outline the important parts of the business plan in a correct order

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

12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

• The name and location of your company
• Products and services offered by your company
• Mission and vision statements
• Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

• Business location
• The legal structure of your business
• Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

• The geographical location of your target market
• Needs of your target market and how your products and services can meet those needs
• Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

• Industry description and statistics
• Demographics and profile of target customers
• Marketing data for your products and services
• Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

• Your competitors' identified advantages in the market
• How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
• The standout qualities that distinguish you from other companies
• Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

• Information about how your company plans to carry out its operations.
• The base location from which your company intends to operate.
• The number of employees to be utilized and other information about your company's operations.
• Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

• Projected income statements
• Cash flow statements
• Balance sheets
• Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

• Legal documents
• Licenses and permits
• Credit histories
• Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

• The management team and other stakeholders resume
• Marketing research
• Permits and relevant legal documents
• Financial documents

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8 Components of a Business Plan

Back to Business Plans

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on February 19, 2023 Updated on February 27, 2024

A key part of the business startup process is putting together a business plan , particularly if you’d like to raise capital. It’s not going to be easy, but it’s absolutely essential, and an invaluable learning tool. 

Creating a business plan early helps you think through every aspect of your business, from operations and financing to growth and vision. In the end, the knowledge you’ll gain could be the difference between success and failure. 

But what exactly does a business plan consist of? There are eight essential components, all of which are detailed in this handy guide.

1. Executive Summary 

The executive summary opens your business plan , but it’s the section you’ll write last. It summarizes the key points and highlights the most important aspects of your plan. Often investors and lenders will only read the executive summary; if it doesn’t capture their interest they’ll stop reading, so it’s important to make it as compelling as possible.

The components touched upon should include:

• The business opportunity – what problem are you solving in the market?
• Your idea, meaning the product or service you’re planning to offer, and why it solves the problem in the market better than other solutions.
• The history of the business so far – what have you done to this point? When you’re just getting started, this may be nothing more than coming up with the idea, choosing a business name , and forming a business entity.
• A summary of the industry, market size, your target customers, and the competition.
• A strong statement about how your company is going to stand out in the market – what will be your competitive advantage?
• A list of specific goals that you plan to achieve in the short term, such as developing your product, launching a marketing campaign, or hiring a key person. 
• A summary of your financial plan including cost and sales projections and a break-even analysis.
• A summary of your management team, their roles, and the relevant experience that they have to serve in those roles.
• Your “ask”, if applicable, meaning what you’re requesting from the investor or lender. You’ll include the amount you’d like and how it will be spent, such as “We are seeking $50,000 in seed funding to develop our beta product”. 

Remember that if you’re seeking capital, the executive summary could make or break your venture. Take your time and make sure it illustrates how your business is unique in the market and why you’ll succeed.

The executive summary should be no more than two pages long, so it’s important to capture the reader’s interest from the start. 

• 2. Company Description/Overview

In this section, you’ll detail your full company history, such as how you came up with the idea for your business and any milestones or achievements. 

You’ll also include your mission and vision statements. A mission statement explains what you’d like your business to achieve, its driving force, while a vision statement lays out your long-term plan in terms of growth. 

A mission statement might be “Our company aims to make life easier for business owners with intuitive payroll software”, while a vision statement could be “Our objective is to become the go-to comprehensive HR software provider for companies around the globe.”

In this section, you’ll want to list your objectives – specific short-term goals. Examples might include “complete initial product development by ‘date’” or “hire two qualified sales people” or “launch the first version of the product”. 

It’s best to divide this section into subsections – company history, mission and vision, and objectives.

3. Products/Services Offered 

Here you’ll go into detail about what you’re offering, how it solves a problem in the market, and how it’s unique. Don’t be afraid to share information that is proprietary – investors and lenders are not out to steal your ideas. 

Also specify how your product is developed or sourced. Are you manufacturing it or does it require technical development? Are you purchasing a product from a manufacturer or wholesaler? 

You’ll also want to specify how you’ll sell your product or service. Will it be a subscription service or a one time purchase?  What is your target pricing? On what channels do you plan to sell your product or service, such as online or by direct sales in a store? 

Basically, you’re describing what you’re going to sell and how you’ll make money.

• 4. Market Analysis 

The market analysis is where you’re going to spend most of your time because it involves a lot of research. You should divide it into four sections.

Industry analysis 

You’ll want to find out exactly what’s happening in your industry, such as its growth rate, market size, and any specific trends that are occurring. Where is the industry predicted to be in 10 years? Cite your sources where you can by providing links. 

Then describe your company’s place in the market. Is your product going to fit a certain niche? Is there a sub-industry your company will fit within? How will you keep up with industry changes? 

Competitor analysis 

Now you’ll dig into your competition. Detail your main competitors and how they differentiate themselves in the market. For example, one competitor may advertise convenience while another may tout superior quality. Also highlight your competitors’ weaknesses.

Next, describe how you’ll stand out. Detail your competitive advantages and how you’ll sustain them. This section is extremely important and will be a focus for investors and lenders. 

Target market analysis 

Here you’ll describe your target market and whether it’s different from your competitors’.  For example, maybe you have a younger demographic in mind? 

You’ll need to know more about your target market than demographics, though. You’ll want to explain the needs and wants of your ideal customers, how your offering solves their problem, and why they will choose your company. 

You should also lay out where you’ll find them, where to place your marketing and where to sell your products. Learning this kind of detail requires going to the source – your potential customers. You can do online surveys or even in-person focus groups. 

Your goal will be to uncover as much about these people as possible. When you start selling, you’ll want to keep learning about your customers. You may end up selling to a different target market than you originally thought, which could lead to a marketing shift. 

SWOT analysis 

SWOT stands for strengths, weaknesses, opportunities, and threats, and it’s one of the more common and helpful business planning tools.   

First describe all the specific strengths of your company, such as the quality of your product or some unique feature, such as the experience of your management team. Talk about the elements that will make your company successful.

Next, acknowledge and explore possible weaknesses. You can’t say “none”, because no company is perfect, especially at the start. Maybe you lack funds or face a massive competitor. Whatever it is, detail how you will surmount this hurdle. 

Next, talk about the opportunities your company has in the market. Perhaps you’re going to target an underserved segment, or have a technology plan that will help you surge past the competition. 

Finally, examine potential threats. It could be a competitor that might try to replicate your product or rapidly advancing technology in your industry. Again, discuss your plans to handle such threats if they come to pass. 

5. Marketing and Sales Strategies

Now it’s time to explain how you’re going to find potential customers and convert them into paying customers.  

Marketing and advertising plan

When you did your target market analysis, you should have learned a lot about your potential customers, including where to find them. This should help you determine where to advertise. 

Maybe you found that your target customers favor TikTok over Instagram and decided to spend more marketing dollars on TikTok. Detail all the marketing channels you plan to use and why.

Your target market analysis should also have given you information about what kind of message will resonate with your target customers. You should understand their needs and wants and how your product solves their problem, then convey that in your marketing. 

Start by creating a value proposition, which should be no more than two sentences long and answer the following questions:

• What are you offering
• Whose problem does it solve
• What problem does it solve
• What benefits does it provide
• How is it better than competitor products

An example might be “Payroll software that will handle all the payroll needs of small business owners, making life easier for less.”

Whatever your value proposition, it should be at the heart of all of your marketing.

Sales strategy and tactics 

Your sales strategy is a vision to persuade customers to buy, including where you’ll sell and how. For example, you may plan to sell only on your own website, or you may sell from both a physical location and online. On the other hand, you may have a sales team that will make direct sales calls to potential customers, which is more common in business-to-business sales.

Sales tactics are more about how you’re going to get them to buy after they reach your sales channel. Even when selling online, you need something on your site that’s going to get them to go from a site visitor to a paying customer. 

By the same token, if you’re going to have a sales team making direct sales, what message are they going to deliver that will entice a sale? It’s best for sales tactics to focus on the customer’s pain point and what value you’re bringing to the table, rather than being aggressively promotional about the greatness of your product and your business. 

Pricing strategy

Pricing is not an exact science and should depend on several factors. First, consider how you want your product or service to be perceived in the market. If your differentiator is to be the lowest price, position your company as the “discount” option. Think Walmart, and price your products lower than the competition. 

If, on the other hand, you want to be the Mercedes of the market, then you’ll position your product as the luxury option. Of course you’ll have to back this up with superior quality, but being the luxury option allows you to command higher prices.

You can, of course, fall somewhere in the middle, but the point is that pricing is a matter of perception. How you position your product in the market compared to the competition is a big factor in determining your price.

Of course, you’ll have to consider your costs, as well as competitor prices. Obviously, your prices must cover your costs and allow you to make a good profit margin. 

Whatever pricing strategy you choose, you’ll justify it in this section of your plan.

• 6. Operations and Management 

This section is the real nuts and bolts of your business – how it operates on a day-to-day basis and who is operating it. Again, this section should be divided into subsections.

Operational plan

Your plan of operations should be specific , detailed and mainly logistical. Who will be doing what on a daily, weekly, and monthly basis? How will the business be managed and how will quality be assured? Be sure to detail your suppliers and how and when you’ll order raw materials. 

This should also include the roles that will be filled and the various processes that will be part of everyday business operations . Just consider all the critical functions that must be handled for your business to be able to operate on an ongoing basis. 

Technology plan

If your product involves technical development, you’ll describe your tech development plan with specific goals and milestones. The plan will also include how many people will be working on this development, and what needs to be done for goals to be met.

If your company is not a technology company, you’ll describe what technologies you plan to use to run your business or make your business more efficient. It could be process automation software, payroll software, or just laptops and tablets for your staff. 

