untapped opportunities for growth and expansion. This insight enables you to develop proactive strategies to mitigate risks and capitalize on opportunities, positioning your business for long-term success.
• Improve Decision-Making : A business plan serves as a reference point so you can make informed decisions that align with your company’s overall objectives and long-term vision. By consistently referring to your plan and adjusting it as needed, you can ensure that your business remains on track and adapts to changes in the market, industry, or internal operations.
• Foster Team Alignment and Communication : A shared business plan helps ensure that all team members are on the same page, promoting clear communication, collaboration, and a unified approach to achieving the company’s goals. By involving your team in the planning process and regularly reviewing the plan together, you can foster a sense of ownership, commitment, and accountability that drives success.

What are the Different Types of Business Plans?

In today’s fast-paced business world, having a well-structured roadmap is more important than ever. A traditional business plan provides a comprehensive overview of your company’s goals and strategies, helping you make informed decisions and achieve long-term success. There are various types of business plans, each designed to suit different needs and purposes. Let’s explore the main types:

• Startup Business Plan: Tailored for new ventures, a startup business plan outlines the company’s mission, objectives, target market, competition, marketing strategies, and financial projections. It helps entrepreneurs clarify their vision, secure funding from investors, and create a roadmap for their business’s future. Additionally, this plan identifies potential challenges and opportunities, which are crucial for making informed decisions and adapting to changing market conditions.
• Internal Business Plan: This type of plan is intended for internal use, focusing on strategies, milestones, deadlines, and resource allocation. It serves as a management tool for guiding the company’s growth, evaluating its progress, and ensuring that all departments are aligned with the overall vision. The internal business plan also helps identify areas of improvement, fosters collaboration among team members, and provides a reference point for measuring performance.
• Strategic Business Plan: A strategic business plan outlines long-term goals and the steps to achieve them, providing a clear roadmap for the company’s direction. It typically includes a SWOT analysis, market research, and competitive analysis. This plan allows businesses to align their resources with their objectives, anticipate changes in the market, and develop contingency plans. By focusing on the big picture, a strategic business plan fosters long-term success and stability.
• Feasibility Business Plan: This plan is designed to assess the viability of a business idea, examining factors such as market demand, competition, and financial projections. It is often used to decide whether or not to pursue a particular venture. By conducting a thorough feasibility analysis, entrepreneurs can avoid investing time and resources into an unviable business concept. This plan also helps refine the business idea, identify potential obstacles, and determine the necessary resources for success.
• Growth Business Plan: Also known as an expansion plan, a growth business plan focuses on strategies for scaling up an existing business. It includes market analysis, new product or service offerings, and financial projections to support expansion plans. This type of plan is essential for businesses looking to enter new markets, increase their customer base, or launch new products or services. By outlining clear growth strategies, the plan helps ensure that expansion efforts are well-coordinated and sustainable.
• Operational Business Plan: This type of plan outlines the company’s day-to-day operations, detailing the processes, procedures, and organizational structure. It is an essential tool for managing resources, streamlining workflows, and ensuring smooth operations. The operational business plan also helps identify inefficiencies, implement best practices, and establish a strong foundation for future growth. By providing a clear understanding of daily operations, this plan enables businesses to optimize their resources and enhance productivity.
• Lean Business Plan: A lean business plan is a simplified, agile version of a traditional plan, focusing on key elements such as value proposition, customer segments, revenue streams, and cost structure. It is perfect for startups looking for a flexible, adaptable planning approach. The lean business plan allows for rapid iteration and continuous improvement, enabling businesses to pivot and adapt to changing market conditions. This streamlined approach is particularly beneficial for businesses in fast-paced or uncertain industries.
• One-Page Business Plan: As the name suggests, a one-page business plan is a concise summary of your company’s key objectives, strategies, and milestones. It serves as a quick reference guide and is ideal for pitching to potential investors or partners. This plan helps keep teams focused on essential goals and priorities, fosters clear communication, and provides a snapshot of the company’s progress. While not as comprehensive as other plans, a one-page business plan is an effective tool for maintaining clarity and direction.
• Nonprofit Business Plan: Specifically designed for nonprofit organizations, this plan outlines the mission, goals, target audience, fundraising strategies, and budget allocation. It helps secure grants and donations while ensuring the organization stays on track with its objectives. The nonprofit business plan also helps attract volunteers, board members, and community support. By demonstrating the organization’s impact and plans for the future, this plan is essential for maintaining transparency, accountability, and long-term sustainability within the nonprofit sector.
• Franchise Business Plan: For entrepreneurs seeking to open a franchise, this type of plan focuses on the franchisor’s requirements, as well as the franchisee’s goals, strategies, and financial projections. It is crucial for securing a franchise agreement and ensuring the business’s success within the franchise system. This plan outlines the franchisee’s commitment to brand standards, marketing efforts, and operational procedures, while also addressing local market conditions and opportunities. By creating a solid franchise business plan, entrepreneurs can demonstrate their ability to effectively manage and grow their franchise, increasing the likelihood of a successful partnership with the franchisor.

Using Business Plan Software

Creating a comprehensive business plan can be intimidating, but business plan software can streamline the process and help you produce a professional document. These tools offer a number of benefits, including guided step-by-step instructions, financial projections, and industry-specific templates. Here are the top 5 business plan software options available to help you craft a great business plan.

1. LivePlan

LivePlan is a popular choice for its user-friendly interface and comprehensive features. It offers over 500 sample plans, financial forecasting tools, and the ability to track your progress against key performance indicators. With LivePlan, you can create visually appealing, professional business plans that will impress investors and stakeholders.

2. Upmetrics

Upmetrics provides a simple and intuitive platform for creating a well-structured business plan. It features customizable templates, financial forecasting tools, and collaboration capabilities, allowing you to work with team members and advisors. Upmetrics also offers a library of resources to guide you through the business planning process.

Bizplan is designed to simplify the business planning process with a drag-and-drop builder and modular sections. It offers financial forecasting tools, progress tracking, and a visually appealing interface. With Bizplan, you can create a business plan that is both easy to understand and visually engaging.

Enloop is a robust business plan software that automatically generates a tailored plan based on your inputs. It provides industry-specific templates, financial forecasting, and a unique performance score that updates as you make changes to your plan. Enloop also offers a free version, making it accessible for businesses on a budget.

5. Tarkenton GoSmallBiz

Developed by NFL Hall of Famer Fran Tarkenton, GoSmallBiz is tailored for small businesses and startups. It features a guided business plan builder, customizable templates, and financial projection tools. GoSmallBiz also offers additional resources, such as CRM tools and legal document templates, to support your business beyond the planning stage.

Business Plan FAQs

What is a good business plan.

A good business plan is a well-researched, clear, and concise document that outlines a company’s goals, strategies, target market, competitive advantages, and financial projections. It should be adaptable to change and provide a roadmap for achieving success.

What are the 3 main purposes of a business plan?

The three main purposes of a business plan are to guide the company’s strategy, attract investment, and evaluate performance against objectives. Here’s a closer look at each of these:

• It outlines the company’s purpose and core values to ensure that all activities align with its mission and vision.
• It provides an in-depth analysis of the market, including trends, customer needs, and competition, helping the company tailor its products and services to meet market demands.
• It defines the company’s marketing and sales strategies, guiding how the company will attract and retain customers.
• It describes the company’s organizational structure and management team, outlining roles and responsibilities to ensure effective operation and leadership.
• It sets measurable, time-bound objectives, allowing the company to plan its activities effectively and make strategic decisions to achieve these goals.
• It provides a comprehensive overview of the company and its business model, demonstrating its uniqueness and potential for success.
• It presents the company’s financial projections, showing its potential for profitability and return on investment.
• It demonstrates the company’s understanding of the market, including its target customers and competition, convincing investors that the company is capable of gaining a significant market share.
• It showcases the management team’s expertise and experience, instilling confidence in investors that the team is capable of executing the business plan successfully.
• It establishes clear, measurable objectives that serve as performance benchmarks.
• It provides a basis for regular performance reviews, allowing the company to monitor its progress and identify areas for improvement.
• It enables the company to assess the effectiveness of its strategies and make adjustments as needed to achieve its objectives.
• It helps the company identify potential risks and challenges, enabling it to develop contingency plans and manage risks effectively.
• It provides a mechanism for evaluating the company’s financial performance, including revenue, expenses, profitability, and cash flow.

Can I write a business plan by myself?

Yes, you can write a business plan by yourself, but it can be helpful to consult with mentors, colleagues, or industry experts to gather feedback and insights. There are also many creative business plan templates and business plan examples available online, including those above.

We also have examples for specific industries, including a using food truck business plan , salon business plan , farm business plan , daycare business plan , and restaurant business plan .

Is it possible to create a one-page business plan?

Yes, a one-page business plan is a condensed version that highlights the most essential elements, including the company’s mission, target market, unique selling proposition, and financial goals.

How long should a business plan be?

A typical business plan ranges from 20 to 50 pages, but the length may vary depending on the complexity and needs of the business.

What is a business plan outline?

A business plan outline is a structured framework that organizes the content of a business plan into sections, such as the executive summary, company description, market analysis, and financial projections.

What are the 5 most common business plan mistakes?

The five most common business plan mistakes include inadequate research, unrealistic financial projections, lack of focus on the unique selling proposition, poor organization and structure, and failure to update the plan as circumstances change.

What questions should be asked in a business plan?

A business plan should address questions such as: What problem does the business solve? Who is the specific target market ? What is the unique selling proposition? What are the company’s objectives? How will it achieve those objectives?

What’s the difference between a business plan and a strategic plan?

A business plan focuses on the overall vision, goals, and tactics of a company, while a strategic plan outlines the specific strategies, action steps, and performance measures necessary to achieve the company’s objectives.

How is business planning for a nonprofit different?

Nonprofit business planning focuses on the organization’s mission, social impact, and resource management, rather than profit generation. The financial section typically includes funding sources, expenses, and projected budgets for programs and operations.

Image: Envato Elements

© Copyright 2003 - 2024, Small Business Trends LLC. All rights reserved. "Small Business Trends" is a registered trademark.

What stage is your business at?

Tell us and we'll match you with a special liveplan discount:, new business idea, startup phase, established business, new business discount, great, we have special savings for organizing your business ideas., get full access to liveplan for 50% off, save big with any monthly package, startup discount, great, we have special savings for businesses just starting up., save big on liveplan premium, save big with any liveplan premium package, established business discount, great, we have special savings for businesses that are up and running., get annual access to liveplan for 40% off, save big with any annual package.

Enter your email address to unlock it.

We care about your privacy. See our Privacy Policy .

Limited Time Offer:

You can do this! Tour LivePlan to see how simple business planning can be.

Have an expert write your plan, build your forecast, and so much more.

Integrations

For Small Businesses

For Advisors & Mentors

Planning a Business

How to Write a Detailed Business Plan Step-by-Step [Free Template]

Image created with Adobe Firefly

12 min. read

Updated September 23, 2024

Writing a business plan is one of the most valuable things you can do for your business. 

Study after study proves that business planning significantly improves your chances of success by up to 30 percent 1 . That’s because the planning process helps you think about all aspects of your business and how it will operate and grow.

Ready to write your own detailed business plan? Here’s everything you need (along with a free business plan template ) to create your plan.

Before you write a detailed business plan, start with a one-page business plan

Despite the benefits of business planning , it’s easy to procrastinate writing a business plan. 

Most people would prefer to work hands-on in their business rather than think about business strategy . That’s why, if you’re writing a business plan for the first time, we recommend you start with a simpler and shorter one-page business plan.

With a one-page plan, there’s no need to go into a lot of details or dive deep into financial projections—you just write down the fundamentals of your business and how it works. 

A one-page plan should cover:

• • Value proposition
• • Market need
• • Your solution
• • Competition
• • Target market
• • Sales and marketing
• • Budget and sales goals
• • Milestones
• • Team summary
• • Key partners
• • Funding needs

A one-page business plan is a great jumping-off point in the planning process. It’ll give you an overview of your business and help you quickly refine your ideas.

Check out our guide to writing a simple one-page business plan for detailed instructions, examples, and a free downloadable one-page plan template .

When do you need a more detailed business plan?

While I will always recommend starting with the one-page plan format, there are times when a more detailed plan is necessary:

• • Flesh out sections of your plan: You need to better understand how your marketing, operations, or other business functions will operate.
• • Build a more detailed financial forecast: A one-page plan only includes a summary of your financial projections. A detailed plan includes a full financial forecast, including a profit and loss statement, balance sheet, and cash flow forecast to better measure performance.
• • Prepare for lenders and investors: While they may not read the full plan, any investor will ask in-depth questions that you can only answer by spending time writing a detailed business plan.
• • Sell your business: Use your business plan as part of your sales pitch, and show potential buyers all the details of how your business works.

How to write a detailed business plan

Let’s walk through writing a detailed business plan step-by-step and explore an example of what a finished business plan (for a local swim club Pools & Laps) built with LivePlan’s business plan builder looks like.

1. Executive summary

Yes, the executive summary comes first in your plan, but you should write it last—once you know all the details of your business plan. 

It is just a summary of your full plan, so be careful not to be too repetitive—keep it between one or two pages and highlight: 

• • Your opportunity: This summarizes what your business does, what problem it solves, and who your customers are. This is where you want readers to get excited about your business
• • Your team: For investors, your business’s team is often even more important than what the business is. Briefly highlight why your team is uniquely qualified to build the business and make it successful.
• • Financials: What are the highlights of your financial forecast ? Summarize your sales goals, when you plan to be profitable, and how much money you need to get your business off the ground.

For existing businesses, write the executive summary for your audience—whether it’s investors, business partners, or employees. Think about what your audience will want to know, and just hit the highlights.

2. Opportunity

The “opportunity” section of your business plan is all about the products and services that you are creating. The goal is to explain why your business is exciting and the problems that it solves for people. You’ll want to cover:

Problem & solution

Every successful business solves a problem for its customers. Their products and services make people’s lives easier or fill an unmet need in the marketplace. 

In this section, you’ll want to explain the problem that you solve, whom you solve it for, and what your solution is. This is where you go in-depth to describe what you do and how you improve the lives of your customers.

Target market

In the previous section, you summarized your target customer. Now you’ll want to describe them in much greater detail. You’ll want to cover things like your target market’s demographics (age, gender, location, etc.) and psychographics (hobbies and other behaviors). 

Ideally, you can also estimate the size of your target market so you know how many potential customers you might have.

Competition

Every business has competition , so don’t leave this section out. You’ll need to explain what other companies are doing to serve your customers or if your customers have other options for solving the problem you are solving. 

Explain how your approach is different and better than your competitors, whether it’s better features, pricing, or location. Explain why a customer would come to you instead of going to another company. 

3. Execution

This section of your business plan dives into how you will accomplish your goals. While the Opportunity section discussed what you’re doing, you now need to explain the specifics of how you will do it.

Marketing & sales

What marketing tactics will you use to get the word out about your business? You’ll want to explain how you get customers to your door and what the sales process looks like. For businesses with a sales force, explain how the sales team gets leads and what the process is like for closing a sale.

Depending on the type of business that you are starting, the operations section needs to be customized to meet your needs. If you are building a mail-order business, you’ll want to cover how you source your products and how fulfillment will work.

If you’re building a manufacturing business, explain the manufacturing process and the necessary facilities. This is where you’ll talk about how your business “works,” meaning you should explain what day-to-day functions and processes are needed to make your business successful.

Milestones & metrics

So far, your business plan has mostly discussed what you’re doing and how you will do it. 

The milestones and metrics section is all about timing. Your plan should highlight key dates and goals that you intend to hit. You don’t need extensive project planning in this section, just key milestones that you want to hit and when you plan to hit them. 

You should also discuss key metrics : the numbers you will track to determine your success.

The Company section of your business plan should explain your business’s overall structure and the team behind it.

Organizational structure

Describe your location, facilities, and anything else about your physical location relevant to your business. You’ll also want to explain the legal structure of your business—are you an S-corp, C-corp, or an LLC? What does company ownership look like?

Arguably one of the most important parts of your plan when seeking investment is the “Team” section. This should explain who you are and who else is helping you run the business. Focus on experience and qualifications for building the type of business that you want to build. 

It’s OK if you don’t have a complete team yet. Just highlight the key roles that you need to fill and the type of person you hope to hire for each role.

5. Financial plan and forecasts

Your business plan now covers the “what,” the “how,” and the “when” for your business. Now it’s time to talk about money. 

Financial forecasts

What revenue do you plan on bringing in, and when? What kind of expenses will you have? How much cash will you need?

These are the types of questions you’ll answer by creating detailed forecasts. Don’t worry about getting it perfect, these are just educated guesses. Your goal is to get numbers down that seem reasonable so you can review and revise financial expectations as you run your business. 

You’ll want to cover sales , expenses , personnel costs , asset purchases, cash , etc, for at least the first 12 months of your business. If you can, also create educated guesses for the following two years in annual totals. 

If you intend to pursue funding, it’s worth noting that some investors and lenders might want to see a five-year forecast. For most other cases, three years is usually enough.

If you’re raising money for your business, the Financing section is where you describe how much you need. Whether you’re getting loans or investments, you should highlight what and when you need it. 

Ideally, you’ll also want to summarize the specific ways you’ll use the funding once you have it. 

For more specifics, check out our write-up explaining what to include in your business plan for a bank loan .

Historical Financial statements

If your business is up and running, you should also include your profit and loss statement , balance sheet , and cash flow statement . These are the historical record of your business performance and will be required by lenders, investors, and anyone considering buying your business. 

If you don’t want lengthy financial statements overwhelming this section of your business plan, you can just include the most recent statements and include the rest within your appendix.

6. Appendix 

The final section of your business plan is the appendix . Include detailed financial forecasts here and any other key documentation for your business. 

If you have product schematics, patent information, or any other details that aren’t appropriate for the main body of the plan but need to be included for reference.

Tips to write a detailed business plan

Keep it brief.

You may not be limited to one page, but that doesn’t mean you need to write a novel. Keep your business plan focused using clear, plain language and avoiding jargon. Make your plan easier to skim by using short sentences, bulleted lists, and visuals. Remember, you can always come back and add more details.

Related Reading: 7 tips to make a high-quality business plan  

Start with what you know

Don’t worry about following a strict top-to-bottom approach. Instead, build momentum by starting with sections you know well. This will help you get information down and ultimately make you more likely to complete your business plan. 

Set time limits

You don’t have to write your business plan in one sitting. It may be more valuable to set a time limit, see how much you get done, and return to it again in another session. This will keep you focused and productive and help you fit plan writing into your other responsibilities.

Reference business plan examples

Real-world business plan examples from your industry can provide valuable insights into how others have successfully presented their ideas, strategies, and financials. Exploring these examples can inspire your own approach and offer practical guidance on what to include and how to tailor it to your specific needs.

Just be sure not to copy and paste anything.

Prioritize sections that really matter

When writing a detailed business plan, focus on the parts most important to you and your business. 

If you plan on distributing your plan to outsiders, you should complete every section. But, if your plan is just for internal use, focus on the areas that will help you right now.

Download a free business plan template

Are you ready to write your detailed business plan? Get started by downloading our free business plan template . With that, you will be well on your way to a better business strategy, with all of the necessary information expected in a more detailed plan.

