what have you learned in business planning

What I Learned from Writing a Business Plan

Jan 3, 2017 | Running a Business

I’ve finally finished writing a business plan after 6 years of part-time freelancing. I felt like it was time to get more serious and put a better plan into action going into 2017. When I first started LR Design & Marketing in 2010, I never thought I would need a business plan. I thought they were more for start-up companies that were looking for funding or huge companies that needed fancy reporting to present to their board of directors. Turns out, if I want to be successful freelancing in the long-term, I need to put my ideas, goals, and strategies down on paper and start sticking to it.

When I first decided to write a business plan, I started where anyone would… Google! “What is a business plan?” “What should be included?” After doing some research, I found out that a business plan is whatever you want it to be. Sure, there are a few standards such as a mission statement, financial objectives, and marketing strategies, but you can include whatever is relevant to your business and how you plan to make it successful. Here’s what I included in my plan:

Executive Summary – Highlights of the past few years, my objectives, a mission statement, and the keys (as I see it) to success.

Description of Business – Company ownership, location, hours, services, management, and financial overview.

Marketing- Market analysis, segmentation, competition, and pricing

Strategies & Implementation – A timeline of milestones and goals

I took about 4 weeks to thoroughly think about where I want my business to be in one year, 5 years, and to completely write my business plan. This process made me take a step back and evaluate how successful (and not) the past 6 have been. Here’s what I’ve learned from completing my first business plan:

• Writing 14 pages of detailed information is hard work, and time consuming
• I’ve finally defined my target audience
• It feels good to have goals in place and monthly milestones to meet
• It’s important to have a pricing structure- who knew?
• Setting high expectations is scary and very exciting

The ultimate reason I wrote a business plan for 2017 is because I want to grow my freelancing career. Establishing strategies and allocating resources according to a strategic priority will help me get the business from where it is now, to where I want it to be in the future. It’s an exciting time for LR Design & Marketing, and I can’t wait to see what the future holds!

I encourage you to take some time and think about your business goals and put them down onto paper.  Never stop trying to turn your dreams into reality! Ready to start your own business? Let’s chat about your brand and website needs today.

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

Noah Parsons

24 min. read

Updated May 7, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

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

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

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

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

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Business Plan Lessons Learned – Part 1

In the course of my work with entrepreneurs and start-up teams, I’m often asked about business plans. Do we really need one? What are the main topics? Should we do a detailed 30-page version, or is a PowerPoint presentation good enough?

Even though many books, articles, and blogs have been written about business plans, I still sense that there is much confusion, especially among young entrepreneurs, regarding their purpose, use, and value.

Therefore, I would like to use this two-part post to offer my humble opinion and some useful suggestions. While business plans apply to all businesses, my primary focus in this article is on start-up companies.

The Purpose of a Business Plan

I’ve probably developed tens of business plans so far in my career. In large corporations and start-up companies; for established businesses and new ventures; for disruptive technologies and industry standards; targeting emerging markets and mature ones.

Consequently, this vast experience has given me a good perspective on the purpose and value of business plans; which elements in the plan are the most critical and which are less; and how to develop and communicate plans effectively.

The motivation behind a business plan is to “sell” a business idea/venture to a potential investor or an internal stakeholder (board of directors, CEO, etc.). However, I personally believe that a premier motivation is the planning process itself.

You simply should not start any business activity, let alone raising funds to launch your company, before you have a clear and detailed plan.

In addition, strategic business planning provides an organization with several important benefits, including:

Learning . Learning about your target markets, competition, customers, and your own capabilities and competencies.

Goal setting . Discussing and defining the organization’s long-term goals and objectives.

Strategic thinking . Brainstorming, developing, and setting the company’s strategy, business model, and priorities.

Alignment . One of the important outcomes of a business plan is achieving an alignment throughout the entire organization, and in particular, among its leadership team.

These are essential activities and habits for any company. That is why I think business planning should not be a one-time event, but rather it should be revisited, reviewed (and modified if needed) on a regular periodic basis, at least once a quarter.

The Key Elements of a Business Plan

The primary purpose of a business plan is to describe and communicate a business venture and how it will be implemented. Therefore, the essence of a business plan is to answer the following key questions:

Who are you? What’s your company’s purpose (why are you doing this)?

What problem are you trying to solve, or what need are you trying to address?

– Who would want to buy your product/service?

– What is their jobs-to-be-done?

What’s your unique value proposition? Why would someone want to buy this product/service? Why would they prefer to buy it from you?

What is your business model? How do you intend to create, deliver, and capture your unique value? Can it scale fast to big business?

What are the main risks (market environment, competitive, technology)?

–  Also, list any limiting factors and obstacles

– Therefore, what are the critical success factors?

Your funding requirements.

In fact, I think these are the most important parts of the business plan itself. Also, notice that I didn’t mention any revenue projections or financial statements (income statement, cash flow statement, balance sheet, etc.).

More on that in part two of this post.

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How to select the best market for your company out of all the possible options. And what is the right set of criteria to use in making this crucial decision?

Take a Strategic Drive

Strategic planning should be a continuous activity. So, you should not start a project, or a new business without a clear plan.

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Written by Jesse Sumrak | May 14, 2023

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Business plans might seem like an old-school stiff-collared practice, but they deserve a place in the startup realm, too. It’s probably not going to be the frame-worthy document you hang in the office—yet, it may one day be deserving of the privilege.

Whether you’re looking to win the heart of an angel investor or convince a bank to lend you money, you’ll need a business plan. And not just any ol’ notes and scribble on the back of a pizza box or napkin—you’ll need a professional, standardized report.

Bah. Sounds like homework, right?

Yes. Yes, it does.

However, just like bookkeeping, loan applications, and 404 redirects, business plans are an essential step in cementing your business foundation.

Don’t worry. We’ll show you how to write a business plan without boring you to tears. We’ve jam-packed this article with all the business plan examples, templates, and tips you need to take your non-existent proposal from concept to completion.

Table of Contents

What Is a Business Plan?

Tips to Make Your Small Business Plan Ironclad

How to Write a Business Plan in 6 Steps

Startup Business Plan Template

Business Plan Examples

Work on Making Your Business Plan

How to Write a Business Plan FAQs

What is a business plan why do you desperately need one.

A business plan is a roadmap that outlines:

• Who your business is, what it does, and who it serves
• Where your business is now
• Where you want it to go
• How you’re going to make it happen
• What might stop you from taking your business from Point A to Point B
• How you’ll overcome the predicted obstacles

While it’s not required when starting a business, having a business plan is helpful for a few reasons:

• Secure a Bank Loan: Before approving you for a business loan, banks will want to see that your business is legitimate and can repay the loan. They want to know how you’re going to use the loan and how you’ll make monthly payments on your debt. Lenders want to see a sound business strategy that doesn’t end in loan default.
• Win Over Investors: Like lenders, investors want to know they’re going to make a return on their investment. They need to see your business plan to have the confidence to hand you money.
• Stay Focused: It’s easy to get lost chasing the next big thing. Your business plan keeps you on track and focused on the big picture. Your business plan can prevent you from wasting time and resources on something that isn’t aligned with your business goals.

Beyond the reasoning, let’s look at what the data says:

• Simply writing a business plan can boost your average annual growth by 30%
• Entrepreneurs who create a formal business plan are 16% more likely to succeed than those who don’t
• A study looking at 65 fast-growth companies found that 71% had small business plans
• The process and output of creating a business plan have shown to improve business performance

Convinced yet? If those numbers and reasons don’t have you scrambling for pen and paper, who knows what will.

Don’t Skip: Business Startup Costs Checklist

Before we get into the nitty-gritty steps of how to write a business plan, let’s look at some high-level tips to get you started in the right direction:

Be Professional and Legit

You might be tempted to get cutesy or revolutionary with your business plan—resist the urge. While you should let your brand and creativity shine with everything you produce, business plans fall more into the realm of professional documents.

Think of your business plan the same way as your terms and conditions, employee contracts, or financial statements. You want your plan to be as uniform as possible so investors, lenders, partners, and prospective employees can find the information they need to make important decisions.

If you want to create a fun summary business plan for internal consumption, then, by all means, go right ahead. However, for the purpose of writing this external-facing document, keep it legit.

Know Your Audience

Your official business plan document is for lenders, investors, partners, and big-time prospective employees. Keep these names and faces in your mind as you draft your plan.

Think about what they might be interested in seeing, what questions they’ll ask, and what might convince (or scare) them. Cut the jargon and tailor your language so these individuals can understand.

Remember, these are busy people. They’re likely looking at hundreds of applicants and startup investments every month. Keep your business plan succinct and to the point. Include the most pertinent information and omit the sections that won’t impact their decision-making.

Invest Time Researching

You might not have answers to all the sections you should include in your business plan. Don’t skip over these!

Your audience will want:

• Detailed information about your customers
• Numbers and solid math to back up your financial claims and estimates
• Deep insights about your competitors and potential threats
• Data to support market opportunities and strategy

Your answers can’t be hypothetical or opinionated. You need research to back up your claims. If you don’t have that data yet, then invest time and money in collecting it. That information isn’t just critical for your business plan—it’s essential for owning, operating, and growing your company.

Stay Realistic

Your business may be ambitious, but reign in the enthusiasm just a teeny-tiny bit. The last thing you want to do is have an angel investor call BS and say “I’m out” before even giving you a chance.

The folks looking at your business and evaluating your plan have been around the block—they know a thing or two about fact and fiction. Your plan should be a blueprint for success. It should be the step-by-step roadmap for how you’re going from Point A to Point B.

How to Write a Business Plan—6 Essential Elements

Not every business plan looks the same, but most share a few common elements. Here’s what they typically include:

• Executive Summary
• Business Overview
• Products and Services
• Market Analysis
• Competitive Analysis
• Financial Strategy

Below, we’ll break down each of these sections in more detail.

1. Executive Summary

While your executive summary is the first page of your business plan, it’s the section you’ll write last. That’s because it summarizes your entire business plan into a succinct one-pager.

Begin with an executive summary that introduces the reader to your business and gives them an overview of what’s inside the business plan.

Your executive summary highlights key points of your plan. Consider this your elevator pitch. You want to put all your juiciest strengths and opportunities strategically in this section.

2. Business Overview

In this section, you can dive deeper into the elements of your business, including answering:

• What’s your business structure? Sole proprietorship, LLC, corporation, etc.
• Where is it located?
• Who owns the business? Does it have employees?
• What problem does it solve, and how?
• What’s your mission statement? Your mission statement briefly describes why you are in business. To write a proper mission statement, brainstorm your business’s core values and who you serve.

Don’t overlook your mission statement. This powerful sentence or paragraph could be the inspiration that drives an investor to take an interest in your business. Here are a few examples of powerful mission statements that just might give you the goosebumps:

• Patagonia: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.
• Tesla: To accelerate the world’s transition to sustainable energy.
• InvisionApp : Question Assumptions. Think Deeply. Iterate as a Lifestyle. Details, Details. Design is Everywhere. Integrity.
• TED : Spread ideas.
• Warby Parker : To offer designer eyewear at a revolutionary price while leading the way for socially conscious businesses.

3. Products and Services

As the owner, you know your business and the industry inside and out. However, whoever’s reading your document might not. You’re going to need to break down your products and services in minute detail.

For example, if you own a SaaS business, you’re going to need to explain how this business model works and what you’re selling.

You’ll need to include:

• What services you sell: Describe the services you provide and how these will help your target audience.
• What products you sell: Describe your products (and types if applicable) and how they will solve a need for your target and provide value.
• How much you charge: If you’re selling services, will you charge hourly, per project, retainer, or a mixture of all of these? If you’re selling products, what are the price ranges?

4. Market Analysis

Your market analysis essentially explains how your products and services address customer concerns and pain points. This section will include research and data on the state and direction of your industry and target market.

This research should reveal lucrative opportunities and how your business is uniquely positioned to seize the advantage. You’ll also want to touch on your marketing strategy and how it will (or does) work for your audience.

Include a detailed analysis of your target customers. This describes the people you serve and sell your product to. Be careful not to go too broad here—you don’t want to fall into the common entrepreneurial trap of trying to sell to everyone and thereby not differentiating yourself enough to survive the competition.

The market analysis section will include your unique value proposition. Your unique value proposition (UVP) is the thing that makes you stand out from your competitors. This is your key to success.

If you don’t have a UVP, you don’t have a way to take on competitors who are already in this space. Here’s an example of an ecommerce internet business plan outlining their competitive edge:

FireStarters’ competitive advantage is offering product lines that make a statement but won’t leave you broke. The major brands are expensive and not distinctive enough to satisfy the changing taste of our target customers. FireStarters offers products that are just ahead of the curve and so affordable that our customers will return to the website often to check out what’s new.

5. Competitive Analysis

Your competitive analysis examines the strengths and weaknesses of competing businesses in your market or industry. This will include direct and indirect competitors. It can also include threats and opportunities, like economic concerns or legal restraints.

The best way to sum up this section is with a classic SWOT analysis. This will explain your company’s position in relation to your competitors.

6. Financial Strategy

Your financial strategy will sum up your revenue, expenses, profit (or loss), and financial plan for the future. It’ll explain how you make money, where your cash flow goes, and how you’ll become profitable or stay profitable.

This is one of the most important sections for lenders and investors. Have you ever watched Shark Tank? They always ask about the company’s financial situation. How has it performed in the past? What’s the ongoing outlook moving forward? How does the business plan to make it happen?

Answer all of these questions in your financial strategy so that your audience doesn’t have to ask. Go ahead and include forecasts and graphs in your plan, too:

• Balance sheet: This includes your assets, liabilities, and equity.
• Profit & Loss (P&L) statement: This details your income and expenses over a given period.
• Cash flow statement: Similar to the P&L, this one will show all cash flowing into and out of the business each month.

It takes cash to change the world—lenders and investors get it. If you’re short on funding, explain how much money you’ll need and how you’ll use the capital. Where are you looking for financing? Are you looking to take out a business loan, or would you rather trade equity for capital instead?

Read More: 16 Financial Concepts Every Entrepreneur Needs to Know

Startup Business Plan Template (Copy/Paste Outline)

Ready to write your own business plan? Copy/paste the startup business plan template below and fill in the blanks.

Executive Summary Remember, do this last. Summarize who you are and your business plan in one page.

Business Overview Describe your business. What’s it do? Who owns it? How’s it structured? What’s the mission statement?

Products and Services Detail the products and services you offer. How do they work? What do you charge?

Market Analysis Write about the state of the market and opportunities. Use date. Describe your customers. Include your UVP.

Competitive Analysis Outline the competitors in your market and industry. Include threats and opportunities. Add a SWOT analysis of your business.

Financial Strategy Sum up your revenue, expenses, profit (or loss), and financial plan for the future. If you’re applying for a loan, include how you’ll use the funding to progress the business.

5 Frame-Worthy Business Plan Examples

Want to explore other templates and examples? We got you covered. Check out these 5 business plan examples you can use as inspiration when writing your plan:

• SBA Wooden Grain Toy Company
• SBA We Can Do It Consulting
• OrcaSmart Business Plan Sample
• Plum Business Plan Template
• PandaDoc Free Business Plan Templates

Get to Work on Making Your Business Plan

If you find you’re getting stuck on perfecting your document, opt for a simple one-page business plan —and then get to work. You can always polish up your official plan later as you learn more about your business and the industry.

