typical example of a business plan

How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

Table of Contents

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

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Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

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Julia is a writer in New York and started covering tech and business during the pandemic. She also covers books and the publishing industry.

How to Write a Business Plan for a Small Business

Noah Parsons

24 min. read

Updated September 2, 2024

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

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

• The basics of writing a business plan

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

You understand that writing a business plan helps you: 

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

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

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

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

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

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

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

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

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

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

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• What to include in your business plan

Executive summary

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

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

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

Your executive summary should include:

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

Dig Deeper: How to write an effective executive summary

Products and services description

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

This is usually called a problem and solution statement .

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

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

Market analysis

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

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

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

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

Related: Target market examples

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

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

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

Dig Deeper: Learn how to write a market analysis

Competitive analysis

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

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

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

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

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

Marketing and sales plan

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

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

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

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

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

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

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

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

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

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

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

Business operations

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

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

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

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

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

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

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

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

Key milestones and metrics

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

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

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

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

Possible milestones might be:

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

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

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

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

Dig Deeper: How to use milestones in your business plan

Organization and management team

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

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

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

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

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

• Sole proprietor
• Partnership

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

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

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

Financial plan

The last section of your business plan is your financial plan and forecasts. 

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

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

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

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

Dig Deeper: How to create financial forecasts and budgets

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

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

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

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

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

Your cover page should be simple and include:

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

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

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

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

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

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

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

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

• Writing tips and strategies

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

Determine why you are writing a business plan

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

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

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

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

Keep things concise

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

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

Have someone review your business plan

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

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

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

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

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

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

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

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

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

Common pitfalls and how to avoid them

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

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

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

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

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

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

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

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

Use your business plan to manage your business

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

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

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

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

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

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

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

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

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

Learn More: How to run a regular plan review

How to write a business plan FAQ

What is a business plan?

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

What are the benefits of writing a business plan?

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

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

What are the 7 steps of writing a business plan?

The seven steps to writing a business plan include:

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

What are the 5 most common business plan mistakes?

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

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

What questions should be answered in a business plan?

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

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

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

How long should a business plan be?

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

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

What are the different types of business plans?

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

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

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

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

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

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

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

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

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

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

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Looking at real business plan examples can help you visualize what a successful plan looks like. With LivePlan you’ll have access to over 550 free examples of a business plan to use as a starting point.

Browse real business plan examples covering a broad range of businesses to see how others have written effective executive summaries, planned marketing activities, created financial forecasts, and more.

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Business Plan: What It Is and How to Write One in 9 Steps

Business plans aren’t just for entrepreneurs who need to secure funding—they can help you plan and evaluate new ideas or growth plans, too. Find out how to write a business plan and get the most out of the process in this comprehensive guide.

A great business plan can help you clarify your strategy, identify potential roadblocks, determine necessary resources, and evaluate the viability of your idea and growth plan before you start a business .

Not every successful business launches with a formal business plan, but many founders find value in the process. When you make a business plan, you get to take time to step back, research your idea and the market you’re looking to enter, and understand the scope and the strategy behind your tactics.

Learn how to write a business plan with this step-by-step guide, including tips for getting the most of your plan and real business plan examples to inspire you.

What is a business plan?

A business plan is a strategic document that outlines a company’s goals, strategies for achieving them, and the time frame for their achievement. It covers aspects like market analysis , financial projections, and organizational structure. Ultimately, a business plan serves as a roadmap for business growth and a tool to secure funding.

Often, financial institutions and investors need to see a business plan before funding any project. Even if you don’t plan to seek outside funding, a well-crafted plan becomes the guidance for your business as it scales.

The key components of a business plan

Putting together a business plan will highlight the parts of your company’s strategy and goals. It involves several key business plan components that work together to show the roadmap to your success.

Your business plan’s key components should include: 

• Executive summary: A brief overview of your entire plan.
• Company description: An explanation of what your business does and why it’s unique. 
• Market analysis: Research on your industry, target market, and competitors.
• Organization and management: Details about your business structure and the people running it.
• Products or services: A description of what you’re selling and how it benefits customers. 
• Customer segmentation: A breakdown of your target market into different groups.
• Marketing and sales plan: The strategy for promoting and selling your products and services.
• Logistics and operations: An overview of how your business will run its daily activities and manage resources.
• Financials: A complete look at projected income, expenses, and funding needs. 

How to write a business plan in 9 steps

• Draft an executive summary
• Write a company description
• Perform a market analysis
• Outline the management and organization
• List your products and services
• Perform customer segmentation
• Define a marketing plan
• Provide a logistics and operations plan
• Make a financial plan

Few things are more intimidating than a blank page. Starting your business plan with a structured outline and key elements for what you’ll include in each section is the best first step you can take.

Since an outline is such an important step in the process of writing a business plan, we’ve put together a high-level overview to get you started (and help you avoid the terror of facing a blank page).

Once you have your business plan template in place, it’s time to fill it in. We’ve broken it down by section to help you build your plan step by step.

1. Draft an executive summary

A good executive summary is one of the most crucial sections of your business plan—it’s also the last section you should write.