If you want to improve your ability to build a healthy, growing business, consider LivePlan.

It’s a product that makes planning easy and features a guided business plan creator , drag-and-drop financial forecasting tools , and an AI-powered LivePlan Assistant to help you write, generate ideas, and analyze your business performance. 

Use your detailed business plan to grow your business

Your business plan isn’t just a document to attract investors or close a bank loan. It’s a tool that helps you better manage and grow your business. And you’ll get the most value from your business plan if you use it as part of a growth planning process . 

With growth planning, you’ll easily create and execute your plan, track performance, identify opportunities and issues, and consistently revise your strategy. It’s a flexible process that encourages you to build a plan that fits your needs.  

So, whether you stick with a one-page plan or expand into a more detailed business plan—you’ll be ready to start growth planning.

Sources in this article

• 1. Parsons, Noah. “Do You Need a Business Plan? This Study Says Yes” Bplans: Free Business Planning Resources and Templates , 10 May 2024, www.bplans.com/business-planning/basics/research .

Like this post? Share with a friend!

Noah Parsons

Before joining Palo Alto Software , Noah Parsons was an early Internet marketing and product expert in the Silicon Valley. He joined Yahoo! in 1996 as one of its first 101 employees and become Producer of the Yahoo! Employment property as part of the Yahoo! Classifieds team before leaving to serve as Director of Production at Epinions.com. He is a graduate of Princeton University. Noah devotes most of his free time to his three young sons. In the winter you'll find him giving them lessons on the ski slopes, and in summer they're usually involved in a variety of outdoor pursuits. Noah is currently the COO at Palo Alto Software, makers of the online business plan app LivePlan.

Table of Contents

Related articles.

Peter Thorsson

August 26, 2024

How to Create Your First Financial Forecast With No Historical Data

August 7, 2024

Cash Flow Explained | What is it, Why it Matters, and How to Calculate

September 23, 2024

Paid Vs. Free Business Plan Software — Which is Right For You?

What Is a Business Plan? Definition and Planning Essentials Explained

How To Write A Business Plan: A Comprehensive Guide

The Startups Team

How To Write A Business Plan: A Comprehensive Guide

A comprehensive, step-by-step guide - complete with real examples - on writing business plans with just the right amount of panache to catch an investor's attention and serve as a guiding star for your business.

Introduction to Business Plans

So you've got a killer startup idea. Now you need to write a business plan that is equally killer.

You fire up your computer, open a Google doc, and stare at the blank page for several minutes before it suddenly dawns on you that,  Hm…maybe I have no idea how to write a business plan from scratch after all.

Don't let it get you down. After all, why would you know anything about business planning? For that very reason we have  4 amazing business plan samples  to share with you as inspiration.

For most founders,  writing a business plan  feels like the startup equivalent of homework. It's the thing you know you have to do, but nobody actually wants to do.

Here's the good news: writing a business plan doesn't have to be this daunting, cumbersome chore.

Once you understand the fundamental questions that your business plan should answer for your readers and how to position everything in a way that compels your them to take action, writing a business plan becomes way more approachable.

Before you set fingers to the keyboard to turn your business idea into written documentation of your organizational structure and business goals, we're going to walk you through the most important things to keep in mind (like company description, financials, and market analysis, etc.) and to help you tackle the writing process confidently — with plenty of real life business plan examples along the way to get you writing a business plan to be proud of!

Keep It Short and Simple.

There's this old-school idea that business plans need to be ultra-dense, complex documents the size of a doorstop because that's how you convey how serious you are about your company.

Not so much.

Complexity and length for complexity and length's sake is almost never a good idea, especially when it comes to writing a business plan. There are a couple of reasons for this.

1. Investors Are Short On Time

If your chief goal is using your business plan to secure funding, then it means you intend on getting it in front of an investor. And if there's one thing investors are, it's busy. So keep this in mind throughout writing a business plan.

Investors wade through hundreds of business plans a year. There's no version of you presenting an 80-page business plan to an investor and they enthusiastically dive in and take hours out of their day to pour over the thing front to back.

Instead, they're looking for you to get your point across as quickly and clearly as possible so they can skim your business plan and get to the most salient parts to determine whether or not they think your opportunity is worth pursuing (or at the very least initiating further discussions).

You should be able to refine all of the key value points that investors look for to 15-20 pages (not including appendices where you will detail your financials). If you find yourself writing beyond that, then it's probably a case of either over explaining, repeating information, or including irrelevant details in your business plan (you don't need to devote 10 pages to how you're going to set up your website, for example).

Bottom line: always be on the lookout for opportunities to “trim the fat" while writing a business plan (and pay special attention to the executive summary section below), and you'll be more likely to secure funding.

2. Know Your Audience

If you fill your business plan with buzzwords, industry-specific jargon or acronyms, and long complicated sentences, it might make sense to a handful of people familiar with your niche and those with superhuman attention spans (not many), but it alienates the vast majority of readers who aren't experts in your particular industry. And if no one can understand so much as your company overview, they won't make it through the rest of your business plan.

Your best bet here is to use simple, straightforward language that's easily understood by anyone — from the most savvy of investor to your Great Aunt Bertha who still uses a landline.

How To Format Your Business Plan

You might be a prodigy in quantum mechanics, but if you show up to your interview rocking cargo shorts and lime green Crocs, you can probably guess what the hiring manager is going to notice first.

In the same way,  how  you present your business plan to your readers equally as important as what you present to them. So don't go over the top with an extensive executive summary, or get lazy with endless bullet points on your marketing strategy.

If your business plan is laden with inconsistent margins, multiple font types and sizes, missing headings and page numbers, and lacks a table of contents, it's going to create a far less digestible reading experience (and totally take away from your amazing idea and hours of work writing a business plan!)

While there's no one  right  way to format your business plan, the idea here is to ensure that it presents professionally. Here's some easy formatting tips to help you do just that.

If your margins are too narrow, it makes the page look super cluttered and more difficult to read.

A good rule of thumb is sticking to standard one-inch margins all around.

Your business plan is made up of several key sections, like chapters in a book.

Whenever you begin a section (“Traction” for example) you'll want to signify it using a header so that your reader immediately knows what to expect from the content that follows.

This also helps break up your content and keep everything nice and organized in your business plan.

Subheadings

Subheadings are mini versions of headings meant to break up content within each individual section and capture the attention of your readers to keep them moving down the page.

In fact, we're using sub-headers right now in this section for that very purpose!

Limit your business plan to two typefaces (one for headings and one for body copy and subheadings, for example) that you can find in a standard text editor like Microsoft Word or Google Docs.

Only pick fonts that are easy to read and contain both capital and lowercase letters.

Avoid script-style or jarring fonts that distract from the actual content. Modern, sans-serif fonts like Helvetica, Arial, and Proxima Nova are a good way to go.

Keep your body copy between 11 and 12-point font size to ensure readability (some fonts are more squint-inducing than others).

You can offset your headings from your body copy by simply upping the font size and by bolding your subheadings.

Sometimes it's better to show instead of just tell.

Assume that your readers are going to skim your plan rather than read it word-for-word and treat it as an opportunity to grab their attention with color graphics, tables, and charts (especially with financial forecasts), as well as product images, if applicable.

This will also help your reader better visualize what your business model is all about.

Need some help with this?

Our  business planning wizard  comes pre-loaded with a modular business plan template that you can complete in any order and makes it ridiculously easy to generate everything you need from your value proposition, mission statement, financial projections, competitive advantage, sales strategy, market research, target market, financial statements, marketing strategy, in a way that clearly communicates your business idea.

Refine Your Business Plans. Then Refine Them Some More.

Your business isn't static, so why should your business plan be?

Your business strategy is always evolving, and so are good business plans. This means that the early versions of your business plans probably won't (and shouldn't be) your last. The details of even even the best business plans are only as good as their last update.

As your business progresses and your ideas about it shift, it's important revisit your business plan from time to time to make sure it reflects those changes, keeping everything as accurate and up-to-date as possible. What good is market analysis if the market has shifted and you have an entirely different set of potential customers? And what good would the business model be if you've recently pivoted? A revised business plan is a solid business plan. It doesn't ensure business success, but it certainly helps to support it.

This rule especially holds true when you go about your market research and learn something that goes against your initial assumptions, impacting everything from your sales strategy to your financial projections.

At the same time, before you begin shopping your business plan around to potential investors or bankers, it's imperative to get a second pair of eyes on it after you've put the final period on your first draft.

After you run your spell check, have someone with strong “English teacher skills” run a fine-tooth comb over your plan for any spelling, punctuation, and grammatical errors you may have glossed over. An updated, detailed business plan (without errors!) should be constantly in your business goals.

More than that, your trusty business plan critic can also give you valuable feedback on how it reads from a stylistic perspective. While different investors prefer different styles, the key here is to remain consistent with your audience and business.

Writing Your Business Plan: A Section-By-Section Breakdown

We devoted an entire article carefully breaking down the  key components of a business plan  which takes a comprehensive look of what each section entails and why.

If you haven't already, you should check that out, as it will act as the perfect companion piece to what we're about to dive into in a moment.

For our purposes here, we're going to look at a few real world business plan examples (as well as one of our own self-penned “dummy” plans) to give you an inside look at how to position key information on a section-by-section basis.

1. Executive Summary

Quick overview.

After your Title Page — which includes your company name, slogan (if applicable), and contact information — and your Table of Contents, the Executive Summary will be the first section of actual content about your business.

The primary goal of your Executive Summary is to provide your readers with a high level overview of your business plan as a whole by summarizing the most important aspects in a few short sentences. Think of your Executive Summary as a kind of “teaser” for your business concept and the information to follow — information which you will explain in greater detail throughout your plan. This isn't the place for your a deep dive on your competitive advantages, or cash flow statement. It is an appropriate place to share your mission statement and value proposition.

Executive Summary Example

Here's an example of an Executive Summary taken from a sample business plan written by the Startups.com team for a fictional company called Culina. Here, we'll see how the Executive Summary offers brief overviews of the  Product ,  Market Opportunity ,  Traction , and  Next Steps .

Culina Tech specializes in home automation and IoT technology products designed to create the ultimate smart kitchen for modern homeowners.

Our flagship product, the Culina Smart Plug, enables users to make any kitchen appliance or cooking device intelligent. Compatible with all existing brands that plug into standard two or three-prong wall outlets, Culina creates an entire network of Wi-Fi-connected kitchen devices that can be controlled and monitored remotely right from your smartphone.

The majority of US households now spend roughly 35% of their energy consumption on appliances, electronics, and lighting.  With the ability to set energy usage caps on a daily, weekly or monthly basis, Culina helps homeowners stay within their monthly utility budget through more efficient use of the dishwasher, refrigerator, freezer, stove, and other common kitchen appliances.

Additionally, 50.8% of house fires are caused in the kitchen — more than any other room in the home — translating to over $5 billion in property damage costs per year.  Culina provides the preventative intelligence necessary to dramatically reduce kitchen-related disasters and their associated costs and risk of personal harm.

Our team has already completed the product development and design phase, and we are now ready to begin mass manufacturing. We've also gained a major foothold among consumers and investors alike, with 10,000 pre-ordered units sold and $5 million in investment capital secured to date.

We're currently seeking a $15M Series B capital investment that will give us the financial flexibility to ramp up hardware manufacturing, improve software UX and UI, expand our sales and marketing efforts, and fulfill pre-orders in time for the 2018 holiday season.

2. Company Synopsis

Your Company Synopsis section answers two critically important questions for your readers: What painful  PROBLEM  are you solving for your customers? And what is your elegant  SOLUTION  to that problem? The combination of these two components form your value proposition.

Company Synopsis Example

Let's look at a real-life company description example from  HolliBlu * — a mobile app that connects healthcare facilities with local skilled nurses — to see how they successfully address both of these key aspects.  *Note: Full disclosure; Our team worked directly with this company on their business plan via Fundable.

Notice how we get a crystal clear understanding of why the company exists to begin with when they set up the  problem  — that traditional nurse recruitment methods are costly, inconvenient, and time-consuming, creating significant barriers to providing quality nursing to patients in need.

Once we understand the painful problem that HolliBlu's customers face, we're then directly told how their  solution  links back directly to that problem — by creating an entire community of qualified nurses and directly connecting them with local employers more cost-effectively and more efficiently than traditional methods.

3. Market Overview

Your Market Overview provides color around the industry that you will be competing in as it relates to your product/service.

This will include statistics about industry size, [growth](https://www.startups.com/library/expert-advice/the-case-for-growing-slowly) rate, trends, and overall outlook. If this part of your business plan can be summed up in one word, it's  research .

The idea is to gather as much raw data as you can to make the case for your readers that:

This is a market big enough to get excited about.

You can capture a big enough share of this market to get excited about.

Target Market Overview Example

Here's an example from HolliBlu's business plan:

HolliBlu's Market Overview hits all of the marks — clearly laying out the industry size ($74.8 billion), the Total Addressable Market or TAM (3 million registered nurses), industry growth rate (581,500 new RN jobs through 2018; $355 billion by 2020), and industry trends (movement toward federally-mandated compliance with nurse/patient ratios, companies offering sign-on bonuses to secure qualified nurses, increasing popularity of home-based healthcare).

4. Product (How it Works)

Where your Company Synopsis is meant to shed light on why the company exists by demonstrating the problem you're setting out to solve and then bolstering that with an impactful solution, your Product or How it Works section allows you to get into the nitty gritty of how it actually delivers that value, and any competitive advantage it provides you.

Product (How it Works) Example

In the below example from our team's Culina sample plan, we've divided the section up using subheadings to call attention to product's  key features  and how it actually works from a user perspective.

This approach is particularly effective if your product or service has several unique features that you want to highlight.

5. Revenue Model

Quite simply, your Revenue Model gives your readers a framework for how you plan on making money. It identifies which revenue channels you're leveraging, how you're pricing your product or service, and why.

Revenue Model Example

Let's take a look at another real world business plan example with brewpub startup  Magic Waters Brewpub .*

It can be easy to get hung up on the financial aspect here, especially if you haven't fully developed your product yet. And that's okay. *Note: Full disclosure; Our team worked directly with this company on their business plan via Fundable.

The thing to remember is that investors will want to see that you've at least made some basic assumptions about your monetization strategy.

6. Operating Model

Your Operating Model quite simply refers to how your company actually runs itself. It's the detailed breakdown of the processes, technologies, and physical requirements (assets) that allow you to deliver the value to your customers that your product or service promises.

Operating Model Example

Let's say you were opening up a local coffee shop, for example. Your Operating Model might detail the following:

Information about your facility (location, indoor and outdoor space features, lease amount, utility costs, etc.)

The equipment you need to purchase (coffee and espresso machines, appliances, shelving and storage, etc.) and their respective costs.

The inventory you plan to order regularly (product, supplies, etc.), how you plan to order it (an online supplier) and how often it gets delivered (Mon-Fri).

Your staffing requirements (including how many part or full time employees you'll need, at what wages, their job descriptions, etc.)

In addition, you can also use your Operating Model to lay out the ways you intend to manage the costs and efficiencies associated with your business, including:

The  Critical Costs  that make or break your business. In the case of our coffee shop example, you might say something like,

“We're estimating the marketing cost to acquire a customer is going to be $25.  Our average sale is $45.  So long as we can keep our customer acquisition costs below $25 we will have enough margin to grow with.”

Cost Maturation & Milestones  that show how your Critical Costs might fluctuate over time.

“If we sell 50 coffees a day, our average unit cost will be $8 on a sale of $10.  At that point we're barely breaking even. However as we scale up to 200 coffees a day, our unit costs drop significantly to $4, creating a 100% increase in net income.”

Investment Costs  that highlight strategic uses of capital that will have a big Return on Investment (ROI) later.

“We're investing $100,000 into a revolutionary new coffee brewing system that will allow us to brew twice the amount our current output with the same amount of space and staff.”

Operating Efficiencies  explaining your capability of delivering your product or service in the most cost effective manner possible while maintaining the highest standards of quality.

“By using energy efficient Ecoboilers, we're able to keep our water hot while minimizing the amount of energy required. Our machines also feature an energy saving mode. Both of these allow us to dramatically cut energy costs.”

7. Competitive Analysis

Like the Market Overview section, you want to show your readers that you've done your homework and have a crazy high level of awareness about your current competitors or any potential competitors that may crop up down the line for your given business model.

When writing your Competitive Analysis, your overview should cover  who  your closest competitors are, the chief  strengths  they bring to the table, and their biggest  weaknesses .

You'll want to identify at least 3 competitors — either direct, indirect, or a combination of the two. It's an extremely important aspect of the business planning process.

Competition Analysis Example

Here's an example of how HolliBlu lays out their Competitive Analysis section for just one of their competitors, implementing each of the criteria noted above:

8. Customer Definition

Your Customer Definition section allows you to note which customer segment(s) you're going after, what characteristics and habits each customer segment embodies, how each segment uniquely benefits from your product or service, and how all of this ties together to create the ideal portrait of an actual paying customer, and how you'll cultivate and manage customer relationships.

Customer Definition Example

HolliBlu's Customer Definition section is effective for several reasons. Let's deconstruct their first target market segment, hospitals.

What's particularly successful here is that we are explained why hospitals are optimal buyers.

They accomplish this by harkening back to the central problem at the core of the opportunity (when hospitals can't supply enough staff to meet patient demands, they have to resort on costly staffing agencies).

On top of that, we are also told how  big  of an opportunity going after this customer segment represents (5,534 hospitals in the US).

This template is followed for each of the company's 3 core customer segments. This provides consistency, but more than that, it emphasizes how diligent research reinforces their assumptions about who their customers are and why they'd open their wallets. Keep all of this in mind when you are write your own business plan.

9. Customer Acquisition

Now that you've defined who your customers are for your readers, your Customer Acquisition section will tell them what marketing and sales strategy and tactics you plan to leverage to actually reach the target market (or target markets) and ultimately convert them into paying customers.

marketing Strategy Example

Similar to the exercise you will go through with your Revenue Model, in addition to identifying  which  channels you're pursuing, you'll also want to detail all of relevant costs associated with your customer acquisition channels.

Let's say you spent $100 on your marketing plan to acquire 100 customers during 2018. To get your CAC, you simply divide the number of customers acquired by your spend, giving you a $1.00 CAC.

10. Traction

This one's huge. Traction tells investors one important thing: that you're business has momentum. It's evidence that you're making forward progress and hitting milestones. That things are happening. It's one of the most critical components of a successful business plan.

Why is this so important? Financial projections are great and all, but if you can prove to investors that your company's got legs before they've even put a dime into it, then it will get them thinking about all the great things you'll be able to accomplish when they do bankroll you.

Traction Example

In our Culina Traction section, we've called attention to several forms of traction, touching on some of the biggest ones that you'll want to consider when writing your own plan.

Have I built or launched my product or service yet?

Have I reached any customers yet?

Have I generated any revenue yet?

Have I forged any strategic industry relationships that will be instrumental in driving growth?

The key takeaway here: the more traction you can show, the more credibility you build with investors. After all, you can't leave it all on market analysis alone.

11. Management Team

Here's what your Management Team section isn't: it's not an exhaustive rundown of each and every position your team members have held over the course of their lives.

Instead, you should tell investors which aspects of your team's experience and expertise directly translates to the success of  this  company and  this  industry.