Management and organizational structure 

Now you’ll describe who’s running the show. It may be just you when you’re starting out, so you’ll detail what your role will be and summarize your background. You’ll also go into detail about any managers that you plan to hire and when that will occur.

Essentially, you’re explaining your management structure and detailing why your strategy will enable smooth and efficient operations. 

Ideally, at some point, you’ll have an organizational structure that is a hierarchy of your staff. Describe what you envision your organizational structure to be. 

Personnel plan 

Detail who you’ve hired or plan to hire and for which roles. For example, you might have a developer, two sales people, and one customer service representative.

Describe each role and what qualifications are needed to perform those roles. 

• 7. Financial Plan 

Now, you’ll enter the dreaded world of finance. Many entrepreneurs struggle with this part, so you might want to engage a financial professional to help you. A financial plan has five key elements.

Startup Costs

Detail in a spreadsheet every cost you’ll incur before you open your doors. This should determine how much capital you’ll need to launch your business. 

Financial projections 

Creating financial projections, like many facets of business, is not an exact science. If your company has no history, financial projections can only be an educated guess. 

First, come up with realistic sales projections. How much do you expect to sell each month? Lay out at least three years of sales projections, detailing monthly sales growth for the first year, then annually thereafter. 

Calculate your monthly costs, keeping in mind that some costs will grow along with sales. 

Once you have your numbers projected and calculated, use them to create these three key financial statements: 

• Profit and Loss Statement , also known as an income statement. This shows projected revenue and lists all costs, which are then deducted to show net profit or loss. 
• Cash Flow Statement. This shows how much cash you have on hand at any given time. It will have a starting balance, projections of cash coming in, and cash going out, which will be used to calculate cash on hand at the end of the reporting period.
• Balance Sheet. This shows the net worth of the business, which is the assets of the business minus debts. Assets include equipment, cash, accounts receivables, inventory, and more. Debts include outstanding loan balances and accounts payable.

You’ll need monthly projected versions of each statement for the first year, then annual projections for the following two years.

Break-even analysis

The break-even point for your business is when costs and revenue are equal. Most startups operate at a loss for a period of time before they break even and start to make a profit. Your break-even analysis will project when your break-even point will occur, and will be informed by your profit and loss statement. 

Funding requirements and sources 

Lay out the funding you’ll need, when, and where you’ll get it. You’ll also explain what those funds will be used for at various points. If you’re in a high growth industry that can attract investors, you’ll likely need various rounds of funding to launch and grow. 

Key performance indicators (KPIs)

KPIs measure your company’s performance and can determine success. Many entrepreneurs only focus on the bottom line, but measuring specific KPIs helps find areas of improvement. Every business has certain crucial metrics. 

If you sell only online, one of your key metrics might be your visitor conversion rate. You might do an analysis to learn why just one out of ten site visitors makes a purchase. 

Perhaps the purchase process is too complicated or your product descriptions are vague. The point is, learning why your conversion rate is low gives you a chance to improve it and boost sales. 

8. Appendices

In the appendices, you can attach documents such as manager resumes or any other documents that support your business plan.

As you can see, a business plan has many components, so it’s not an afternoon project. It will likely take you several weeks and a great deal of work to complete. Unless you’re a finance guru, you may also want some help from a financial professional. 

Keep in mind that for a small business owner, there may be no better learning experience than writing a detailed and compelling business plan. It shouldn’t be viewed as a hassle, but as an opportunity! 

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What to Include in Your Business Plan Appendix?

Published on September 13, 2023

Launching a business involves countless tasks, and one of the crucial early hurdles is writing a business plan. Many entrepreneurs who aren’tlooki ...

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The Perfect Business Plan Layout & Outline

Written by Dave Lavinsky

The layout of a business plan is not an area where great imagination and creativity is needed or recommended. It should be a more or less straightforward task to layout or outline your plan, using industry standard practices which funders have become familiar with through thousands of business plans. Use the following steps to implement this standard layout and save creativity for your business venture within the plan.

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Start by getting your hands on a good business plan template. This will speed your time to completing your plan. Business plans generally start with an executive summary and company overview, move through background research and market analysis, customers, and competition, describe the company’s intended methods in the marketing plan and operation plan, show who’s on the management team, and conclude with the financial plan and appendices featuring full financial statements.

Use the business plan template to guide your understanding of each section and to see how they relate to each other. Don’t assume that any one example should dominate your understanding unless it comes from an extremely trusted source with a reputation for business plan expertise and success.

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Sample Outline For Your Business Plan

1. executive summary.

Your executive summary is the most important part of your plan. It comes at the beginning and is the first thing potential investors or lenders will read. If they aren’t excited by what they see, they’ll unfortunately stop reading. So make sure your executive summary gives a quick overview of what your company does and explains, in an exciting tone, why your company will be successful.

In your Company Description, provide background on your company. When did you incorporate? What have you accomplished to date? Here you will let readers know the history of your business.

In the Market Analysis section of your business plan provide background on the industry in which you operate. Conduct market research to make this section concrete and compelling. Answer questions such as: how big is your industry? what trends are affecting it?

Here you will document your target market. How are they? How many are there? What are their likes and dislikes? Ideally you can provide comprehensive demographic and psychographic profiles of your target customers and show how your company’s product or service are ideally suited to their needs.

In this section of your business plan, document your key competitors. Explain their strengths and their weaknesses. Remember that investors and lenders expect you to have direct competitors. They just want to feel confident that despite them, you can still achieve lasting success.

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Your marketing strategy should primarily focus on the promotional methods you will use to attract new customers. Will you use search engine marketing? Will you employ radio ads? Document each of the promotional methods you will use.

This section of your plan should discuss the key roles that your company must expertly perform and your strategies for operational excellence. You must also outline the long-term milestones your company plans to accomplish and the key dates for each.

In your Management Team section, detail the key members of your team. Document their backgrounds and how their past experiences make them well suited to succeed in your organization.

Here you will layout the key assumptions used in creating your financial model and then provide topline results from your income statement, balance sheet and cash flow projections. If you are seeking funding, document the amount of funding you seek and the key uses for it.

In your Appendix, you will provide supporting information such as employee or customer agreements, store layouts, etc. You must also include your full, five-year financial projections.

By following the comprehensive business plan outline, you will ensure your plan is in the format investors and lenders expect.

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Business Page Layout FAQs

How do i lay out a business plan.

Laying out a well-crafted business plan is not, and should not, be complicated. You can lay out your business plan using our sample business plan outline discussed here . An organized business plan structure is key to a successful business plan.

What is a business plan outline?

A business plan outline allows you to organize your plan and present it in the format that’s most compelling to readers. Also, by starting with your outline, it’s easier to add the required information into the key elements of a comprehensive business plan.

Other Helpful Business Plan Articles & Templates

Use This Simple Business Plan Outline to Organize Your Plan

12 min. read

Updated October 27, 2023

When starting a business, having a well-thought-out business plan prepared is necessary for success . It helps guide your strategy and prepares you to overcome the obstacles and risks associated with entrepreneurship. In short, a business plan makes you more likely to succeed.

However, like everything in business, starting is often the hardest part. What information do you need? How in-depth should each section be? How should the plan be structured?

All good questions that you can answer by following this business plan outline. 

• What is a business plan outline?

A business plan outline is similar to a template for a business plan . It lists the common sections that all business plans should include.

A traditional business plan typically includes an executive summary, an overview of your products and services, thorough market research, a competitive analysis, a marketing and sales strategy, operational and company details, financial projections, and an appendix. 

• Why is a business plan outline important?

Starting with a business plan outline helps ensure that you’re including all of the necessary information for a complete business plan. 

But, depending on what you intend to do with your plan, you may not need all of this information right away. If you’re going to speak with investors or pursue funding, then yes, you’ll need to include everything from this outline. But, if you’re using your plan to test an idea or help run your business, you may want to opt for a one-page plan . This is a simpler and faster method that is designed to be updated and used day-to-day. 

If you’re unsure of which plan is right for you, check out our guide explaining the differences and use cases for each plan type . 

• 10 key sections in a standard business plan outline

No matter the type of business plan you create, these are the ten basic sections you should include. Be sure to download your free business plan template to start drafting your own plan as you work through this outline.

1. Executive summary

While it may appear first, it’s best to write your executive summary last. It’s a brief section that highlights the high-level points you’ve made elsewhere in your business plan.

Summarize the problem you are solving for customers, your solution, the target market, your team that’s building the business, and financial forecast highlights. Keep things as brief as possible and entice your audience to learn more about your company. 

Keep in mind, this is the first impression your plan and business will make. After looking over your executive summary, your reader is either going to throw your business plan away or keep reading. So make sure you spend the time to get it just right.

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2. Products and services

Start the products and services section of your business plan by describing the problem you are solving for your customer. Next, describe how you solve that problem with your product or service. 

If you’ve already made some headway selling your solution, detail that progress here—this is called “traction”. You can also describe any intellectual property or patents that you have if that’s an important part of your business.

3. Market analysis 

You need to know your target market —the types of customers you are looking for—and how it’s changing.

Use the market analysis section of your business plan to discuss the size of your market—how many potential customers exist for your business—and if your potential customers can be segmented into different groups, such as age groups or some other demographic.

4. Competition

Describe your competition in this section. If you don’t have any direct competitors, describe what your customers currently do to solve the problem that your product fixes. 

If you have direct competition, detail what your strengths and weaknesses are in comparison, and how you’ll differentiate from what is already available. 

5. Marketing and sales

Use this business plan section to outline your marketing and sales plan —how you’ll reach your target customers and what the process will be for selling to them.

You’ll want to cover your market position, marketing activities, sales channels, and your pricing strategy. This will likely evolve over time, but it’s best to include anything that clearly details how you will sell and promote your products and services. 