The executive summary distills everything that follows and gives time-crunched reviewers (e.g., potential investors and lenders) a high-level overview of your business that persuades them to read further.

Again, it’s a summary, so highlight the key points you’ve uncovered while writing your plan. If you’re writing for your own planning purposes, you can skip the summary altogether—although you might want to give it a try anyway, just for practice.

An executive summary shouldn’t exceed one page. Admittedly, that space constraint can make squeezing in all of the salient information a bit stressful—but it’s not impossible. 

Your business plan’s executive summary should include:

• Business concept. What does your business do?
• Business goals and vision. What does your business want to accomplish?
• Product description and differentiation. What do you sell, and why is it different?
• Target market. Who do you sell to?
• Marketing strategy. How do you plan on reaching your customers?
• Current financial state. What do you currently earn in revenue?
• Projected financial state. What do you foresee earning in revenue?
• The ask. How much money are you asking for?
• The team. Who’s involved in the business?

2. Write a company description

This section of your business plan should answer two fundamental questions: 

• Who are you?
• What do you plan to do? 

Answering these questions with a company description provides an introduction to why you’re in business, why you’re different, what you have going for you, and why you’re a good investment. 

For example, clean makeup brand Saie shares a letter from its founder on the company’s mission and why it exists.

Clarifying these details is still a useful exercise, even if you’re the only person who’s going to see them. It’s an opportunity to put to paper some of the more intangible facets of your business, like your principles, ideals, and cultural philosophies.

Here are some of the components you should include in your company description:

• Your business structure (Are you a sole proprietorship, general partnership, limited partnership, or incorporated company?)
• Your business model
• Your industry
• Your business’s vision, mission, and value proposition
• Background information on your business or its history
• Business objectives, both short and long term
• Your team, including key personnel and their salaries

Brand values and goals

To define your brand values , think about all the people your company is accountable to, including owners, employees, suppliers, customers, and investors. Now consider how you’d like to conduct business with each of them. As you make a list, your core values should start to emerge.

Your company description should also include both short- and long-term goals. Short-term goals, generally, should be achievable within the next year, while one to five years is a good window for long-term goals. Make sure your goal setting includes SMART goals : specific, measurable, attainable, realistic, and time-bound.

Vision and mission statements

Once you know your values, you can write a mission statement . Your statement should explain, in a convincing manner, why your business exists, and should be no longer than a single sentence.

Next, craft your vision statement : What impact do you envision your business having on the world once you’ve achieved your vision? Phrase this impact as an assertion—begin the statement with “We will” and you’ll be off to a great start. Your vision statement, unlike your mission statement, can be longer than a single sentence, but try to keep it to three at most. The best vision statements are concise.

3. Perform a market analysis

Market analysis is a key section of your business plan, whether or not you ever intend for anyone else to read it.

No matter what type of business you start, whether a home-based business or service-based, it’s no exaggeration to say your market can make or break it. Choose the right market for your products—one with plenty of customers who understand and need your product—and you’ll have a head start on success. 

If you choose the wrong market, or the right market at the wrong time, you may find yourself struggling for each sale. Your market analysis should include an overview of how big you estimate the market is for your products, an analysis of your business’s position in the market, and an overview of the competitive landscape. Thorough research supporting your conclusions is important both to persuade investors and to validate your own assumptions as you work through your plan.

How big is your potential market?

The potential market is an estimate of how many people need your product. While it’s exciting to imagine sky-high sales figures, you’ll want to use as much relevant independent data as possible to validate your estimated potential market.

Since this can be a daunting process, here are some general tips to help you begin your research:

• Understand your ideal customer profile. Look for government data about the size of your target market , learn where they live, what social channels they use, and their shopping habits.
• Research relevant industry trends and trajectory. Explore consumer trends and product trends in your industry by looking at Google Trends, trade publications, and influencers in the space.
• Make informed guesses. You’ll never have perfect, complete information about your total addressable market. Your goal is to base your estimates on as many verifiable data points as necessary.

Some sources to consult for market data include government statistics offices, industry associations, academic research, and respected news outlets covering your industry.

Read more: What is a Marketing Analysis? 3 Steps Every Business Should Follow

SWOT analysis

A SWOT analysis looks at your strengths, weaknesses, opportunities, and threats. 

That involves asking questions like: 

• What are the best things about your company? 
• What are you not so good at? 
• What market or industry shifts can you take advantage of and turn into opportunities? 
• Are there external factors threatening your ability to succeed?

SWOT is often depicted in a grid or otherwise visual way. With this visual presentation, your reader can quickly see the factors that may impact your business and determine your competitive advantage in the market.

Competitive analysis

There are three overarching factors you can use to differentiate your business in the face of competition:

• Cost leadership. You have the capacity to maximize profits by offering lower prices than the majority of your competitors. Examples include companies like Mejuri and Endy .
• Differentiation. Your product or service offers something distinct from the current cost leaders in your industry and banks on standing out based on your uniqueness. Think of companies like Knix and QALO .
• Segmentation. You focus on a very specific, or niche, target market, and aim to build traction with a smaller audience before moving on to a broader market. Companies like TomboyX and Heyday Footwear are great examples of this strategy.