In other words, what applicable, relevant background do they bring to the table?

Management Team Example

Let's be real. The vast majority of startup teams probably aren't stacked with Harvard and Stanford grads. But the thing to home in on is how the prior experience listed speaks directly to how it qualifies that team member's current position.

The word of the day here is relevancy. If it's not relevant, you probably don't need to include it in your typical business plan.

12. Funding

Funding overview.

The ask! This is where you come out and, you guessed it,  ask  your investors point blank how much money you need to move your business forward, what specific milestones their investment will allow you to reach, how you'll allocate the capital you secure, and what the investor will get in exchange for their investment.

You can also include information about your  exit strategy  (IPO, acquisition, merger?).

Funding Example

While we've preached against redundancy in your business plan, an exception to the rule is using the Funding section to offer up a very brief recap that essentially says, “here are the biggest reasons you should invest in my company and why it will ultimately benefit you.”

13. Financials

Spreadsheets and numbers and charts, oh my! Yes, it's everybody's “favorite” business plan section: Financials.

Your Financials section will come last and contain all of the forecasted numbers that say to investors that this is a sound investment. This will include things like your sales forecast, expense budget, and break-even analysis. A lot of this will be assumptions, or estimates.

The key here is keeping those estimates as realistic as humanly possible by breaking your figures into components and looking at each one individually.

Financials Example

The balance sheet above illustrates the business' estimated net worth over a three-year period by summarizing its assets (tangible objects owned by the company), liabilities (debt owed to a creditor of the company), and shareholders' equity (source of financing used to fund the assets).

In plain words, the balance sheet is basically a snapshot of your business' financial status by laying out what you own and owe, helping investors determine the level of risk involved and giving them a good understanding of the financial health of the business.

If you're looking to up your game from those outdated Excel-style spreadsheets,  our business planning software  will help you create clean, sleek, modern financial reports the modern way. Plus, it's as easy to use as it is attractive to look at. You might even find yourself enjoying financial projections, building a cash flow statement, and business planning overall.

You've Got This!

You've committed to writing your business plan and now you've got some tricks of the trade to help you out along the way. Whether you're applying for a business loan or seeking investors, your well-crafted business plan will act as your Holy Grail in helping take your business goals to the next plateau.

This is a ton of work. It's not a few hours and a free business plan template. It's not just a business plan software. We've been there before. Writing your [business plan](https://www.startups.com/library/expert-advice/top-4-business-plan-examples) is just one small step in startup journey. There's a whole long road ahead of you filled with a marketing plan, investor outreach, chasing venture capitalists, actually getting funded, and growing your business into a successful company.

And guess what? We've got helpful information on all of it — and all at your disposal! We hope this guides you confidently on how to write a business plan worth bragging about.

Find this article helpful?

This is just a small sample! Register to unlock our in-depth courses, hundreds of video courses, and a library of playbooks and articles to grow your startup fast. Let us Let us show you!

Step-by-Step Guide to Writing a Simple Business Plan

By Joe Weller | October 11, 2021

• Share on Facebook
• Share on LinkedIn

Link copied

A business plan is the cornerstone of any successful company, regardless of size or industry. This step-by-step guide provides information on writing a business plan for organizations at any stage, complete with free templates and expert advice. 

Included on this page, you’ll find a step-by-step guide to writing a business plan and a chart to identify which type of business plan you should write . Plus, find information on how a business plan can help grow a business and expert tips on writing one .

What Is a Business Plan?

A business plan is a document that communicates a company’s goals and ambitions, along with the timeline, finances, and methods needed to achieve them. Additionally, it may include a mission statement and details about the specific products or services offered.

A business plan can highlight varying time periods, depending on the stage of your company and its goals. That said, a typical business plan will include the following benchmarks:

• Product goals and deadlines for each month
• Monthly financials for the first two years
• Profit and loss statements for the first three to five years
• Balance sheet projections for the first three to five years

Startups, entrepreneurs, and small businesses all create business plans to use as a guide as their new company progresses. Larger organizations may also create (and update) a business plan to keep high-level goals, financials, and timelines in check.

While you certainly need to have a formalized outline of your business’s goals and finances, creating a business plan can also help you determine a company’s viability, its profitability (including when it will first turn a profit), and how much money you will need from investors. In turn, a business plan has functional value as well: Not only does outlining goals help keep you accountable on a timeline, it can also attract investors in and of itself and, therefore, act as an effective strategy for growth.

For more information, visit our comprehensive guide to writing a strategic plan or download free strategic plan templates . This page focuses on for-profit business plans, but you can read our article with nonprofit business plan templates .

Business Plan Steps

The specific information in your business plan will vary, depending on the needs and goals of your venture, but a typical plan includes the following ordered elements:

• Executive summary
• Description of business
• Market analysis
• Competitive analysis
• Description of organizational management
• Description of product or services
• Marketing plan
• Sales strategy
• Funding details (or request for funding)
• Financial projections

If your plan is particularly long or complicated, consider adding a table of contents or an appendix for reference. For an in-depth description of each step listed above, read “ How to Write a Business Plan Step by Step ” below.

Broadly speaking, your audience includes anyone with a vested interest in your organization. They can include potential and existing investors, as well as customers, internal team members, suppliers, and vendors.

Do I Need a Simple or Detailed Plan?

Your business’s stage and intended audience dictates the level of detail your plan needs. Corporations require a thorough business plan — up to 100 pages. Small businesses or startups should have a concise plan focusing on financials and strategy.

How to Choose the Right Plan for Your Business

In order to identify which type of business plan you need to create, ask: “What do we want the plan to do?” Identify function first, and form will follow.

Use the chart below as a guide for what type of business plan to create:

Is the Order of Your Business Plan Important?

There is no set order for a business plan, with the exception of the executive summary, which should always come first. Beyond that, simply ensure that you organize the plan in a way that makes sense and flows naturally.

The Difference Between Traditional and Lean Business Plans

A traditional business plan follows the standard structure — because these plans encourage detail, they tend to require more work upfront and can run dozens of pages. A Lean business plan is less common and focuses on summarizing critical points for each section. These plans take much less work and typically run one page in length.

In general, you should use a traditional model for a legacy company, a large company, or any business that does not adhere to Lean (or another Agile method ). Use Lean if you expect the company to pivot quickly or if you already employ a Lean strategy with other business operations. Additionally, a Lean business plan can suffice if the document is for internal use only. Stick to a traditional version for investors, as they may be more sensitive to sudden changes or a high degree of built-in flexibility in the plan.

How to Write a Business Plan Step by Step

Writing a strong business plan requires research and attention to detail for each section. Below, you’ll find a 10-step guide to researching and defining each element in the plan.

Step 1: Executive Summary

The executive summary will always be the first section of your business plan. The goal is to answer the following questions:

• What is the vision and mission of the company?
• What are the company’s short- and long-term goals?

See our  roundup of executive summary examples and templates for samples. Read our executive summary guide to learn more about writing one.

Step 2: Description of Business

The goal of this section is to define the realm, scope, and intent of your venture. To do so, answer the following questions as clearly and concisely as possible:

• What business are we in?
• What does our business do?

Step 3: Market Analysis

In this section, provide evidence that you have surveyed and understand the current marketplace, and that your product or service satisfies a niche in the market. To do so, answer these questions:

• Who is our customer? 
• What does that customer value?

Step 4: Competitive Analysis

In many cases, a business plan proposes not a brand-new (or even market-disrupting) venture, but a more competitive version — whether via features, pricing, integrations, etc. — than what is currently available. In this section, answer the following questions to show that your product or service stands to outpace competitors:

• Who is the competition? 
• What do they do best? 
• What is our unique value proposition?

Step 5: Description of Organizational Management

In this section, write an overview of the team members and other key personnel who are integral to success. List roles and responsibilities, and if possible, note the hierarchy or team structure.

Step 6: Description of Products or Services

In this section, clearly define your product or service, as well as all the effort and resources that go into producing it. The strength of your product largely defines the success of your business, so it’s imperative that you take time to test and refine the product before launching into marketing, sales, or funding details.

Questions to answer in this section are as follows:

• What is the product or service?
• How do we produce it, and what resources are necessary for production?

Step 7: Marketing Plan

In this section, define the marketing strategy for your product or service. This doesn’t need to be as fleshed out as a full marketing plan , but it should answer basic questions, such as the following:

• Who is the target market (if different from existing customer base)?
• What channels will you use to reach your target market?
• What resources does your marketing strategy require, and do you have access to them?
• If possible, do you have a rough estimate of timeline and budget?
• How will you measure success?

Step 8: Sales Plan

Write an overview of the sales strategy, including the priorities of each cycle, steps to achieve these goals, and metrics for success. For the purposes of a business plan, this section does not need to be a comprehensive, in-depth sales plan , but can simply outline the high-level objectives and strategies of your sales efforts. 

Start by answering the following questions:

• What is the sales strategy?
• What are the tools and tactics you will use to achieve your goals?
• What are the potential obstacles, and how will you overcome them?
• What is the timeline for sales and turning a profit?
• What are the metrics of success?

Step 9: Funding Details (or Request for Funding)

This section is one of the most critical parts of your business plan, particularly if you are sharing it with investors. You do not need to provide a full financial plan, but you should be able to answer the following questions:

• How much capital do you currently have? How much capital do you need?
• How will you grow the team (onboarding, team structure, training and development)?
• What are your physical needs and constraints (space, equipment, etc.)?

Step 10: Financial Projections

Apart from the fundraising analysis, investors like to see thought-out financial projections for the future. As discussed earlier, depending on the scope and stage of your business, this could be anywhere from one to five years. 

While these projections won’t be exact — and will need to be somewhat flexible — you should be able to gauge the following:

• How and when will the company first generate a profit?
• How will the company maintain profit thereafter?

Business Plan Template

Download Business Plan Template

Microsoft Excel | Smartsheet

This basic business plan template has space for all the traditional elements: an executive summary, product or service details, target audience, marketing and sales strategies, etc. In the finances sections, input your baseline numbers, and the template will automatically calculate projections for sales forecasting, financial statements, and more.

For templates tailored to more specific needs, visit this business plan template roundup or download a fill-in-the-blank business plan template to make things easy. 

If you are looking for a particular template by file type, visit our pages dedicated exclusively to Microsoft Excel , Microsoft Word , and Adobe PDF business plan templates.

How to Write a Simple Business Plan

A simple business plan is a streamlined, lightweight version of the large, traditional model. As opposed to a one-page business plan , which communicates high-level information for quick overviews (such as a stakeholder presentation), a simple business plan can exceed one page.

Below are the steps for creating a generic simple business plan, which are reflected in the template below .

• Write the Executive Summary This section is the same as in the traditional business plan — simply offer an overview of what’s in the business plan, the prospect or core offering, and the short- and long-term goals of the company. 
• Add a Company Overview Document the larger company mission and vision. 
• Provide the Problem and Solution In straightforward terms, define the problem you are attempting to solve with your product or service and how your company will attempt to do it. Think of this section as the gap in the market you are attempting to close.
• Identify the Target Market Who is your company (and its products or services) attempting to reach? If possible, briefly define your buyer personas .
• Write About the Competition In this section, demonstrate your knowledge of the market by listing the current competitors and outlining your competitive advantage.
• Describe Your Product or Service Offerings Get down to brass tacks and define your product or service. What exactly are you selling?
• Outline Your Marketing Tactics Without getting into too much detail, describe your planned marketing initiatives.
• Add a Timeline and the Metrics You Will Use to Measure Success Offer a rough timeline, including milestones and key performance indicators (KPIs) that you will use to measure your progress.
• Include Your Financial Forecasts Write an overview of your financial plan that demonstrates you have done your research and adequate modeling. You can also list key assumptions that go into this forecasting. 
• Identify Your Financing Needs This section is where you will make your funding request. Based on everything in the business plan, list your proposed sources of funding, as well as how you will use it.

Simple Business Plan Template

Download Simple Business Plan Template

Microsoft Excel |  Microsoft Word | Adobe PDF  | Smartsheet

Use this simple business plan template to outline each aspect of your organization, including information about financing and opportunities to seek out further funding. This template is completely customizable to fit the needs of any business, whether it’s a startup or large company.

Read our article offering free simple business plan templates or free 30-60-90-day business plan templates to find more tailored options. You can also explore our collection of one page business templates . 

How to Write a Business Plan for a Lean Startup

A Lean startup business plan is a more Agile approach to a traditional version. The plan focuses more on activities, processes, and relationships (and maintains flexibility in all aspects), rather than on concrete deliverables and timelines.

While there is some overlap between a traditional and a Lean business plan, you can write a Lean plan by following the steps below:

• Add Your Value Proposition Take a streamlined approach to describing your product or service. What is the unique value your startup aims to deliver to customers? Make sure the team is aligned on the core offering and that you can state it in clear, simple language.
• List Your Key Partners List any other businesses you will work with to realize your vision, including external vendors, suppliers, and partners. This section demonstrates that you have thoughtfully considered the resources you can provide internally, identified areas for external assistance, and conducted research to find alternatives.
• Note the Key Activities Describe the key activities of your business, including sourcing, production, marketing, distribution channels, and customer relationships.
• Include Your Key Resources List the critical resources — including personnel, equipment, space, and intellectual property — that will enable you to deliver your unique value.
• Identify Your Customer Relationships and Channels In this section, document how you will reach and build relationships with customers. Provide a high-level map of the customer experience from start to finish, including the spaces in which you will interact with the customer (online, retail, etc.). 
• Detail Your Marketing Channels Describe the marketing methods and communication platforms you will use to identify and nurture your relationships with customers. These could be email, advertising, social media, etc.
• Explain the Cost Structure This section is especially necessary in the early stages of a business. Will you prioritize maximizing value or keeping costs low? List the foundational startup costs and how you will move toward profit over time.
• Share Your Revenue Streams Over time, how will the company make money? Include both the direct product or service purchase, as well as secondary sources of revenue, such as subscriptions, selling advertising space, fundraising, etc.

Lean Business Plan Template for Startups

Download Lean Business Plan Template for Startups

Microsoft Word | Adobe PDF

Startup leaders can use this Lean business plan template to relay the most critical information from a traditional plan. You’ll find all the sections listed above, including spaces for industry and product overviews, cost structure and sources of revenue, and key metrics, and a timeline. The template is completely customizable, so you can edit it to suit the objectives of your Lean startups.

See our wide variety of  startup business plan templates for more options.

How to Write a Business Plan for a Loan

A business plan for a loan, often called a loan proposal , includes many of the same aspects of a traditional business plan, as well as additional financial documents, such as a credit history, a loan request, and a loan repayment plan.

In addition, you may be asked to include personal and business financial statements, a form of collateral, and equity investment information.

Download free financial templates to support your business plan.

Tips for Writing a Business Plan

Outside of including all the key details in your business plan, you have several options to elevate the document for the highest chance of winning funding and other resources. Follow these tips from experts:.

• Keep It Simple: Avner Brodsky , the Co-Founder and CEO of Lezgo Limited, an online marketing company, uses the acronym KISS (keep it short and simple) as a variation on this idea. “The business plan is not a college thesis,” he says. “Just focus on providing the essential information.”
• Do Adequate Research: Michael Dean, the Co-Founder of Pool Research , encourages business leaders to “invest time in research, both internal and external (market, finance, legal etc.). Avoid being overly ambitious or presumptive. Instead, keep everything objective, balanced, and accurate.” Your plan needs to stand on its own, and you must have the data to back up any claims or forecasting you make. As Brodsky explains, “Your business needs to be grounded on the realities of the market in your chosen location. Get the most recent data from authoritative sources so that the figures are vetted by experts and are reliable.”
• Set Clear Goals: Make sure your plan includes clear, time-based goals. “Short-term goals are key to momentum growth and are especially important to identify for new businesses,” advises Dean.
• Know (and Address) Your Weaknesses: “This awareness sets you up to overcome your weak points much quicker than waiting for them to arise,” shares Dean. Brodsky recommends performing a full SWOT analysis to identify your weaknesses, too. “Your business will fare better with self-knowledge, which will help you better define the mission of your business, as well as the strategies you will choose to achieve your objectives,” he adds.
• Seek Peer or Mentor Review: “Ask for feedback on your drafts and for areas to improve,” advises Brodsky. “When your mind is filled with dreams for your business, sometimes it is an outsider who can tell you what you’re missing and will save your business from being a product of whimsy.”

Outside of these more practical tips, the language you use is also important and may make or break your business plan.

Shaun Heng, VP of Operations at Coin Market Cap , gives the following advice on the writing, “Your business plan is your sales pitch to an investor. And as with any sales pitch, you need to strike the right tone and hit a few emotional chords. This is a little tricky in a business plan, because you also need to be formal and matter-of-fact. But you can still impress by weaving in descriptive language and saying things in a more elegant way.

“A great way to do this is by expanding your vocabulary, avoiding word repetition, and using business language. Instead of saying that something ‘will bring in as many customers as possible,’ try saying ‘will garner the largest possible market segment.’ Elevate your writing with precise descriptive words and you'll impress even the busiest investor.”

Additionally, Dean recommends that you “stay consistent and concise by keeping your tone and style steady throughout, and your language clear and precise. Include only what is 100 percent necessary.”

Resources for Writing a Business Plan

While a template provides a great outline of what to include in a business plan, a live document or more robust program can provide additional functionality, visibility, and real-time updates. The U.S. Small Business Association also curates resources for writing a business plan.

Additionally, you can use business plan software to house data, attach documentation, and share information with stakeholders. Popular options include LivePlan, Enloop, BizPlanner, PlanGuru, and iPlanner.

How a Business Plan Helps to Grow Your Business

A business plan — both the exercise of creating one and the document — can grow your business by helping you to refine your product, target audience, sales plan, identify opportunities, secure funding, and build new partnerships. 

Outside of these immediate returns, writing a business plan is a useful exercise in that it forces you to research the market, which prompts you to forge your unique value proposition and identify ways to beat the competition. Doing so will also help you build (and keep you accountable to) attainable financial and product milestones. And down the line, it will serve as a welcome guide as hurdles inevitably arise.

Streamline Your Business Planning Activities with Real-Time Work Management in Smartsheet

Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change. 

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

Discover why over 90% of Fortune 100 companies trust Smartsheet to get work done.

Home > Business > Business Startup

How To Write a Business Plan

We are committed to sharing unbiased reviews. Some of the links on our site are from our partners who compensate us. Read our editorial guidelines and advertising disclosure .

Starting a business is a wild ride, and a solid business plan can be the key to keeping you on track. A business plan is essentially a roadmap for your business — outlining your goals, strategies, market analysis and financial projections. Not only will it guide your decision-making, a business plan can help you secure funding with a loan or from investors .

Writing a business plan can seem like a huge task, but taking it one step at a time can break the plan down into manageable milestones. Here is our step-by-step guide on how to write a business plan.

Table of contents

• Write your executive summary
• Do your market research homework
• Set your business goals and objectives
• Plan your business strategy
• Describe your product or service
• Crunch the numbers
• Finalize your business plan

By signing up I agree to the Terms of Use and Privacy Policy .

Step 1: Write your executive summary

Though this will be the first page of your business plan , we recommend you actually write the executive summary last. That’s because an executive summary highlights what’s to come in the business plan but in a more condensed fashion.