Remember, business plans are not a requirement for starting a business—they’re only truly essential if a bank or investor is asking for it.

Ask others to review your business plan. Get feedback from other startups and successful business owners. They’ll likely be able to see holes in your planning or undetected opportunities—just make sure these individuals aren’t your competitors (or potential competitors).

Your business plan isn’t a one-and-done report—it’s a living, breathing document. You’ll make changes to it as you grow and evolve. When the market or your customers change, your plan will need to change to adapt.

That means when you’re finished with this exercise, it’s not time to print your plan out and stuff it in a file cabinet somewhere. No, it should sit on your desk as a day-to-day reference. Use it (and update it) as you make decisions about your product, customers, and financial plan.

Review your business plan frequently, update it routinely, and follow the path you’ve developed to the future you’re building.

Keep Learning: New Product Development Process in 8 Easy Steps

What financial information should be included in a business plan?

Be as detailed as you can without assuming too much. For example, include your expected revenue, expenses, profit, and growth for the future.

What are some common mistakes to avoid when writing a business plan?

The most common mistake is turning your business plan into a textbook. A business plan is an internal guide and an external pitching tool. Cut the fat and only include the most relevant information to start and run your business.

Who should review my business plan before I submit it?

Co-founders, investors, or a board of advisors. Otherwise, reach out to a trusted mentor, your local chamber of commerce, or someone you know that runs a business.

Ready to Write Your Business Plan?

Don’t let creating a business plan hold you back from starting your business. Writing documents might not be your thing—that doesn’t mean your business is a bad idea.

Let us help you get started.

Join our free training to learn how to start an online side hustle in 30 days or less. We’ll provide you with a proven roadmap for how to find, validate, and pursue a profitable business idea (even if you have zero entrepreneurial experience).

Stuck on the ideas part? No problem. When you attend the masterclass, we’ll send you a free ebook with 100 of the hottest side hustle trends right now. It’s chock full of brilliant business ideas to get you up and running in the right direction.

About Jesse Sumrak

Jesse Sumrak is a writing zealot focused on creating killer content. He’s spent almost a decade writing about startup, marketing, and entrepreneurship topics, having built and sold his own post-apocalyptic fitness bootstrapped business. A writer by day and a peak bagger by night (and early early morning), you can usually find Jesse preparing for the apocalypse on a precipitous peak somewhere in the Rocky Mountains of Colorado.

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The ultimate guide to business planning (with template)

November 19, 2020 by MindManager Blog

By: Jill Huettich

If you could do something to double the success of your business, would you do it? Of course you would! Happily, that’s not pie-in-the-sky kind of talk either. There is something you can do to increase your likelihood of business success by a whopping 200%. That something is business planning. Time and time again, business planning has been shown to have a huge impact on business growth.

Take, for instance, the results of a survey completed by 2,877 business owners. After analyzing respondents’ answers, the Oregon Department of Economics concluded that business planning correlates with success in multiple areas, including: obtaining a loan, getting investment capital, making a major purchase, recruiting a new team member, thinking more strategically, and growing a company.

Mind you, those results were “regardless of the type of company, the growth stage of the company, and the intent of the business plan.” Clearly, business planning works!

In this guide to business planning, we’ll cover everything you need to know about business plans, their benefits and importance, what does into one, and will provide a template for you to get started. Jump ahead using the links below.

What is business planning?

The importance of business planning, how to write a business plan, sample business plan template.

• Downloadable MindManager template

[Free eBook] How Visualization Builds Better Strategic Plans

Business planning refers to the process of determining a company’s objectives, strategies, and projected actions to reach certain goals within a specific time fame. Typically, business planning focuses on two key areas: making profits and mitigating risks.

When companies engage in business planning, it’s with the objective of creating a business plan.  A business plan is a written document that contains: the company’s vision, a description of the company, information about its products and services, marketing research, sales strategies, financial projections, competitor analysis, and financial records.

The purpose of a business plan is to act as a road map of sorts, providing a company with the direction, focus, and clarity it needs to achieve its goals.

Business planning vs. strategic planning

Now that you know what business planning is, you may be wondering if it’s any different from strategic planning, and if so, how? That’s what we’ll go over in this section.

As we mentioned before, business planning provides a detailed overview of a company. Usually, this is undertaken with the goal of building revenue and support for a startup. In other words, a business plan tests the proposition that a “particular undertaking—program, partnership, new venture, growth strategy, or entity as a whole—is economically or operationally viable.”

By contrast, a strategic plan is a high-level document that creates a vision for an established company. From that vision, broadly defined objectives are outlined.

Because strategic plans define companies’ most important objectives, they’re used to align department goals, build consensus among stakeholders, and prioritize company spending.

Another difference between these two types of plans is the length of time they cover. A strategic plan typically looks at a period of 3-5 years, whereas a business plan usually just looks at a year.

Additionally, business plans are primarily written to raise money, so their audience is external. Strategic plans are internal documents, created for people within the company.

The importance of business planning cannot be overstated. In particular, businesses do it for the following reasons :

1. To obtain loans or investments

It would be virtually impossible for a startup to secure capital without a business plan—they’re considered that essential.

That’s because business plans establish the viability of a business, which is something any bank or venture capitalist needs to be convinced of before funding a venture.

2. To prevent mistakes

Unfortunately, most startups don’t even last 5 years. There are a number of different reasons for this, but some of the main ones include: tough competition, low demand for what they’re selling, a poor pricing model, an inadequate team, and an inability to secure that all-important funding we just mentioned.

A good business plan helps companies anticipate these types of problems, so they can prevent them.

3. To examine viability

The idea for a startup is often met with a lot of enthusiasm. That vending machine featuring high-end desserts and pastries? Brilliant!

However, sometimes that enthusiasm needs to be tempered by reality. A business plan offers a great opportunity to do that, because it gets entrepreneurs to think through the answers to questions they may never have even considered, like “Is there a demand in this neighborhood for desserts?” and “How many businesses are already selling desserts in this location?

4. To reduce risk

Flying by the seat of your pants in the business world is not the best idea. A business plan clearly lays out a company’s objectives, as well as the landscape of the market.

As a result, business leaders know which challenges to expect. With that knowledge in hand, they can take proactive steps to mitigate their risks.

5. To accelerate growth

Quite simply, business planning works. In fact, according to one study, companies that plan grow 30% faster than those who don’t. And, interestingly enough, another study found that 71% of fast-growing companies (those defined as having 92% growth in sales from one year to the next) have business plans.

6. To identify problems with cash flow

Business plans contain 3 financial statements: a balance sheet, an income statement, and a cash flow statement. For startups, these numbers are projected.

When entrepreneurs have these numbers to refer to, they can more easily monitor cash flow, comparing reality to their projections. This gives them the opportunity to quickly deal with cash flow challenges, should any arise.

7. To make decisions

When faced with tough business decisions, it can be difficult to know which path to choose. However, with a business plan in hand, entrepreneurs can make well-thought-out decisions based on the analysis they’ve already performed.

As you can see, there are tons of great reasons to create a business plan, particularly for start-ups and other new businesses. However, even well-established businesses can benefit from a business plan.

Not only does a business plan provide a valuable overview of an entire company, but it’s also an excellent tool for pinpointing potential challenges, so they can be proactively addressed and resolved.

There may be nothing more critical to your company’s success than a business plan. That’s why it’s so important to understand how to write a business plan, and to devote time and effort to creating a solid, well-researched one.

The elements of a business plan are fairly straightforward. While no two business plans are identical, most of them rely on the following structure:

1. Executive summary

Business plans typically run dozens of pages long. While, ideally, you’d like to think that people will read your entire plan, there’s no guarantee of that—which is why the executive summary is the most important part of your business plan.

In the summary, you’ll want to provide readers with a quick synapsis that explains what your company is and why it’ll be successful.

This summary should include your company’s mission statement and a description of the product or service you provide. You’ll also want to briefly touch on the company’s founders, employees, location, and financial growth.

Aim to make your executive summary about 4 pages max , and don’t write it until you’ve completed the rest of your business plan. That’ll make it easier to summarize all the information your plan contains.

2. Company description

This detailed overview of your company includes such things as the problems your business solves, as well as the customers it serves. You should view this section as your opportunity to shine by also explaining your business’ competitive advantages.

3. Market analysis

What’s the outlook of the industry you’re in? Who’s your target market and how do you plan to reach the people in it? These are the types of questions you’ll answer in this section of your business plan.

Additionally, you’ll want to use the Market Analysis section to perform a competitor analysis, identifying who the major players are in your industry, as well as their strengths and weaknesses.

By understanding what’s working well for your competitors—and what isn’t—you’ll be better able to determine how you can grab some of their market share.

4. Organization & management

How will your business be structured—as a sole proprietorship, corporation, partnership, or LLC? Include that information in this section, as well as an organization chart showing who’s heading up your company. You may also want to include resumes or CVs for key team members here too.

5. Service or product line

This section should explain what you sell, how it helps customers, and what the product lifecycle looks like. This is where you’ll also want to mention any patents or copyrights.

6. Marketing & sales

How do you intend to attract customers? What marketing channels will you use? What’s your strategy for growth? Think carefully about your answers to these questions, because later, you’ll use this information to make your financial projections.

7. Funding request

If one of the objectives of your business plan is to obtain funding, this section should be included in your plan. When you write your funding request, you’ll want to explain what your funding requirements are over the next 5 years and how those funds will be used.

Additionally, this section should specify , “whether you want debt or equity, the terms you’d like applied, and the length of time your request will cover.”

8. Financial projections

Financial projections are a key part of your plan, particularly if you’re seeking funding. In this section, you’ll want to include financial projections for the next five years, as well as explain how you came up with those figures.

Your projections should include cash flow statements, balance sheets, income statements, and capital expenditure budgets. If your business is operational already, you’ll also want to include the past 3-5 years of those same documents.

9. Appendix

Think of this section as your final opportunity to convince readers of your business’ success. So, this is where you can include supporting documentation, like product pictures, reference letters, permits, patents, legal documents, contracts, credit histories, etc.

And there you have it! Once you’ve finished the analysis required for each of these elements—and typed your findings into a well-formatted document–your business plan will be complete.

Understanding the business planning cycle

After you’ve completed the business planning process, your work—while not over—gets easier. Your job now is to review the business plan periodically to see how well your company is achieving its objectives.

Did you meet your financial projections? In what areas is your company doing well? How is it falling short? Are there any new opportunities for your organization?

During this period of analysis, you’ll ideally want to set 1-year and 3-year goals , as well as key performance indicators (KPIs). These will help you track on a quarterly, or even monthly, basis how well your company’s meeting its objectives.

Most businesses engage in business planning on an annual or quarterly basis. Truly, it depends on how much time your organization has to devote to the task, as well as the industry you’re in.

For smaller businesses, a good aim is to perform the business planning process once a year. For larger companies—or ones where the market changes frequently—you may want to “plan to plan” every quarter.

Generally speaking, most business plan templates will include the following key elements and information. We’ve provided a downloadable MindManager template below that you can use to create your own business plan.

Section 1: Executive summary

The executive summary is the most important part of your business plan, so you’ll really want to put time and effort into getting it just right.

Make sure to include the following elements :

• Explain the mission of your company – what is the reason for your company?
• Describe your product or service – what types of products and services will you offer customers?
• Introduce the company founders – who are your company’s founders, and what roles will they play within your organization?
• Briefly provide information about your customer base – which customers will your business target, and how will your company serve them?
• Provide an overview of your competitors – explain why your business will succeed by identifying your competitive advantage and describing how you’ll get market share.
• Summarize your financial projections – what financial growth do you expect your company to achieve over the next few years?
• Mention financing requirements – if your business is a start-up seeking financing, briefly mention those financial requirements here.

If you want a good idea of what your completed executive summary should look like, you can check out an example of one here.

Section 2: Company overview

In this section, you’ll want to go into greater detail than you did in the executive summary, explaining which problems your business solves, who its customers are, and what competitive advantages your company has.

Here are the important elements you’ll want to include :

• Provide an overview of your company – what’s its mission, vision, and purpose?
• Give background about the formation of your company – when did your company form?
• Explain who your company’s founders are – what backgrounds do they have that make them uniquely qualified to run your business successfully?
• Provide geographic information – where is your business located and in which markets do you have a presence?
• Describe your company’s competitive advantages – while this was briefly touched upon in the executive summary, you’ll want to provide more information here about why your company will be successful.

Section 3: Market analysis

In this section, you want to prove the viability of your business by providing solid market research about your industry.

To achieve this goal, you’ll want to include the following in this section:

• Identify your target market – who are you trying to sell your products and services to?
• Describe the need for your products or services – why do you anticipate demand for your company’s offerings?
• Give information about the overall market size – how big is the market? How much do you expect your company to sell? Are there any demographic or geographic factors that might impact your sales projections?
• Identify the competition – who are your company’s main competitors? What advantages and disadvantages do they have? What’s their percentage of market share? How much do they sell annually?
• Perform a SWOT analysis – identify your company’s strengths, weaknesses, opportunities, and strengths.

For help writing this section, you may find it useful to look at this marketing analysis example .

For the competitor and SWOT analyses, we recommend an information visualization software, like MindManager. View the SWOT analysis template at the end of this article.

Section 4: Organization & management

In this section, you want to give readers a solid overview of how your company will be structured. To do that, you’ll want to answer the following questions :

• Describe the legal structure of your business – is it a sole proprietorship, corporation, partnership, or LLC?
• Identify your management team – name the key roles within your organization, identify who will fulfill them, and explain how those individuals will be compensated. You may want to include an organization chart here too, as well as brief resumes or CVs for key team members.

Section 5: Service or product line

In this portion of the business plan, you’ll want to provide more information about the product or service you provide. So, make sure to include these elements here :

• Describe the product or service you sell – what are you offering and how does it help customers?
• Explain the product lifecycle – how long does it take to bring new products/services to market?
• Provide pricing information – how will you price your products or services? What will your operating costs be?
• Describe how you’ll acquire products – are you the manufacturer? If not, who is? Are you working directly with a manufacturer or are you going through a wholesaler? If product demand suddenly increases, what’s the likelihood you’ll experience supply problems?

Section 6: Sales and marketing strategy

Your customer acquisition strategy is especially important to potential investors, so you’ll definitely want to be thorough here. Plus, later you’ll be using this information to make financial projections, so take your time when writing this part of your plan.

• Describe the customer acquisition process – how will you find and attract customers? For instance, will you use salespeople, call centers, social media ads, etc.?
• Explain any promotional methods you plan on using – will you offer free samples or perform product demonstrations?
• Provide information about the marketing materials you intend to use – like brochures, flyers, trade show booths, etc.
• Estimate your advertising budget – how much will you have to spend to achieve your marketing objectives?

Section 7 – Funding request

This section is only necessary if you’re seeking business funding. If you are, you’ll want to include the following information in your business plan:

• Identify your funding requirements – how much money are you requesting and how will those funds be used?
• Describe the terms you’re seeking – do you want debt or equity? Which terms do you want applied? What length of time does your request cover?

Section 8 – Financial projections

As you might imagine, financial projections are a key part of your plan, especially if you’re seeking funding. So, in this section, you’ll want to make sure you include :

• 5 years of projected cash flow statements, balance sheets, income statements, and capital expenditure budgets – these documents should also explain how you came up with the figures you’re using.
• If your business is already up and running, you’ll also want to include the past 3-5 years of those same documents.