6. Operations

What’s included in the operations section really depends on the type of business you are planning for. If your business has a physical location or other facilities, you’ll want to describe them here. If your business relies heavily on technology or specific equipment or tools, you should describe that technology or equipment here.

You can also use this section to describe your supply chain if that’s an important aspect of your business. 

7. Milestones and metrics

In a business, milestones are important goals that you are setting for your business. They may be important launch dates, or a timeline of when you’ll get regulatory approval—if that’s something you need for your business. Use this section of your plan to describe those milestones and the roadmap you are planning to follow.

You can also describe important metrics for your business, such as the number of sales leads you expect to get each month or the percentage of leads that will become customers.

8. Company overview and team

The company and team section of your plan is an overview of who you are.

It should describe the organization of your business, and the key members of the management team. It should also provide any historical background about your business. For example, you’ll describe when your company was founded, who the owners are, what state your company is registered in and where you do business, and when/if your company was incorporated.

Be sure to include summaries of your key team members’ backgrounds and experience—these should act like brief resumes—and describe their functions with the company. You should also include any professional gaps you intend to fill with new employees.

9. Financial plan and forecasts

Your financial plan should include a sales forecast, profit and loss, cash flow projections, and balance sheet, along with a brief description of the assumptions you’re making with your projections.

If you are raising money or taking out loans, you should highlight the money you need to launch the business. This part should also include a use of funds report—basically an overview of how the funding will be used in business operations. 

And while it’s not required, it may be wise to briefly mention your exit strategy . This doesn’t need to be overly detailed, just a general idea of how you may eventually want to exit your business. 

10. Appendix

The end of your business plan should include any additional information to back up specific elements of your plan. More detailed financial statements, resumes for your management team, patent documentation, credit histories, marketing examples, etc. 

• Detailed business plan outline

If you’re looking for greater insight into what goes into specific planning sections, check out the following outline for a business plan. It can help you develop a detailed business plan or provide guidance as to what may be missing from your current plan. 

Keep in mind that every business plan will look a bit different because every business is unique. After all, business planning is to help you be more successful, so focus on the sections that are most beneficial to your business and skip the sections that aren’t useful or don’t apply. 

To help, we’ve marked sections that are truly optional with an *.

Executive summary

Company purpose / mission statement.

A very brief description of what your business does and/or what its mission is.

Problem We Solve

A summary of the problem you are solving and an identifiable need in the market you are filling.

Our Solution

A description of the product or service you will provide to solve the problem.

Target Market

A defined customer base who will most likely purchase the product or service.

Briefly describe who is behind the business.

Financial Summary

A short overview of revenue goals and profitability timeline.

If you’ve already started selling your product or service, highlight important initial details here.

Funding Needed*

If you are raising money for your business, describe how much capital you need.

Products & Services

Problem worth solving.

A thorough description of the problem or pain points you intend to solve for your customer base. 

A thorough description of your proposed product or service that alleviates the problem for your customer base.

Describe any initial evidence that your customers are excited to spend money on your solution. Initial sales or signed contracts are good signs.

Intellectual Property/Patents*

If this is important for your business, outline it here.

Regulatory Requirements*

If government approval is required for your business, explain the details and timeline.

Future Products and Services*

What products and services might you offer in the future once your initial products and services are successful?

Market Size & Segments

How many potential customers do you have and what potential groups of customers are separated by specific characteristics?

Market Trends*

How consumers in your target market tend to act including purchasing habits, financial trends, and any other relevant factors.

Market Growth*

The perceived potential increase or decrease in the size of your target market.

Industry Analysis*

If your industry is changing or adjusting over time, describe those changes.

Key Customers*

If your business relies on certain important customers, describe who they are here.

Future Markets*

A snapshot of the potential market based on the last few sections and how your business strategy works within it.

Competition 

Current alternatives.

A list of potential competitors. Identifying the competition isn’t always obvious and it may take some digging on your part.

Our Advantages

The strategic advantage(s) that makes your target market more likely to choose you over the competition. 

Barriers to Entry*

If there’s anything that makes it more difficult for other people to start competing with you, describe those barriers.

Marketing & Sales

Market positioning.

Where do your products or services fit into the market? Are you the low-price leader or the premium option?

Unique value proposition*

What’s special about your offering that makes your customers want to choose it over the competition.

Marketing Plan

An outline of your marketing and advertising strategy including costs, advertising channels, and goals.

How do you sell your product or service? Self-serve or with a team of sales representatives?

Pricing Strategy*

Describe your pricing and how it compares to alternatives in the market.

Distribution*

Describe how your product gets in front of customers. Are you selling in stores and online? Which retailers?

SWOT Analysis*

Strengths, weaknesses, opportunities, and threats.

Location & Facilities

If you have a physical presence, describe where and what it is.

What technology is crucial for your business success?

Equipment & Tools

If special equipment or tools are needed for your business, describe them here.

Sourcing and fulfillment*

If you purchase your products or parts for your products from somewhere else, describe that sourcing and supply chain.

Partners and Resources*

If you have key partners that you work with to make your business a success, describe who they are and what services or products they provide.

Milestones and metrics

A detailed roadmap of specific goals and objectives you plan to achieve will help you manage and steer your business.

Key metrics

Performance measurements that help you gauge the overall performance and health of your business.

Company overview and team

Organizational structure.

An overview of the legal structure of your business. 

Company history and ownership

A summary of your company’s history and how it relates to planning your business.

Management team

The team that is starting or running your business and why they are uniquely qualified to make the business a success.

Management team gaps

Key positions that your business will need to fill to make it successful.

Financial plan and forecast

Projected profit and loss.

How much money you will bring in by selling products and/or services and how much profit you will make or lose after accounting for costs and expenses.

Projected cash flow

How and when cash moves in and out of your business. This also includes your overall cash position.

Projected balance sheet

Expected balances for business assets, liabilities, and equity.

Use of funds

If you are raising money either through loans or investment, explain how funds will be used. This is typically meant to be shared with investors or lenders.

Exit strategy

A brief explanation of how you intend to eventually exit from your business. This could include selling the business, going public, transitioning the business to a family member/employee, etc.

A repository for any additional information, including charts and graphs, to support your business plan.

Business plan outline FAQ

How do you organize your business plan?

There’s no real established order to business plans, aside from keeping the Executive Summary at the top. As long as you have all of the main business plan components, then the order should reflect your goals. 

If this is meant solely for your personal use, lay it out as a roadmap with similar sections grouped together for easy reference. If you’re pitching this to potential investors, lead with the stronger sections to emphasize the pitch. Then if you’re unsure of what order makes sense, then just stick to the outline in this article.

Should you include tables and charts in your business plan?

Every business plan should include bar charts and pie charts to illustrate the numbers. It’s a simple way for you, your team, and investors to visualize and digest complex financial information.

Cash flow is the single most important numerical analysis in a business plan, and a standard cash flow statement or table should never be missing. Most standard business plans also include a sales forecast and income statement (also called profit and loss), and a balance sheet.

How long should your business plan be?

There’s no perfect length for a business plan. A traditional business plan can be anywhere from 10 to 50 pages long depending on how much detail you include in each section. However, as we said before unless you intend to pursue funding, you likely don’t need a lengthy business plan at first.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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8 Things You Need in a Business Plan

The Harvard Business Review says a good business plan is super important for entrepreneurs. It’s like a guide for them in the tricky world of business. The plan has different parts, and each part is like a piece of the puzzle for success.

For example, there’s the short and powerful Executive Summary that tells the most important things about the business. Then, there’s the smart Market Analysis that helps you understand what customers want.

All of these parts work together to make a strong plan. So, let’s take a closer look at these important pieces that help turn business dreams into successful reality.

What is a business plan?

A business plan is a detailed document that explains how a business works and what it aims to achieve. It outlines the business’s goals, strategies , and resources. It’s like a roadmap for the business, helping it stay on course and navigate challenges.

 The plan typically includes sections about the business’s description , market research , marketing and sales strategies, operations, management, and financial projections .

 Entrepreneurs use it to clarify their vision, secure funding, and measure progress. It’s a crucial tool for anyone starting or running a business, helping them make informed decisions and work toward success.

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Eight Key Components of Business Plans

Crafting a business plan is akin to laying the foundation for a grand architectural masterpiece. It’s your roadmap to success, a strategic blueprint that breathes life into your entrepreneurial dreams. Allow me to take you on a journey through the essential components of this vital document.

• Executive Summary
• Business Description
• Market Analysis
• Marketing and Sales Strategy
• Operations Plan
• Management and Organization
• Financial Plan

1. Executive Summary

Picture this as the dazzling opening act of your business plan, where you showcase your vision, mission, and why your venture is destined for greatness. It’s a compelling glimpse into the heart and soul of your business.

It’s like a short summary of your business, including what it does and what makes it special.

• Advice: Keep it concise and engaging. Think of it as a teaser that makes people want to read more. Highlight what makes your business unique.

2. Business Description

Here, we dive deep into the DNA of your business. You’ll spill the beans on what you do, your industry, your history, and your grand plans for the future. It’s a snapshot that captures the essence of your business.

This part explains your business in detail, like what it sells, the industry it’s in, and its history.

• Advice: Be clear about what your business does and why it matters. Describe your industry and explain how your business fits into it.

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3. Market Analysis

This section is where we turn detective. We unearth market trends, study customer behaviors, and dissect your competitors. It’s a treasure trove of insights that helps you navigate the marketplace.

Here, you look at the market your business is in. You study things like customer behavior and what other businesses are doing.

• Advice: Research thoroughly. Understand your customers’ needs and your competition. Show that you know your market inside and out.