An executive summary gives stakeholders who are reading your business plan the key points quickly without having to comb through pages and pages. Be sure to cover each successive point in a concise manner, and include as much data as necessary to support your claims.

You’ll cover other things too, but answer these basic questions in your executive summary:

• Idea: What’s your business concept? What problem does your business solve? What are your business goals?
• Product: What’s your product/service and how is it different?
• Market: Who’s your audience? How will you reach customers?
• Finance: How much will your idea cost? And if you’re seeking funding, how much money do you need? How much do you expect to earn? If you’ve already started, where is your revenue at now?

Step 2: Do your market research homework

The next step in writing a business plan is to conduct market research . This involves gathering information about your target market (or customer persona), your competition, and the industry as a whole. You can use a variety of research methods such as surveys, focus groups, and online research to gather this information. Your method may be formal or more casual, just make sure that you’re getting good data back.

This research will help you to understand the needs of your target market and the potential demand for your product or service—essential aspects of starting and growing a successful business.

Step 3: Set your business goals and objectives

Once you’ve completed your market research, you can begin to define your business goals and objectives. What is the problem you want to solve? What’s your vision for the future? Where do you want to be in a year from now?

Use this step to decide what you want to achieve with your business, both in the short and long term. Try to set SMART goals—specific, measurable, achievable, relevant, and time-bound benchmarks—that will help you to stay focused and motivated as you build your business.

Step 4: Plan your business strategy

Your business strategy is how you plan to reach your goals and objectives. This includes details on positioning your product or service, marketing and sales strategies, operational plans, and the organizational structure of your small business.

Make sure to include key roles and responsibilities for each team member if you’re in a business entity with multiple people.

Step 5: Describe your product or service

In this section, get into the nitty-gritty of your product or service. Go into depth regarding the features, benefits, target market, and any patents or proprietary tech you have. Make sure to paint a clear picture of what sets your product apart from the competition—and don’t forget to highlight any customer benefits.

Step 6: Crunch the numbers

Financial analysis is an essential part of your business plan. If you’re already in business that includes your profit and loss statement , cash flow statement and balance sheet .

These financial projections will give investors and lenders an understanding of the financial health of your business and the potential return on investment.

You may want to work with a financial professional to ensure your financial projections are realistic and accurate.

Step 7: Finalize your business plan

Once you’ve completed everything, it's time to finalize your business plan. This involves reviewing and editing your plan to ensure that it is clear, concise, and easy to understand.

You should also have someone else review your plan to get a fresh perspective and identify any areas that may need improvement. You could even work with a free SCORE mentor on your business plan or use a SCORE business plan template for more detailed guidance.

Compare the Top Small-Business Banks

Data effective 1/10/23. At publishing time, rates, fees, and requirements are current but are subject to change. Offers may not be available in all areas.

The takeaway

Writing a business plan is an essential process for any forward-thinking entrepreneur or business owner. A business plan requires a lot of up-front research, planning, and attention to detail, but it’s worthwhile. Creating a comprehensive business plan can help you achieve your business goals and secure the funding you need.

Related content

• 5 Best Business Plan Software and Tools in 2023 for Your Small Business
• How to Get a Business License: What You Need to Know
• What Is a Cash Flow Statement?

Best Small Business Loans

5202 W Douglas Corrigan Way Salt Lake City, UT 84116

Accounting & Payroll

Point of Sale

Payment Processing

Inventory Management

Human Resources

Other Services

Best Inventory Management Software

Best Small Business Accounting Software

Best Payroll Software

Best Mobile Credit Card Readers

Best POS Systems

Best Tax Software

Stay updated on the latest products and services anytime anywhere.

By signing up, you agree to our Terms of Use  and  Privacy Policy .

Disclaimer: The information featured in this article is based on our best estimates of pricing, package details, contract stipulations, and service available at the time of writing. All information is subject to change. Pricing will vary based on various factors, including, but not limited to, the customer’s location, package chosen, added features and equipment, the purchaser’s credit score, etc. For the most accurate information, please ask your customer service representative. Clarify all fees and contract details before signing a contract or finalizing your purchase.

Our mission is to help consumers make informed purchase decisions. While we strive to keep our reviews as unbiased as possible, we do receive affiliate compensation through some of our links. This can affect which services appear on our site and where we rank them. Our affiliate compensation allows us to maintain an ad-free website and provide a free service to our readers. For more information, please see our  Privacy Policy Page . |

© Business.org 2024 All Rights Reserved.

Writing a business plan: Your step-by-step guide

Learn how to write a sound business plan to help set up your business for success.

Learning how to write a sound business plan is an essential first step toward creating a successful business. Simply put, a business plan outlines your business’s overall goals, strategies, and operations, providing a long-term vision and plan for your entire business. It’s not to be confused with a business proposal, which is a sales document that pitches a specific business idea or product to a potential client or investor. A business plan can help you clarify what you want to achieve and lay out exactly how to reach those goals. This, in turn, can help you motivate your team, promote your business, and make key decisions.

A strong business plan serves as an important communication tool to potential investors and lenders. It will allow you to articulate your current financial status, sources of revenue, and how you plan to meet revenue projections. Although a business plan isn’t always required when applying for all types of credit, it often plays a significant role in SBA loan applications . While no two business plans are alike, every plan should cover the following elements.

Executive summary: Define your business

Your plan’s executive summary is your chance to introduce the business — so it needs to be concise and compelling. The summary should give a brief recap of the history and background of your business in a manner that will make the reader want to learn more about your plan. Sometimes it’s helpful to write this last — after you’ve spent some time contemplating and articulating all the details of your business.

Company summary: Delve into the details

Your business plan should explain what your product or service is and why people and businesses will want to purchase it. Be sure to highlight areas where your product or service has a clear advantage over the competition. Also, include details about pending or established copyrights or trademarks, and present or future plans for research and development (R&D).

Market analysis: Outline your strategy

A market analysis centers on the marketability of your business, who your competitors are and how you fit into the competitive landscape. In the analysis, give detailed information about your business’s industry, including the size of the market, your target market, the market need, and barriers to entry such as supply issues and regulation. Also, include information on any market tests you have conducted and identify your direct and indirect competition.

Marketing plan: Identify your niche

Here, you’ll highlight how you plan to promote your business and generate revenue. Describe in detail what your product or service does and how it will help consumers. Explain how your product is unique from others on the market, and how you will promote your business and generate revenue. Also, provide details about the product life cycle and any intellectual property issues. (Note: Some of this may reiterate or expand upon information elsewhere in your business plan.) You can protect your intellectual property , which can include names, designs and automated process, through trademarks, copyrights, non-disclosure agreements and more.

Management overview: Introduce your leaders

To highlight your human capital, describe how your business will be organized in terms of structure and leadership. Let your reader know who does what and what qualifications they have. Summarize this in your writeup, but consider providing relevant resumes, too.

Financial summary: Develop your financial plan

The financial summary, which includes details about your company’s funding sources, existing debt, any grants , as well as financial analysis, are crucial areas to lay out in detail. Explain the amount of funding your business needs and provide supporting financial data as well as financial projections . Include documents that communicate your business’s current financial status, such as income statements, balance sheets , and cash flow statements. List your expectations for revenues as well as the cost of your goods, rent, fuel, utilities, salaries, and other expenses.

The final step: Organize it logically

There are many ways you can organize the information mentioned above so you can share it with potential investors and lenders, current and prospective team members and managers, and anyone else who needs to understand your vision.

Do your research and find a business plan format that works for your business. There can be different types of plans for different types of readers, i.e. investors vs. employees, so you can modify your plan depending on your audience.

A few things to keep in mind:

• Make it easy to find key info . Create a cover page and table of contents, so information is easy to find. Also consider using dividers with tabs if you’re printing it out and putting it in a binder.
• Add more details as they emerge . Depending on what you do or sell, you may also want to add a section on Action Plans, which includes information on regulations, legal and compliance issues, safety processes, operational and management plans, an employee handbook, delineations of job descriptions of your staff, and anything else you’ve put on paper (or into a digital document).
• Consider using an Appendix . This is where you can store any supporting documents, including financial and market analyses, logo and branding examples, team resumes, and so on.

Your business plan should reflect changes in your business, the industry or the market. Make changes as necessary to incorporate the changing needs of customers or changing economic conditions in order to keep your plan current. Treating your business plan as a living document — and revising it regularly — can help you stay ahead of the competition and exceed your dreams.

Learn more:

For additional support, make an appointment with a Wells Fargo banker who can help you develop your business plan. There are also several resources available to get you started with your business and business plan. Here are a few:

• U.S. Small Business Administration
• America’s Small Business Development Centers Network
• SCORE Association

You might also like

A business owner’s guide to balance sheets

Preparing balance sheets can help attract investors by providing a clear picture of your financials.

Three key partners for managing your small business finances

Learn how your business can benefit from working with accountants, financial advisors, and bankers.

We’re here for you

Talk with a banker

Find products and services

More support.

Expand your business with interactive tools and knowledgeable partners ready to help

Work with Wells Fargo as a supplier

Learn about the broad range of opportunities we help provide diverse suppliers and how you can start working with us.

Funding for your business

Access funds for growth, cash flow or commercial reaI estate.

Move your business forward

Easy-to-use products, tools, and resources for small businesses

How to Build a Detailed Business Plan That Stands Out [Free Template]

Updated: September 20, 2024

Published: June 14, 2017

When you already have a well-established business and need a business plan, it’s usually not difficult because you know everything inside out.

But when you’re a startup and need to create your first detailed business plan, it’s a challenge. A serious challenge. Been there — done that.

My first business plan was, to put it mildly, a disaster. It had so many unnecessary details and lacked essentials that it was practically a novel.

So, I sought professional help with writing the business plan and learned everything I’m going to share with you today.

Let’s learn how to craft an organized and well-thought-out business idea that answers potential investors’ questions.

Table of Contents

Business Plan Template

Building a successful business plan, how to build a business plan, from mistakes to milestones: what my business plan taught me.

Free Business Plan Template

The essential document for starting a business -- custom built for your needs.

• Outline your idea.
• Pitch to investors.
• Secure funding.
• Get to work!

Download Free

All fields are required.

You're all set!

Click this link to access this resource at any time.

To make this post practical from the get-go, I’ll walk you through the process of filling out your business plan template, like this free, editable version :

Download the template for free.

1. Cover Page

Your business plan should be prefaced with an eye-catching cover page. This means including a high-resolution image of your company logo, followed by your company's name, address, and phone number.

Since this business plan will likely change hands and be seen by multiple investors, you should also provide your own name, role in the business, and email address on the cover page.

At the bottom of this page, you can also add a confidentiality statement to protect against the disclosure of your business details.

The statement can read as follows: " This document contains confidential and proprietary information created by [your company name]. When receiving this document, you agree to keep its content confidential and may only reproduce and/or share it with the express written permission of [your company name] ."

Keep your cover page simple and concise — and save the important details for other sections.

Why it matters: First impressions are everything, and a clean cover page is the first step in the right direction.

Examples of a Cover Page

There is no single ideal cover page that every business should follow.

For instance, if you're in real estate, you might want a catchy design showcasing luxury villas, jacuzzis, palm trees, and so on — you get my point.

On the other side, if you're in finance, you might prefer a more corporate style like this:

Our goal is to generate approximately $50,000 in monthly revenue within the first six months. We expect to reach a break-even point around this time. As we scale, we project significant growth, aiming for $200,000 in monthly revenue by the end of the first year."

10. Appendix

A detailed and well-developed business plan can range anywhere from 20 to 50 pages, with some even reaching upward of 80.

In many cases, the appendix is the longest section.

Because it includes the supportive materials mentioned in previous sections.

To avoid disrupting the flow of the business plan with visuals, charts, and spreadsheets, business owners usually add them in the last section, i.e., the appendix.

Aside from what I've already mentioned — marketing plan, sales plan, department budgets, financial documents — you may also want to attach the following in the appendix:

• Marketing materials.
• Market research data.
• Licensing documentation.
• Branding assets .
• Floor plans for your location.
• Mockups of your product.
• Renderings of your office space or location design.

Adding these pieces to the appendix enriches the reader‘s understanding of your business and proves you’ve put the work into your business plan without distracting from the main points throughout the plan.

Example of Appendix

How to Calculate Your Lead Generation Goals [Free Calculator]

What Are Direct Costs & How Do They Differ From Indirect Costs?

How to Write a Business Plan: A Step-by-Step Guide [Examples + Template]

9 Handy Business Calculators That’ll Make Your Life Easier

The Definition of CAC [In Under 100 Words]

How to Calculate the Value of Your Social Media Followers [CALCULATOR]

How to Calculate & Track a Leads Goal That Sales Supports

2 Essential Templates For Starting Your Business

Marketing software that helps you drive revenue, save time and resources, and measure and optimize your investments — all on one easy-to-use platform

How to write a business plan in 12 steps (2024 edition)

This guide breaks down how to write a business plan and what you need to think about to make your business plan as persuasive as possible.

20 August 2024

This guide breaks down how to write a business plan, step-by-step, detailing what your document needs to include and what you need to think about to make your business plan as persuasive as possible.

What is a business plan?

A business plan is an essential document that can provide immense value for new and existing companies of all sizes. It is an overview that includes an outline of your business, its key objectives and plan for achieving important goals.

This information can be used to communicate strategic actions to internal teams and also attract interest from potential partners and investors . However, writing a business plan can be a lengthy and involved process. For many, using a business plan template can be a good way to get started.

For best results, you’ll need to do a lot of thinking and planning before you start writing your business plan. This way you have all the information and resources you need at your fingertips and won’t be under time pressure to come up with something at the last minute. After all, a well-thought-out business plan can help you avoid generic information and set your company up for success.

Download your free business plan template .

Why write a business plan?

Writing your business plan helps to get your strategy nailed down and onto the page. A plan that stays in your head is probably going to be full of unrealistic assumptions and biases, whereas a strategically thought-out and organised approach forces you to notice your blind spots and find a way forward.

If you’re looking for financing, a bank or investor needs to be persuaded by your business proposal and the opportunity to work with you. Therefore, a well-written business plan can help provide potential financial partners with the confidence that your business can become profitable. Your business plan gives them a comprehensive view of all aspects of your business and details your strategy for achieving your goals.

What are the main sections of a business plan?

Whatever your line of work, your business plan will generally need to provide the following:

An executive summary

A business overview

The market opportunity

Your products/services

How to write a business plan

Make sure you cover each of the following steps when preparing your document:

1. Write an executive summary

This section of your business plan should be 1–2 pages in length and enables potential financiers or partners to get an overview of what your business does and – most importantly — what the opportunity is for them. If they’re interested in the opportunity, they’ll conduct their own due diligence - and this will start with going through your business plan and financials.

It’s a good idea to write your executive summary last, when you’ve clarified your thinking around every section of the document. As an overview section, you don’t want to add any new content that isn’t in your business plan. Aim to keep this summary succinct and engaging by using simple, plain language, as this is much more persuasive than complicated or academic wording.

Use sub-headings and bullet points to help your most important information stand out, especially as busy executives may simply scan your executive summary and use this to decide whether they want to find out more.

What to include in an executive summary?

Make sure you include details on:

What your business does

What the opportunity is

What your unique selling points / differentiators are

How much funding you’re looking for

What the funding will be used for

How you'll succeed

Remember, you’re providing the big picture overview of your business - the detail is in the rest of the document and in the appendices.

2. Write your business overview

This section of your business plan needs to be more than just a list of what your business does. Its purpose is to excite those you’re hoping will work with you or help to fund your business.

Information to address includes:

What's the purpose of your business?

What problem does your business’ product or service solve?

What niche could it fill?

What’s different about your offering?

How are you better than anyone else at what you do?

Consider what your customer value proposition is by deciding what you want to achieve and what your number 1 benefit is for your customer.

3. Identify your USP

Think about what your unique selling points (USP) or differentiators are, and what proof-points you can provide to back them up.

For example, you can use terms like “market-leading” but if you don’t provide any evidence to back up your claims, your reader will take them with a big pinch of salt!

You should certainly reference any awards or endorsements that position you as the best person to provide your product or service, as well as any client testimonials. Make sure you include any education or experience that makes you an expert in your field as well.

4. Describe the market opportunity

Show you understand your industry, market and where you fit in it. While no-one can predict the future, offer up where you think the opportunity is for your business and make sales projections based on that. 

For example, imagine your business is selling personalised cookies - there's little competition in your area and you see your market opportunity to create designs for all calendar and holiday events. You expect to increase sales by 30% in one year and 50% in three years, driven primarily by word-of-mouth referrals.

Make sure you also consider macro trends that may create opportunities for you, such as social, environmental, or technological changes that may affect buying behaviour.

5. Include a SWOT analysis

Whatever your business strengths or opportunities, they’ll always be known and unknown weaknesses and threats; there’s no such thing as certainty in business or in life!

However, you can demonstrate that you’ve examined your business through different lenses and have a thorough understanding of it by doing a SWOT (strengths, weaknesses, opportunities, threats) analysis.

Don’t worry about drawing attention to your business’ shortcomings - every opportunity has them and it’ll give investors and partners confidence in you that you won't bury your head in the sand. Naturally, it's important that you specify what you’re going to do to address these weaknesses and counter these threats.

Here are some areas you can think about to get started: reputation, technology, location, experience, staff, overheads, competition, suppliers and price.

6. Present a competitor analysis

Let’s face it, no matter what industry you’re in, or what you’re selling, there’s going to be other businesses offering the same thing. But instead of worrying about the competition, use this as a positive opportunity to up your game and work out the unique advantages you have that will keep you competitive.

Identify your top 3 competitors and analyse what they're doing well and where they’re coming up short. Try to be as objective as possible and identify how to differentiate yourself from them.

You should also look into who the industry leaders are and what the benchmarks are for your industry so that you can set yourself targets for continuous improvement.

7. Create a customer persona

A customer persona is a fictional person who represents your company's ideal customer. Naturally, the persona can be based on a real person - the more you get to know your ideal customer, the more targeted and successful your marketing efforts will be.

To create a customer persona, you need to conduct research into your ideal customer’s age, sex, income, employment, daily activities, interests and hobbies. If you’re feeling unsure about your customer persona, you may need to give your ideal customer further thought and download the customer persona template to get started.

8. Write your marketing strategy

When you’ve created your customer persona, you need to work out how you’re going to reach them. Do they hang out on social media apps, like Facebook, Instagram, Pinterest, Twitter or LinkedIn? Or are they more used to local, traditional marketing like free local papers or high foot traffic areas?

Once you’ve figured where your audience is likely to hang out, you can outline your strategies for promoting and advertising your products or services in the next 12 months.

Make a list of the marketing channels you’ll use to achieve your advertising strategy and be sure to include your budget. How much can you set aside for advertising? And where are you most likely to see a return on your efforts? Paid ads on Facebook? Half or full paid spreads in an industry magazine? Or even a direct mail out? 

For more structured help around this, check out free course: Business 101 | Get social with your business on Facebook . 

9. Design your customer retention strategy

Business success relies heavily on the relationship you’re able to build with your customers. What techniques will you use to keep them coming back? Consider the following:

What can your business do to increase the number of repeat customers? 

Does your business have a referral or loyalty program? 

Do you have a post-purchase follow up in place?

Will you use surveys to track customer satisfaction?