Of course to create these financial projections, you’ll need to have the right software. Two good ones to check out are ProjectionHub and PlanGuru .

These forecasting software packages make it easy to create the kinds of financial statements you’ll want to include in your business plan.

Section 9 – Appendix

This is your last chance to convince readers your business will be a success. So, if you have additional information to give your business plan more weight, you’ll want to incorporate it here. Consider including the following in this section:

• Product pictures
• Reference letters
• Legal documents
• Credit histories

And that’s it! After you’ve completed these sections, just assemble them into a single document, format everything neatly, add a table of contents, and your business plan will be complete.

Afterwards, you can use it to obtain loans, determine viability, reduce risk, assess cash flow problems, make decisions, and accelerate business growth—making it well-worth the time and effort it takes to write your plan.

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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)

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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.

The Business Planning Process: 6 Steps To Creating a New Plan

In this article, we will define and explain the basic business planning process to help your business move in the right direction.

What is Business Planning?

Business planning is the process whereby an organization’s leaders figure out the best roadmap for growth and document their plan for success.

The business planning process includes diagnosing the company’s internal strengths and weaknesses, improving its efficiency, working out how it will compete against rival firms in the future, and setting milestones for progress so they can be measured.

The process includes writing a new business plan. What is a business plan? It is a written document that provides an outline and resources needed to achieve success. Whether you are writing your plan from scratch, from a simple business plan template , or working with an experienced business plan consultant or writer, business planning for startups, small businesses, and existing companies is the same.

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The Better Business Planning Process

The business plan process includes 6 steps as follows:

• Do Your Research
• Calculate Your Financial Forecast
• Draft Your Plan
• Revise & Proofread
• Nail the Business Plan Presentation

We’ve provided more detail for each of these key business plan steps below.

1. Do Your Research

Conduct detailed research into the industry, target market, existing customer base,  competitors, and costs of the business begins the process. Consider each new step a new project that requires project planning and execution. You may ask yourself the following questions:

• What are your business goals?
• What is the current state of your business?
• What are the current industry trends?
• What is your competition doing?

There are a variety of resources needed, ranging from databases and articles to direct interviews with other entrepreneurs, potential customers, or industry experts. The information gathered during this process should be documented and organized carefully, including the source as there is a need to cite sources within your business plan.

You may also want to complete a SWOT Analysis for your own business to identify your strengths, weaknesses, opportunities, and potential risks as this will help you develop your strategies to highlight your competitive advantage.

2. Strategize

Now, you will use the research to determine the best strategy for your business. You may choose to develop new strategies or refine existing strategies that have demonstrated success in the industry. Pulling the best practices of the industry provides a foundation, but then you should expand on the different activities that focus on your competitive advantage.

This step of the planning process may include formulating a vision for the company’s future, which can be done by conducting intensive customer interviews and understanding their motivations for purchasing goods and services of interest. Dig deeper into decisions on an appropriate marketing plan, operational processes to execute your plan, and human resources required for the first five years of the company’s life.

3. Calculate Your Financial Forecast

All of the activities you choose for your strategy come at some cost and, hopefully, lead to some revenues. Sketch out the financial situation by looking at whether you can expect revenues to cover all costs and leave room for profit in the long run.

Begin to insert your financial assumptions and startup costs into a financial model which can produce a first-year cash flow statement for you, giving you the best sense of the cash you will need on hand to fund your early operations.

A full set of financial statements provides the details about the company’s operations and performance, including its expenses and profits by accounting period (quarterly or year-to-date). Financial statements also provide a snapshot of the company’s current financial position, including its assets and liabilities.

This is one of the most valued aspects of any business plan as it provides a straightforward summary of what a company does with its money, or how it grows from initial investment to become profitable.

4. Draft Your Plan

With financials more or less settled and a strategy decided, it is time to draft through the narrative of each component of your business plan . With the background work you have completed, the drafting itself should be a relatively painless process.

If you have trouble writing convincing prose, this is a time to seek the help of an experienced business plan writer who can put together the plan from this point.

5. Revise & Proofread

Revisit the entire plan to look for any ideas or wording that may be confusing, redundant, or irrelevant to the points you are making within the plan. You may want to work with other management team members in your business who are familiar with the company’s operations or marketing plan in order to fine-tune the plan.

Finally, proofread thoroughly for spelling, grammar, and formatting, enlisting the help of others to act as additional sets of eyes. You may begin to experience burnout from working on the plan for so long and have a need to set it aside for a bit to look at it again with fresh eyes.

6. Nail the Business Plan Presentation

The presentation of the business plan should succinctly highlight the key points outlined above and include additional material that would be helpful to potential investors such as financial information, resumes of key employees, or samples of marketing materials. It can also be beneficial to provide a report on past sales or financial performance and what the business has done to bring it back into positive territory.

Business Planning Process Conclusion

Every entrepreneur dreams of the day their business becomes wildly successful.

But what does that really mean? How do you know whether your idea is worth pursuing?

And how do you stay motivated when things are not going as planned? The answers to these questions can be found in your business plan. This document helps entrepreneurs make better decisions and avoid common pitfalls along the way. ​

Business plans are dynamic documents that can be revised and presented to different audiences throughout the course of a company’s life. For example, a business may have one plan for its initial investment proposal, another which focuses more on milestones and objectives for the first several years in existence, and yet one more which is used specifically when raising funds.

Business plans are a critical first step for any company looking to attract investors or receive grant money, as they allow a new organization to better convey its potential and business goals to those able to provide financial resources.

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Other Helpful Business Plan Articles & Templates

Table of Contents

What is a business plan, the advantages of having a business plan, the types of business plans, the key elements of a business plan, best business plan software, common challenges of writing a business plan, become an expert business planner, business planning: it’s importance, types and key elements.

Every year, thousands of new businesses see the light of the day. One look at the  World Bank's Entrepreneurship Survey and database  shows the mind-boggling rate of new business registrations. However, sadly, only a tiny percentage of them have a chance of survival.   

According to the Bureau of Labor Statistics, about 20% of small businesses fail in their first year, about 50% in their fifth year.

Research from the University of Tennessee found that 44% of businesses fail within the first three years. Among those that operate within specific sectors, like information (which includes most tech firms), 63% shut shop within three years.

Several  other statistics  expose the abysmal rates of business failure. But why are so many businesses bound to fail? Most studies mention "lack of business planning" as one of the reasons.

This isn’t surprising at all. 

Running a business without a plan is like riding a motorcycle up a craggy cliff blindfolded. Yet, way too many firms ( a whopping 67%)  don't have a formal business plan in place. 

It doesn't matter if you're a startup with a great idea or a business with an excellent product. You can only go so far without a roadmap — a business plan. Only, a business plan is so much more than just a roadmap. A solid plan allows a business to weather market challenges and pivot quickly in the face of crisis, like the one global businesses are struggling with right now, in the post-pandemic world.  

But before you can go ahead and develop a great business plan, you need to know the basics. In this article, we'll discuss the fundamentals of business planning to help you plan effectively for 2021.  

Now before we begin with the details of business planning, let us understand what it is.

No two businesses have an identical business plan, even if they operate within the same industry. So one business plan can look entirely different from another one. Still, for the sake of simplicity, a business plan can be defined as a guide for a company to operate and achieve its goals.  

More specifically, it's a document in writing that outlines the goals, objectives, and purpose of a business while laying out the blueprint for its day-to-day operations and key functions such as marketing, finance, and expansion.

A good business plan can be a game-changer for startups that are looking to raise funds to grow and scale. It convinces prospective investors that the venture will be profitable and provides a realistic outlook on how much profit is on the cards and by when it will be attained. 

However, it's not only new businesses that greatly benefit from a business plan. Well-established companies and large conglomerates also need to tweak their business plans to adapt to new business environments and unpredictable market changes. 

Before getting into learning more about business planning, let us learn the advantages of having one.

Since a detailed business plan offers a birds-eye view of the entire framework of an establishment, it has several benefits that make it an important part of any organization. Here are few ways a business plan can offer significant competitive edge.

• Sets objectives and benchmarks: Proper planning helps a business set realistic objectives and assign stipulated time for those goals to be met. This results in long-term profitability. It also lets a company set benchmarks and Key Performance Indicators (KPIs) necessary to reach its goals. 
• Maximizes resource allocation: A good business plan helps to effectively organize and allocate the company’s resources. It provides an understanding of the result of actions, such as, opening new offices, recruiting fresh staff, change in production, and so on. It also helps the business estimate the financial impact of such actions.
• Enhances viability: A plan greatly contributes towards turning concepts into reality. Though business plans vary from company to company, the blueprints of successful companies often serve as an excellent guide for nascent-stage start-ups and new entrepreneurs. It also helps existing firms to market, advertise, and promote new products and services into the market.
• Aids in decision making: Running a business involves a lot of decision making: where to pitch, where to locate, what to sell, what to charge — the list goes on. A well thought-out business plan provides an organization the ability to anticipate the curveballs that the future could throw at them. It allows them to come up with answers and solutions to these issues well in advance.
• Fix past mistakes: When businesses create plans keeping in mind the flaws and failures of the past and what worked for them and what didn’t, it can help them save time, money, and resources. Such plans that reflects the lessons learnt from the past offers businesses an opportunity to avoid future pitfalls.
• Attracts investors: A business plan gives investors an in-depth idea about the objectives, structure, and validity of a firm. It helps to secure their confidence and encourages them to invest. 

Now let's look at the various types involved in business planning.

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Business plans are formulated according to the needs of a business. It can be a simple one-page document or an elaborate 40-page affair, or anything in between. While there’s no rule set in stone as to what exactly a business plan can or can’t contain, there are a few common types of business plan that nearly all businesses in existence use.  

Here’s an overview of a few fundamental types of business plans. 

• Start-up plan: As the name suggests, this is a documentation of the plans, structure, and objections of a new business establishments. It describes the products and services that are to be produced by the firm, the staff management, and market analysis of their production. Often, a detailed finance spreadsheet is also attached to this document for investors to determine the viability of the new business set-up.
• Feasibility plan: A feasibility plan evaluates the prospective customers of the products or services that are to be produced by a company. It also estimates the possibility of a profit or a loss of a venture. It helps to forecast how well a product will sell at the market, the duration it will require to yield results, and the profit margin that it will secure on investments. 
• Expansion Plan: This kind of plan is primarily framed when a company decided to expand in terms of production or structure. It lays down the fundamental steps and guidelines with regards to internal or external growth. It helps the firm to analyze the activities like resource allocation for increased production, financial investments, employment of extra staff, and much more.
• Operations Plan: An operational plan is also called an annual plan. This details the day-to-day activities and strategies that a business needs to follow in order to materialize its targets. It outlines the roles and responsibilities of the managing body, the various departments, and the company’s employees for the holistic success of the firm.
• Strategic Plan: This document caters to the internal strategies of the company and is a part of the foundational grounds of the establishments. It can be accurately drafted with the help of a SWOT analysis through which the strengths, weaknesses, opportunities, and threats can be categorized and evaluated so that to develop means for optimizing profits.

There is some preliminary work that’s required before you actually sit down to write a plan for your business. Knowing what goes into a business plan is one of them. 

Here are the key elements of a good business plan:

• Executive Summary: An executive summary gives a clear picture of the strategies and goals of your business right at the outset. Though its value is often understated, it can be extremely helpful in creating the readers’ first impression of your business. As such, it could define the opinions of customers and investors from the get-go.  
• Business Description: A thorough business description removes room for any ambiguity from your processes. An excellent business description will explain the size and structure of the firm as well as its position in the market. It also describes the kind of products and services that the company offers. It even states as to whether the company is old and established or new and aspiring. Most importantly, it highlights the USP of the products or services as compared to your competitors in the market.
• Market Analysis: A systematic market analysis helps to determine the current position of a business and analyzes its scope for future expansions. This can help in evaluating investments, promotions, marketing, and distribution of products. In-depth market understanding also helps a business combat competition and make plans for long-term success.
• Operations and Management: Much like a statement of purpose, this allows an enterprise to explain its uniqueness to its readers and customers. It showcases the ways in which the firm can deliver greater and superior products at cheaper rates and in relatively less time. 
• Financial Plan: This is the most important element of a business plan and is primarily addressed to investors and sponsors. It requires a firm to reveal its financial policies and market analysis. At times, a 5-year financial report is also required to be included to show past performances and profits. The financial plan draws out the current business strategies, future projections, and the total estimated worth of the firm.

The importance of business planning is it simplifies the planning of your company's finances to present this information to a bank or investors. Here are the best business plan software providers available right now:

• Business Sorter

The importance of business planning cannot be emphasized enough, but it can be challenging to write a business plan. Here are a few issues to consider before you start your business planning:

• Create a business plan to determine your company's direction, obtain financing, and attract investors.
• Identifying financial, demographic, and achievable goals is a common challenge when writing a business plan.
• Some entrepreneurs struggle to write a business plan that is concise, interesting, and informative enough to demonstrate the viability of their business idea.
• You can streamline your business planning process by conducting research, speaking with experts and peers, and working with a business consultant.

Whether you’re running your own business or in-charge of ensuring strategic performance and growth for your employer or clients, knowing the ins and outs of business planning can set you up for success. 

Be it the launch of a new and exciting product or an expansion of operations, business planning is the necessity of all large and small companies. Which is why the need for professionals with superior business planning skills will never die out. In fact, their demand is on the rise with global firms putting emphasis on business analysis and planning to cope with cut-throat competition and market uncertainties.

While some are natural-born planners, most people have to work to develop this important skill. Plus, business planning requires you to understand the fundamentals of business management and be familiar with business analysis techniques . It also requires you to have a working knowledge of data visualization, project management, and monitoring tools commonly used by businesses today.   

Simpliearn’s Executive Certificate Program in General Management will help you develop and hone the required skills to become an extraordinary business planner. This comprehensive general management program by IIM Indore can serve as a career catalyst, equipping professionals with a competitive edge in the ever-evolving business environment.

What Is Meant by Business Planning?

Business planning is developing a company's mission or goals and defining the strategies you will use to achieve those goals or tasks. The process can be extensive, encompassing all aspects of the operation, or it can be concrete, focusing on specific functions within the overall corporate structure.

What Are the 4 Types of Business Plans?

The following are the four types of business plans:

Operational Planning

This type of planning typically describes the company's day-to-day operations. Single-use plans are developed for events and activities that occur only once (such as a single marketing campaign). Ongoing plans include problem-solving policies, rules for specific regulations, and procedures for a step-by-step process for achieving particular goals.

Strategic Planning

Strategic plans are all about why things must occur. A high-level overview of the entire business is included in strategic planning. It is the organization's foundation and will dictate long-term decisions.

Tactical Planning

Tactical plans are about what will happen. Strategic planning is aided by tactical planning. It outlines the tactics the organization intends to employ to achieve the goals outlined in the strategic plan.

Contingency Planning

When something unexpected occurs or something needs to be changed, contingency plans are created. In situations where a change is required, contingency planning can be beneficial.

What Are the 7 Steps of a Business Plan?

The following are the seven steps required for a business plan:

Conduct Research

If your company is to run a viable business plan and attract investors, your information must be of the highest quality.

Have a Goal

The goal must be unambiguous. You will waste your time if you don't know why you're writing a business plan. Knowing also implies having a target audience for when the plan is expected to get completed.