4. Marketing and Sales Strategy

Imagine this as the stage where you reveal your magic tricks. Here, you outline how you’ll entice and retain your customers. It’s where the art of attracting and selling meets strategy.

This section talks about how you’ll get customers and sell your products or services.

• Advice: Outline your plan for attracting customers and selling your products or services. Focus on how you’ll reach your target audience and convince them to buy from you.

5. Operations Plan

Ever wondered how the show runs backstage? This is where you spill the beans. From location to logistics, it’s the nitty-gritty of daily operations. It’s the backbone that keeps your business standing tall.

It’s about how your business will work day-to-day, like where you’ll be located and how you’ll make your products.

Advice: Detail how your business will operate day-to-day. Discuss your location, equipment, suppliers, and how you’ll ensure quality.

6. Management and Organization

Introducing the cast and crew of your business. Who’s in charge? What’s their expertise? It’s where you showcase your dream team and the hierarchy that keeps everything in check.

This part introduces the people running the business and how it’s organized.

• Advice: Introduce your team and their qualifications. Explain who’s in charge and how your business is structured.

7. Financial Plan

This section is your crystal ball into the future. It predicts your financial performance, balances your books, and forecasts cash flows. Investors love it, and you will too.

It’s like a prediction of how much money your business will make and spend in the future.

Advice: Be realistic with your financial projections. Include income, expenses, and cash flow predictions. Show how you’ll make a profit.

8. Appendix

This is your secret stash. All those extra documents, licenses, contracts, and accolades find their home here. It’s the vault of credibility that adds weight to your plan.

This is where you put extra documents like licenses, contracts, and other important stuff.

• Advice: Use this section for supporting documents. Include licenses, contracts, and anything that adds credibility to your plan.

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Remember, your business plan isn’t set in stone. It’s a living, breathing document that evolves with your journey. It’s your guiding star, your go-to reference, and your pitch to investors, all rolled into one.

With a well-crafted business plan, you’re equipped to clarify your vision, rally support from investors, and steer your venture to success. So, let’s get started on your masterpiece!

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The following is a general outline of the Order that should be followed in constructing your business plan. With the exception of the Executive Summary and the Marketing Summary, all other summaries should be no more than one [1] paragraph in length.

The purpose of each summary is to give the reader an overview of the upcoming segments. This is helpful to your reader when reviewing your business plan since almost all readers of your business plan will be looking to read specific details and will use only those segments of interest to them. Any time you help the reader find what they are looking for, then you increase your favor with that person and increase your opportunities for funding or for a successful business presentation.

• EXECUTIVE SUMMARY
• Company Profile
• PRODUCTS and SERVICES SUMMARY
• Products and Services Description Details
• MARKETING SUMMARY
• Marketing Plan and Marketing Strategy
• Target Market or Customers
• Competition
• Advertising and Promotions
• Sales and Distribution
• OPERATIONS SUMMARY
• Operations & Operational Plan
• Client Account Management and Credit and Policies
• FINANCIAL SUMMARY
• Accounting and Management - Cash Flow Statements and Management Structure
• Financial Planning and Projected Balance Sheet
• SUPPORT SUMMARY

Details, interesting details , and keep it interesting!

Think of what you would tell a potential client in each of the above sections if you were working to persuade them to complete a deal with you that was worth several thousand or hundreds of thousands of dollars. This is the primary way to approach this part of writing your business plan.

Yes, it's true: some of these segments would not be the business of your average client. But stretch your thinking here just a bit, and consider what you would say if the person listening to you were a close friend or confidant and you were trying to persuade them that your business was strong, profitable, and worth taking a look at for financial support. This thought process will reveal to you what to put in and how to approach it.

WHAT TO LEAVE OUT

You will want to leave out everything personal. If it is your personal career change [unless that career change brought you to the creation of your company], leave it out. If your family suffered serious and long term setbacks, leave it out. If you filed a personal bankruptcy, definitely leave that information out of your business plan. If you are desperate for funding to help your ailing and aging mother, leave it out.

Remember the more desperate things in life that sometimes propel us to certain individuals or companies are not usually the more attractive details of our business decisions. People who read your business plan should be reading the most attractive summary of you and your business available anywhere. If you feel it is necessary to discuss any of these personal items with your reader, then wait until they ask you a specific question. Some things should remain personal unless you are asked specifically about them.

SEGMENT BY SEGMENT DETAILS

If you cover each of these details in each of the business plan's segments, then your final plan will be comprehensive and answer any banker's or investor's questions. Ultimately, this should be one of the goals of your business plan since every banker or investor will ask to see your business plan so they can judge your plans, decision making process, strategies, and the bottom line.

• For a more in depth coverage of the details of this portion of your business plan
• You will write this section LAST and place it in front of the entire business plan for a quick review and overview of the entire document. Two to three pages is the maximum for the Executive Summary.
• Mission and Vision statements.
• Product or services marketed [this is a one-liner].
• Target market [again, a one-liner].
• Business form [sole prop, LLC, LLP, LP, corporation, or partnership].
• Company history [what sparked it, recent struggles, and successes, use only one paragraph].
• Company strengths [one paragraph],
• Long term goals [one paragraph, no more].

1. Each Summary should include the high points of the detailed section beneath it. You may want to limit it to a certain number of points in each summary, or you may choose to simply write one or two paragraphs in a summation style to accomplish this goal. Either way, most Summary sections should be less than one page unless otherwise noted.

2. Do not add anything into the Summary that does not exist in the detailed section. Do not bore your reader with the same language as your detailed section or a "copy and paste" of certain sentences, but be sure to keep the essence of the details congruent between the Summary and the detailed sections.

1. Describe your Products or Services in detail in this section. Use common sense here; if you have 300 products, you do not want to list each of them separately. But you may want to group them according to category and explain why this group of products is so important to your target market and to your business.

2. Your description details should include the range of quality (qualities) in the different products or services that your company offers. In this description is the range of pricing as well, along with which segment of the market that product or service is designed to capture.

3. Descriptions should be worded in such a way as to emphasize what it is about your product or service that sets your company apart from its competitors in the market place. Why do your clients want YOUR product or service over the apparently same product or service offered by another company?

4. The Products and Services description details should be limited to no more than one five sentence paragraph per product category for a total of no more than two pages of product descriptions.

• Everything mentioned in the Products and Services Summary section above applies here as well.
• Aside from the Executive Summary this is the largest Summary as it includes information from 5 detailed subsections. Allow yourself up to two (2) full pages for this Summary. Although that is the same layout size as the Executive Summary, bankers and investors will not object to a fat Summary in the section that tells them the most about profitability other than the Financial Summary.
• Bankers and investors want to know exactly what your plan is for marketing your products or services.
• This is a section for specifics. How are you going to reach your market? Advertising? Door to door sales? Retail sales? Direct marketing?
• How many people do you have helping you? How are you compensating them? Is their compensation plan one that will keep them on board or create a revolving door? What do you have in their plan that sows seeds of salesman loyalty to your company?
• What will your company do if your Marketing Plan is thwarted by competition or other circumstances? What is your secondary plan of action with regards to marketing your product or services?
• Marketing Strategy is equally important here. Your Marketing Strategy should be detailed, lengthy, and clearly laid out. Allow up to 1 ½ pages just for this subsection.
• Description of your target market or your clients.
• How will you distribute your product?
• Explain how your company is unique in what it offers. What is it that your company gives the marketplace that the marketplace is starving for, but is otherwise unavailable?
• Will you compete in the market place by means of your pricing or your product's quality? How will you capture your market share? What will cause your clients to remain loyal to your company?
• How will you spend advertising and marketing budgets? Will you purchase television or radio spots? Will you target a niche portion of the market?
• A definition of the company and its market place position. Paint the company's "personality" for the reader so that they have a clear image of the company's place and image in the market.
• Target Market and Customers

1. Demographics [gender, race, income, and education level of potential clients].

1. Name names and list web addresses.

2. Statistics about your competition.

3. Insider's reports about client relations.

4. Are they located near your business? Are they local, regional, or national? How does that directly affect your company?

5. Are they strong in advertising and promotions? Are they stable and reliable in the eyes of the customer?

6. Do they provide variety in their product availability? How is their product quality?

7. What are their sales methods and credit policies?

8. Is their pricing competitive? Or do they price because of a standard of high quality in their product?

• What are your company's strategies for Advertising and Promotions?
• Do you have a regular budget established for promoting your company's products or services? If so, how much?
• Are you frugal in your approach in using staff members or do you have a larger budget for professional promotions using people to give your company a polished public image?
• Do you have planned events strategically executed monthly or quarterly that are designed to continually keep your company and its products or services forever in the front of the minds of your target market? If so, what are those events and how do they work? What are the tangible results that your company regularly realizes from them? Do you envision any changes or needs in your Advertising and Promotions strategy?

1. What size and type of sales staff do you have promoting your company's products?

2. By what percentage has your sales staff outperformed itself over last year or over last month?

3. Are the salesmen directly involved in the distribution of the product or is the distribution handled by a separate handler or department?

4. What is the chain of distribution for your company? Once the order is placed, what route does the product or service take to get to the customer?