What ways can you continue delivering outstanding service?

Is there a way to continue educating and adding value to your customers?

10. Present your financials

Most people who are looking at investing their time and/or money in your business will want to see your financial statements - your performance to date and your projections over the short and medium term. They'll also want to know how much you’ve received in funding to date and what these other sources of funding are - including your own investment.

Current finances

You need to show how your business has performed financially over the last year, highlighting metrics such as positive cashflow , net profit and assets.

Financial forecasts

You should also provide a balance forecast projecting total assets, total liabilities and net assets over 1, 2 and 3 years, and a profit and loss forecast for the same periods detailing gross profit /net sales, total expenses and net profit/loss. Finally, you should also provide a cash flow forecast month by month over the next year.

It’s also a good idea to speak to an expert like an accountant or bookkeeper about your finances and get advice on how best to present them in this all-important section of your business plan.

11. Detail how much funding is needed

Naturally, you also need to be very clear about how much money you’re looking for and what you plan to do with it. If you’re looking for a loan , you need to detail what it’s for, over what period it’ll be repaid, and what collateral you have to secure it.

12. Propose an exit strategy

Any financial stakeholder in your business will want a return on investment. If you’re pursuing this type of funding, you should include some detail on your proposed exit strategy . For example, do you want to sell the company at some point or go public?

Similarly, you should outline your succession plan so the business can continue to operate if you decide to step away from it. Likewise, you need a plan for what happens if the business loses money and can’t sustain itself. Documenting this means that everyone is on the same page and potential investors have this information upfront.

Frequently asked questions about writing a business plan:

When to write a business plan.

Typically, entrepreneurs write their business plans within the first year of operations. A business plan is a tool that helps business owners refine their strategy, attract partners and financiers, and grow their business.

If a business plan is written too soon, it may lack the substance that comes with time in the market. However, it’s important to note that a business plan isn't a static document - it can and should change as the business evolves.

How long should your business plan be?

There are no hard and fast rules around how long your business plan should be - it just needs to include all the relevant information. Aim for clear, concise sections and build a business plan that is as easy to read and navigate as possible.

Using a business plan template can help you make sure you have everything covered off, while also having a document that looks as professional as possible. Make sure you run a spelling and grammar check too - any sloppy errors can undermine your credibility.

What’s a business plan on a page?

It’s important to write your business plan as it helps to embed your strategy - as well as communicate what you’re about to potential partners or investors. When you have a comprehensive business plan you can easily adapt it to suit different audiences. For example, a full business plan is essential for raising capital but a business plan on a page may be enough for potential partners or employees.

What do venture capitalists look for in a business plan?

Venture capitalists invest money into businesses with the goal of achieving a return on their investment within the short to medium term. As a result, they’re looking for an attractive market opportunity, a clear point of differentiation, a strong management team, a proven track record, solid financials and, importantly, an exit opportunity.

Where to go for help or more information?

There are many great resources out there to help you fine-tune your business strategy and write your business plan. The Australian Government has a comprehensive website dedicated to supporting businesses at all stages of their journey.

You can also get help from Business Enterprise Centres , business advisors, accountants and fellow business owners, so your venture has the very best chance of success. 

Disclaimer:  Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.

Related Guides

How to get a business loan arrow right.

Discover how you can get the business loan you need to get your business up and running.

How to find investors: A guide for startups Arrow right

Business models: definitions, types and key components arrow right.

How to Write a One-Page Business Plan

Noah Parsons

5 min. read

Updated July 29, 2024

What’s the most challenging part of writing a business plan? Getting started. That’s why you should create a one-page plan as a starting point.

The one-page business plan is simple to create, easy to update, and built for adaptation. It includes all of the essential components of a traditional plan but is far briefer and more focused.

Think of it like you’re tweeting about your business. You have a limited number of characters to work with and are intentionally making it easy to digest. If you need additional support, try downloading our free one-page business plan template .

• What is a one-page business plan?

The one-page business plan is a simplified version of traditional operational plans that focuses on the core aspects of your business. While it may be a shorter business plan, it still follows the structure of a standard business plan  and serves as a beefed-up pitch document.

There’s really not much difference between a single-page business plan and a good executive summary. In fact, as you create a more detailed plan you may even be able to use it as your executive summary .

• What to include in your one-page plan

Here are the eight necessary sections to include when developing your one-page business plan.

Try and keep each section limited to 1-2 sentences or 3-4 bullet points to ensure that you stay within one page. It’s always easier to add more later rather than cutting back from lengthy sections.

The problem

A description of the problem or need your customers have and any relevant data that supports your claim.

The solution

Your product or service and how it solves the problem.

Business model

How you will make money—including the costs of production and selling, and the price that customers will pay.

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

Target market

Who is your customer and how many of them are there? Define your ideal customer by starting with a broad audience and narrowing it down. This provides investors with a clear picture of your thought process and understanding of the greater consumer market.

Competitive advantage

What makes you different from the competition? Explain how this will lead to greater success, customer loyalty, etc.

Management team

The management structure of your business, including currently filled roles, ideal candidates, and any management gaps.

Financial summary

Key financial metrics include your profit and loss, cash flow, balance sheet, and sales forecast. This section may be the most difficult part to condense, so try and focus on visualization and standard business ratios to get the point across. You can always share broader financial information if requested.

Funding required

Have what funding total you need front and center to clearly display what you are asking from investors.

Why you should start with a one-page plan

There are plenty of good reasons to write a business plan . There are even more reasons why your first step should be writing a one-page plan.

1. It’s faster

Instead of slogging away for hours, days, or even weeks tackling a formal business plan—the one-page format helps you get your ideas down much faster. In fact, with the right process and preparation, you can write a working one-page business plan in under an hour .

2. A great format for feedback

Need quick feedback from business partners, colleagues, potential customers, or your spouse? Provide them with a one-page plan instead of a lengthy in-depth version for better results.

The one-page plan is more likely to be read and reviewed. And since all of your business information is available at a glance, you’ll receive far more valuable and timely feedback.

3. Easy to update

Entrepreneurs never get things right the first time. You’ll constantly be learning and receiving feedback—requiring you to iterate and revise your business concept. Instead of updating a large document every time, you can do it in minutes with a one-page plan.

4. Direct and to-the-point

Learning to communicate your ideas clearly and directly is critical. You need to be sure that anyone can really understand the essence of your business. Delivering your entire business concept on a single page is a great way to practice this, as it forces you to be succinct.

5. Works as an idea validation tool

Initially, your business is just a set of assumptions that you need to validate. Do your potential customers have the problem you assume they have? Do they like your solution and are they willing to pay for it? What marketing and sales tactics will work?

As you validate these assumptions, you leave them in your plan. But, assumptions that end up being wrong will quickly fall off the page.

6. Becomes an outline for your detailed plan

By “detailed” we don’t mean “long.” If you do need to create a detailed business plan document for investors or business partners, you can use your one-page plan as your core outline. You will just expand and provide more details for each section.

7. No one really reads long business plans

A common problem with traditional business plans is that they are simply too long and overly complex. Even when investors ask for a detailed document, chances are that they won’t actually read every word. They may read certain sections, but often just want to see if you’ve thought through the details of your business, how it will operate, and how it will grow.

8. Useful for any business stage

A one-page plan is useful for business owners that are mulling over ideas, just starting, actively managing, or looking to grow a business. It can help validate a business idea, work as an internal strategy document, or as a flexible management tool that can be adapted over time.

Resources to help you write a business plan

While I highly recommend that you at least start with a one-page business plan, there are times where a more traditional business plan is necessary—such as applying for a loan or pitching to investors.

For additional support, check out our guide on writing a detailed business plan and download our free business plan template .

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Why start with a one-page plan

Related Articles

6 Min. Read

Differences Between Single-Use and Standing Plans Explained

14 Min. Read

How to Write a Five-Year Business Plan

5 Min. Read

How to Write a Growth-Oriented Business Plan

8 Min. Read

What Type of Business Plan Do You Need?

The LivePlan Newsletter

Become a smarter, more strategic entrepreneur.

Your first monthly newsetter will be delivered soon..

Unsubscribe anytime. Privacy policy .

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.

Discover the world’s #1 plan building software

Crafting your business plan: A step-by-step guide

Yajush Gupta

October 23, 2024

Thinking about starting a small business but feeling uncertain about how to develop a business plan? You’re not alone—creating a clear and effective plan can seem overwhelming at first, but it’s a crucial step toward turning your vision into a thriving enterprise.

A well-structured business plan not only helps you map out your goals and strategies but also attracts potential investors and provides a guide for sustainable growth. 

In this week’s edition of Let’s Talk, our experts dive into the essential steps you need to create a roadmap that will set your business up for success.

More Let’s Talk episodes

Contribute to Dynamic Business ✍

James Kittos, Director, Self-Employment Assistance, Asuria

“Embarking on the creation of a business plan for any entrepreneur can be a case of you don’t know what you don’t know. It’s common to face unknown challenges, especially when dealing with insurance, legal, and financial matters. We believe that building a support network around you is critical to building a strong plan with actionable steps on your journey to achieving your vision. This is where Self-Employment Assistance providers like Asuria can make a significant difference. Asuria offers a Government-funded service that connects eligible small business owners with experienced Business Mentors in your local area. These mentors can help not only with crafting a comprehensive business plan but also provide ongoing support to overcome challenges, seize new opportunities, and to strengthen the support network around you. With experienced mentors by your side, you’re better equipped to embrace the entrepreneurship journey.”

Jennifer McKennariey, CEO at Dynamic Capabilities Consulting

“Business plans are more than documents; they’re blueprints for a business’s future. The key to creating an effective plan is to find balance between vision and practicality.

“Start with purpose. Why does your business exist? Define your mission clearly, as this will be the guiding star for all decisions. Set SMART goals – specific, measurable, achievable, relevant, and time-bound – that align with your vision. Break these goals into short-term milestones and long-term objectives that will guide your growth trajectory.

“Conduct market analysis. Along with competitors, look at your unique value. What gap are you filling? How will you differentiate? Knowing your market will guide everything from pricing to marketing strategies.

“Financial projections are crucial, but think beyond revenue – what are your long-term goals? How will you reinvest profits to fuel growth and sustainability? What risks exist? Make sustainability part of your foundation. Whether it’s fostering inclusive workplace practices or integrating lean management, planning for sustainability strengthens your business long term.

“Incorporate flexibility. Business plans are living documents that adapt to change. Include space for reviewing progress and adjusting strategies.

“A business plan isn’t just about growth; it’s about sustainable success. Stay dynamic, purpose-driven, goal-oriented, and ready to evolve.”

Andrew ‘Billy’ Baxter, Chair, Non-Executive Director, Senior Advisor & Founder, 24HR Business Plan

“What we’ve learned from creating over 150 business plans in 3 years —whether for big or small businesses—is that success hinges on two key principles:

• Align the team around the 3-5 year strategy, including the culture to support it . Involve your team in shaping the business’s future, ensuring everyone understands the context you’re operating in, as well as the purpose, vision, growth plan, values and culture of the company. And tie it all together visually and as a story. When the team can concisely see and clearly articulate the strategic direction, they are more likely to buy into it and work together.
• Prioritise the top 10 priorities to execute the strategy with excellence in year 1 . Once the long-term strategy is set, focus on identifying the top 10 critical priorities for the first year. By simplifying the plan into actionable, practical and achievable goals, the team can track progress effectively and ensure flawless execution. This is especially important for small businesses where resources are limited and team members wear multiple hats.

“A clear plan with aligned priorities sets the foundation for growth, helping your business stay focused and effective.”

Fleur Allen, Business Success Coach, Ask Fleur

“Plan to plan – set aside dedicated, uninterrupted time to develop a comprehensive business plan.

“For small business owners, creating a detailed business plan every 3 to 5 years is essential for setting a clear path for growth. I also recommend annual updates with quarterly reviews to ensure the plan stays aligned with changing business needs and goals.

“A key part of this process is reviewing your financial statements from the previous year. This helps ensure your plan is realistic, backed by accurate data, and able to meet your financial goals. Examining metrics like revenue, gross profit, and net profit allows business owners to assess whether adjustments are necessary for future growth or cost management.

“In addition to reviewing finances, there are many valuable resources available, such as free templates from websites like smallbusiness.wa.gov.au and specialised workshops provided by business coaches. Choose the approach that fits your needs best.

“By regularly reviewing both financials and business goals, small business owners can create a plan that’s both flexible and actionable, helping them stay focused and accountable.”

David Price, CEO at Peninsula Australia and Peninsula New Zealand

“The importance of a strong business plan cannot be overstated. It brings together every aspect of a business and becomes its roadmap for success. A clear company vision and viable financial plan, backed by comprehensive research, are essential elements in crafting an effective business plan.

“A vision statement can help you identify your business’ strengths, understand where it sits in the market, and convey your value proposition to prospective clients or customers. Conduct research on competitors to find out what you can do differently, and better. Do this regularly to help your product or service stay competitive.

“A great idea, however, still needs financing – after all, it can take years for a business to become profitable. There’s a variety of funding options for different types of businesses and personal circumstances, so it’s important to seek professional advice to determine what’s best for you and your business.

“Create a realistic budget, allocating extra funds in case unexpected expenses arise. There are a lot of costs to consider, such as equipment, insurances, salaries, and amenities, so it’s important to ensure you’ve accounted for all spending.”

Chris Dahl, Co-CEO, Pin Payments

“Creating a business plan is essential for the success of your SMB or start-up. Without one, you risk operating without direction, making mistakes, and having to rework strategies. A business plan allows you to carefully assess every part of your business, from monetisation and marketing to operations, ensuring you have a clear path to growth. As a new business owner, a well-structured plan helps you avoid common blind spots that could hinder your progress. It enables you to anticipate challenges and make better decisions, reducing risks and improving your chances of success. For start-ups aiming to raise capital, a solid business plan is even more vital. Whether you’re applying to accelerators, incubators, or pitching to investors, a detailed plan is key. Investors need to see a clear strategy that outlines how you will scale, target your market, and generate returns.

“In short, a business plan is not just a formality—it is your blueprint for building a sustainable, scalable business, equipping you to navigate challenges and seize opportunities with confidence.”

Steven Nicholson, Founder of GearChange Business Advisory

“A business plan is an essential document for all small business owners looking to start a new venture. It may be required to assist with obtaining funding or it may just be a great opportunity to clearly set out your plans and goals for the business. Consider including the following:

• Value Proposition – Clearly articulate what problem you are trying to solve? What value do you deliver?
• Customers – Who are they? Segment your market. What channels will you use to reach them? How costly is marketing?
• Key Activities and Resources – What must you be good at? Manufacturing or distribution? Sourcing goods? Marketing?
• Key Partners – Who are they and how will you secure their services?
• Revenue and Cost Modelling – Estimate your sales and all costs for at least 12 months and develop a cash flow forecast to ensure you will have enough cash runway whilst you build your business.

“Don’t labour over a perfect business plan. It will undoubtedly change as you learn more about your customers and markets. You must be flexible and be ready to adapt your plan and financial modelling as required.

“Seek support from an experienced business consultant to ensure you set off on the right track.”

Ryan Zahrai, Founder, ZedLaw

“A business plan that can’t adapt is useless. It’s a guide, not a rulebook, and if you don’t build it with flexibility in mind, it’s going to fail. The market moves fast, and if you’re not ready to pivot, you’ll get left behind. Focus on smart, sustainable growth—scaling when the time is right, not just because a spreadsheet says so. Constantly reassess your direction to make sure you’re not just growing, but growing in the right way.

“Your plan should be a living document. That means reviewing it regularly, tweaking it, and making adjustments when needed. Growth isn’t just about getting bigger; it’s about improving your processes and offerings while staying solid. If your plan can’t flex with the market, it’s not going to work.

“Adapting fast and scaling smart are the keys to staying competitive. And remember—if your strategy doesn’t ruffle a few feathers, you’re probably playing it too safe. Growth means making bold moves, shaking things up, and not worrying about offending people. You’re not here to please everyone; you’re here to build a business. Bold action beats playing it safe every time.”

Kristian Inglis, Head of Human Resources at Employment Compass

“Small businesses grow on the dedication and talent of their employees.  But as your SME grows, managing your team effectively can become increasingly complex.  A well-crafted HR plan acts as a roadmap, guiding your workforce towards your business goals and fuelling success.  Some businesses think it’s just paperwork, but don’t realise it’s a strategic investment in your most valuable asset – your people.

“Think of HR planning as laying the foundation for a strong and motivated team.  By anticipating your future staffing needs, you can proactively ensure you have the right people in the right roles at the right time.  This involves analyzing your business objectives and identifying the skills and experience required to achieve them.

“Attracting top talent is very important for any growing business.  A solid HR plan includes a recruitment strategy that outlines how you’ll find and secure the best candidates.  This might involve using several recruitment channels, building a strong employer brand, and offering competitive compensation packages.

“Once you’ve assembled a talented team, it’s then time to nurture their growth and development.  HR planning focuses on investing in your employees through training programs, performance management, and opportunities for advancement.  This fosters a culture of engagement and helps you retain valuable team members.

“By creating an HR plan that includes policies and procedures that comply with Australian employment laws, SMEs minimize their legal risks but also ensure fair treatment and a positive work environment for their employees.

“By integrating HR planning into your overall business strategy, you create a powerful synergy.  You’ll have a motivated, skilled, and engaged workforce equipped to drive your business forward and achieve lasting success.”

Ryan Chilton, SEO & Digital Marketing Consultant, RC Digital

“Creating a detailed business plan requires a number of things including; goals & vision for the business, products & services, financials, market analysis and more. However, one thing often left out that needs to be touched more on is Marketing Strategy.

“I’ve seen it with plenty of entrepreneurs, they’ll have “the best product” and the financials to back it but expect that the product will just sell itself. The issue here is that it doesn’t matter how good your product is, If people don’t know about it, well it’s just not going to work .

“Including a detailed marketing strategy that goes beyond “posting on social media” can make all the difference when it comes to the success of your business in its early stages. Knowing who you’re targeting & how you’re going to reach them is crucial to implementing a successful product or service launch.

“Building a marketing roadmap into your business plan is also a great way to entice potential investors, as any potential partner in your business is going to want to see how this business plan will make them actual money in the bank. While you’re super passionate about your product, the end goal is to make a return. Through marketing modelling & detailed analysis of your competitors, you can provide a pretty solid forecast of what ROI could be expected to show potential partners.”

Discover Let’s Talk Business Topics

Keep up to date with our stories on  LinkedIn ,  Twitter ,  Facebook  and  Instagram .

What do you think?

Be the first to comment, add a new comment.

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

Plans and Pricing

Artificial intelligence (AI)

Business leadership

Communication & collaboration

CX / Customer experience

EX / Employee experience

Hybrid work

Productivity

Small business

Virtual events

UCaaS Roundup

Business Communications Roundup

Business Software Roundup

Life @ RingCentral

RingCentral newsdesk

RingCentral products

Customer stories

Industry insights

Reports & research

Global Strategic Partnerships

Working at RC Bulgaria

Already a partner?

Interested in partnering with us? Tell us a little about your business here .

Sales: (877) 768-4369

Business plans for beginners: a step-by-step guide

Don’t worry; we’re here to help.