Create a Company Profile

Some refer to it as a company profile, while others refer to it as a snapshot. It's designed to be mentally quick and digestible because it needs to stick in the reader's mind quickly since more information is provided later in the plan.

Describe the Company in Detail

Explain the company's current situation, both good and bad. Details should also include patents, licenses, copyrights, and unique strengths that no one else has.

Create a marketing plan ahead of time.

A strategic marketing plan is required because it outlines how your product or service will be communicated, delivered, and sold to customers.

Be Willing to Change Your Plan for the Sake of Your Audience

Another standard error is that people only write one business plan. Startups have several versions, just as candidates have numerous resumes for various potential employers.

Incorporate Your Motivation

Your motivation must be a compelling reason for people to believe your company will succeed in all circumstances. A mission should drive a business, not just selling, to make money. That mission is defined by your motivation as specified in your business plan.

What Are the Basic Steps in Business Planning?

These are the basic steps in business planning:

Summary and Objectives

Briefly describe your company, its objectives, and your plan to keep it running.

Services and Products

Add specifics to your detailed description of the product or service you intend to offer. Where, why, and how much you plan to sell your product or service and any special offers.

Conduct research on your industry and the ideal customers to whom you want to sell. Identify the issues you want to solve for your customers.

Operations are the process of running your business, including the people, skills, and experience required to make it successful.

How are you going to reach your target audience? How you intend to sell to them may include positioning, pricing, promotion, and distribution.

Consider funding costs, operating expenses, and projected income. Include your financial objectives and a breakdown of what it takes to make your company profitable. With proper business planning through the help of support, system, and mentorship, it is easy to start a business.

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Writing a business plan will teach you these three important skills

There’s a new trend in the world of entrepreneurship; to disregard old rules and barriers to entry and create a sleek, new, efficiency focused start-up culture. Expensive office space is being replaced by quirky co-working spaces, locally based in-office staff are being replaced by flexible, remote workers and detailed business plans are being replaced with… a one page summary.

While the majority of the new changes I’m totally on board with, waving goodbye to the tried and tested business plan seems like a naive step too far. What’s most concerning is that these entrepreneurs are missing out on the chance to get to know both themselves and their business on a deeper level, before throwing themselves into the unknown.

Some people say that starting a business without a business plan is a guaranteed failure, and while there are successful businesses that haven’t used a traditional business plan, they are few and far between. This new ‘fly by the seat of your pants’ concept of doing away with business plans gives the impression that it’s oh so easy to start your own business, but it may cause your downfall in the long run .

Aside from an in-depth, well documented business plan being a key requirement for investors and start-up loan companies, writing a business plan is also an important learning curve. It forces you to face up to the realities of starting a business , your true financial situation and the feasibly of your success . The process of writing a business plan is also important, it’s a journey, and one that’s a different experience for each entrepreneur. You will learn new skills that will benefit both your personal and professional life and will make you a better business owner in the future.

Speaking with some of Business West’s fantastic clients, here are the top three skills that they noted after going through the process of writing their business plans:

Starting your own business is exciting, and if you’ve had a revolutionary idea you will want to get started straight away. Being patient will be the last thing on your mind, but patience is a virtue! (Yes, yes I know…)

In the early stages of starting your business you will probably be running around like a headless chicken, spending every waking moment working on your new business. All of this time and effort is a lot of work and you are justified in wanting to see results. But it’s ok for business to take a while to pick up. You will have to give time to establish your brand, run marketing campaigns and wait for word of mouth to start spreading about your new venture. It might seem like the norm, but a start-up business that hits the ground running isn’t a common occurrence. 

Just because things seem to be taking their time doesn’t mean that you’re doing anything wrong, it’s just the nature of the beast. During this time it’s important to be patient and stay positive, just keep working away and soon enough you will see your customer numbers improving. If you aren’t patient you run the risk of throwing in the towel too soon and missing out on something truly great, convinced that your business was an immediate flop.

Writing a business plan will teach you to be patient because, and this is undeniable, it takes a lot of time! While different for each entrepreneur, writing a business plan can take weeks or even months, depending on how much research is involved. Your business plan is going to act as your roadmap, so you will want to ensure your map is accurate. Developing patience while writing your business plan also forces you to take your business idea seriously. This isn’t a fleeting hobby that you started last weekend and by next month you’ve given up. This business will be your future, your income and your passion. Isn’t that worth being patient, doing the ground work and preparing properly?

The life of an entrepreneur revolves around being a Jack of all trades. In the beginning you will be responsible for all areas of your business, from marketing to accounts, and you may begin to feel your brain being pulled into a million different directions. How well you can focus may be the difference between the success or failure of your business.

There is a lot to think about when writing a business plan and an unexpected outcome of this is that it will really teach you how to focus! If you set yourself the aim of only launching your business once your business plan is complete, you will have a clear target to work towards. To complete each section of your plan accurately and concisely you will need to dedicate time and attention to it. This is the future of your business!

To put your plan together you will need to delve deep into market research, competitor analysis, financial projections and more. It’s not a walk in the park but it’s definitely a rewarding one. If you’re not used to focusing your attention on one task at a time, it may seem difficult at first, but practice makes perfect and by the time you’re finished you will not only have a fantastic business plan, but you’ll have developed a handy ability to focus, which will serve you well in the future.

Appreciating what makes you unique

We all know that we’re unique, there is no one anywhere in the world who is exactly like us. We all have our own qualities, personalities and experiences, but how often do we actually take note of and appreciate these? 

You might be an aspiring entrepreneur, in a sea of other aspiring entrepreneurs, all bursting with business ideas, but you are still you. Your mind can make or break your business. If you gave your business idea to someone else, they may not be able to turn it into a success. Just because you have a great idea doesn’t mean it will be a hit. 

While you’re writing your business plan you will be continually presented with opportunities to think long and hard about what makes you unique. Your business, yes, of course you need to have a unique selling point and a differentiator from the competition, but also you personally. What strengths, knowledge and experience do you bring to the table and how will this benefit your business?

By choosing not to write a business plan, you’re missing the opportunity to truly appreciate what makes you unique. You might rush head on into launching your business, focused solely on how great your new product is, but relying on the strength of your product alone won’t be enough to get you through. By analysing your unique trails you will not only see how to use your strengths to benefit the business, but you will also be aware of how to work with your weaknesses to achieve the best outcomes. At the end of the day, people buy from people.

The most solid argument for writing a business plan is that if you’re hoping to receive any form of investment or funding, you need one! In addition to that, your business plan will allow you to analyse future opportunities and avoid potential pitfalls and alongside both of these, you will also learn some valuable skills which will benefit both you and your business. 

If you need help writing your business plan or you’re unsure where to start or what you need to include, our business advisers are here to help. They will walk you through what’s required, show you how to tailor your plan to your business and provide you with a template that covers everything you need to get investment ready. Find out more.

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Module 9: Management

Introduction to planning, what you’ll learn to do: identify the types of planning and decision making managers engage in, and explain how these help organizations reach their goals.

In this section, we’ll introduce the concept of planning, including the foundational documents—vision and mission—that need to be in place prior to developing a plan. We will identify the three levels of planning—strategic, tactical, and operational (plus contingency)—and the role of each in achieving the business goals and objectives. This section also introduces the SWOT Analysis, a planning tool that provides a framework for analyzing an organization’s strengths, weaknesses, opportunities, and threats.

• Introduction to Planning. Authored by : Linda Williams and Lumen Learning. License : CC BY: Attribution

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What Do You Learn in Business School? 6 Skills You Could Gain

• 01 Nov 2022

Whether you’re an aspiring business professional or interested in developing business skills , the question of whether to pursue a master of business administration (MBA) has likely crossed your mind.

An MBA is an investment of time and money, so the decision shouldn’t be made lightly. One of the biggest questions you may have while deciding is what skills you can gain from an MBA program.

Here’s an overview of what an MBA is, six skills you could gain, and how to prepare.

Access your free e-book today.

What Is an MBA Program?

A master of business administration (MBA) is a graduate degree program designed to equip students with the knowledge and skills to succeed in business. Harvard Business School established the world’s first MBA in 1908 .

When taken full-time, an MBA program takes two years to complete. Typically, as is the case at HBS, the first academic year is spent developing technical skills and the big-picture perspective business leaders need. The summer is spent working, interning, or launching a business before the second academic year when students take more specific, advanced courses to hone their skills and expertise.

The complementary nature of broad and specific topics grants graduates a deep understanding of the intricacies of business and the skills to lead across departments and industries.

Related: 10 Reasons It Makes Sense to Get an MBA

6 Skills You’ll Learn in Business School

1. technical skills.

One type of skill you’ll learn in an MBA program is technical or “hard” skills. This is the type of hands-on knowledge required for business professionals and leaders.

Technical skills include:

• Creating and analyzing financial statements
• Using ratios and formulas to understand a business’s financial health
• Crafting marketing strategies based on key performance indicators and market research
• Understanding supply chain management and how to streamline processes to create value
• Assessing international opportunities and threats based on macroeconomic trends and calculations
• Gathering, processing, and analyzing data using statistics to drive business decisions

These are typically gained in the first year of business school, although more advanced technical skills may be taught in the second year. Learning and honing these skills will help you provide value for your organization and set yourself up for career growth.

2. Leadership and Management Skills

If your goal is to be a well-rounded business leader and manager, an MBA is an effective way to prepare. In addition to technical skills, MBA programs prioritize teaching leadership and management skills to empower students to become successful leaders.

These skills include:

• Emotional intelligence : Emotionally intelligent leaders understand and manage their emotions and recognize and influence the emotions of those around them.
• Strong communication : Clearly and effectively communicating vision, goals, and action items can align teams.
• Empowering others : Strong leaders empower employees to harness their strengths and perform at their best.
• Self-awareness : Become aware of your leadership style so you can cultivate and develop it over time.
• Financial literacy : Learn to make data-driven decisions that directly impact the company’s bottom line.
• Resilience : Effective leaders are agile, flexible, and resilient in the face of change and tumult—and guide their teams to adopt these qualities, too.

You’ll develop many of these skills throughout your business school career as you encounter new challenges and practice refining your mindset and leadership style.

3. Entrepreneurial Skills

Because an MBA program gives you an in-depth understanding of the many facets of business, it can be a great choice for building the skills needed to become a successful entrepreneur .

From learning to identify market opportunities, conduct market research, and develop an innovative idea to sustaining a business, navigating investor relations, and building and leading a team, you can gain skills for every stage of your entrepreneurial journey.

4. Strategic Thinking Skills

Another skill you’ll develop throughout your MBA experience is the ability to think strategically . Crafting business strategy requires understanding pricing structure, value creation, and market and macroeconomic trends—competencies you can gain in business school.

A big-picture perspective, data analysis skills, and strong communication are all required to formulate, validate, and execute a successful strategy.

5. Empathy & Global Perspective

A pair of often-overlooked skills you can gain in an MBA program are empathy—the ability to understand others’ experiences and emotions—and a global perspective. These two emotional intelligence skills can be credited largely to the global pool of MBA students and collaborative learning that comes with a business school education.

Vai Schierholtz, director of marketing for MBA Admissions at HBS, comments on the transferability of these skills.

“Because of the global context and curriculum you will be exposed to—from international classmates to cases about global companies—you’re going to develop the empathy and interpersonal skills that will be essential in your future career when you’re managing teams,” Schierholtz says.

A recent survey from workplace inclusion nonprofit Catalyst found that empathetic leadership and management yields innovation, engagement, and decreased burnout, resulting in employees that feel respected and valued. An MBA can equip you with the mindset to be an empathetic leader and set your future teams up for success.

6. Integrative Problem-Solving

One of the most critical skills you can gain in business school is integrative problem-solving—the ability to consider multiple perspectives and stakeholders when solving problems.

In an MBA program, you’ll learn about each facet of a functioning business and gain new perspectives from your professors and classmates.

“You may enter an MBA program with one siloed level of expertise—for instance, finance or marketing—but an MBA introduces you to all the other industries and functions within a team,” Schierholtz says. “As a future business leader, you need to integrate all of those teams together and make decisions across the spectrum, not in the silo. That’s a huge piece of the MBA. We aim for students to think about complex, integrated problems that rely on many different perspectives to solve.”

One way HBS teaches this skill is through the case method , a learning model in which students are presented with a real-world business problem and asked how they would solve it. After working through the challenge themselves, students are told how the real scenario played out.

This method allows students to problem-solve creatively and collaboratively with peers, engage with imperfect data and complex scenarios, and learn from the business professionals who navigated those challenges.

Related: Should You Go to Business School? 6 Benefits of Strong Business Skills

How Can the Skills Gained from an MBA Benefit Your Career?

An MBA program can equip you with several skills that will prove useful in the business world, some more immediately applicable than others.

Technical skills—such as analyzing financial statements, crafting a marketing strategy, and calculating key metrics—will prove useful right away.

Other skills, referred to as “soft skills,” may not be as applicable in your first role after graduation but will set you apart as a leader, manager, and decision-maker as advancement opportunities arise.

“An MBA teaches you the hard and soft skills you need in business,” Schierholtz says. “Alumni will often say that the hard skills helped them in the first three years of their first job, but their career accelerates after they start using the soft skills they developed in the MBA program.”

An MBA can differentiate you from others who may have strong technical skills but don’t possess the perspective, empathy, and integrative problem-solving skills to be a great cross-functional leader.

Making the Most of Your MBA Experience

As with any other educational opportunity, what you gain from an MBA program depends on the effort you put into it. If business school is the right next step for you, prepare yourself in advance so you can make the most of the two-year intensive.

Schierholtz recommends entering the program with an open mind and an idea of your personal and professional goals. What do you hope to gain from the program? These goals will give you direction, but your flexibility will keep you open to change as you learn and grow.

He also recommends preparing in advance for the rigorous academics. One way to do so is by taking a program that teaches business essentials, like HBS Online’s Credential of Readiness (CORe) program , comprised of three online courses: Business Analytics , Financial Accounting , and Economics for Managers .

“Taking a business fundamentals program like CORe, especially if you’re coming from an industry that isn’t as business-focused, is a great idea to help you prepare for business school,” Schierholtz says.

Entering an MBA program with foundational knowledge, an open mind, and a sense of your personal and professional goals can enable you to gain the skills an MBA offers and accelerate your career.

Are you considering earning an MBA? Explore our three-course Credential of Readiness (CORe) program and download our free guide to preparing for business school.

About the Author

7 Key Steps in Lessons Learned in Project Management

In the fast-paced and ever-evolving business world, project management has emerged as a vital discipline, bridging the gap between ideas and execution. It is a realm where plans are forged, teams are led, and challenges are conquered. Every project brings a unique set of lessons to be learned, shaping how we approach future challenges.

Whether you're an experienced project manager or just starting, embracing these lessons can be transformative, enabling you to navigate the complexities of project management with confidence and finesse. Join us as we share priceless lessons learned in project management.

What Are the Lessons Learned in Project Management?

Lessons learned in project management are invaluable insights and experiences gained throughout the project lifecycle. They provide guidance and wisdom for future endeavors, helping project managers navigate challenges and achieve success. These lessons include planning, communication, risk management, team collaboration, and stakeholder engagement.

Why Are Lessons Learned Important in Project Management?

Lessons learned are vital in project management because they help project managers navigate challenges, enhance their skills, and drive positive organizational change.