• This Summary should cover the details of your day-to-day operations.
• How does your business operate on a day-to-day basis?
• Do you operate from an office, a retail location, a home office, a virtual office, or some other facility? Does your location meet building codes for your area?
• Do you have staff and employees? What is the pecking order in your office? Which employees or staff answers to whom?
• Explain your pay structures, training, and hiring policies. Do you contract or subcontract any of your help?
• What is the management accountability in the company?
• How are you structured legally? Do you have special permits needed to operate without regulatory violations?
• How do you handle quality control issues and customer service?
• What is your method for product development and cost control?
• What are your supplier policies and your credit policies? How do you determine whether to extend credit to a client?
• How do you manage your accounts receivables? Are they tracked internally by an accounting department or some other way?
• Are your company's payables managed within the accounting department of your company or is that payment process outsourced?
• Have you offset your credit risk in the structure of your product pricing? In other words, do you manage your risk or is it pure risk?
• What are your terms for credit accounts? When is payment due? When do you send the client into collection? How do you handle collections?
• Your company's most current annual P&L statement belongs on the Financial Summary page. If you are an upstart and do not have an annual P&L, then have your CPA or accountant prepare a monthly or quarterly version of the P&L. The presence of your P&L in the Financial Summary signals to bankers and investors that you understand what it is, what it entails, and its importance in their decision making process. If it is skeletal because you are a new upstart, do not be concerned about how that will make you look to them. It will only make you look like an upstart. If you don't include it [empty or full], then you are more likely to appear as a clueless upstart owner.
• Are your Cash Flow statements produced monthly or quarterly?
• Does your entire top level management review Cash Flow statements and regular P&L statements? What things do you determine from these reports and how does it affect your management? Do you hold company financial review sessions with your management team?
• How is your management team structured?
• What type of advisory boards or private consultants do you use for your professional advice? Do you have a board of directors, a business consultant, a mentor, or an advisor?
• Have you prepared a personal financial statement in the event a banker or investor requests it for loan guarantee information? [Suggestion: Prepare this statement, but keep it separate and out of the business plan. Bring it out if asked for it, but do not wait until you are asked for it, to prepare it.] This belongs in your collection of Appendices and preferably not listed on anything at the end of the business plan.
• A professionally prepared financial plan for your business [no more than 3 pages].
• Supporting spreadsheets, at least one quarter's worth. If you can provide them, then provide up to one years' worth of balance sheets or three years if they are annual balance sheets.
• Projected balance sheets, a two to four year set of projection balance sheets is fairly normal for financial projections. Do not do less than two year's worth of projections; it makes you look either ignorant or lazy.
• In your financial projections, be sure to include a breakeven analysis whenever possible. The breakeven figure is the number of sales your company will have to make to break even on the expense side. In other words, breakeven is the zero point in a deal where you then sit ready to make a profit. This is vital information to investors and bankers alike since it helps them to gauge the risk of their investment with you. You can calculate your breakeven point from this equation:

1. Appendices are generally speaking documents referred to in the content of your business plan that exist outside of the business plan.

2. When you refer to any of the Appendices in the context of the business plan, you will footnote it with a sequential number. You will then number the Appendix accordingly in the context of your listing at the end of the business plan. For example : If you had 3 Appendices, you would foot note them in the appropriate context of the business plan and on the coordinating page, then number them as 1, 2, and 3. Then, at the end of the business plan, where you list these documents under the subheading "Appendices," you would assign the corresponding document the number which applied to it per the context of the business plan.

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How to Write a Business Plan Complete Guide

Free Business Plan Template

Paresh Balar

• March 18, 2024

25 Min Read

Welcome to the journey of entrepreneurship . You are here because you have a great business idea and want to know how to write a business plan to convert that idea into reality.

Before you start writing your business plan, let’s understand What is a business plan? Why do you need one in the first place? And What should you include in your business plan?

Table of Contents

• What is a business plan?
• What to include in your business plan?

Business Plan Cover Page

Business plan outline, things to consider before writing a business plan.

• Why do you need a business plan?

Let’s get started with an important question.

What is a Business Plan?

In simple words, a business plan is a document that outlines your business goals and details how you plan to achieve those goals. It is a living document that will prove to you and the rest of the world that your idea is not just a dream but can be a viable reality.

Also, it will help investors learn about your business, and vision, and convince them that your business idea is worth investing in. Your business plan will provide concrete evidence that your business idea is sound and has every chance of success.

Your business plan is the backbone of your business.

What Should You Include in Your Business Plan?

Every business idea and plan is unique in its terms. You should include all the details that explain your business idea in the best possible way. However, there are a few elements that every entrepreneur should include in their business plan.

The following is a full guide for creating a comprehensive business plan. We’ll first list out the sections that must be included in the business plan and in the later part, we’ll explain what should be added to each section:

• Executive Summary
• Company Overview
• Problem Analysis
• Products & Services
• Product Features
• Market Overview
• Market Size
• Target Customers
• Customer Needs
• Direct Competitors
• Indirect Competitors

Competitive Advantages

Swot analysis.

• Promotions Plan
• Distribution Plan
• Key Operational Processes

Management Team

• Management Team Gaps
• Board Members
• Revenue Model
• Financial Highlights
• Funding Requirements
• Use of Funds
• Exit Strategy
• Appendix – Supporting Documentation

Now you are ready to write your business plan, let’s understand in detail how you can write your business plan and what you should include in each element of the business plan.

The business plan cover page is the first and most important part of the business plan because it will create the first impact and will set the platform for how investors or readers will engage with your business plan.

Just by looking at the business plan cover page, an investor or reader can get a quick idea about the purpose of your business idea and business plan.

However, many entrepreneurs do not pay enough attention to the cover page, which is their biggest mistake.

In any document, the business plan table of contents provides a quick overview and works as navigation to navigate across the document. The same does for a business plan as well.

A table of contents is important to provide a quick overview of the sections that you have included in your business plan and help readers to navigate to the section that interests them the most. If investors are excited about a particular part of the business plan first, they will find the table of contents extremely useful in finding the relevant sections within the business plan.

Usually, the table of contents needs to be added at the start of the document and just after the business plan cover page.

Here’s a Quick Overview of Each Key Chapter:

1. Executive Summary

The executive summary is the first section of your business plan. However, the executive summary is always written at last as it is a brief introduction to your business plan and a summary of your entire business plan document.

A good executive summary should answer the following basic questions:

• What are you trying to achieve with your business idea?
• Why is your business idea important? and
• How are you going to achieve your business goals?

Generally, a good executive summary should include the following details:

• A brief description of the problems you will be solving
• Summary of your business goals & vision
• Products or services you are going to offer
• A solid description of the market you are targeting
• A quick look at your competition and your competitive advantages
• A basic financial projection of your revenue, expenses, and profits
• Your funding requirements (if any) and how you will be using that funds.

It does seem like lots of details are required to write a good executive summary but at the same time, it is important to get it right because if your summary does not clearly explain how you will solve a customer problem and make a profit, then investors or readers might not find it worth reading.

Most of the investors just read the executive summary and decide if they should read the rest of the business plan or not. So make your efforts count in this part of the business plan.

In short, write your executive summary in such a way that readers would want to turn the page and keep on reading.

Always remember, that a good executive summary should not be more than one or two pages long. However, in some cases, it can be longer if there is an absolute requirement.

2. Company Overview

The company overview section provides a brief history of your company if it already exists. However, if you are starting a new business, here you will need to write about yourself, your achievements, and how you will set up and form your business as a company.

Here you need to answer questions such as how and when your company was formed, what type of legal entity you are, and what are your achievements to date. Your past journey and achievements are the best sign of your possible future success, so make sure to include all the important milestones you or your company have achieved to date.

As a startup, your company overview can be very much short, so focus on your personal history, achievements, and the journey that led you to start your business in the first place. Sharing your original idea is important because it shows how you think and how you were able to craft your idea into a business.

Even if you are just starting, your educational background, professional experience, achievements, and the details of your best business idea can give potential investors a vision of what you are trying to achieve.

Have a look at this company overview example

• Starbucks company profile
• Puma company page

3. Problem Analysis

You have started the business because you have identified the unique problem that customers are facing and in this section, you just need to explain that problem.

The problem statement section can be explained with three simple questions.

• Whom does the problem affect?
• What are the causes of the problem?
• Why is it important to fix it?

When you write your problem statement, just describe how bigger the problem is and why it is most important to fix it. Also, there might be multiple problems you will be solving, but always try to focus on the main problem because you don’t win on the number of problems you solve; you win on how well you solve a specific problem .

While writing the business plan, most entrepreneurs focus on the solution they are going to offer, and in that process, they forget to explain the actual importance of the problem. Remember the more accurately you will explain the problem, the more valuable the solution will be.

Remember to keep the problem statement as simple as possible and should be self-explanatory. Also, it is good to include the key statistics that explain the severity of the problem.

After you explain the problem, it is also important to describe the world once a particular problem will be solved and that will set the stage to introduce the solution you are proposing.

4. The Solution

The solution section is also called the product & services section . In this section, you will need to define your best-proposed solution to the problem you explained in the previous problem analysis section.

Your solution details should be as simple as possible. It is not recommended to use too many technical or industry details while writing about your product details. Keep in mind your readers will not have the same education or technical background as you.

The length of this section will depend on the nature of your business. for example, if your business is product-focused and the product is relatively new in the market, then you should write more about the product, its design, its features, etc. However, if your business is relatively common like selling bicycles or restaurant business and you are planning to compete with better pricing or customer service then you probably don’t need to write more about products.

If your product is hard to explain it’s a good idea to include a picture. Also, if you are planning to expand your business and will come with new products or services in the future, then you can mention those details here as well.

Your product or service pricing should be mentioned here in this section. Apply the right pricing strategy to set the best pricing for your product or services. Also, if you have any product patents, copyrights, licenses, etc then add those details here in this section.

In short, your solution section should answer the following common questions:

• Your products or services are currently under development or already available?
• If not available, what will be the timeline for delivering products and services to the market?
• How are your products or services different from the competition?
• How will you get your products? Are you the manufacturer or do you purchase products from suppliers or wholesalers?

When you write this product and services section, think of your reader as a person who knows little to nothing about your business. so make it as simple as possible.

5. Market Analysis

Before you start your business, it is essential to check if there is a viable market available for the products or services you are planning to offer, and that makes market research the most critical and key to success for any business.