If you’re ready to start a small business, a business plan is the way to take your idea and put it into action. As you’ll see, it’s not just for the investors or the bank’s benefit. When it’s done well, a business plan can serve as your very own road map to a successful, sustainable new business.

The good news is, there’s no one right way to write a business plan, but there are some tips and tricks that can ensure you include all the important information any lender or investor will want to see before they go into business with you.

Today, we’ll share:

4 guiding principles for a successful business plan

8 common mistakes in writing a business plan.

• Choose your own adventure: which business plan is right for you?

Build your own traditional business plan in 8 steps

• Build your own lean business plan (sample plan included!)

BONUS: Add depth to any business plan with these sections

7 tips for a killer business plan pitch deck.

• Tools to help you build your business plan

More resources: helpful books for starting a small business

We have lots of in-depth advice ahead on how to craft a business plan that’s specific to your small business idea. But first, here are some broader guidelines that should help you get in the right headspace:

1.  Be objective

We know this idea is your baby, your pride and joy. It’s hard to stand back and evaluate it without the rose-colored glasses. But the better you are at seeing your idea’s strengths and weaknesses, the better you’ll be able to improve and see issues coming before they snowball into problems, both before you launch and as a business owner.

2. Be realistic

Some new small business owners think they need to pad the numbers and set lofty expectations for the first few years of a business. But when you overpromise, you’re bound to underdeliver, and that impresses nobody. You also should avoid sandbagging, or underpromising on purpose just to look extra successful.

Be honest as you build your plan. Investors and lenders understand the first five years of a small business can be tough with limited to modest profits.

3. Be specific

You might be a big-idea person who doesn’t love the details, but this is the time to take a deep breath and dive into the details. The more details you understand about your business, the better you can respond to the questions and concerns of lenders and investors.

4. Ask for help

While most of the pieces of your plan might come from your own heart, soul, and brain, there are sure to be sections that aren’t as easy to rattle off. A business plan takes a lot of different skills, and it’s uncommon that anyone is good at all of them: market analysis, financial projections, strategic thinking, supply chain… the list goes on.

Don’t hesitate to reach out to your community and find some experts to help make your plan sing. This could mean engaging a market research analyst or an accountant to help with financial projections, or even a fellow small business owner who’s been through the new-business wringer before and can help you navigate the red tape and share what investors appreciate most in a plan.

If you don’t know anyone who can help you yet, we’ve got you covered. The Small Business Administration offers  free, local counseling  for entrepreneurs that can point you in the right direction.

Pro-tip:  A business plan isn’t just for your investors or loan officers. It’s a guide for you and a great way to attract top talent to your business. A well-written and researched plan helps you best understand your own idea and its viability so you can sell that idea to all important stakeholders. Put in the time to make this document a reliable resource; we promise you won’t regret it.

Before we dive into the different ways to build a business plan, let’s start with some of the common traps that new business plans fall into:

1. Financial projections that don’t add up

Loan officers and most investors know money and the realities of new-business revenue and spending, and they can smell fishy numbers from a mile away. Your financials are not a place to fudge it. Make sure you get some expert advice and assistance to ensure your projects are as airtight as can be.

2. Unfounded claims

Three words to live by when building a business plan: do your research. The research you do into the markets, potential audience, and competitors will inform your projections and instill confidence in the assumptions you make. This is another area where it might help to have a professional assist you, if you’re new to the entrepreneurial game.

3. Unclear goals

Don’t leave your investors guessing about your key milestones and objectives. Use your research and financials to create realistic, specific goals. These will be especially important to investors, who are looking to make a return on their investment and want a trustworthy timeline on when that could happen.

4. Ignoring the competition

Unless you’ve invented something the world has never seen before, your business idea will have competitors. And even if your idea is completely novel, chances are you’re looking to better fill a need that other businesses or industries are currently serving. What we mean to say is: you’ve got competition, no matter your business idea. Investors know this, and they want to know that you can clearly see who your competitors are and how you’ll set yourself apart.

5. A blind spot for your business’s weaknesses and risks

You might think that you should avoid talking about the risks to your idea when you’re building your business plan. And while you don’t need to harp on them, you should fully understand what your weaknesses are and acknowledge them somewhere in the plan, along with potential solutions to compensate for them. If you don’t show your awareness of risks and weaknesses in the plan, investors might think you’re hiding something.

The better you know your own weaknesses, the better you can address lender and investor concerns about them.

6. Overhyped impact

Your little bookstore doesn’t have to change the world. We know you’re excited about your business idea, and you should be; that passion will take you far. But a common pitfall of new entrepreneurs is to overstate how their idea will impact the market or the community. Remember, you’ll have to live up to what you put down in your plan, so be sure you can make good on the statements therein.

7. Not enough outside insight

If you’re the only person looking at your business plan, you might be heading for a “no” from lenders or investors. It’s critical that you get other people’s eyes on your plan before you present or submit it.

Even if the people in your life have no experience in business, your plan should be easy enough for them to read, understand, and critique. And if you want expert feedback, there are several free resources available to hopeful small business owners, including the  Small Business Administration’s network of counselors .

8. Poor readability

Spelling and grammar matter. If your investors and lenders can’t get through your plan because of easy-to-fix mistakes, they might question your attention to detail. If grammar isn’t your thing, have a friend proofread your plan before you share. It can also help to read your plan aloud to catch these kinds of errors.

Choose your own adventure: Which business plan is right for you?

Business plans aren’t one-size-fits-all. There are lots of ways to create the right plan for you, depending on what your financial backers and other stakeholders need to see in order to have confidence in your idea. But overall, most plans fall into one of two models:

Impress with a traditional business plan

A traditional business plan is the more in-depth of the two, full of fleshed-out financials, market analyses, risk assessment, and other nitty-gritty factors. This is the model to use if you’re looking for a small business loan from a bank and some investor situations.

The pros:  This comprehensive plan is extremely detailed and, if done properly, is sure to make your investors feel safe putting their funding into your new venture.

The cons:  These plans take a longer time to pull together, which could slow down your timeline. Plus, the traditional model is more granular and tends to leave out more high-level, strategic ideation that some investors might find important.

Inspire with a lean business plan, or business model canvas

If a traditional business plan is the trees, a lean plan is the forest. The one-page approach, also known as a business model canvas, is more about the concepts and big picture of your future business and is focused on relationships, key activities, and your overall value proposition. This type of plan is popular for startups or super-simple and small business ventures looking for independent investors.

The pros:  This version might get you out the door first, since it usually involves less upfront analysis. It can also be the more inspiring and visionary of the two models, since it focuses on the big ideas and broader impact than the nuts and bolts.

The cons:  Investors kind of love the nuts and bolts, most of the time. After you’ve sold them with your high-level concept, chances are you’ll have to dig in on the details, which might feel like you’ve doubled your work.

It’s time to get those facts and figures together and floor your potential investors!

Here are the main sections of a traditional business plan that you should include:

1. Executive summary

Whether it’s a bank loan officer or an investor reading your business plan, chances are they’re short on time and need the fast facts up front. The executive summary opens your plan, and it’s where you share your overall mission statement, along with important market analyses and financial projections.

A top-notch executive summary will give readers the most important details in the first few pages of your plan so they feel confident in your idea and interested in reading on.

Pro-tip:  Write your executive summary last. You’ll be able to see the full picture of your plan more clearly, and that means you can sum it up more effectively.

2. Company description

In this section, give all the specifics about your business, and don’t be afraid to brag. The more tangible and sure-footed you can make the company feel, the more confident your investors will be in the concept.

Here are some of the questions your company description should answer:

• Who are you? What’s your business’s name?
• What are you selling?
• Where and how do you plan to sell it?
• How does your business solve problems for customers?
• Who do you plan to serve? Individual customers, other businesses, or both?
• How is your business unique from its competitors?
• What makes this business a successful idea… or, why should someone give you money to pursue it?

3. Market research and competitive analysis

Here’s where the nitty-gritty details come into play. It’s time to do some research on your future market and analyze that data to make decisions on how to structure your business, and what you can reasonably charge for goods and services.

Not a huge fan of data? Don’t sweat it. You can hire market research analysts who will do the heavy lifting for you. We highly recommend finding a professional to help with the research if it’s not in your wheelhouse, since it’s really important to get the numbers right.

Here are some areas of analysis you’ll need to include in your business plan:

• Where does your business fit in the world?
• How large is the current market?
• How is the market currently structured?
• What does year-over-year growth look like in this market?
• Is the market trending in a positive direction? If not, how will a business like yours pick up the slack and reinvigorate the market?
• What are consumers clamoring for in this market today?
• How have businesses adjusted to customer demand? Where have they fallen short?
• Are businesses themselves setting trends that have taken off? What are they and how will your business respond?
• How does your business answer the call for these trends and themes?
• How does your business anticipate trends on the horizon?
• Who’s currently doing what your business plans to do?
• What are these other companies’ strengths and weaknesses?
• How will your business outdo competitor strengths and pick up the slack on their weaknesses?

Pro-tip : Be sure to include ways your business idea  disrupts  the status quo of the market you’re targeting, if it plans to do so. Disruption is the name of the game today, and investors who are looking for the Next Big Thing might be excited and impressed by this potential.

4. Company structure and operations

This section is where you detail the people and processes that will keep your business profitable.

In the company operations section, it’s a good idea to include:

• Your proposed business’s legal structure: LLC, nonprofit, sole proprietorship, etc.
• An organizational chart for easy reading and understanding
• A detailed breakdown of who is responsible for which aspects of the business
• Bios of your team members: showcase the expertise and experience your team has, especially in this market, since that can instill confidence in your idea
• Projected staffing needs and onboarding process, as well as the cost to compensate these team members
• Your approach to building relationships in the community and market to promote business growth
• Plans for growth: how will you scale up efficiently while offering the same level of service to your customers? What might need to be outsourced to third-party partners as you grow?
• Zoning permits, licensing, rent (if applicable): nail down the brass tacks of what it costs to keep your doors open in this section, so your investor knows you’ve thought of everything.

5. Your service and product line

You’ve mentioned what you plan to sell in your executive summary. Now it’s time to, you guessed it, dig into the details.

In your service and product line section, be sure to include:

• A list of the initial products and/or services you plan to sell
• The initial pricing for each of these items
• The product life cycle (if applicable): how are your products made, how long does it take, and what does it cost?
• Third-party services (if applicable): do you engage outside help for the development of your products? For example, if you sell perfumes, do you fill vials yourself or do you work with a bottling company?
• Intellectual property plans (if applicable): where are you in the patent process?
• Research and development details (if applicable): What is the R&D process for new products, who is involved, and what does it cost?

6. Sales and marketing plan

The data is all well and good, but how will you take action on it and move your products and services? Having even a tentative sales and marketing plan in place that discusses how you’ll position yourself in the market and attract customers can go a long way to proving you have a game plan beyond getting the doors open.

Here are some key elements to include in your sales and marketing plan:

• Sample messaging : How do you plan to talk about your company in the market to attract customers? What solution are you selling, and how will you convey that?
• Sample design work : How will you grab the market’s attention? Decide on the “look and feel” of your business: the website, packaging, and advertisements.
• Promotion strategy : How much do you plan to set aside for advertising and other promotions? Where will you advertise, and how will you measure success?
• Sales process : How will your team nurture a new lead until they become a customer? How will they upsell/cross sell to them? Where will they look for new leads and relationships?
• Customer service and retention : Marketing doesn’t stop when a customer buys from you for the first time. Keeping customers happy is a huge piece of growing a small business. Be sure to outline your plan for proactive, delightful customer experiences.

7. Your ask

Even if you have to close your eyes while you do it, you’re going to have to write down the exact amount of money you’re asking for from investors or the bank. If you’ve done the rest of this business plan with great attention to detail and objectivity, the number should be pretty clear and based on your projected overhead.

The Small Business Administration recommends asking for the amount you’ll need to keep the doors open for the first five years, so be sure to think ahead when calculating that number. And whether you’re working with a bank or an investor, clearly outline the terms you seek for repayment.

Be specific in this section about how you will spend this particular funding. If you’ve already nailed down a loan for business supplies, for example, be upfront with your investors about needing their support to compensate your team and keep the lights on. People are likely to feel more comfortable investing if they know exactly how their money will be used.

Pro-tip:  Don’t sell yourself short. When looking for investors, ask for what you need, not what you  think  someone will give. You never know what someone is willing to invest until you ask, so give them the opportunity to pleasantly surprise you!

8. Financial projections

You might see some investors skip right to this section of your proposal, after seeing the highlights in your executive summary. While everything else in your business plan is important, you can’t blame them for wanting to know how financially sound your idea is… and how much money they might stand to make as a result.

This piece is also crucial to you as the potential business owner. Numbers don’t lie, so make sure you listen; if the projections aren’t positive, you might need to rethink your plan.

Here’s what your financial projection section might include, depending on your position as you launch a new business:

• Projections for the first five years:  Provide detailed, quarterly financial outlooks for the first year or two, and annual projections after that. Total operating expenses:  Be explicit about what exactly it will cost to run your business for the next five years. This includes everything from office space to supplies to salaries. And be sure to account for inflation and business growth!
• Break-even analysis:  The amount of revenue you’ll need to cover costs and, well, break even. This should be pretty accurate for the first year, given your projected operating expenses, and should be adjusted for increased expenses in the next four years, depending on your projected growth.
• Forecasted income and expenses:  What can you reasonably expect to bring in over the next five years? What ongoing expenses can you plan for or predict?
• Projected balance sheets:  Balance sheets tell investors what financial resources you’ll have on hand after your expenses to re-invest into growing the business: basically, how healthy do you expect your business to be in five years’ time?
• Projected cash flow statements : This tells your investors how much cash will be coming into your business from sales and how that cash is being spent in a given year.
• Potential collateral:  If you’re looking to get a bank loan, be sure to include any additional collateral that you can put up against the loan.

Pro-tip:  Don’t skimp on the expert input. Find a great accountant you trust to help you develop the financial projections for the first five years of your business, so you know they’re sound enough to share with your investors or bank. If you want help calculating costs, try the Small Business Administration’s startup calculator  here .

Build your own lean business plan

It’s time to polish up your vision and inspire those potential backers to believe in your idea with a high-level, conceptual plan. Some startups are able to accomplish their lean plan in one page, but feel free to add the amount of detail that makes you (and your investors) most comfortable.

Here are the usual sections of a lean business plan that you might want to include or adjust as you see fit. We’ll lay it out in the traditional lean plan format, based on the Small Business Administration’s suggestions, to show you just how high-level it can be. But remember: a lean plan can be whatever you need it to be, so don’t be shy about adjusting the structure and content to suit your investors’ needs.

Here’s an idea of what you can include in your one-sheet lean business plan, using an online flower delivery service as an example:

Pro-tip:  An appendix can really come in handy if you’re doing a lean business plan. Attach some more concrete financial projections and any other background research you’ve done to bolster this more conceptual, strategic plan model.

Here are a few extra sections you can sprinkle in to either plan format to give your investors even more peace of mind:

Your story.  Paint a complete picture of your business’s journey up to this moment. Tell the story of how your idea was born, why it’s important to you and the world, and what your vision is for the future.

Product development and distribution plan.  If you’re selling products, this is a great piece to add within your product line section. A distribution plan shows exactly how your products go from concept to customer. Seeing that flow chart clearly is helpful for both you and your investors.

Risk assessment and mitigation.  Are you looking to break into a high-risk industry like construction, cannabis, or even owning your own restaurant? Chances are your investors want to see that you are aware of the risks and have plans in place to manage them.

Early wins.  Do you already have proof that your business is in demand? Maybe you’ve been selling your products informally to family and friends to gauge interest, or other investors have already ponied up because they love your idea. It’s a good idea to include these wins in your business plan. Seeing that others already believe in you will make it easier for new investors to make that leap of faith, so include these facts and figures to invigorate confidence.

As you do research for writing your business plan, you’ll probably hear about a  pitch deck.  This is a slide-show version of your plan that might come in handy. You’re likely to need a pitch deck if you’re looking for investors. Most banks’ small business loan officers just want the facts on paper and don’t expect to see a pitch deck.

Here are some pointers to help you create a dynamic, easy-to-follow pitch deck:

1. Include overview and conclusion slides

This is a classic teacher technique:  tell the audience what you’re going to show them, show them what you promised, and recap what you’ve shown . This gives your listeners an experience that has a beginning, middle, and end… and you’ll see in #2 that this might be more important than you thought.

Take a moment at the top of your presentation to tell your investors exactly what you’ll cover in your allotted time, so they know what’s coming. Then include a wrap-up slide at the end, with a few of the key points from the presentation, to tie it all together.

2. Tell a story

Since the beginning of humankind we’ve loved and gravitated toward storytelling, from cave paintings to binge-watching the latest season of our favorite show. And it’s not just for entertainment purposes; a classic Stanford study once showed that people retain information when delivered in the form of a story six to seven times better than they do when the same information is given as dry lists or statistics.

This doesn’t mean you need to open your presentation with “Once upon a time.” Just focus on the story of you and what brought you to this big idea: what roadblocks were you running into when you saw the solution? What product did you need that didn’t exist? Share the cold, hard financial facts, of course, but don’t leave out the  you  of this journey. Use storytelling to build trust in your vision and inspire passion in this new business venture.

3. Hit the high-level points of your business plan

A pitch deck should stick to the most important pieces of information that investors need, in order to hold their attention from beginning to end.

Here’s where you should spend your time in a pitch deck:

• Who you are and why you’re the one to run this business
• What problem the business solves
• How you’ll spend the investment money
• When investors will see an ROI, or return on investment

4. Make your data more digestible

In both your business plan and your pitch deck, make sure your market research and financial projections are easy to read and understand. Use the tools at your disposal to make the numbers sing: charts, graphs, statistics spelled out big and bold.

5. Keep it simple

The more uniform and clean your pitch deck is, the easier it will be to read and retain. Stick to one font, one color scheme, throughout the deck. Make sure the graphics you decide to use—images, charts, graphs, other designed pieces—are high quality and sprinkled in. Do your best not to clutter slides with multiple graphics, as this can make your presentation harder to follow.

6. Brevity is your friend

Speaking of holding your audience’s attention: pare down the text on your slides to the most essential points. A good pitch deck is usually 10 to 15 slides, with around a minute spent on each slide. Be sure you’re only tackling one topic per slide to keep things focused.

Your pitch deck is for the investors’ engagement, so if you need more detailed reminders about what to cover, create separate notes for yourself instead of crowding the slides with text. If you need to provide your audience with more context, you can always add an Appendix at the end of the deck, which investors can review on their own time. (And don’t forget your business plan! It should answer most of the more detailed questions your investors have.)