By analyzing what went well and what didn't, project managers can identify areas for improvement, avoid repeating mistakes, and make informed decisions for future projects. Project learning also fosters a culture of continuous learning and improvement, ensuring that knowledge is shared and applied to future attempts. In short, project learning is a vital tool for project success and professional growth.

Lessons Learned Process

The lessons learned process in project management involves systematically identifying, documenting, analyzing, validating, sharing, applying insights, and reviewing experiences gained during a project. Here are the key steps involved in the lessons-learned process:

• Identification: Project managers and team members identify lessons learned throughout the project lifecycle. This can be done through regular reflection, team discussions, surveys, and interviews.
• Documentation: Lessons learned are documented in a structured manner, including details about the project, the specific situation or issue, the lessons learned, and any recommendations or actions to be taken.
• Analysis: Project learnings are analyzed to understand their impact on the project. This involves identifying patterns, root causes, and potential opportunities for improvement. It also helps in assessing the effectiveness of project management processes and practices.
• Validation: The documented lessons learned are validated by relevant stakeholders to ensure accuracy and completeness. This step may involve seeking feedback and input from team members, project sponsors, customers, and other stakeholders.
• Sharing: The lessons learned are shared with the project team, other project managers, and stakeholders. This can be done through formal reports, presentations, knowledge repositories, or informal discussions. Sharing lessons learned promotes knowledge sharing and prevents the repetition of mistakes.
• Application: The insights gained from the lessons learned are applied to future projects or the current project if it is ongoing. This involves incorporating the lessons into project plans, processes, and best practices. Applying lessons learned helps avoid mistakes, optimize project performance, and ensure continuous improvement.
• Review: The lessons learned process is reviewed periodically to assess its effectiveness and identify areas for improvement. This helps in refining the process and making it more efficient and impactful.

Purpose of Lessons Learned

The purpose of key learnings from a project is to capture and document valuable insights, experiences, and best practices gained throughout the project lifecycle . These lessons serve several purposes:

• Enhancing Skills: Lessons learned allow project managers to reflect on their experiences, identify areas for improvement, and improve their skills and knowledge. By analyzing successes and failures, project managers can learn valuable lessons that help them become more effective.
• Avoiding Mistakes: Lessons learned enable project managers to identify and understand mistakes made during previous projects. By documenting these mistakes, they can develop strategies to avoid repeating them in future projects. This helps reduce risks, improve project outcomes, and ensure continuous improvement.
• Optimizing Project Execution: By analyzing project learnings, project managers can identify areas of improvement in project execution . They can identify processes, tools, or techniques that worked well and those that didn't and adjust accordingly. This helps streamline project workflows, increasing efficiency and delivering better results.
• Sharing Knowledge: By documenting and sharing lessons, project managers enable others to benefit from their experiences, avoiding potential pitfalls and leveraging best practices. This promotes collaboration, innovation, and continuous improvement across projects.
• Ensuring Project Success: By applying lessons learned, project managers are better equipped to handle challenges and avoid risks. Key learnings from a project help project managers develop more effective strategies, make informed decisions, and adapt project plans as needed. This ultimately increases the chances of project success and client satisfaction.
• Driving Professional Growth: Project learning is valuable for the current project and the professional growth of project managers. By reflecting on their experiences, project managers can identify areas for personal development, acquire new skills, and enhance their project management capabilities. This contributes to their professional growth and helps them become more effective leaders in future projects.

How To Capture Lessons Learned?

Capturing lessons learned is an essential step in the project management process. Here's how you can do it using ActiveCollab:

• Set up a Lessons Learned section: Create a dedicated section in ActiveCollab where you can capture and organize all lessons learned. This can be a separate project or a specific category within your project.
• Identify the lessons: Encourage team members to reflect on their experiences and identify lessons learned. You can do this through surveys, interviews, team meetings, or individual reflections.
• Document the lessons: Use AtiveCollab's task or document management feature to record the identified lessons learned. Include details such as the project phase, the problem or issue encountered, the solution implemented, and the outcome.
• Analyze and validate: Review the captured lessons learned and validate their relevance and accuracy. Try discussing them with the project team or subject matter experts.
• Share and communicate: Share the lessons learned with the project team, stakeholders, and other relevant parties. AtiveCollab allows you to share documents or tasks with specific individuals or groups easily.
• Apply the lessons: Integrate the lessons learned into your project management practices. Update your project plans, processes, and procedures to incorporate the new knowledge and avoid repeating past mistakes.
• Review and improve: Regularly review the lessons learned repository to ensure it remains current. Continuously improve your project management practices based on the insights gained from past experiences.

How To Write Lessons Learned Report in Project Management?

Here are easy step-by-step instructions to help you write an effective lesson-learned report:

• Identify the purpose: Determine why you are creating the report. Is it to improve future projects, share knowledge with stakeholders, or comply with organizational requirements?
• Gather information: Collect data and information from various sources, such as project documentation, team members, stakeholders, and project meetings. Ensure that you have a comprehensive understanding of the project's successes, challenges, and outcomes.
• Define the structure: Organize the report into sections such as project overview, objectives, key deliverables, challenges faced, successes achieved, and recommendations for future projects. This structure will help readers navigate the report easily.
• Document lessons learned: Summarize the lessons learned from the project. Include positive and negative experiences, highlighting what worked well and what could have been improved. Use specific examples and anecdotes to illustrate each lesson.
• Analyze lessons learned: Reflect on the project learnings and analyze their impact on the project's overall success. Identify patterns or recurring issues that may need attention in future projects.
• Provide recommendations: Based on the key learnings from a project, offer practical recommendations and solutions for addressing similar challenges in future projects. These recommendations should be actionable and specific.
• Document best practices: Identify best practices that contributed to the project's success and document them in the report. This will help ensure that these practices are repeated in future projects.
• Create a lesson-learned document: Compile the report into a formal lesson-learned document. Make sure it is well-structured, easy to read, and includes relevant graphics or visual aids.
• Share the report: Distribute the lessons learned copy to relevant stakeholders, project team members, and other interested parties. Consider using a lesson-learned repository or knowledge management system to store and easily access lessons learned from multiple projects.
• Review and update: Periodically review and update the lessons learned document as new projects are completed. This will ensure that the report remains a valuable resource for future projects.

Types of Lessons Learned

Lessons learned in project management can be categorized into various types based on the nature of the insights gained. Here are some common types of lessons learned:

• Technical Lessons: These lessons focus on the technical aspects of the project, such as technology implementation, design considerations, or development methodologies. They highlight what worked well and what could be improved regarding tools, processes, or techniques.
• Process Lessons: Process project learning related to the management and execution of the project. They include insights into project planning, scheduling, risk management, communication, stakeholder engagement, and quality control. These lessons help identify best practices and areas for improvement in project management processes.
• Team and Interpersonal Lessons: Lessons in this category focus on team dynamics, collaboration, and communication within the project. They can include insights into team structure, leadership styles, conflict resolution, or effective communication strategies. These lessons help improve teamwork and foster a positive work environment.
• Stakeholder Lessons: Stakeholder lessons involve understanding and managing the expectations and needs of project stakeholders. They can include insights into stakeholder engagement, relationship management, or addressing conflicts of interest. These lessons help improve stakeholder satisfaction and ensure successful project outcomes.
• Risk and Issue Management Lessons: These lessons highlight identifying, assessing, and mitigating risks and issues throughout the project lifecycle. They can include insights into risk assessment techniques, issue resolution approaches, or contingency planning. These lessons help improve risk management strategies and minimize project disruptions.
• Organizational Lessons: Organizational lessons focus on the broader implications of the project within the organization. They can include insights into organizational culture, governance, resource allocation, or strategic alignment. These lessons help align projects with organizational goals and improve decision-making processes.

Benefits of Lessons Learned

Here are the benefits of lessons learned in project management:

• Cost-Efficiency: Key learning from a project helps identify cost-saving measures, avoid unnecessary expenses, and optimize resource allocation.
• Time-Saving: By learning from past mistakes and successes, project teams can streamline processes, eliminate inefficiencies, and reduce project duration.
• Quality Improvement: Project learning enables teams to identify areas for improvement, implement best practices, and deliver higher quality outcomes.
• Risk Mitigation: Lessons learned help identify potential risks and develop strategies to mitigate them, reducing the likelihood of project failures or disruptions.
• Team Morale: By recognizing and celebrating successes, lessons learned boost team morale, motivation, and engagement.
• Scalability: Project learnings provide insights into scaling project operations, processes, and resources to accommodate growth and changing project requirements.
• Market Reach: Key learnings from a project help teams understand market dynamics, customer preferences, and industry trends, enabling them to expand their market reach.
• Innovation: Lessons learned foster a culture of innovation by encouraging experimentation, learning from failures, and promoting creative problem-solving.
• Customer Satisfaction: By incorporating lessons learned, project teams can better understand customer needs, deliver products or services that meet or exceed expectations, and enhance customer satisfaction.
• Competitive Advantage: Key learnings give organizations a competitive edge by enabling them to learn from their competitors' mistakes, capitalize on industry trends, and stay ahead of the competition.
• Streamlined Communication: Lessons learned improve communication practices, ensuring information flows effectively between team members, stakeholders, and project sponsors.
• Task Automation: Lessons learned help identify opportunities for automating repetitive tasks, reducing manual effort, and improving overall project efficiency.
• Employee Retention: By implementing lessons learned, organizations can create a supportive work environment, foster employee growth, and improve retention rates.
• Incremental Improvements: Project learnings facilitate continuous improvement by identifying small-scale changes that can lead to significant overall project enhancements.
• Quick Decision-making: Lessons learned provide valuable information that enables teams to make informed decisions quickly, reducing project delays and bottlenecks.
• Lower Operational Costs: Lessons learned help identify cost-saving measures, eliminate wasteful practices, and optimize operational efficiency.
• Simplified Reporting: Key learnings from a project streamline reporting processes, making it easier to track project progress, identify issues, and communicate project status to stakeholders.
• Enhanced Collaboration: Project learning promotes collaboration among team members, enabling knowledge sharing, cross-functional cooperation, and collective problem-solving .
• Skill Development: Lessons learned allow individuals to develop new skills, enhance their expertise, and grow professionally within the organization.

Project Management Lessons Learned Example

Project Name: Product Launch for Organic Skincare Line

Team Members: Sarah, Michael, Emily

Project Goals: Successfully launch a new line of organic skincare products, increase brand visibility, and generate sales.

Project Successes:

1. Implemented a comprehensive marketing strategy that included social media campaigns, influencer partnerships, and email marketing.

2. Conducted market research to identify target audience preferences and tailored product offerings accordingly.

3. Developed a user-friendly e-commerce website with secure payment gateways and seamless navigation.

4. Established partnerships with local retailers to expand distribution channels and increase product accessibility.

Lessons Learned:

1. Problem: Limited product availability during the initial launch phase.

Impact: Potential customers could not purchase products, resulting in missed sales opportunities.

Recommendation: Ensure sufficient inventory is available before launching and establish a robust supply chain management system.

2. Problem: Ineffective communication between the marketing and design teams.

Impact: Marketing materials did not accurately represent the brand's values and product benefits.

Recommendation: Implement regular cross-functional meetings to align marketing and design strategies and improve communication channels.

3. Problem: Insufficient customer support resources.

Impact: Customers experienced delays in receiving responses to inquiries and complaints.

Recommendation: Increase customer support staffing and implement a ticketing system for efficient issue resolution.

4. Problem: Inadequate post-launch analysis and evaluation.

Impact: Difficulty identifying areas for improvement and measuring the success of the launch.

Recommendation: Establish key performance indicators (KPIs) and conduct regular post-launch evaluations to track progress and refine strategies.

What Tools Are Best Used To Share Lessons Learned From Projects?

There are several effective tools for sharing project learning. One popular option is project management software with a knowledge base or a project learnings repository. This allows team members to document and share their insights and experiences. ActiveCollab, for example, offers Notes as Discussions as features that can serve as a place for teammates to share experiences and observations on the project they've worked on.

Another tool is a project retrospective meeting, where team members can openly discuss successes, challenges, and key learnings from a project. Creating a project closure report or a post-project review document can also help consolidate and disseminate valuable lessons to the wider organization or future project teams. Ultimately, the best tool depends on the organization's preferences and the project's specific requirements.

How Should the Lessons Learned From a Project Be Communicated?

Lessons learned from a project should be communicated concisely and effectively. This can be done through various means, such as project reports, presentations, or meetings. The key is highlighting the key positive and negative takeaways and providing actionable recommendations for future projects.

It is important to document the lessons learned in a structured format, ensuring they are easily accessible to the relevant stakeholders. Additionally, sharing these lessons learned with the broader organization can help foster a culture of continuous learning and improvement.

Types of Teams Cheat Sheet

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• Small Business
• How to Start a Business

How to Start a Business: A Comprehensive Guide and Essential Steps

Building an effective business launch plan

• Search Search Please fill out this field.

Conducting Market Research

Crafting a business plan, reviewing funding options, understanding legal requirements, implementing marketing strategies, the bottom line.

• How to Start a Business: A Comprehensive Guide and Essential Steps CURRENT ARTICLE
• How to Do Market Research, Types, and Example
• Marketing Strategy: What It Is, How It Works, How To Create One
• Marketing in Business: Strategies and Types Explained
• What Is a Marketing Plan? Types and How to Write One
• Business Development: Definition, Strategies, Steps & Skills
• Business Plan: What It Is, What's Included, and How to Write One
• Small Business Development Center (SBDC): Meaning, Types, Impact
• How to Write a Business Plan for a Loan
• Business Startup Costs: It’s in the Details
• Startup Capital Definition, Types, and Risks
• Bootstrapping Definition, Strategies, and Pros/Cons
• Crowdfunding: What It Is, How It Works, and Popular Websites
• Starting a Business with No Money: How to Begin
• A Comprehensive Guide to Establishing Business Credit
• Equity Financing: What It Is, How It Works, Pros and Cons
• Best Startup Business Loans
• Sole Proprietorship: What It Is, Pros & Cons, and Differences From an LLC
• Partnership: Definition, How It Works, Taxation, and Types
• What is an LLC? Limited Liability Company Structure and Benefits Defined
• Corporation: What It Is and How to Form One
• Starting a Small Business: Your Complete How-to Guide
• Starting an Online Business: A Step-by-Step Guide
• How to Start Your Own Bookkeeping Business: Essential Tips
• How to Start a Successful Dropshipping Business: A Comprehensive Guide

Starting a business in the United States involves a number of different steps spanning legal considerations, market research, creating a business plan, securing funding, and developing a marketing strategy. It also requires decisions about a business’ location, structure, name, taxation, and registration. Here are the key steps involved in starting a business, as well as important aspects of the process for entrepreneurs to consider.

Key Takeaways

• Entrepreneurs should start by conducting market research to understand their industry space, competition, and target customers.
• The next step is to write a comprehensive business plan, outlining the company’s structure, vision, and strategy.
• Securing funding in the form of grants, loans, venture capital, and/or crowdfunded money is crucial if you’re not self-funding.
• When choosing a venue, be aware of local regulations and requirements.
• Design your business structure with an eye to legal aspects, such as taxation and registration.
• Make a strategic marketing plan that addresses the specifics of the business, industry, and target market.