In simple words, market analysis is studying the industry your business will operate in, the size of the industry, and its trend & direction (growing, stable, or in decline).

The market analysis consists of main three parts:

• Market Overview: This is a general overview of the industry. In this part, you will need to describe the current position of the industry, market trends, and where it is heading. Also, you can write about your knowledge and experience in the industry.
• Target Market: In this part, you will need to be more specific about the segment of the market that will use your products or services. Not everyone from the industry will use your product or services, so it is important to find the right audience for your product. (For example, if you are starting a veg restaurant in the town, then all the people from town will not visit your restaurant. The only people who prefer and eat veg food will be your target customers).
• Market Size: Market size is all about finding how many potential customers are there for your product or service. Here you will need to show some statistics about the size of the industry (e.g., total U.S. sales in the last year) and its growth rate over the last few years.

The main objective of the market analysis is to identify the opportunities and risks associated with the business. It will also help you to understand how you should prepare your marketing strategy , where you should invest in terms of marketing efforts, and avoid making the wrong decisions.

With market analysis, you can identify the market entry barrier, and market needs, and estimate the market attractiveness from a financial standpoint.

6. Customer Analysis

Once you complete your market analysis, it’s time to identify the customers and needs of customers who are going to use your product or services, and this process is called customer analysis . Customer analysis is a key element of any successful marketing plan, as well as your overall business plan.

Customer analysis is critical for any business to succeed because if you do not know who is going to your offerings, and what your customers want, no business can succeed.

Now that you know customer analysis is that important, it is time to learn how you can perform strong customer analysis.

Customer analysis consists of main three parts:

• Demographics: Age, Sex, Ethnicity, Income, Family, Occupation, etc.
• Geographic: Location (Neighbourhood, Region, Urban/Rural, Online)
• Psychographic: Lifestyle, Personality, etc
• Interests: Hobbies, Activities, etc
• Growth: Size of the target customers and whether they are growing, shrinking, or stable.

It’s up to you what is the best way to get this information for your business. However, some practical methods include customer surveys, existing customer data analysis, social media listening, or talking with your customer support team.

• Identify your customer’s needs: Once you identify who your customers are, it’s important to understand their needs as well, and the answer to this question should be your offering.
• Explain how your product or services will meet those needs: Now that you know your target customers and what they need, it’s time to explain your products or services’ benefits. In this part, list out the key features of your products or services that will fulfill customers’ needs, explain the benefits of your offerings, and the outcome customers can expect by using your products or services.

Keep in mind, that a strong customer analysis must answer these three key questions:

• Who are your customers?
• What do they need?
• How do your products or services meet those needs?

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7. Competitive Analysis

Competitive analysis is all about finding your competitors, analyzing their strengths and weaknesses, products and services, pricing, social media presence, marketing & sales strategy, etc.

Your competitors can be categorized into two classes:

• Direct Competitors: Direct competitors are the ones who provide the same solution as you do. For example, if you operate an Italian restaurant, other restaurants that serve Italian food will be your direct competitors. In this section of your business plan, outline who your direct competitors are, and add their strengths and weaknesses.
• Indirect Competitors: Indirect competitors are the ones who do not provide the same solution as you do. However, solve the same customer problem as you do. For example, if you operate an Italian restaurant, a Mexican or Spanish restaurant would be an indirect competitor. In this section of your business plan, outline who your indirect competitors are, and add their strengths and weaknesses.

Once you identify who your competitors are, it’s time to explain how different and superior you are compared to them and that will be the competitive advantage section of your business plan .

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.

Her strengths and weaknesses are subjective to your business which you can control and change like business location, pricing, uniqueness, etc. While opportunities and threats are external that are running outside your business, in the larger market. However, you can take advantage of opportunities and defend your business against potential threats, but you can’t change them.

It is always best if the business owners perform a SWOT analysis themselves. This task is not something that you should assign to someone else. A precise SWOT analysis will allow you to measure your strengths and weaknesses against the opportunities and threats in your business environment.

Once your SWOT analysis is ready, it will help you to form a strategy to achieve your business goals.

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8. Marketing Plan

Now that you have explained your products or services and identified who is going to use those products or services, it is time to let your customers know about your products or services. And for this, you will have to plan strategy, and that planning you will need to explain in this section.

Your marketing plan can be divided into the following sections:

• Pricing: Explain your product or service pricing here in this section. Mainly, discuss how you finalized your pricing and how your pricing is better than the competition. Also, discuss if it’s low-cost or premium offerings and how your pricing supports it. This will ensure investors also that you have finalized your pricing with proper research.
• Promotional Plan: In this section, talk about your marketing activities and strategies that you will execute to attract your customers. It is always great to have some unique selling propositions (USP). However, Unique selling propositions should be short and self-explanatory. For example, Domino’s Pizza’s USP is “We deliver hot, fresh pizza in 30 minutes or less, or it’s free.” Also, discuss your other marketing or promotional activities that may include discount offers for early customers, media or online advertisements, product launches or social events, radio newspaper or magazine ads, affiliate or referral programs, etc. In this section, you can also write about your customer relation and support team and how they will work to retain your existing customers.
• Distribution Plan: The main purpose of your marketing plan is that customers to buy your products or services. So it is important to explain how they can buy your products or services. Your distribution plan will include all details about your distribution channel, sales channel & strategy, and payment policies.

Once you complete writing your marketing plan , make sure your marketing plan answers these key questions.

• What will be the pricing of your offerings?
• How will you reach out to your target customers?
• How will you retain your customers to buy from you repeatedly?
• How and from where customers can buy your products and services?

Your marketing plan can be 7-8 pages long. However, while writing your business plan, make sure you do not go into details and try to keep it as simple as possible. You can separately write your marketing plan for internal purposes.?

9. Operations Plan

Your operation plan will explain how you will manufacture your product and run your business. It can include a lot of details depending on your business. For example, if you are in the production business, you will want to include all the information about how you will get raw materials, and equipment, build your products and ship them.

However, it is not recommended to include all these details while writing the operations section of your business plan . You should include only major details that you think will give you a competitive advantage or are important for your readers.

An operations plan is useful for internal purposes as it will help your team to understand their roles to achieve your business goals. However, it will help investors also to learn how you will run your business to make your business succeed.

The management team should be the easiest section of your business plan because, in this section, you will need to write about yourself and your core team members who will run the business.

Always remember, that businesses’ success will depend on the team who is running them. So you must write this section carefully and convince your readers or investors that you are the best person to execute and run this business.

Many investors believe it is not the business that succeeds, it is the team that makes the business successful. In fact, in some cases, investors have funded start-ups mainly based on the team who will run the business.

In this section, list out important details of core team members like name, position in the company, contact information, qualifications, past experiences, achievements, etc.

You can also mention any management gaps present in your organization and when you are planning to fill those gaps. You can also mention if there is an advisory team or board of members who might not work in your organization but will advise you from outside.

10. Financial Plan

The financial section of the business plan is the most important component of the business plan. Whatever you will write in the business plan will be conceptual until you do not add some numbers to support it.

Have a financial plan if you want to secure outside funding from investors or bank loans from financial institutes. Even if you do not need funds, it is always helpful to have a financial forecast to achieve your business goals and make your business successful. Financial forecasting will give you a clear idea of whether your business is viable or not.

Your financial plan will include the following sections.

• Revenue Model: The main purpose of this section is to explain the different revenue streams of your business. Do you sell products?  Do you provide services? Do you provide third-party advertisements? Or do you sell all of the above? It is equally important to update this revenue model section, once you start generating revenue. Use the revenue model as a living document to improve your plans. Focus on revenue streams that work best, while changing your approach to those that aren’t doing well.
• Financial Highlights: Include financial reports like cash flow, balance sheet, profit & loss, projected revenue, expenses, etc.
• Funds Needed: This section is required if you are looking for funds to run your business operations. Before you directly request funds, it is good to explain your current financial situation, how much you have already invested, and how much funds you already have secured. Once you explain your current financial position, it is time to explain what type of funding you are looking for. What are your preferred options to secure funds? It is important to update this section once you secure funding.
• Use of Funds: Once you explain how many funds you are looking for, it’s time to explain how you will use those funds. You will use it to hire new talents, expand your operations, pay your existing debts, or buy new equipment. If you are going to use funds for multiple things, mention each and also mention how much funds you are going to spend for each thing. Investors or financial institutes usually approve funds if they have a clear idea about how you are going to use your money.
• Exit Strategy: If you are looking for equity funding, it is important to have an exit strategy. A common exit strategy includes selling your company to a larger firm (acquisitions), selling or diluting your ownership, initial public offering (IPO), etc. If you have such plans, provide a detailed explanation of them in this section.

With upmetrics, business financial forecasting is easy and fun. Once you add your data, the system will generate all required reports automatically. Later you can embed those reports into your business plan. learn more about the upmetrics financial planning feature .

11. Supporting Documentation (Appendix)

Adding supporting documents is not a mandatory section in your business plan. However, it is important to add the documents which you think can convince investors that your business will succeed.

These documents can include achievements, product patents, awards, financial statements, resumes of key team members, legal agreements, product or organization pictures, etc. These documents can help readers understand your story clearly and concisely.

Once you write your business plan, it is equally important to update your business plan as your business grows. Keep in mind, that a business plan is not just a document but it is a roadmap of your business.

Now before you start the actual writing of your business plan and learn what to include in each section of the business plan, there are some key concepts that you must keep in mind and rules that you should follow during the entire business planning process .

1. Keep it short

Don’t you want your business plan to be read by your investors? Remember, many investors do not like to read a long business plan.