7. EXTRA: Present your deck

The way you present your pitch deck is as important as its contents. Here are some

• Be clear on your time frame, and stick to it.  If someone has money to invest in your business, odds are good that they’re a busy person. Show that you respect their schedule by ensuring your pitch fits into the timeframe they’ve carved out for you.
• Practice, practice, practice.  The smoother your presentation can go, the better. Give your potential investors added confidence by knowing your facts, figures, and slides backward and forward. Set a timer while you practice, so you know if you need to pick up the pace or speak more slowly.
• Stay on your toes.  No matter how well you prepare, live presentations can always surprise you. As you prepare and practice, remember to expect the unexpected and not get tunnel vision on your pitch. Handle whatever is within your control with grace and a sense of humor.
• Watch the clock.  Pace yourself, and make sure to stop at your given time. Depending on the number of questions you’ve taken during the pitch, you might be behind when time’s up. It’s better to stop and ask if the investors have time for your final slides than to potentially make them late for their next appointment.
• Wrap up with earnest thanks.  Don’t forget to say thank you! Your conclusion is also a good time to remind your investors why you’re the one who should run this new business. Leave them with the memory of your passion for the venture.
• Save sharing your presentation until the end.  Whether it’s via email or hard copies, you’ll retain people’s focus better if they don’t have something to flip through while you’re talking. Pass around or send out your presentation once you’ve concluded, so folks can peruse on their own time.

Tools to help you build a business plan

If you need some help organizing your ideas and building your first business plan, here are some tools that can assist:

• The Small Business Administration’s startup calculator.  Not sure what to project as your initial costs?  Download this editable worksheet , plug in your categories and numbers, and you’ll get a better idea of what funding you need to ask for.
• LivePlan.  This online business-planning tool helps you write your plan (either in-depth or lean) and comes with industry benchmark data that can help with your market research. You can also track your funding progress right in the app. Multiple review sites have named LivePlan the best software for help writing a business plan.
• RocketLawyer.  Get legal assistance on your documents without having an attorney on retainer. RocketLawyer has an entire section of their website dedicated to helping folks launch businesses, and you can breathe easy knowing the legal side will be handled.
• SCORE free business resources.  SCORE is a resource partner of the Small Business Administration and offers free business counseling to entrepreneurs.  Visit SCORE  to find a mentor, download business plan templates, and explore their library of resources.

Starting a business is a big undertaking. If you want to do some more research before you start making your plan, here are some helpful reads:

• Mind Your Business: A Workbook to Grow Your Creative Passion Into a Full-time Gig  (Ilana Griffo, 2019). In addition to covering all the basics of starting a business, including the legal and tax hurdles, this workbook-style guide has checklists and other writing activities to help you put the theory of starting a business into practice.
• Starting a Business QuickStart Guide: The Simplified Beginner’s Guide to Launching a Successful Small Business, Turning Your Vision into Reality, and Achieving Your Entrepreneurial Dream  (Ken Colwell, 2019). This book comes backed with the author’s 20 years of experience working with entrepreneurs and will help you sort out how viable your business idea is and how to get it off the ground.
• Side Hustle: From Idea to Income in 27 Days  (Chris Guillebeau, 2017). This book takes a more entertaining, conversational approach to launching a new business, and it’s backed up by hundreds of case studies and written by a  New York Times  bestselling author in the entrepreneurial world.
• Legal Guide for Starting & Running a Small Business  (Fred S. Steingold, 2017). This book is in its fifteenth edition, and we can see why. It breaks down the legal intricacies of starting a business that most new entrepreneurs aren’t familiar with: taxes for small businesses, structuring partnership agreements, creating an LLC, and more.
• Small Business For Dummies  (Schell & Tyson, 2018). From the classic how-to series comes the fifth edition of their popular book on starting a small business. You’ll get all the basics you need in the no-nonsense approach the  Dummies  series always provides, from authors with decades of experience in launching businesses. And if you’re specifically looking to start an online business, try  Starting an Online Business for Dummies .

Your business plan: the hard work will pay off

Creating a business plan can feel overwhelming at first if you’ve never made one before. And we won’t lie; it does take a little bit of elbow grease to put one together.

But a business plan done well, be it traditional or lean, will either reinforce how great your idea is or help you find ways to make it even better. Take the time to do it well, and you’ll have a much easier time securing funding for your new small business venture.

Got your plan in hand? Learn more about how a business communications system can help you thrive.

Originally published Oct 02, 2024, updated Oct 19, 2024

Small business, Startups

4 ways to know when to start a business

Starting a business is an exciting venture, but it can also be daunting, especially when the economic landscape seems uncertain. You have a brilliant idea burning inside you, but you might be wondering if now is the right time to take the plunge. After all, the path to entrepreneurship can sometimes feel like stepping off ...

Thank you for your interest in RingCentral.

Related content

3 Ways Free File Sharing Makes Your Team More Productive

The best collaboration software for efficient remote teams

The habits of highly successful remote companies

What is an Action Plan? Learn with Templates and Examples

Planning on turning your vision into reality? And what’s your best way to avoid challenges and problems during this journey? A solid action plan.

We have outlined 6 steps explaining how to write an action plan. Once you familiarize yourself with them, go ahead and use the editable templates below to start planning right away.

What is an Action Plan?

Why you need an action plan, how to write an action plan, action plan templates.

An action plan is a specific list of tasks in order to achieve a particular goal. It can be regarded as a proposed strategy to execute a specific project to achieve a specific or general goal effectively and efficiently. It outlines steps to take and helps stay focused and organized, whether it’s personal or work-related. Breaking down the goal into smaller, manageable steps, makes it easier to stay motivated and track progress.

It’s an essential part of the strategic planning process and helps with improving teamwork planning Not only in project management, but action plans can be used by individuals to prepare a strategy to achieve their own personal goals as well.

Components of an action plan include

• A well-defined description of the goal to be achieved
• Tasks/ steps that need to be carried out to reach the goal
• People who will be in charge of carrying out each task
• When will these tasks be completed (deadlines and milestones)
• Resources needed to complete the tasks
• Measures to evaluate progress

What’s great about having everything listed down on one location is that it makes it easier to track progress and effectively plan things out.

An action plan is not something set in stone. As your organization grows, and surrounding circumstances change, you will have to revisit and make adjustments to meet the latest needs.

Sometimes businesses don’t spend much time on developing an action plan before an initiative, which, in most cases, leads to failure. If you haven’t heard, “failing to plan is planning to fail” said Benjamin Franklin supposedly once.

Planning helps you prepare for the obstacles ahead and keep you on track. And with an effective action plan, you can boost your productivity and keep yourself focused.  

Here are some benefits of an action plan you should know;

• It gives you a clear direction. As an action plan highlights exactly what steps to be taken and when they should be completed, you will know exactly what you need to do.
• Having your goals written down and planned out in steps will give you a reason to stay motivated and committed throughout the project.  
• With an action plan, you can track your progress toward your goal.
• Since you are listing down all the steps you need to complete in your action plan, it will help you prioritize your tasks based on effort and impact.

From the looks of it, creating an action plan seems fairly easy. But there are several important steps you need to follow with caution in order to get the best out of it. Here’s how to write an action plan explained in 6 easy steps.

Step 1: Define your end goal

If you are not clear about what you want to do and what you want to achieve, you are setting yourself up for failure.

Planning a new initiative? Start by defining where you are and where you want to be.

Solving a problem? Analyze the situation and explore possible solutions before prioritizing them.

Then write down your goal. And before you move on to the next step, run your goal through the SMART criteria . Or in other words, make sure that it is

• Specific – well-defined and clear
• Measurable – include measurable indicators to track progress  
• Attainable – realistic and achievable within the resources, time, money, experience, etc. you have
• Relevant – align with your other goals
• Timely – has a finishing date

Use this SMART goal worksheet to simplify this process. Share it with others to get their input as well.  

• Ready to use
• Fully customizable template
• Get Started in seconds

And refer to our easy guide to the goal-setting process to learn more about setting and planning your goals.

Step 2: List down the steps to be followed

The goal is clear. What exactly should you do to realize it?

Create a rough template to list down all the tasks to be performed, due dates and people responsible.

It’s important that you make sure that the entire team is involved in this process and has access to the document. This way everyone will be aware of their roles and responsibilities in the project.

Make sure that each task is clearly defined and is attainable. If you come across larger and more complex tasks, break them down to smaller ones that are easier to execute and manage.

Tips: Use a RACI Matrix template to clarify project roles and responsibilities, and plan projects

Step 3: Prioritize tasks and add deadlines

It’s time to reorganize the list by prioritizing the tasks . Some steps, you may need to prioritize as they can be blocking other sub-steps.

Add deadlines, and make sure that they are realistic. Consult with the person responsible for carrying it out to understand his or her capacity before deciding on deadlines.

Step 4: Set milestones

Milestones can be considered mini goals leading up to the main goal at the end. The advantage of adding milestones is that they give the team members to look forward to something and help them stay motivated even though the final due date is far away.

Start from the end goal and work your way back as you set milestones . Remember not to keep too little or too much time in between the milestone you set. It’s a best practice to space milestones two weeks apart.  

Step 5: Identify the resources needed

Before you start your project, it’s crucial to ensure that you have all the necessary resources at hand to complete the tasks. And if they are not currently available, you need to first make a plan to acquire them.

This should also include your budget. You can assign a column of your action plan to mark the cost of each task if there are any.  

Step 6: Visualize your action plan

The point of this step is to create something that everyone can understand at a glance and that can be shared with everyone.

Whether your action plan comes in the shape of a flowchart , Gantt chart , or table , make sure that it clearly communicates the elements we have identified so far – tasks, task owners, deadlines, resources, etc.

This document should be easily accessible to everyone and should be editable.

Step 7: Monitor, evaluate and update

Allocate some time to evaluate the progress you’ve made with your team.

You can mark tasks that are completed as done on this final action plan, bringing attention to how you’ve progressed toward the goal.

This will also bring out the tasks that are pending or delayed, in which case you need to figure out why and find suitable solutions. And then update the action plan accordingly.

Business action plan

You may like to read: The Easy Guide to Making a Business Plan for Presentations

Marketing action plan

Strategic action plan, corrective action plan template.

Learn more about: Corrective Action Plan template .

Additional resources: The Easy Guide to Creating a Business Contingency Plan

Simple action plan template

Any more tips on creating an action plan.

An action plan is designed to guide your way to accomplishing your goals. It turns your vision into actionable goals and steps. And it helps you stay focused and motivated.

From an individual employee in an organization to larger departments can make use of action plans to steer their way towards completing their goals.

Maybe you are about to create your very first action plan, or you are already a pro at writing them. Either way, we’d like to hear your opinions on how to write an action plan. Do share them with us in the comments section below.

FAQs About Action Plan

What are the common mistakes to avoid when collaborating on creating an action plan.

Lack of clarity on goals: Make sure the team understands the goals and objectives of the action plan. The goals should be specific, measurable, attainable, relevant, and time-bound (SMART).

Unclear responsibilities: Assign clear roles and responsibilities for each team member to avoid confusion and ensure accountability.

Overcomplicating the plan: Keep the action plan simple and easy to understand. Avoid adding unnecessary complexity or detail that may confuse the team.

Failure to prioritize tasks: Prioritize tasks based on their importance and urgency. This will ensure that the team focuses on the most critical tasks first.

Inadequate resources: Ensure that the team has access to the necessary resources such as time, budget, and equipment, to carry out the action plan successfully.

Lack of communication: Effective communication is crucial to the success of any action plan. Ensure that team members are regularly updated on progress and any changes to the plan.

Failure to monitor progress: Regularly monitor progress and adjust the action plan as needed to ensure that it stays on track and achieves its goals.

What are the different types of action plans?

Strategic action plan: This type of plan outlines the long-term goals and objectives of an organization, and the actions that will be taken to achieve them. It typically covers a period of several years and includes high-level strategies and initiatives.

Operational action plan: This plan focuses on the day-to-day operations of an organization, outlining the actions that will be taken to achieve short-term goals and objectives. It typically covers a period of one year or less and includes specific actions and timelines.

Project action plan: This type of plan is used for individual projects and outlines the actions that will be taken to achieve specific project goals and objectives. It includes a detailed breakdown of tasks, timelines, and responsibilities.

Sales action plan: This plan focuses on the actions that will be taken to increase sales and revenue. It includes specific strategies for marketing, sales, and customer service.

Marketing action plan: This plan outlines the actions that will be taken to promote a product or service and increase brand awareness. It includes strategies for advertising, social media, public relations, and other marketing initiatives.

Crisis management action plan: This type of plan outlines the actions that will be taken in the event of a crisis, such as a natural disaster or security breach. It includes specific protocols for communication, evacuation, and other emergency procedures.

Who can use an action plan?

An action plan can be used by anyone who wants to achieve specific goals or objectives. It is a useful tool for individuals, teams, and organizations in a variety of contexts. Here are some examples:

Individuals: An individual can use an action plan to achieve personal goals such as losing weight, completing a degree, or starting a business.

Teams: A team can use an action plan to achieve goals related to a specific project or initiative. For example, a marketing team may use an action plan to launch a new product.

Small businesses: Small businesses can use an action plan to achieve goals related to sales, marketing, operations, or finance.

Non-profit organizations: Non-profit organizations can use an action plan to achieve goals related to fundraising, volunteer recruitment, or program implementation.

Government agencies: Government agencies can use an action plan to achieve goals related to policy implementation, disaster response, or public safety.

Educational institutions: Educational institutions can use an action plan to achieve goals related to improving student outcomes, increasing enrollment, or expanding programs.

Amanda Athuraliya is the communication specialist/content writer at Creately, online diagramming and collaboration tool. She is an avid reader, a budding writer and a passionate researcher who loves to write about all kinds of topics.

Related Tools and Resources

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

Ideas and insights from Harvard Business Publishing Corporate Learning

How to Create a Successful Leadership Development Program

• Leadership development initiatives are most effective when they focus on performance outcomes that support a key business priority, like revenue increase.
• Leadership development program content and design should be tailored to different leadership levels for maximum relevance and engagement.
• Data should be collected before, during, and after the program to measure progress and optimize for impact.

As organizations evolve in response to technological advancement, external events, and generational paradigm shifts, it can feel like the only constant for leaders is change. If so, there is no greater leadership asset than the drive to keep learning. And there is much to learn. Today’s leaders have a broader scope of priorities than ever before. They must manage volatility in the short term while maintaining a vision for the long term. They must be silo-bridgers, thoughtful innovators, and stewards of company culture. Companies that prioritize continuous learning can realize extraordinary potential ; those that don’t will stagnate.

Learning at this scale doesn’t happen without a plan. It’s great to set development goals for leaders during yearly evaluations, but without a solid leadership development plan that directly connects to business outcomes, other priorities and distractions will take over.

At Harvard Business Publishing Corporate Learning, we partner with companies to create curated learning experiences for leaders at every level. Though each partnership is unique, there is a proven process for designing and developing impactful learning initiatives. This guide shows you how to use that process to shape, implement, and optimize a leadership development program for your organization.

Process for designing and developing impactful Leadership Development Programs

Alignment: what do you need, goals: how will performance change, assessment: where are you now, development: what kind of learning experiences will work for you, executive involvement: how can senior leaders support learners, implementation: how will you integrate the learning experience, feedback and evaluation: how are learners performing, measuring impact: how effective was the program, what’s next: creating a culture of learning.

A generic leadership development program will yield generic results, so your plan should be grounded in a firm understanding of your organization’s unique values, challenges, and priorities. The process begins with alignment on one foundational question: What is the business priority driving leadership development? In the most general terms, most business priorities fall into a few broad buckets: Companies want to increase profits, cut costs, and mitigate risks .

Once you’ve established the key business priority, identify how employees can support it. What do you want leaders (and by extension, their teams) to do differently as a result of the program? Do leaders need to be more agile ? More innovative ? More inclusive ? These performance outcomes will shape the structure, content, and measurement of the learning experience.

Concentrate on the most critical needs. It’s tempting to try to improve everywhere, but learning experiences are most effective when they focus on a few key outcomes. If your goal is to inspire leaders to innovate more, ask yourself: What is preventing them? Skills gaps might include digital competency, navigating complexity, cross-functional collaboration, or even talent development. Identifying these gaps will ensure your learning objectives have the greatest impact on the business’s most important priorities.

The process begins with alignment on one foundational question: What is the business priority driving leadership development?

When we partnered with the global theater chain Cinépolis , their key business priority was growth through innovation. Their primary performance outcome was developing innovative leaders from the C-suite to the frontline. Cinépolis had total alignment on what they wanted, so their leadership development program could be highly focused. Their program used a cascade approach, beginning with intensive training for senior leaders and extending all the way to individual theater employees. The culminating exercise asked employees to propose one-page solutions to identified problems, which resulted in innovative new projects that increased revenue and customer satisfaction.

Checklist for Alignment

• Align on the key business priority
• Choose a focused set of performance outcomes

Additional Resources

• Key Alignment Questions
• Top 10 In-Demand Leadership Skills for the Future of Work

Now that you’ve identified your business priorities and performance outcomes, you can set leadership development goals . Your program should deliver impact in three areas: learner experience, on-the-job performance, and impact on the business. Success indicators might include strong engagement in the program, more confident decision-making, and improved retention, respectively.

Whether success indicators are qualitative or quantitative, each will need corresponding metrics to measure at the beginning and the end of the program, and each metric should have clear methods and sources for measurement. Success indicators should be specific to your organization and the unique ways you measure performance.

Leadership Development Program Goals Example

Checklist for goals.

• Set program goals, including success indicators and metrics
• How to Define Impactful Leadership Development Goals
• Learning Experiences That Get Results

With detailed goals in hand, leadership skills assessment can begin. Start with an honest assessment of your business’s organizational systems and norms. Can they support the changes you’re advocating for? If entrenched company culture or processes will disincentivize leaders from applying new skills and approaches, the investment in training will be wasted. If you expect leaders to evolve, the broader organizational culture must welcome and support it.

The clarity you established in the previous phases will be helpful here. Ensure that senior leaders understand the leadership behaviors you’re targeting and the business priorities they serve. Encourage executives to raise awareness of why certain leadership behaviors are needed and reinforce those behaviors by highlighting success. Celebrating early wins by sharing success stories—the “what,” “the why,” and most importantly, “the how”—will link those behaviors to desirable outcomes and encourage other leaders to practice these new habits.

If you expect leaders to evolve, the broader organizational culture must welcome and support it.

Now you’re ready to segment leaders by senior, mid-level, and frontline (or whatever distinctions make sense for your organization) and assess their baseline. You may already have a strong anecdotal sense of what each level needs, but data will always surface fresh insights. You may be able to leverage yearly evaluations or previous survey results, but you’ll probably want to do a new survey to capture more targeted data that you can track through the end of the program.

Make sure you’re hearing from individuals as well as supervisors. We’ve found that employees clearly understand their own needs. In our survey , 85% of respondents recognized the skills needed to improve their current performance. It’s worth understanding what leaders want to learn, because employees are most engaged when learning is linked to individual goals and aspirations, not just company performance.

With data in hand, consider the gaps between the current state and the ideal one. Where are the gaps most significant? This will help you prioritize who and what to focus on.

If your business is at an inflection point, your program should target leaders at all levels. The learning experiences will vary in content or method, but they’ll all be driving towards organizational transformation. You’ll want to decide if learning will be segmented, conducted in parallel with tailored learning experience for each level, or cascaded, where leader-teachers train their staff.

If you’re working towards a narrower goal, focus your effort on the learner levels that will be most impactful. For example, in our work with Fortune 2000 global companies who want to innovate, a common goal is getting leaders to foster group norms of innovation on their teams. To that end, we’ve found that starting with mid-level leaders is most impactful.