Before starting a business, entrepreneurs should conduct market research to determine their target audience, competition, and market trends. The U.S. Small Business Administration (SBA) breaks down common market considerations as follows:

• Demand : Is there a need for this product or service?
• Market size : How many people might be interested?
• Economic indicators : What are the income, employment rate, and spending habits of potential customers?
• Location : Are the target market and business well situated for each other?
• Competition : What is the market saturation ? Who and how many are you going up against?
• Pricing : What might a customer be willing to pay?

Market research should also include an analysis of market opportunities, barriers to market entry, and industry trends, as well as the competition’s strengths, weaknesses, and market share .

There are various methods for conducting market research, and these will vary depending on the nature of the industry and potential business. Data can come from a variety of places, including statistical agencies, economic and financial institutions, and industry sources, as well as direct consumer research through focus groups, interviews, surveys, and questionnaires.

A comprehensive business plan is like a blueprint. It lays the foundation for business development and affects decision-making, day-to-day operations, and growth. Potential investors or partners may want to review and assess it in advance of agreeing to work together. Financial institutions often request business plans as part of an application for a loan or other forms of capital. 

Business plans will differ according to the needs and nature of the company and should only include what makes sense for the business in question. As such, they can vary in length and structure. They can generally be divided into two formats: traditional and lean start-up. The latter is less common and more useful for simple businesses or those that expect to rework their traditional business plan frequently. It provides a vivid snapshot of the company through a small number of elements.

The process of funding a business depends on its needs and the vision and financial situation of its owner.  The first step is to calculate the start-up costs . Identify a list of expenses and put a dollar amount to each of them through research and requesting quotes. The SBA has a start-up costs calculator for small businesses that includes common types of business expenses.  

The next step is to determine how to get the money. Common methods include:

• Self-funding , also known as “ bootstrapping ”
• Finding investors willing to contribute to your venture capital
• Raising money online by crowdfunding
• Securing a business loan from a bank, an online lender, or a credit union
• Winning a business grant from a donor, usually a government, foundation, charity, or corporation

Different methods suit different businesses, and it’s important to consider the obligations associated with any avenue of funding. For example, investors generally want a degree of control for their money, while self-funding puts business owners fully in charge. Of course, investors also mitigate risk; self-funding does not.

Availability is another consideration. Loans are easier to get than grants, which don’t have to be paid back. Additionally, the federal government doesn’t provide grants for the purposes of starting or growing a business, although private organizations may. However, the SBA does guarantee several categories of loans , accessing capital that may not be available through traditional lenders. No matter the funding method(s), it’s essential to detail how the money will be used and lay out a future financial plan for the business, including sales projections and loan repayments . 

Businesses operating in the U.S. are legally subject to regulations at the local, county, state, and federal level involving taxation, business IDs, registrations, and permits.

Choosing a Business Location

Where a business operates will dictate such things as taxes, zoning laws (for brick-and-mortar locations), licenses, and permits. Other considerations when choosing a location might include:

• Human factors : These include target audience and the preferences of business owners and partners regarding convenience, knowledge of the area, and commuting distance.
• Regulations : Government at every level will assert its authority.
• Regionally specific expenses : Examples are average salaries (including required minimum wages), property or rental prices, insurance rates, utilities, and government fees and licensing.
• The tax and financial environment : Tax types include income, sales, corporate, and property, as well as tax credits; available investment incentives and loan programs may also be geographically determined.

Picking a Business Structure

The structure of a business should reflect the desired number of owners, liability characteristics, and tax status. Because these have legal and tax compliance implications , it’s important to understand them fully. If necessary, consult a business counselor, a lawyer, and/or an accountant.

Common business structures include:

• Sole proprietorship : A sole proprietorship is an unincorporated business that has just one owner, who pays personal income tax on its profits.
• Partnership : Partnership options include a limited partnership (LP) and a limited liability partnership (LLP) .
• Limited liability company (LLC) : An LLC protects its owners from personal responsibility for the company’s debts and liabilities.
• Corporation : The different types of corporations include C corp , S corp , B corp , closed corporation , and nonprofit .

Getting a Tax ID Number

A tax ID number is the equivalent of a Social Security number for a business. Whether or not a state and/or federal tax ID number is required will depend on the nature of the business and the location in which it’s registered.

A federal tax ID, also known as an employer identification number (EIN) , is required if a business:

• Operates as a corporation or partnership
• Pays federal taxes
• Has employees
• Files employment, excise, alcohol, tobacco, or firearms tax returns
• Has a Keogh plan
• Withholds taxes on non-wage income to nonresident aliens
• Is involved with certain types of organizations, including trusts, estates, real estate mortgage investment conduits, nonprofits, farmers’ cooperatives, and plan administrators

An EIN can also be useful if you want to open a business bank account, offer an employer-sponsored retirement plan, or apply for federal business licenses and permits. You can get one online from the Internal Revenue Service (IRS) . State websites will do the same for a state tax ID.

Registering a Business

How you register a business will depend on its location, nature, size, and business structure.  For example, a small business may not require any steps beyond registering its business name with local and state governments, and business owners whose business name is their own legal name might not need to register at all.

That said, registration can provide personal liability protection, tax-exempt status, and trademark protection, so it can be beneficial even if it’s not strictly required. Overall registration requirements, costs, and documentation will vary depending on the governing jurisdictions and business structure.  

Most LLCs, corporations, partnerships, and nonprofits are required to register at the state level and will need a registered agent to file on their behalf. Determining which state to register with can depend on factors such as:

• Whether the business has a physical presence in the state
• If the business often conducts in-person client meetings in the state
• If a large portion of business revenue comes from the state
• Whether the business has employees working in the state

If a business operates in more than one state, it may need to file for foreign qualification in other states in which it conducts business. In this case the business would register in the state in which it was formed (this would be considered the domestic state) and file for foreign qualification in any additional states.

Obtaining Permits

Filing for the applicable government licenses and permits will depend on the industry and nature of the business and might include submitting an application to a federal agency, state, county, and/or city. The SBA lists federally regulated business activities alongside the corresponding license-issuing agency, while state, county, and city regulations can be found on the official government websites for each region.

Every business should have a marketing plan that outlines an overall strategy and the day-to-day tactics used to execute it. A successful marketing plan will lay out tactics for how to connect with customers and convince them to buy what the company is selling. 

Marketing plans will vary according to the specifics of the industry, target market, and business, but they should aim to include descriptions of and strategies for the following:

• A target customer : Including market size, demographics, traits, and relevant trends
• Value propositions or business differentiators : An overview of the company’s competitive advantage with regard to employees, certifications, and offerings
• A sales and marketing plan : Including methods, channels, and a customer’s journey through interacting with the business
• Goals : Should cover different aspects of the marketing and sales strategy, such as social media follower growth, public relations opportunities, and sales targets
• An execution plan : Should detail tactics and break down higher-level goals into specific actions
• A budget : Detailing how much different marketing projects and activities will cost

How Much Does It Cost to Start a Business?

Business start-up costs will vary depending on the industry, business activity, and product or service offered. Home-based online businesses will usually cost less than those that require an office setting to meet with customers. The estimated cost can be calculated by first identifying a list of expenses and then researching and requesting quotes for each one. Use the SBA’s start-up costs calculator for common types of expenses associated with starting a small business.

What Should I Do Before Starting a Business?

Entrepreneurs seeking to start their own business should fully research and understand all the legal and funding considerations involved, conduct market research, and create marketing and business plans. They will also need to secure any necessary permits, licenses, funding, and business bank accounts.

What Types of Funding Are Available to Start a Business?

Start-up capital can come in the form of loans, grants, crowdfunding, venture capital, or self-funding. Note that the federal government does not provide grant funding for the purposes of starting a business, although some private sources do.

Do You Need to Write a Business Plan?

Business plans are comprehensive documents that lay out the most important information about a business. They reference its growth, development, and decision-making processes, and financial institutions and potential investors and partners generally request to review them in advance of agreeing to provide funding or to collaborate.

Starting a business is no easy feat, but research and preparation can help smooth the way. Having a firm understanding of your target market, competition, industry, goals, company structure, funding requirements, legal regulations, and marketing strategy, as well as conducting research and consulting experts where necessary, are all things that entrepreneurs can do to set themselves up for success.

U.S. Small Business Administration. “ Market Research and Competitive Analysis .”

U.S. Small Business Administration. “ Write Your Business Plan .”

U.S. Small Business Administration. " Calculate Your Startup Costs ."

U.S. Small Business Administration. “ Fund Your Business .”

U.S. Small Business Administration. “ Grants .”

U.S. Small Business Administration. “ Loans .”

U.S. Small Business Administration. “ Pick Your Business Location .”

U.S. Small Business Administration. “ Choose a Business Structure .”

Internal Revenue Service. “ Do You Need an EIN? ”

U.S. Small Business Administration. “ Get Federal and State Tax ID Numbers .”

U.S. Small Business Administration. “ Register Your Business .”

U.S. Small Business Administration. “ Apply for Licenses and Permits .”

U.S. Small Business Administration. “ Marketing and Sales .”

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What I've Learned About Strategic Planning

By Jason Heckl - September 11, 2019

SME Strategy is a strategy consulting company that specializes in aligning teams around their vision, mission, values, goals and action plans. Learn more about how we can help you and your team create a strategic plan with our strategic planning and implementation services.

This May, I moved to Vancouver to join SME Strategy as co-op student. The role was described as a marketing role at a small and growing consulting company, so I was excited by the opportunity. Shortly after arriving, I realized my role would expand to be much more than originally expected. I was eventually tasked with a variety of tasks that fit into the marketing bucket, including one-to-one sales, content creation, email marketing and copywriting. 

As a student arriving straight of college, I had little knowledge of the consulting industry as a whole, let alone its size and scope. SME Strategy specializes in strategic planning, which fits under the management consulting umbrella. There was a lot to learn, and I started at the ground floor. Over the next several months, I would take courses, read about, receive mentorship, listen to coaching calls and sit in on strategic planning sessions to understand the processes involved in strategic planning. By receiving guidance and mentorship from our Managing Partner who’s facilitated strategic planning sessions around the world for businesses, schools, governments and nonprofits, I was able to learn a great deal. This is what I learned:

• Importance of the vision and mission

Figuring out your organization’s vision and mission is one of the most important parts of the planning process, as well as one of the deciding factors of success or failure. Determining a clear vision and mission for your organization will set the table for the rest of the planning process, allowing you to come up with clear, measurable goals that will directly impact the future of the organization for the better. Without a clear vision and mission, you team is destined for burnout. If your team doesn’t know what they’re working towards they won’t know which direction to move, making it easier for them to disengage.

The vision represents where the organization would like to be in the future, whether that be one, three or five years ahead of today. Naturally, getting alignment around the vision can be tough. Surely, not everyone has the same career goals, personal aspirations and ideal future for the organization. At SME Strategy, we put a focus on figuring out where there’s alignment and where there’s not. Not everyone has to agree, but it’s valuable to hear what people think about the future.

The mission is the second part of the planning process, and should ultimately help your organization achieve the mission. In short, the mission should encapsulate why the organization exists. This includes what products and services you offer, where you do business and who you serve. A strong mission will allow you and your team to ask “Is this in line with our mission?” whenever the organization has a decision to make.

For help creating your organization’s vision and mission, check out this previous blog post: How to Create a Vision.

• Pre-session and post-session work

Before I learned about the strategic planning process, I assumed that strategy meetings would simply take place and then the organization would set off down a new path. What I didn’t realize was the amount of buy-in required from all participants. Not only do they have to attend the strategy session, but there’s a considerable amount of pre-session and post-session work required in order to get the most out of strategic planning.

At SME Strategy, we like to engage all strategy session participants in a survey as part of the pre-session work. The survey is used as a probe to figure out what is going right within the organization, and where there are challenges that need to be addressed. In a survey of 10 people, it’s easy to detect recurring themes and problems. During the session, in a scenario where people would normally be averse to sharing their honest opinion about the organization in front of their boss, the anonymous results of the survey are read out loud. At this point, everything is out on the table and people are ready to move forward with planning for the future.

After the strategy session, there’s a considerable amount of work to be done by each participant. Once goals, tactics and actions have been hammered out, there needs to be alignment between the new plan and whoever needs to know about it. SME Strategy can also assist in the post-session work to provide accountability. At whichever frequency your organization desires, a combination of conference calls, meetings and one-on-one calls will keep the team on track.

• Having measurable goals

One of the biggest challenges people face with the strategic planning process is creating measurable goals. Date ranges, revenue targets, satisfaction scores, return rates and number of calls are all examples of what makes a goal measurable. If there’s no way to measure a goal, you won’t be able to tell when or if you’ve failed. That’s why they can be so tough to set- it requires conviction and commitment throughout your organization.

Without something to work towards, team members will be lost and lack the drive necessary to produce the best goods and services. Measurable goals can be the driving factor of motivation among your team if done correctly. Friendly competition, bonuses and recognition can unify and inspire your organization to fulfill the mission and vision. 

Focusing in on just a couple strategic priorities can be one of the hardest aspects of strategic planning for organizations. On the day of the strategy session, there is often a sense of urgency in the air as everyone is keen to resolve different challenges and point the organization towards a slightly different direction. Unfortunately, having too many goals and strategic priorities is a recipe for failure. In this case, the organization will be pulled in too many directions with resources stretched too thin, resulting in not much progress at all.

The best strategic plans are the ones that get executed on, and the ones that get executed on have a precise focus on just a couple areas. Organizations in this position are able to fully dedicate themselves to their goals and point all their resources in one place.  The power of focus is preached by business leaders like Elon Musk and Jeff Bezos, and should be observed before embarking on your next strategic planning session.

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Planning Lessons – lessons I’ve learned from lessons I've taught

This is a summary and a drawing together of several earlier posts. I consider it a refinement of my thinking and something which is painstakingly (and grandiosely) groping its way towards a total philosophy of planning. It does also attempt to offer something new but is this enough to deserve a new post? You decide.

“Failing to plan is planning to fail.” Smug teachers, everywhere

Planning: still a good thing to do first

3. Focus on learning not activities I consider myself the enemy of activities! Loading lessons with things to do actively gets in the way of students learning whatever your clear, thoughtful objective was. Time spent planning card sorts, writing worksheets and lovingly crafting resources is, by and large, time wasted. Or at least, time that could have been spent doing something more profitable. If you’ve followed the first 2 principles, this one’s a no-brainer. Does the evidence in books match the expectations of your medium term plan? If not, remediate. If it does, move on but beware that what you think students have learned may well be forgotten by the time they need it, so ensure you plan to revisit this learning multiple times. Top tip: ask yourself, what will students think about during the lesson? What they think about is what they will remember. 4. Know your students This sounds insultingly obvious but is easily forgotten. It’s a widely accepted truism that good teaching is founded on good relationships. Good relationships are, in their turn, founded on detailed knowledge and understanding of the kids you teach. At Clevedon School we use a system called Pen Portraits. Every term we write a mini ‘portrait’ of 5 students in each class based on the data we collect and our knowledge of their personalities, backgrounds and potential. By the end of the year you will have written a portrait of every student in every class you teach. This is all fine and dandy, but what gets done with this information? I try to work out how exactly I might be able to help these particular pupils and make sure that every student I teach gets at least one (but in practice more) lesson which has been planned just for them. And I tell them. Today you are my Pen Portrait student and this lesson is yours! Also, knowing your students makes you bullet proof! You are the indisputable expert on how these students learn in your classroom, and woe betide anyone who comes in shouting the odds about what they would do differently! 5. The ‘1 in 4’ Rule Let’s be realistic, churning out Outstanding (TM) lessons five or six times a day, every day is probably unsustainable. Working yourself into the ground benefits no one. In any given week I’ll spend a disproportionate of my planning time on one or two lessons, but most will be put together in 5 minutes or less. My formula is that if every fourth lesson for every class is a corker, all will be well. Students are forgiving creatures. They will happily dine off a barnstorming lesson for a week. Plus, if the lesson’s worth its salt it ought to produce work that is marked and then becomes next lesson’s menu anyway.