In this competitive time, no one has time to go through a 100-page long document. A typical 20-25 pages should be fine for any standard business plan. A well-written business plan ensures to communicate your message to your potential investors effectively.

However, if your business idea is a completely new kind of business or even a new industry, it may need quite a bit of writing to get the message across.

Your business plan writing purpose will decide how long your business plan should be . If you are writing your business plan to seek millions of funding, then you might need a lengthy and detailed business plan. A short business plan would work if you are looking to expand your business.

2. Be realistic and creative

Do not consider your business idea as your baby. Be realistic and honest with yourself while writing your business plan, and always try to add facts and realistic details of your business idea.

Also, your business plan should grab your reader’s attention quickly. Be creative while designing your business plan cover page and writing any important details in your business plan.

When it comes to the formatting of the business plan, make sure to use bullet points, images, and charts. Also, highlight the key points or metrics that you want readers to focus on. It helps bring your idea to life. Plus, it will keep your readers focused on reading.

3. You should be able to change it as the business grows

Most businesses start with a business plan, and once written, it’s never revisited. Never make that mistake. Your business plan should be treated as a working document that should be developed as your business grows.

For example, you might want to update your business plan as per the changing trends for a new round of funding or you might want to update it to counter unexpected problems like the COVID crisis. In a nutshell, keep your plan alive!

Why Do You Need a Business Plan?

Some entrepreneurs have achieved tremendous success without writing a business plan with their past experiences, less competition, or maybe by luck.

But the fact is, that many entrepreneurs have failed as well. It is just that we learn more about success stories only.

So, does writing a business plan guarantee success? Of course Not.

But, the business plan is your companion on your entrepreneurship journey. It will help you and your team understand the problems and the competition you will encounter in your journey. It will keep you and your entire team in sync and on the right path to achieving your business goals and success.

Click here to download how to write a business plan pdf

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About the Author

Paresh Balar is the co-founder of Upmetrics, the #1 business planning software. His ultimate goal with Upmetrics is to revolutionize how entrepreneurs create, manage, and execute their business plans. He loves sharing his thoughts on business and financial planning and its challenges through his blog posts. Read more

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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11.4 The Business Plan

Learning objectives.

By the end of this section, you will be able to:

• Describe the different purposes of a business plan
• Describe and develop the components of a brief business plan
• Describe and develop the components of a full business plan

Unlike the brief or lean formats introduced so far, the business plan is a formal document used for the long-range planning of a company’s operation. It typically includes background information, financial information, and a summary of the business. Investors nearly always request a formal business plan because it is an integral part of their evaluation of whether to invest in a company. Although nothing in business is permanent, a business plan typically has components that are more “set in stone” than a business model canvas , which is more commonly used as a first step in the planning process and throughout the early stages of a nascent business. A business plan is likely to describe the business and industry, market strategies, sales potential, and competitive analysis, as well as the company’s long-term goals and objectives. An in-depth formal business plan would follow at later stages after various iterations to business model canvases. The business plan usually projects financial data over a three-year period and is typically required by banks or other investors to secure funding. The business plan is a roadmap for the company to follow over multiple years.

Some entrepreneurs prefer to use the canvas process instead of the business plan, whereas others use a shorter version of the business plan, submitting it to investors after several iterations. There are also entrepreneurs who use the business plan earlier in the entrepreneurial process, either preceding or concurrently with a canvas. For instance, Chris Guillebeau has a one-page business plan template in his book The $100 Startup . 48 His version is basically an extension of a napkin sketch without the detail of a full business plan. As you progress, you can also consider a brief business plan (about two pages)—if you want to support a rapid business launch—and/or a standard business plan.

As with many aspects of entrepreneurship, there are no clear hard and fast rules to achieving entrepreneurial success. You may encounter different people who want different things (canvas, summary, full business plan), and you also have flexibility in following whatever tool works best for you. Like the canvas, the various versions of the business plan are tools that will aid you in your entrepreneurial endeavor.

Business Plan Overview

Most business plans have several distinct sections ( Figure 11.16 ). The business plan can range from a few pages to twenty-five pages or more, depending on the purpose and the intended audience. For our discussion, we’ll describe a brief business plan and a standard business plan. If you are able to successfully design a business model canvas, then you will have the structure for developing a clear business plan that you can submit for financial consideration.

Both types of business plans aim at providing a picture and roadmap to follow from conception to creation. If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept.

The full business plan is aimed at executing the vision concept, dealing with the proverbial devil in the details. Developing a full business plan will assist those of you who need a more detailed and structured roadmap, or those of you with little to no background in business. The business planning process includes the business model, a feasibility analysis, and a full business plan, which we will discuss later in this section. Next, we explore how a business plan can meet several different needs.

Purposes of a Business Plan

A business plan can serve many different purposes—some internal, others external. As we discussed previously, you can use a business plan as an internal early planning device, an extension of a napkin sketch, and as a follow-up to one of the canvas tools. A business plan can be an organizational roadmap , that is, an internal planning tool and working plan that you can apply to your business in order to reach your desired goals over the course of several years. The business plan should be written by the owners of the venture, since it forces a firsthand examination of the business operations and allows them to focus on areas that need improvement.

Refer to the business venture throughout the document. Generally speaking, a business plan should not be written in the first person.

A major external purpose for the business plan is as an investment tool that outlines financial projections, becoming a document designed to attract investors. In many instances, a business plan can complement a formal investor’s pitch. In this context, the business plan is a presentation plan, intended for an outside audience that may or may not be familiar with your industry, your business, and your competitors.

You can also use your business plan as a contingency plan by outlining some “what-if” scenarios and exploring how you might respond if these scenarios unfold. Pretty Young Professional launched in November 2010 as an online resource to guide an emerging generation of female leaders. The site focused on recent female college graduates and current students searching for professional roles and those in their first professional roles. It was founded by four friends who were coworkers at the global consultancy firm McKinsey. But after positions and equity were decided among them, fundamental differences of opinion about the direction of the business emerged between two factions, according to the cofounder and former CEO Kathryn Minshew . “I think, naively, we assumed that if we kicked the can down the road on some of those things, we’d be able to sort them out,” Minshew said. Minshew went on to found a different professional site, The Muse , and took much of the editorial team of Pretty Young Professional with her. 49 Whereas greater planning potentially could have prevented the early demise of Pretty Young Professional, a change in planning led to overnight success for Joshua Esnard and The Cut Buddy team. Esnard invented and patented the plastic hair template that he was selling online out of his Fort Lauderdale garage while working a full-time job at Broward College and running a side business. Esnard had hundreds of boxes of Cut Buddies sitting in his home when he changed his marketing plan to enlist companies specializing in making videos go viral. It worked so well that a promotional video for the product garnered 8 million views in hours. The Cut Buddy sold over 4,000 products in a few hours when Esnard only had hundreds remaining. Demand greatly exceeded his supply, so Esnard had to scramble to increase manufacturing and offered customers two-for-one deals to make up for delays. This led to selling 55,000 units, generating $700,000 in sales in 2017. 50 After appearing on Shark Tank and landing a deal with Daymond John that gave the “shark” a 20-percent equity stake in return for $300,000, The Cut Buddy has added new distribution channels to include retail sales along with online commerce. Changing one aspect of a business plan—the marketing plan—yielded success for The Cut Buddy.

Link to Learning

Watch this video of Cut Buddy’s founder, Joshua Esnard, telling his company’s story to learn more.

If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept. This version is used to interest potential investors, employees, and other stakeholders, and will include a financial summary “box,” but it must have a disclaimer, and the founder/entrepreneur may need to have the people who receive it sign a nondisclosure agreement (NDA) . The full business plan is aimed at executing the vision concept, providing supporting details, and would be required by financial institutions and others as they formally become stakeholders in the venture. Both are aimed at providing a picture and roadmap to go from conception to creation.

Types of Business Plans

The brief business plan is similar to an extended executive summary from the full business plan. This concise document provides a broad overview of your entrepreneurial concept, your team members, how and why you will execute on your plans, and why you are the ones to do so. You can think of a brief business plan as a scene setter or—since we began this chapter with a film reference—as a trailer to the full movie. The brief business plan is the commercial equivalent to a trailer for Field of Dreams , whereas the full plan is the full-length movie equivalent.

Brief Business Plan or Executive Summary

As the name implies, the brief business plan or executive summary summarizes key elements of the entire business plan, such as the business concept, financial features, and current business position. The executive summary version of the business plan is your opportunity to broadly articulate the overall concept and vision of the company for yourself, for prospective investors, and for current and future employees.

A typical executive summary is generally no longer than a page, but because the brief business plan is essentially an extended executive summary, the executive summary section is vital. This is the “ask” to an investor. You should begin by clearly stating what you are asking for in the summary.

In the business concept phase, you’ll describe the business, its product, and its markets. Describe the customer segment it serves and why your company will hold a competitive advantage. This section may align roughly with the customer segments and value-proposition segments of a canvas.

Next, highlight the important financial features, including sales, profits, cash flows, and return on investment. Like the financial portion of a feasibility analysis, the financial analysis component of a business plan may typically include items like a twelve-month profit and loss projection, a three- or four-year profit and loss projection, a cash-flow projection, a projected balance sheet, and a breakeven calculation. You can explore a feasibility study and financial projections in more depth in the formal business plan. Here, you want to focus on the big picture of your numbers and what they mean.

The current business position section can furnish relevant information about you and your team members and the company at large. This is your opportunity to tell the story of how you formed the company, to describe its legal status (form of operation), and to list the principal players. In one part of the extended executive summary, you can cover your reasons for starting the business: Here is an opportunity to clearly define the needs you think you can meet and perhaps get into the pains and gains of customers. You also can provide a summary of the overall strategic direction in which you intend to take the company. Describe the company’s mission, vision, goals and objectives, overall business model, and value proposition.