Checklist for Assessment

• Assess organizational context
• Consider the gaps between the current state and the ideal one
• Identify target audiences
• How to Assess Leadership Skills for a Leadership Development Program
• Don’t Let Your Company’s Culture Stifle Leadership Development
• How L&D Can Create More Effective Learner-Driven Experiences

Leadership development programs are a significant investment. Not only do they cost time and money, but they also connect to individual emotions about workplace performance and worth. Employees feel valued, engaged, and empowered if the program is worthwhile. If it isn’t, it can be a powerful drag on morale.

Because the stakes are high, organizations often partner with learning experts like Harvard Business Publishing Corporate Learning to guarantee that their investment has value and impact. Through decades of research and continuous focus on improvement, we’ve found that clarity, thoughtful design, and quality content yield the most successful programs.

The right experience will consider what leaders at each level need and how much time and focus they can devote. Self-guided programs are consistent and low-maintenance; immersive group experiences allow for more nuance and depth.

Different leadership levels have distinct responsibilities, needs, and expectations. The architecture of the learning experience should consider these factors. Frontline leaders who are new to management may feel isolated and can benefit from an experience that connects them with mentors and peers. Mid-level leaders, managing both up and down, are highly leveraged and can benefit from micro-learning and skill practice that is directly applicable to their work. Executives benefit from depth and high-touch interactions with peers and experts that provide an outside-in perspective.

Most enterprise leadership development programs leverage a combination of experiences. Our partnership with Capital Group , designed to reinforce leadership standards and priorities across locations, included a mix of in-person and virtual learning with curated content, facilitated discussions, executive sponsorship, and structured assignments that pushed participants to apply learning on the job.

Content is another critical factor. There’s no shortage of leadership development resources, and a coming wave of low-quality AI-generated content will only exacerbate that. Resources should be vetted, relevant, and applicable to learning goals. This is essential to building trust in the program.

With learning content, less is more: too many choices will overwhelm the learner; too many priorities distract from the key goals. Keep the program focused, even in the face of pressure from senior leaders to add new things to the mix. Generally, what is highly relevant is much more important than what is “interesting.” Make learner relevance your touchstone.

Checklist for Development

• Define the learning experience
• Tailor architecture for different leadership levels
• Curate content
• Strategies to Effectively Engage Learners Across the Enterprise
• When Designing Employee Learning Programs, Less Is More

The behaviors that are reinforced and rewarded by senior leaders greatly influence how employees act. If time and structure allow it, consider how you can integrate senior leadership in your leadership development program, beyond simply seeking buy-in.

Our learning solutions often include a “leader as teacher” element. Leaders might share a personal story at the program’s kick-off, host a discussion, participate on a panel, or sponsor an action learning project. Some of our clients also use formal mentorship programs to reinforce learning. Whatever the method, the payoff is significant: the presence of leaders as teachers significantly increases relevance and engagement.

Even if leaders aren’t directly involved, they should be very aware of the context of your learning initiative so they can identify teachable moments in the day-to-day work. Regular updates from you will keep the program content top-of-mind for them.

When American Express wanted to strengthen close to 16,000 mid-level leaders, we co-created a virtual, blended cohort program customized for relevancy and immediate application. Over 100 senior leaders acted as sponsors, sharing career stories and contextualizing learnings to American Express’ business environment. Frontline, mid-level, and upper-level leaders got to explore how important topics like collaboration really worked at American Express. For sponsors, it was a good opportunity to connect authentically with a large number of leaders in a psychologically safe space to discuss topics they were passionate about, which helped build these senior leaders’ personal brands in the company.

Checklist for Executive Involvement

• Determine how senior leaders will be integrated into the program
• How to Turn Your Busy Leaders into the Teachers They Need to Be

Successful implementation requires clarity, ease, and support. Leaders’ time is precious, so program delivery should be relatively seamless. Experiences can be integrated into an existing environment to minimize learning curves and platform fatigue or delivered on a separate, all-in-one platform. The right choice will vary by organization, but the most critical factor is ease. It should be easy to access lessons, content, schedules, cohort information, and progress indicators. Make sure there’s a responsive support contact to provide platform training and field questions.

Before you launch a leadership development program, make sure everyone understands how the program aligns with your learning development strategy and the organization’s broader business strategy. Drawing clear connections between desired behaviors and business outcomes will encourage employees to prioritize learning. If it’s one of multiple learning initiatives, help employees understand the unique part this program plays.

Drawing clear connections between desired behaviors and the ultimate business priority will encourage employees to prioritize learning.

Beyond serving company goals, leadership development has a lot of value for individuals. Defining “What’s in it for me?” for employees is a powerful motivator, especially at the beginning of the program. Share the scope of the learning development plan with participants so they understand that it will be relevant and practical, with clear outcomes that align with what leaders believe will make them even more successful.

Checklist for Implementation

• Choose the right platform
• Delegate a support contact for participants
• Contextualize the program before launch
• The Changing Face of Leadership Development

Leaders can read a thousand articles, but if they’re not putting learning into practice, the effort is wasted. Managers and leadership development teams must cultivate a safe space for application and experimentation. Digital simulations and peer discussion groups can help, but it’s just as critical for senior leaders to encourage and support applications of learning throughout the workday and to provide regular feedback.

You shouldn’t wait until the end of your learning experience to find out if it worked. Some digital platforms, including Harvard ManageMentor® and ManageMentor Spark® , can provide real-time reporting in aggregate, in groups, or at the individual level, including real-time polling on behaviors. With this data, managers and learning partners can adjust lessons and content to address gaps and areas of challenge. Over time, trends can be identified, helping organizations deepen their understanding of organizational strengths and weaknesses. This also provides useful information on how leaders learn best, to guide future programming.

Checklist for Feedback and Evaluation

• Create a plan for learning application and feedback
• Collect data for analysis and optimization
• Decisions, Decisions: How L&D Can Use Data to Gain Insight on Learning
• How to Give Feedback—Especially When You’re Dreading it

Once a leadership development program ends, you can analyze its business impact and learner engagement and satisfaction. Depending on your program timeframe and goals, it may be months before some quantitative business metrics like increased revenue or retention are proven out, but others—like program engagement and application of learning on the job—can be assessed immediately.

Engagement data might include participation by team and level; hits and return visits for specific content; and social and sharing metrics. Application data can be quantitative (number of learners who used new behaviors on the job) and qualitative (self-reported ratings of success, confidence, and desire for more practice).

An end-of-session satisfaction survey for participants provides feedback on many points, including perceived value, program strengths and drawbacks, logistical and platform feedback, success stories, and more. A survey aimed at supervisors can determine if the program influenced behavior change. We typically recommend conducting a follow-up survey two or three months after the learning experience to assess the program’s impact on behavior.

Change requires effort and risk—make sure participants know their efforts are appreciated.

Evaluating satisfaction, engagement, and impact data will provide valuable information about the levers you can pull to improve future learning experiences. But no matter what the outcome is, be sure to celebrate employees for their commitment to learning. A third of employees don’t think their companies provide enough recognition or reward for the learning they’re doing. Change requires effort and risk—make sure participants know their efforts are appreciated.

Checklist for measuring imapct

• Measure outcomes against the baseline
• Celebrate program success!
• Measuring the Impact of Leadership Development

Analyzing your learning experiences will yield important information about the structure, content, and concepts that work. You can bring that information into the next learning initiative, which might tackle a new business priority or scale the program for a different leadership level or geography.

Between formal learning experiences, learning and development teams can offer self-guided options and resource libraries to help employees maintain a continuous learning cadence. We’ve found that companies with strong learning cultures share a few key strategies.

Strategies that Nurture a Learning Culture

The leadership development journey is ongoing. Critical skill sets are rapidly evolving, and there will always be new leaders entering the field who need to learn the evergreen skills of management. Developing a culture of continuous learning is one of the most forward-looking investments a company can make in an era marked by uncertainty and disruptive shifts.

• Create a Culture of Learning: Five Critical Strategies
• Six Ways to Scale Corporate Leadership Development Quickly for Strategic Advantage
• Driving Learning Across the Organization at ABB

Explore further

Ready to level up your leaders? Use our checklist to help your organization develop a leadership development program that delivers results.

Download Now

If you have a question about leadership development programs, get in touch with one of our learning design specialists.

About the authors

Deanna Foster

• Senior Director, Global Solutions at Harvard Business Publishing
• Connect with Deanna on LinkedIn

Dr. Gregg Kober

• Director, Global Solutions at Harvard Business Publishing
• Connect with Dr. Gregg o n LinkedIn

Let’s talk

Change isn’t easy, but we can help. Together we’ll create informed and inspired leaders ready to shape the future of your business.

© 2024 Harvard Business School Publishing. All rights reserved. Harvard Business Publishing is an affiliate of Harvard Business School.

• Privacy Policy
• Copyright Information
• Terms of Use
• About Harvard Business Publishing
• Higher Education
• Harvard Business Review
• Harvard Business School

We use cookies to understand how you use our site and to improve your experience. By continuing to use our site, you accept our use of cookies and revised Privacy Policy .

Cookie and Privacy Settings

We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.

Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.

These cookies are strictly necessary to provide you with services available through our website and to use some of its features.

Because these cookies are strictly necessary to deliver the website, refusing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.

We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.

We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.

We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.

Google Webfont Settings:

Google Map Settings:

Google reCaptcha Settings:

Vimeo and Youtube video embeds:

You can read about our cookies and privacy settings in detail on our Privacy Policy Page.

Advertisement

Supported by

Behind OpenAI’s Audacious Plan to Make A.I. Flow Like Electricity

Sam Altman, OpenAI’s chief executive, is talking to the United Arab Emirates, Asian chipmakers and U.S. officials to expand the computing power needed to build artificial intelligence.

• Share full article

By Cade Metz and Tripp Mickle

Reporting from San Francisco

Late last year, Sam Altman, the chief executive of OpenAI, started pitching an audacious plan that he hoped would create the computing power his company needed to build more powerful artificial intelligence.

In meetings with investors in the United Arab Emirates, computer chip makers in Asia and officials in Washington, he proposed that they unite on a multitrillion-dollar effort to erect new computer chip factories and data centers across the globe, including in the Middle East. Though some participants and regulators balked at parts of the plan, the talks have continued and expanded into Europe and Canada.

OpenAI’s blueprint for the world’s technology future, which was described to The New York Times by nine people close to the company’s discussions, would create countless data centers providing a global reservoir of computing power dedicated to building the next generation of A.I.

As far-fetched as it may have seemed, Mr. Altman’s campaign showed how in just a few years he has become one of the world’s most influential tech executives, able in a span of weeks to gain an audience with Middle Eastern money, Asian manufacturing giants and top U.S. regulators.

It was also a demonstration of the tech industry’s determination to accelerate the development of a technology it claims could be as transformative as the Industrial Revolution.

When word leaked that Mr. Altman, 39, was looking for trillions of dollars, he was mocked for seeking investments equivalent to roughly a quarter of the annual economic output of the United States. Officials in Washington also expressed concerns that a U.S. company was trying to build vital technology in the Middle East. To build A.I. infrastructure in a number of countries, American companies would need approval from United States officials who oversee export controls.

Mr. Altman has since scaled his ambition down to hundreds of billions of dollars, the nine people said, and hatched a new strategy: Court U.S. government officials by first helping to build data centers in the United States.

It is still unclear how all this would work. OpenAI has tried to assemble a loose federation of companies, including data center builders like Microsoft as well as investors and chipmakers. But the particulars of who would pay the money, who would get it and what they would even build are hazy.

At the same time, OpenAI has been in separate talks to raise $6.5 billion to support its own business, a deal that would value the start-up at $150 billion. The Emirates’ technology investment firm, MGX, is among the group of potential investors, which also includes Microsoft, Nvidia, Apple and Tiger Global, three people familiar with the conversations said.

OpenAI is seeking cash because its costs far outpace its revenue, the three people said. It annually collects more than $3 billion in sales while spending about $7 billion.

Some of OpenAI’s plans have been previously reported by Bloomberg , The Wall Street Journal and Reuters . Conversations with the nine people close to the talks, who requested anonymity because they are not authorized to speak to the media, provide a fuller picture of the efforts and how the strategy has evolved.

(The Times sued OpenAI and Microsoft in December for copyright infringement of news content related to A.I. systems.)

In private conversations, Mr. Altman has compared the world’s data centers to electricity, according to three people close to the discussions. As the availability of electricity became more widespread, people found better ways of using it. Mr. Altman hoped to do the same with data centers and eventually make A.I. technologies flow like electricity.

Chatbots like OpenAI’s ChatGPT learn their skills by analyzing troves of digital data. But there is a shortage of the chips and data centers that drive this process. If that supply grows, OpenAI believes it can build more powerful A.I. systems.

In dozens of meetings, OpenAI executives have prodded tech companies and investors to expand global computing power, the nine people close to the company’s discussions said.

“Sam is thinking about how OpenAI remains relevant,” said Daniel Newman, chief executive of the Futurum Group, a tech research firm. “It needs more compute, more connectivity, more power.”

Mr. Altman’s original plan called for the Emirates to fund the construction of multiple chip-making plants, which can cost as much as $43 billion each. The plan would reduce chip manufacturing costs for companies like Taiwan Semiconductor Manufacturing Company, the world’s largest chip producer .

TSMC makes semiconductors for Nvidia, the leading developer of A.I. chips. The plan would allow Nvidia to churn out more chips. OpenAI and other companies would use those chips in more A.I. data centers.

Mr. Altman and his colleagues discussed building the data centers in the Emirates, a nation with excess electrical power. In the United States, it has been hard for companies to build new data centers because there is not enough electrical power to run them.

OpenAI discussed funding the infrastructure plan with MGX, an A.I.-focused investment vehicle created by the Emirates. It also met with TSMC, Nvidia and another chip company, Samsung.

Omar Sultan Al Olama, the Emirates’ minister of state for A.I., told The Times in a March interview that there “is a business case” for going after such a giant deal.

Nvidia declined to comment. MGX and Samsung did not respond to requests for comment.

OpenAI said in a statement that it was focused on building infrastructure in the United States “with the goals of ensuring the U.S. remains the global leader in innovation, driving re-industrialization across the country and ensuring A.I.’s benefits are widely accessible.”

Will Moss, a spokesman for TSMC, said the company was open to discussions about expanding semiconductor development but was concentrating on its current global expansion projects and had “no new investment plans to disclose at this time.”

When Mr. Altman visited TSMC’s headquarters in Taiwan shortly after he started his fund-raising effort, he told its executives that it would take $7 trillion and many years to build 36 semiconductor plants and additional data centers to fulfill his vision, two people briefed on the conversation said. It was his first visit to one of the multibillion-dollar plants.

TSMC’s executives found the idea so absurd that they took to calling Mr. Altman a “podcasting bro,” one of these people said. Adding just a few more chip-making plants, much less 36, was incredibly risky because of the money involved.

“We are not, nor have we ever been considering multitrillion-dollar projects. While the total investment needed for the global infrastructure of A.I. to be fully built out by everyone could cost trillions over several decades, what OpenAI is specifically exploring is on the scale of hundreds of billions,” said Liz Bourgeois, an OpenAI spokeswoman.

Around the same time, Mr. Altman visited South Korea and held talks with two chipmakers in the country: Samsung and SK Hynix. But he soon ran into national security concerns over a prominent role for the United Arab Emirates in developing a technology that many consider critical to the economy and warfare.

Some White House officials and congressional leaders are afraid that approving the infrastructure to be built in the Emirates could give China a back door to important technologies. National security researchers have found evidence that some Emirati universities have worked with Chinese universities with ties to Beijing’s military, said Sihao Huang, a technology fellow at the RAND Corporation.

Talks with the Department of Commerce, the Emirates and chipmakers are continuing. OpenAI has also expanded its discussions into other parts of the world, according to four people familiar with those talks.

In the spring, company executives held meetings with Japanese officials in Tokyo. They laid out a plan for building data centers powered by electricity from nuclear power plants that were decommissioned after the Fukushima disaster in 2011 .

During one meeting, a Japanese official laughed when OpenAI said it was seeking 5 gigawatts of electrical power, about a thousand times the power that an average data center consumes, a person familiar with the meeting said.

Later, in meetings with officials in Germany, OpenAI explored building a data center in the North Sea so it could tap into 7 gigawatts of power from offshore wind turbines, the person said.

But political pressures have forced OpenAI to explore options in the United States. During a White House meeting with other tech leaders this month, Mr. Altman presented an OpenAI study called “Infrastructure Is Destiny.”

The study called for new data centers in the United States, two people familiar with the meeting said. Built at a cost of $100 billion each — about 20 times the cost of today’s most powerful data centers — they would hold two million A.I. chips and consume 5 gigawatts of electricity.

As he spoke, Mr. Altman sat in front of a portrait of President Franklin D. Roosevelt, who poured money into massive infrastructure projects like New York’s Lincoln Tunnel, two people familiar with the discussion said. The OpenAI chief told White House officials — including Commerce Secretary Gina M. Raimondo and Jake Sullivan, the national security adviser — that A.I. data centers would be a catalyst for the re-industrialization of America, creating as many as half a million jobs.

Mr. Altman also warned that the United States risked falling behind China and that if the United States did not work with the Emirates, China would instead.

This week, President Biden and Sheikh Mohammed bin Zayed , the Emirati president, met at the White House and directed their senior officials to develop a memorandum detailing future collaboration on A.I.

To bolster its efforts, OpenAI has hired Chris Lehane, a Clinton White House lawyer, as its vice president of global policy , along with two people from the Commerce Department who worked on the CHIPS Act, a bipartisan law designed to increase domestic chip manufacturing. One of them will manage future infrastructure projects and policy.

Speaking last week at an investor event for T-Mobile, which is a customer of OpenAI, Mr. Altman struck a modest tone about the company’s ambitions.

“We build on a gigantic amount of work that has come before us,” he said. “If you think about all that had to happen throughout human history to discover semiconductors and build chips and networks and these massive data centers, we’re just doing our one little bit on the very top of that.”

Adam Satariano contributed reporting from London, and Paul Mozur from Taipei, Taiwan.

Cade Metz writes about artificial intelligence, driverless cars, robotics, virtual reality and other emerging areas of technology. More about Cade Metz

Tripp Mickle reports on Apple and Silicon Valley for The Times and is based in San Francisco. His focus on Apple includes product launches, manufacturing issues and political challenges. He also writes about trends across the tech industry, including layoffs, generative A.I. and robot taxis. More about Tripp Mickle

Explore Our Coverage of Artificial Intelligence

News  and Analysis

A former OpenAI researcher who helped gather and organize the enormous amounts of internet data used to train the startup’s ChatGPT chatbot says the company broke copyright law .

OpenAI hired Aaron Chatterji, a professor of business and public policy at Duke University, to be its chief economist . He previously served in both the Obama and Biden administrations.

Cerebras, a chip company with bold ambitions to take on Nvidia, filed for an I.P.O. , taking a key step toward being among the first A.I. companies to go public since the release of ChatGPT.

The Age of A.I.

Nevada used A.I. to find students in need of help. The new system cut the number of students deemed “at risk” in the state by 200,000 , leading to tough moral and ethical questions over which children deserve extra assistance.

A project at Stanford points to the need for institutional innovation, especially in government, to increase the odds that A.I. enhances democracy .

From hurricanes to wildfires, a new generation of technologies driven by artificial intelligence could help utilities better plan for the risk of extreme weather to their electric grid .