Lesson plans

The Input/Output Myth: If only!

‘Break’ your plan

The more practised you become, the quicker you’ll be able to rattle through these 5 questions. The only other advice I’d offer is to conduct a thought experiment I call breaking your plan. Knowing your students is crucial for this to be effective but all it involves is running though your lesson and testing it for weak spots. For me it becomes like a game of chess: I’ll say X, and then she’ll do Y. OK, so I need to… Or: when I want them to do X, he’ll need extra support so I need to make sure I’m free to support by doing Y. If it’s a high stakes lesson I might spend a while doing this but normally a couple of minutes spent thinking in this way is all it takes to ensure that most of the kinks you can anticipate are ironed out. So, these are the lessons I’ve learned about planning. They are, of course, just my thoughts although they are underpinned by 12 years of bitter experience. Please feel free to use, adapt or disregard as you see fit.

Related posts

The Problem with Progress part 3 – designing lessons for learning Go with the flow – the 2 minute lesson plan Work scrutiny – what’s the point of marking books? Anatomy of an Outstanding Lesson

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34 comments.

[…] This is @LearningSpy’s latest blog. The first para really rang true for me: […]

This was terrific! I will continue to use this as I teach various levels throughout the year.

[…] Continued in Planning Lessons – lessons I’ve learned about how to plan. […]

[…] Edssential article from @learningspy : […]

[…] https://learningspy.co.uk/2013/06/09/planning-lessons-lessons-ive-learned-about-how-to-plan/ […]

[…] Failing to plan is planning to failSmug teachers, everywhereAs a new teacher, lesson planning seemed to suck up almost all of my available time and energy. Looking back over those frenetic early years it’s become increasingly clear that I wasted an awful lot of effort designing activities rather than considering what my students needed to learn. That is to say, I put most of my effort into things that had only a marginal impact on students’ learning.  […]

[…]   […]

Thanks, David – I thought this was terrific. I started teaching in 1980 and I just don’t remember conversations about the importance of lesson planning in that decade (the dark ages, I know – before Ofsted…) despite the fact that I’d been though the PGCE/Probationary Year (as it was called) experience. I was a new Head of Department in the early 1990s and remember how time-consuming I found a lot of my new HoD tasks. On Sundays (which were always a Day of Work throughout my teaching career) I always had a list of jobs to do, and planning the following week’s lessons was usually at the bottom of the list. It was a job that always got done, but depending on how long other tasks had taken, it was sometimes rushed. One week we had a two-day departmental inspection by a lone HMI. It was a Big Thing to this new HoD and I decided I’d reverse my usual order of doing things and plan the following week’s lessons first, when I had plenty of time/energy and I was fresher. The difference was striking – my lessons had always been fine (these were biddable students) but having spent considerably more time and thought on what I wanted to do and what I wanted them to get out of each lesson, the lessons were so much better. I enjoyed them more, and I could see the students were just moving further forward in their thinking and learning. For the rest of my career, including when I was a (teaching) head twenty years later, I still planned my lessons before I did any other work on a Sunday. It was one of the most productive uses of my time.

I was wondering whether you have read any of Zahoric’s research on lesson planning. I summarise some of it here – http://websofsubstance.wordpress.com/2013/01/20/we-love-it-when-a-plan-comes-together/

Thanks Harry – no, I’d never heard of Zahoric before. It’s fascinating that planning could actually undermine our teaching! And also interesting that planning should provide opportunities for students to feedback to students. I’ve blogged about this here: https://learningspy.co.uk/2012/02/20/feedback-its-better-to-receive-than-to-give/

A fascinating read, David. I am two years into the profession and feel that I have well and truly been in the time management / Planning Vs Marking quandary since September. Thank you for posting, will look out for more of your blogs in future.

[…] Planning lesson: lessons I’ve learned from lessons I’ve taught Are worksheets a waste of time? […]

David, Thanks for a great lot of information and reassuring thoughts. I was wondering if you’d talk more about the pen portraits. I have never heard the term before and in the past have struggled to find the right way to collect and communicate such information to help with student identification and continuity from teacher to teacher and grade to grade. Any chance you’d share more- specifically how they look/what information is recorded/student involvement. I’ve been percolating and planning how to implement, but not one to reinvent the wheel if something else is already done well. Anything you’d share would be greatly appreciated. Thanks for all of your great ideas- keep them coming!

Pen portraits were developed as a way to get teachers to interact more usefully with data. The idea is that you cross reference your knowledge of a student against what the data says about them to put together some classroom strategies for use with that particular student. Teachers are asked to select 5 students from each class and to write a brief summary of the student and how they planned to cater for their needs. Ideally, this information would then be shared with the student. Does that help?

As a new (mature) teacher to the profession, this sounds good – I am in my third year of teaching and will be moving on to a new school in September (with lots of exciting opportunities and developments). However, what have YOU done with the data you gathered – can you please give examples? I’m thinking that as the tutor for a new form, I could get the kids to do this on each other – extra info, fills a tutor time constructively and you get an insight into both the writer and the subject. Thank you for your advice.

Sorry Stella – I’m not sure what you mean by asking what I’ve done with data – can you explain further? Thanks, DD

[…] This is a summary and a drawing together of several earlier posts. I consider it a refinement of my thinking and something which is painstakingly (and grandiosely) groping its way towards a total philosophy of planning.  […]

[…] Anatomy of an outstanding lesson The myth of progress in lessons by Kev Bartle Lesson planning – lessons I’ve learned from lessons I’ve taught […]

[…] NB: This post does no longer represents my latest thinking. I’ve updated my approach to planning here. […]

[…] I will talk anyone to death about how Twitter has transformed my teaching. Even I find it difficult to comprehend sometimes just how much I’ve gained from seeing the posts of some truly inspirational teachers. One thing that I stumbled across last year was @learningspy‘s use of DIRT for marking and feedback. I can honestly say it has transformed the way I mark and there has been a marked improvement in both the QUALITY and the FREQUENCY of the feedback I give to pupils. I am very grateful to David for sharing this and you can read more about DIRT here. […]

[…] https://www.learningspy.co.uk/featured/planning-lessons-lessons-ive-learned-about-how-to-plan/ […]

[…] year. It’s well out of date and even has a disclaimer at the top directing traffic to this updated planning post. The title itself was a joke based on the 7 minute abs gag from There’s Something About […]

I know you possibly disagree with parts of what you have written but I think this is excellent advice on the key to planning lessons. Learning not tasks. Perfect. Damian

[…] Example Posts: 1) Planning Lessons – Lessons I’ve Learnt About How to Plan […]

[…] 3. Planning Lessons – Learning Spy – https://www.learningspy.co.uk/featured/planning-lessons-lessons-ive-learned-about-how-to-plan/ […]

[…] “how?”‘ (see her comment on this post).  More simply, as David Didau has written, I’m focusing ‘on learning not activities.’  What I think is needed to plan a […]

[…] Planning Lessons – lessons I’ve learned from lessons I’ve taught – David Didau […]

[…] you have the time, search the word planning. Further reading Never enough time? Lesson planning? Planning Lessons – lessons I’ve learned from lessons I’ve taught. This is a summary and a drawing together of several earlier posts. I consider it a refinement of […]

Thanks David, this is really clear and concise and I’m relieved to see that I’m not alone in spending much more time thinking about learning of my specific students than I do planning particular activities. And you do make me laugh: “…12 bitter years of experience.” – I’m sure they’ve not all been bitter! (Especially as it must now be 14 or 15)

[…] Planning Lessons – lessons I’ve learned from lessons I’ve taught. This is a summary and a drawing together of several earlier posts. I consider it a refinement of my thinking and something which is painstakingly (and grandiosely) groping its way towards a total philosophy of planning. It does also attempt to offer something new but is this enough to deserve a new post? You decide. “Failing to plan is planning to fail.”Smug teachers, everywhere Planning: still a good thing to do first As a new teacher, lesson planning seemed to suck up almost all of my available time and energy. The Pareto Principle, or The Law of the Valuable Few, suggests that in most fields of endeavour, people spend 80% of their time on those activities that produce 20% of the impact. What if, I started to wonder, I tried to turn those percentages around? 1. […]

[…] Planning lessons – lessons I’ve learned from lessons I’ve taught Fireworks teaching – why less might well be more Easy vs Hard […]

[…] Planning Lessons – lessons I’ve learned from lessons I've taught […]

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How to Start an Ecommerce Business: 2024 Edition

With global online retail sales expected to hit $8.15 trillion by 2026, there’s no better time to start an ecommerce business.

But if you’re new to the business world, launching an online store can be daunting. Where do you begin? Should your initial focus be on product selection, website design, or marketing strategy? These questions are common for any budding entrepreneur.

This guide covers all the steps, from the basics to the more advanced aspects of running an online store. You’ll learn how to set up, manage, and grow your business into a profitable ecommerce venture.

How to start an ecommerce business: 5 steps to launch

1. find products to sell.

Being strategic with your product selection is key. Here are some tips to help you choose:

Capitalize on regional products

Identify products unique to certain regions or cultures that might have a demand in other areas. These can be traditional crafts, local delicacies, or specific fashion styles.

Explore niche communities

Look into niche hobbies or interests and find products that cater to these specific groups. These communities often have passionate followers looking for specialized items.

Solve a pain point

Think of a problem you’ve personally encountered and consider if there’s a product that could solve it. Products that address real-life issues can resonate well with customers.

You’ll find inspiration is abundant once you start your search. Google Trends can be a useful tool to help validate your product ideas.

Additional resources:

• How To Find a Product to Sell Online: 13 Tactics for 2024
• 10 White Label Products Ideas for Ecommerce  

How to source your products

When it comes to sourcing products, dropshipping is a solid option to think about. It’s a setup where an ecommerce business sells products without dealing with inventory. A customer buys something from you, and then you order it from a dropshipping supplier who ships it directly to them.

While dropshipping is a popular choice, there are other business models like wholesaling or direct-to-consumer that might suit different business needs. However, dropshipping stands out for several reasons:

• Testing new ideas is easier: With dropshipping, trying out new products is a breeze. You don’t buy a bunch of stock upfront, so experimenting with different items to see what sticks is less risky.
• Geographic flexibility: Run your business from anywhere. As long as you have internet access, you can manage a dropshipping store, making it perfect for those who love flexibility.
• Lower entry barriers: You don’t need a big budget to start. This makes dropshipping ideal for those beginning their ecommerce journey.
• The Ultimate Shopify Dropshipping Guide (2024)
• 11 Best Dropshipping Suppliers and How To Choose the Right One

2. Analyze the competition

Research is integral to the success of your ecommerce store. Once you’ve chosen your products, look at competitors and what they’re doing. Here are a few things to pay attention to when doing a competitor analysis: 

• What is their business model?
• Are they selling multiple items or just one product?
• What social media channels do they utilize?
• Who is their target market?
• How do they push sales? (e.g., paid social, PPC, SEO, email, etc.)

Competitor analysis can lead you to identify better products to sell and give you a good understanding of how to launch an online business. Additional resources:

• SWOT Analysis: How to Create One + Examples to Inspire You

3. Write a business plan

With your competitive research complete, it’s time to write your business plan. This plan serves as a roadmap, guiding your ecommerce journey from start to growth. It’s especially important for aligning your goals and strategies.

Tips for crafting a successful business plan:

• Define clear objectives: Start by setting specific, measurable goals for your business. This could include sales targets, customer acquisition numbers, or market penetration rates.
• Outline your business model: Describe how you will manage inventory, whether through dropshipping or holding stock.
• Detail your marketing approach: Explain how you’ll attract customers. Include tactics like SEO, social media marketing, and influencer collaborations.
• Make financial projections: Include detailed financial forecasts. Show expected revenue, expenses, and break-even point.
• Conduct a risk analysis: Identify potential challenges and how you’ll address them. This could include market changes, supply issues, or technological advancements.
• Include an action plan: Break down your strategies into actionable steps with timelines. This makes your goals more attainable and trackable.
• The 7 Best Business Plan Examples (2024)
• Business Plan Template: The Ultimate Guide for Ecommerce Businesses

4. Choose a name and logo

Choosing a business name.

Choosing the right name for your online business is a critical step. A good name sticks in people’s minds and becomes synonymous with your brand’s identity. Tools like Oberlo’s business name generator are great for sparking unique ideas and checking if a domain is up for grabs.

After picking a few names, see if they’re available on social media. Your brand needs the same name everywhere for people to recognize you easily. Thinking of selling worldwide? Make sure your name works across different cultures. You don’t want any surprises there.

Crafting a logo

Your logo is the visual heartbeat of your brand. Begin with something straightforward yet impactful using Shopify’s free logo maker . This tool is ideal for those new to logo design.

Consider how your logo will appear in different settings. It needs to shine on everything from your website to product packaging. A well-designed logo, aligned with your business name, lays the foundation for a strong brand presence in the online marketplace.

• How to Build a Brand: An 8-Step Guide
• Branding Design: What It Is and How to Do It

5. Build your online store

Once you have chosen a name and logo, the next thing to do is build your store. Choosing ecommerce hosting platforms like Shopify can make setting up your store easy. Shopify has lots of templates to start with and an easy-to-use online store builder that doesn’t need coding input. 

When your website is ready to start taking orders, remember to try a test order yourself to make sure the process is smooth for the customer. Alleviate any additional steps needed to buy something online and ask only for information that is necessary for the checkout process.

• 7 Best Free Shopify Themes For Your Online Store
• 58 Most Inspiring and Successful Shopify Stores in 2024

6. Choose your sales and marketing channels

There are various sales channels available, and selecting the right ones depends heavily on your target audience and the types of products you sell. If you specialize in unique or handcrafted items, niche marketplaces like Etsy are more suitable than broader platforms like Amazon or eBay. 

Here’s a list of marketplaces that cater to different niches:

• Bonanza : A great platform if you’re selling unique and diverse items. From fashionable clothing to rare collectibles, it attracts a wide range of buyers.
• Newegg : If your specialty is electronics and tech gadgets, Newegg is your marketplace.
• Reverb : This niche marketplace is dedicated to musical instruments and gear. It connects sellers with a targeted audience of musicians and enthusiasts.

On the marketing front, balancing cost and effectiveness is key. You want to reach the right people without breaking the bank. Here are some strategies to consider:

• Social media marketing: Engage on Instagram with live sessions, for example—a cost-effective way to connect and show your brand’s personality.
• Email marketing: Interactive emails with quizzes or polls boost engagement without significant expense, offering valuable customer insights.
• Influencer partnerships: Working with niche micro-influencers can be more affordable and effective for targeting specific customer groups.
• Search engine optimization (SEO): Focus on voice search optimization. It’s a smart, future-proof strategy that can reduce long-term marketing costs.