Rice University’s Student Business Plan Competition, one of the largest and overall best-regarded graduate school business-plan competitions (see Telling Your Entrepreneurial Story and Pitching the Idea ), requires an executive summary of up to five pages to apply. 51 , 52 Its suggested sections are shown in Table 11.2 .

Are You Ready?

Create a brief business plan.

Fill out a canvas of your choosing for a well-known startup: Uber, Netflix, Dropbox, Etsy, Airbnb, Bird/Lime, Warby Parker, or any of the companies featured throughout this chapter or one of your choice. Then create a brief business plan for that business. See if you can find a version of the company’s actual executive summary, business plan, or canvas. Compare and contrast your vision with what the company has articulated.

• These companies are well established but is there a component of what you charted that you would advise the company to change to ensure future viability?
• Map out a contingency plan for a “what-if” scenario if one key aspect of the company or the environment it operates in were drastically is altered?

Full Business Plan

Even full business plans can vary in length, scale, and scope. Rice University sets a ten-page cap on business plans submitted for the full competition. The IndUS Entrepreneurs , one of the largest global networks of entrepreneurs, also holds business plan competitions for students through its Tie Young Entrepreneurs program. In contrast, business plans submitted for that competition can usually be up to twenty-five pages. These are just two examples. Some components may differ slightly; common elements are typically found in a formal business plan outline. The next section will provide sample components of a full business plan for a fictional business.

Executive Summary

The executive summary should provide an overview of your business with key points and issues. Because the summary is intended to summarize the entire document, it is most helpful to write this section last, even though it comes first in sequence. The writing in this section should be especially concise. Readers should be able to understand your needs and capabilities at first glance. The section should tell the reader what you want and your “ask” should be explicitly stated in the summary.

Describe your business, its product or service, and the intended customers. Explain what will be sold, who it will be sold to, and what competitive advantages the business has. Table 11.3 shows a sample executive summary for the fictional company La Vida Lola.

Business Description

This section describes the industry, your product, and the business and success factors. It should provide a current outlook as well as future trends and developments. You also should address your company’s mission, vision, goals, and objectives. Summarize your overall strategic direction, your reasons for starting the business, a description of your products and services, your business model, and your company’s value proposition. Consider including the Standard Industrial Classification/North American Industry Classification System (SIC/NAICS) code to specify the industry and insure correct identification. The industry extends beyond where the business is located and operates, and should include national and global dynamics. Table 11.4 shows a sample business description for La Vida Lola.

Industry Analysis and Market Strategies

Here you should define your market in terms of size, structure, growth prospects, trends, and sales potential. You’ll want to include your TAM and forecast the SAM . (Both these terms are discussed in Conducting a Feasibility Analysis .) This is a place to address market segmentation strategies by geography, customer attributes, or product orientation. Describe your positioning relative to your competitors’ in terms of pricing, distribution, promotion plan, and sales potential. Table 11.5 shows an example industry analysis and market strategy for La Vida Lola.

Competitive Analysis

The competitive analysis is a statement of the business strategy as it relates to the competition. You want to be able to identify who are your major competitors and assess what are their market shares, markets served, strategies employed, and expected response to entry? You likely want to conduct a classic SWOT analysis (Strengths Weaknesses Opportunities Threats) and complete a competitive-strength grid or competitive matrix. Outline your company’s competitive strengths relative to those of the competition in regard to product, distribution, pricing, promotion, and advertising. What are your company’s competitive advantages and their likely impacts on its success? The key is to construct it properly for the relevant features/benefits (by weight, according to customers) and how the startup compares to incumbents. The competitive matrix should show clearly how and why the startup has a clear (if not currently measurable) competitive advantage. Some common features in the example include price, benefits, quality, type of features, locations, and distribution/sales. Sample templates are shown in Figure 11.17 and Figure 11.18 . A competitive analysis helps you create a marketing strategy that will identify assets or skills that your competitors are lacking so you can plan to fill those gaps, giving you a distinct competitive advantage. When creating a competitor analysis, it is important to focus on the key features and elements that matter to customers, rather than focusing too heavily on the entrepreneur’s idea and desires.

Operations and Management Plan

In this section, outline how you will manage your company. Describe its organizational structure. Here you can address the form of ownership and, if warranted, include an organizational chart/structure. Highlight the backgrounds, experiences, qualifications, areas of expertise, and roles of members of the management team. This is also the place to mention any other stakeholders, such as a board of directors or advisory board(s), and their relevant relationship to the founder, experience and value to help make the venture successful, and professional service firms providing management support, such as accounting services and legal counsel.

Table 11.6 shows a sample operations and management plan for La Vida Lola.

Marketing Plan

Here you should outline and describe an effective overall marketing strategy for your venture, providing details regarding pricing, promotion, advertising, distribution, media usage, public relations, and a digital presence. Fully describe your sales management plan and the composition of your sales force, along with a comprehensive and detailed budget for the marketing plan. Table 11.7 shows a sample marketing plan for La Vida Lola.

Financial Plan

A financial plan seeks to forecast revenue and expenses; project a financial narrative; and estimate project costs, valuations, and cash flow projections. This section should present an accurate, realistic, and achievable financial plan for your venture (see Entrepreneurial Finance and Accounting for detailed discussions about conducting these projections). Include sales forecasts and income projections, pro forma financial statements ( Building the Entrepreneurial Dream Team , a breakeven analysis, and a capital budget. Identify your possible sources of financing (discussed in Conducting a Feasibility Analysis ). Figure 11.19 shows a template of cash-flow needs for La Vida Lola.

Entrepreneur In Action

Laughing man coffee.

Hugh Jackman ( Figure 11.20 ) may best be known for portraying a comic-book superhero who used his mutant abilities to protect the world from villains. But the Wolverine actor is also working to make the planet a better place for real, not through adamantium claws but through social entrepreneurship.

A love of java jolted Jackman into action in 2009, when he traveled to Ethiopia with a Christian humanitarian group to shoot a documentary about the impact of fair-trade certification on coffee growers there. He decided to launch a business and follow in the footsteps of the late Paul Newman, another famous actor turned philanthropist via food ventures.

Jackman launched Laughing Man Coffee two years later; he sold the line to Keurig in 2015. One Laughing Man Coffee café in New York continues to operate independently, investing its proceeds into charitable programs that support better housing, health, and educational initiatives within fair-trade farming communities. 55 Although the New York location is the only café, the coffee brand is still distributed, with Keurig donating an undisclosed portion of Laughing Man proceeds to those causes (whereas Jackman donates all his profits). The company initially donated its profits to World Vision, the Christian humanitarian group Jackman accompanied in 2009. In 2017, it created the Laughing Man Foundation to be more active with its money management and distribution.

• You be the entrepreneur. If you were Jackman, would you have sold the company to Keurig? Why or why not?
• Would you have started the Laughing Man Foundation?
• What else can Jackman do to aid fair-trade practices for coffee growers?

What Can You Do?

Textbooks for change.

Founded in 2014, Textbooks for Change uses a cross-compensation model, in which one customer segment pays for a product or service, and the profit from that revenue is used to provide the same product or service to another, underserved segment. Textbooks for Change partners with student organizations to collect used college textbooks, some of which are re-sold while others are donated to students in need at underserved universities across the globe. The organization has reused or recycled 250,000 textbooks, providing 220,000 students with access through seven campus partners in East Africa. This B-corp social enterprise tackles a problem and offers a solution that is directly relevant to college students like yourself. Have you observed a problem on your college campus or other campuses that is not being served properly? Could it result in a social enterprise?

Work It Out

Franchisee set out.

A franchisee of East Coast Wings, a chain with dozens of restaurants in the United States, has decided to part ways with the chain. The new store will feature the same basic sports-bar-and-restaurant concept and serve the same basic foods: chicken wings, burgers, sandwiches, and the like. The new restaurant can’t rely on the same distributors and suppliers. A new business plan is needed.

• What steps should the new restaurant take to create a new business plan?
• Should it attempt to serve the same customers? Why or why not?

This New York Times video, “An Unlikely Business Plan,” describes entrepreneurial resurgence in Detroit, Michigan.

• 48 Chris Guillebeau. The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future . New York: Crown Business/Random House, 2012.
• 49 Jonathan Chan. “What These 4 Startup Case Studies Can Teach You about Failure.” Foundr.com . July 12, 2015. https://foundr.com/4-startup-case-studies-failure/
• 50 Amy Feldman. “Inventor of the Cut Buddy Paid YouTubers to Spark Sales. He Wasn’t Ready for a Video to Go Viral.” Forbes. February 15, 2017. https://www.forbes.com/sites/forbestreptalks/2017/02/15/inventor-of-the-cut-buddy-paid-youtubers-to-spark-sales-he-wasnt-ready-for-a-video-to-go-viral/#3eb540ce798a
• 51 Jennifer Post. “National Business Plan Competitions for Entrepreneurs.” Business News Daily . August 30, 2018. https://www.businessnewsdaily.com/6902-business-plan-competitions-entrepreneurs.html
• 52 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition . March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf
• 53 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition. March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf; Based on 2019 RBPC Competition Rules and Format April 4–6, 2019. https://rbpc.rice.edu/sites/g/files/bxs806/f/2019-RBPC-Competition-Rules%20-Format.pdf
• 54 Foodstart. http://foodstart.com
• 55 “Hugh Jackman Journey to Starting a Social Enterprise Coffee Company.” Giving Compass. April 8, 2018. https://givingcompass.org/article/hugh-jackman-journey-to-starting-a-social-enterprise-coffee-company/

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• Book title: Entrepreneurship
• Publication date: Jan 16, 2020
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