Additional resources

• 10 Best Marketing Channels for Ecommerce Stores
• 9 Marketing Strategies That’ll Level Up Your Ecommerce Store

7. Launch your business 

Now, you’re ready to launch your online business. It’s a big step, and there’s plenty to keep an eye on as you start. First up, watch your key performance indicators (KPIs) closely. They tell you how well your store is doing and what you might need to tweak.

Next, make sure your shipping runs smoothly. Happy customers often come back, so getting orders to them without a hitch is crucial. If something goes off track, be ready with a backup plan.

Finally, keep learning and adjusting based on what your customers say and what your data shows. This way, your business keeps growing and improving.

How much does it cost to start an ecommerce business?

Starting an ecommerce business can be more budget-friendly than you think. Often, you might need only about $100 to get going, mainly for a website subscription and a theme for your store. One of the perks of an ecommerce business is that it typically costs less than a brick-and-mortar store. You won’t have the same overheads like rent for a physical space.

If you opt for a dropshipping business model, the initial costs can be even lower. In dropshipping, you pay for products only after customers buy them, so there’s no upfront expense for stock. However, if you’re making products yourself or working with manufacturers, you’ll need to invest in materials and labor from the start.

Shopify’s research sheds some light on what to expect financially. They surveyed 150 entrepreneurs and 300 small business owners across the US. The findings suggest that new ecommerce store owners might spend up to $40,000 in their first year, covering everything from products and operations to marketing and staff wages. But these costs are usually offset by your business’s profits.

Here’s a rough breakdown of typical first-year expenses: 

• Online store setup: 9%
• Operating costs like legal fees and software: 11%
• Marketing: 10.3%
• Product-related costs: 31.6%
• Shipping: 8.7%
• Team and staff expenses: 18.8%
• Offline costs, like event fees: 10.5% 

However, the actual amount can vary based on factors like your industry, the type of ecommerce model you choose, and whether you hire employees. And you don’t need to have the entire sum upfront. Many entrepreneurs start with personal savings, while others may seek support from friends, family, or personal loans.

4 tips for creating a profitable online store

Launching an ecommerce business is just the beginning. To make it profitable, you need to think differently. Here are some actionable tips for success: 

1. Enhance customer interaction 

Revamp your customer service approach. Implement interactive features like virtual product trials or augmented reality on your site. This will give customers a new way to experience your products.

2. Gamify your shopping experience

Transform your website into an interactive playground. Add elements like scavenger hunts for discounts or fun quizzes that lead to personalized offers. These tactics can make shopping more engaging and increase sales.

3. Personalize with AI

Incorporate AI technology into your store. Use it to analyze customer behaviors and preferences. Then, tailor product recommendations and content accordingly to enhance the shopping experience.

4. Keep your inventory fresh 

Regularly update your product offerings. Use market trends and customer feedback to introduce new items. Consider limited-edition products or collaborations to create excitement and attract repeat visits.

Open your ecommerce store

Building an ecommerce business from scratch has its mix of highs and lows. You’ll be choosing products, gauging their market fit, and handling production. Next comes developing your online store and drawing in customers. It’s a bit like solving a complex puzzle, and the satisfaction of seeing it come together is immense.

Hopefully this article has helped you understand how to start an ecommerce business. You’ve got everything you need at your fingertips to make this the year your store takes off, and we’re happy to help you meet this goal.

Ecommerce business FAQ

What are the 4 ecommerce business models.

There are four primary ecommerce business models, : 

• Consumer to business (C2B): In this model, individuals offer products or services to businesses. An example is an influencer charging a fee to provide brand exposure to their audience.
• Business to business (B2B): Here, one business sells goods or services to another business. For instance, a company might sell wholesale products to another business for their use.
• Consumer to consumer (C2C): This model involves transactions between consumers. An example is selling vintage clothes on a platform like Facebook Marketplace to another individual.
• Business to consumer (B2C): In this common model, ecommerce businesses sell goods or services directly to individual consumers, like purchasing a jacket from an online retailer.

How do I start an ecommerce business without money?

To be honest, you’d need at least a few hundred dollars to start an ecommerce business. That’s because it’s a product-based business that requires you to build an online store, do marketing, and invest in the growth of your brand.

That said, you can start an ecommerce business on the cheap by choosing dropshipping as your business model, tapping into free marketing channels, and creating brand awareness via word-of-mouth strategies. You can also look into funding programs like Shopify Capital to get the money you need to start and grow your ecommerce business.

Is an ecommerce business profitable?

In a word: yes. But realizing your profits could take a while, since an ecommerce entrepreneur’s journey is a marathon rather than a sprint. It could take you 18 to 24 months to see a profit. That’s why we recommend you don’t measure the success of your ecommerce venture by your net profit in the first year.

Want to Learn More?

• How to Start a Photography Business
• 30 Amazing Startup Business Ideas
• The Ultimate Guide to Mobile Commerce
• How to Start a Business

Transforming supply chains: Do you have the skills to accelerate your capabilities?

What expertise will your next generation of warehouse managers require? Computer programming? Data analytics? Advanced robotics? Maybe all those things and more. If you are like the 71 global companies that responded to a 2021 supply chain survey , you probably accelerated your investments in digital technology as your supply chain grappled with COVID-19 challenges.

What’s more, 99 percent of respondents to that survey said they need more in-house digital supply chain talent to support their current and planned digitization efforts, a tenfold increase on the previous year. That need is driving them to look toward reskilling and redeploying today’s workforce to achieve the required levels of competency (Exhibit 1).

But what is the current state of supply chain capa­bilities, and what will it take to accelerate them?

In 2017, we published the results of research into the capabilities necessary to run digital supply chains . We found that the majority of companies needed greater numbers of well-rounded professionals who had all the fundamental skills to manage supply chains from end to end. We see this is as a pre­requisite for the transition to digitally enabled supply chains, in which skill profiles are redefined with greater emphasis on data and algorithmic literacy, exception-handling competency, and the ability to make sound, integrated business decisions.

Since our last article, we have continued to measure the evolution of supply chain capabilities at hundreds of companies worldwide. Our analysis is based on results from a psychometrician-validated tool that assesses individuals’ knowledge in eight core domains: supply chain strategy, order and demand management, forecasting, inventory management, production planning, supply planning, operational logistics, and performance management. This data set has more than doubled in size since our 2017 article (to more than 15,000 responses), so we thought it timely to revisit our analysis to see what has changed.

Change is happening but too slowly

The headline figures from our most recent analysis look similar to our previous results. Overall, companies’ average supply chain capability scores are still clustered tightly around the 46 percent mark, which is about where they were in 2017. We have seen some movement in specific industries, however. Comparing our sample of companies that have applied the assessment to their workforce, we notice an improvement in the average supply chain capabilities of pharmaceutical organizations, while the average performance of companies in advanced industries (including automotive, aerospace and defense, and semiconductors) and the basic materials sectors (such as metals and mining, oil and gas, and pulp and paper) has fallen slightly (Exhibit 2).

These changes might be driven by shifts in management focus. For example, pharmaceutical companies are paying more attention to supply chain efficiency in response to cost pressure from customers and competitors, and they may aim to improve efficiency through talent acquisition and development. Many advanced industries have faced increased technological disruption in both products and production processes, which may have shifted attention and investment away from further developing people capabilities in supply chain.

As we found the first time around, there is still significant variation in the performance of companies within each sector. Regardless of geographical market or industry, a company controls its own ability to attract, develop, and retain top talent, and this may influence its performance in the long run.

When we look beyond the averages, however, evidence of more movement emerges. In 2017, almost 60 percent of supply chain professionals had an expertise spike only in one area, measured as expert-level achievement in that domain. Today, only 30 percent of people have such a narrow skills profile, while 28 percent have mastered two to five areas. The number of truly well rounded “end-to-end” supply-chain-management experts has been stable at 5 percent of all supply chain roles in the average organization. Capabilities seem to be broadening, although slowly, in line with our expectations that organizations’ capability requirements expand as digital supply chain initiatives grow (Exhibit 3).

In addition to the traditional functional topics, the assessment introduced a new module in 2020 that focuses on digital and advanced analytics applications for supply chain management. This module has been deployed at 25 manufacturers in five industry groups, for a total of nearly 5,000 respondents. The overall average score (40 out of 100) for knowledge of digital topics is somewhat lower than the average score for traditional functional topics, which is 46. But network analytics and demand-planning functions, two of the most frequently implemented digital supply-chain-transformation initiatives, show somewhat higher scores: 46 and 49, respectively. This finding suggests a correlation between higher levels of talent and advances in supply chain processes.

Moreover, despite the argument that digital skills favor the young, the data show that the highest command of applied digital and analytics topics lay with senior executives, followed by midlevel leaders. This hierarchy also exists for traditional supply chain topics. Although more junior employees may have the technical understanding and educational background for digital, they may lack a broad perspective on value creation from applying data science methods and advanced technologies to business problems.

Together, these analyses suggest that most companies face the task of ramping up their supply chain capability-building efforts—across the whole supply chain workforce, not just for their most promising experts. The accelerating pace of automation and digitization is likely to make this all the more urgent in the coming years. According to McKinsey Global Institute research, half of today’s tasks are expected to be automated by 2055 , resulting in process transformations and the implicit need to reskill and upskill workers. We’ve known for some time that nearly 70 percent of all transformation programs fail , and a main reason is that employees do not have the necessary skills and capabilities to support the transformation program.

Knowing where to start

The most effective capability-building programs invest in foundational, end-to-end supply chain knowledge building, coupled with advanced functional, technical, and leadership training based on the business’s aspirations and existing capability profiles. But one major challenge often faced by organizations is identifying the specific skills they need to develop and grow competitive people capabilities. In our recent global survey of supply chain executives, we found that only 6 percent of the 71 companies that responded have a formal perspective on their organizations’ strategically important skills and competencies. While most of these organizations said they have a corporate capability-building academy—30 percent of which now include new data and analytics programs—only one in 20 respondents believed that those programs effectively build the skills needed to deliver on strategic aspirations.

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Without a clear road map of either their current capabilities or their future skills needs, supply chain organizations are working in the dark. Many end up relying heavily on external talent pools, using contractors for specialized areas or projects and to fill immediate skill gaps. This practice presents its own risks, however. A manufacturing company in the energy sector, with a strategy that involved contingent workers providing a spike of core capabilities in critical planning and distribution roles, tested its workforce using the standardized assessment. The responses showed that the external talent population had, on average, lower skills than the company’s full-time supply chain employees. These results suggested that the company’s existing selection processes were failing to identify the best talent or to boost the overall functional knowledge of its supply chain group.

An effective capability-building formula

Companies that have a clear perspective of what they need regarding talent still rely on external talent pools to fill urgent capability gaps quickly, but they also take a strategic approach to the develop­ment of skills across their existing workforce. The business case is there: organizations that invest in developing their people while launching a transformational change program see a higher success rate than those that do not— by a factor of up to fourfold .

Organizations that invest in developing their people while launching a transformational change program see a higher success rate than those that do not.

Designing a successful capability-development program is not easy, with most programs failing to produce sustainable results. 1 Steve Glaveski, “Where companies go wrong with learning and development,” Harvard Business Review , October 2, 2019. But the experiences of exceptional companies show that successful capability-building programs are typically designed around five elements:

• focusing on the skills that matter, which is often hindered by a lack of understanding of what “good” looks like or what it takes to be “great”
• using diverse and effective learning methods
• incentivizing participation and engagement
• setting up the program to scale beyond the initial pilot
• and driving for impact on company’s operating performance

The formula in action

What does a successful supply chain capability-building program look like? Take the example of a high-tech company that embarked on a large-scale, two-year effort to upgrade the skills of more than 3,000 employees, many of whom had been working in the organization for 20 or 30 years. The company had no systematic capability-building program in place for experienced staff and had made only limited efforts to import external best practices. That organization’s supply chain was underperforming too, with low service levels and significant order backlogs despite high on-hand inventory. As it embarked on a holistic supply chain transformation, the company’s leaders suspected that success would depend on a significant shift in the skills and mindsets of its staff.

Their fears were confirmed by the first step in the development of the new program, in which the company, using assessment-based benchmarking, defined the required core capabilities of its future supply chain and compared those with the skills it had available across its current staff. That work revealed a big gap: the average scores were around 50 percent lower than those seen in the highest-performing organizations.

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To close its capability gap, the company designed a learning road map that structured the learning journeys into multiple stages. Initially, it focused on building foundational supply chain knowledge that leveled up skills and established a common language across more than 3,000 members of the supply chain organization. This intervention was delivered via video—allowing broad participation of the supply chain community and adjacent functions, as well as interaction with experienced faculty who could take questions and ensure that participants understood the material.

Next, the company focused on the development of functional expertise for the core group of approximately 1,400 supply chain professionals. This part of the curriculum covered principles for supply chain configuration and basic methods for inventory management, demand forecasting, and balancing of demand and supply through integrated sales and operations planning. Interventions included in-class and online self-paced sessions. The in-class elements were led by expert trainers who could provide context, examples, opportunities for open reflection, and answers to learners’ specific questions. Dedicated online sessions supported the in-person learning with a variety of training formats, including interactive video sessions with expert faculty, content slides, interactive exercises, and quizzes.

Finally, for a selected group of around 100 high-potential participants, the company developed a mastery-level program covering advanced concepts in supply chain management. In addition to classroom and online learning approaches, this part of program incorporated site visits to model warehouses and group discussions. Using a “train the trainer” approach, some expert staff were encouraged to become faculty in the organization’s in-house capability-building academy, helping to develop the supply chain management skills of colleagues and members of adjacent functions.

In line with adult-learning best practices, the entire program placed significant emphasis on experiential learning, giving participants the opportunity to see new skills in action, apply them in practice, and teach them to others. This hands-on experience was delivered in a variety of formats, including interactive case-study sessions, role-playing games, and simulations. This included, for example, the long-established beer game, in which players coordinate a simulated beverage supply chain in the face of inaccurate forecasting, misaligned incentives, a lack of transparency, and poor information sharing. The sight of inventory piling up and the sense of the supply chain running out of control provides an immediate and vivid lesson that is rarely forgotten.

The company measured the impact of its program using a variant of the assessment it used for benchmarking. Participants improved their performance by an average of 20 percentage points over the duration of the program, and the company established a permanent pool of internal trainers, together with a group of change agents and experts in different functions to further disseminate learning, transfer knowledge through practice-sharing communities, and promote continuous skills improvement.

Building a capability accelerator

Developing the capabilities needed to run modern supply chains takes time and commitment, but the job doesn’t end when companies fill their immediate skills requirements. Companies will want to continuously monitor the alignment between their capabilities and their strategic goals, together with the operating performance of the organization. When new gaps become apparent, this continual awareness makes it easier to move rapidly to close them.

These cases illustrate how the most successful supply chains of the future will likely be those that build accelerated capability building into their DNA. These organizations will use mechanisms such as communities of practitioners and in-house supply chain academies to share emerging best practices and deliver training at scale. They will set up their staff incentive systems to encourage continuous personal development, and the message will be reinforced by the involvement of senior leaders, who will act both as program sponsors and role models for the new learning culture.

Knut Alicke is a partner in McKinsey’s Stuttgart office, Elena Dumitrescu  is a senior knowledge expert in the Toronto office, and Margarita Protopappa-Sieke is a senior knowledge expert in the Cologne office.

The authors wish to thank Daniel Gass for his contributions to this article.

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