To understand which is the best fit, you’ll need to understand your business as well as the competitive landscape.

You’ll always have competition in the market, even with an innovative product, so it’s important to include a competitive overview in your business plan. If you’re entering an established market, include a list of a few companies you consider direct competitors and explain how you plan to differentiate your products and business from theirs.

For example, if you’re selling jewelry , your competitive differentiation could be that, unlike many high-end competitors, you donate a percentage of your profits to a notable charity or pass savings on to your customers.

If you’re entering a market where you can’t easily identify direct competitors, consider your indirect competitors—companies offering products that are substitutes for yours. For example, if you’re selling an innovative new piece of kitchen equipment, it’s too easy to say that because your product is new, you have no competition. Consider what your potential customers are doing to solve the same problems.

4. Outline the management and organization

The management and organization section of your business plan should tell readers about who’s running your company. Detail the legal structure of your business. Communicate whether you’ll incorporate your business as an S corporation or create a limited partnership or sole proprietorship.

If you have a management team, use an organizational chart to show your company’s internal structure, including the roles, responsibilities, and relationships between people in your chart. Communicate how each person will contribute to the success of your startup.

5. List your products and services

Your products or services will feature prominently in most areas of your business plan, but it’s important to provide a section that outlines key details about them for interested readers.

If you sell many items, you can include more general information on each of your product lines. If you only sell a few, provide additional information on each. 

For example, bag shop BAGGU sells a large selection of different types of bags, in addition to home goods and other accessories. Its business plan would list out those categories and key details about the products within each category.

Describe new products you’ll launch in the near future and any intellectual property you own. Express how they’ll improve profitability. It’s also important to note where products are coming from—handmade crafts are sourced differently than trending products for a dropshipping business, for instance.

6. Perform customer segmentation

Your ideal customer, also known as your target market, is the foundation of your marketing plan , if not your business plan as a whole. 

You’ll want to keep this buyer persona in mind as you make strategic decisions, which is why an overview of who they are is important to understand and include in your business plan.

To give a holistic overview of your ideal customer, describe a number of general and specific demographic characteristics. Customer segmentation often includes:

• Where they live
• Their age range
• Their level of education
• Some common behavior patterns
• How they spend their free time
• Where they work
• What technology they use
• How much they earn
• Where they’re commonly employed
• Their values, beliefs, or opinions

This information will vary based on what you’re selling, but you should be specific enough that it’s unquestionably clear who you’re trying to reach—and more importantly, why you’ve made the choices you have based on who your customers are and what they value.

For example, a college student has different interests, shopping habits, and pricing sensitivity than a 50-year-old executive at a Fortune 500 company. Your business plan and decisions would look very different based on which one was your ideal customer.

Put your customer data to work with Shopify’s customer segmentation

Shopify’s built-in segmentation tools help you discover insights about your customers, build segments as targeted as your marketing plans with filters based on your customers’ demographic and behavioral data, and drive sales with timely and personalized emails.

7. Define a marketing plan

Your marketing efforts are directly informed by your ideal customer. That’s why, as you outline your current decisions and future strategy, your marketing plan should keep a sharp focus on how your business idea is a fit for that ideal customer.

If you’re planning to invest heavily in Instagram marketing or TikTok ads , for example, it makes sense to include whether Instagram and TikTok are leading platforms for your audience. If the answer is no, that might be a sign to rethink your marketing plan.

Market your business with Shopify’s customer marketing tools

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Most marketing plans include information on four key subjects. How much detail you present on each will depend on both your business and your plan’s audience.

• Price: How much do your products cost, and why have you made that decision?
• Product: What are you selling and how do you differentiate it in the market?
• Promotion: How will you get your products in front of your ideal customer?
• Place: Where will you sell your products? On what channels and in which markets?

Promotion may be the bulk of your plan, since you can more readily dive into tactical details, but the other three areas should be covered at least briefly—each is an important strategic lever in your marketing mix.

8. Provide a logistics and operations plan

Logistics and operations are the workflows you’ll implement to make your business idea a reality. If you’re writing a business plan for your own planning purposes, this is still an important section to consider, even though you might not need to include the same level of detail as if you were seeking investment.

Cover all parts of your planned operations, including:

• Suppliers. Where do you get the raw materials you need for production, or where are your products produced?
• Production. Will you make, manufacture, wholesale , or dropship your products? How long does it take to produce your products and get them shipped to you? How will you handle a busy season or an unexpected spike in demand?
• Facilities. Where will you and any team members work? Do you plan to have a physical retail space? If yes, where?
• Equipment. What tools and technology do you require to be up and running? This includes everything from software to lightbulbs and everything in between.
• Shipping and fulfillment. Will you be handling all the fulfillment tasks in-house, or will you use a third-party fulfillment partner?
• Inventory. How much will you keep on hand, and where will it be stored? How will you ship it to partners if required, and how will you approach inventory management ?

This section should signal to your reader that you’ve got a solid understanding of your supply chain, with strong contingency plans in place to cover potential uncertainty. If your reader is you, it should give you a basis to make other important decisions, like how to price your products to cover your estimated costs, and at what point you anticipate breaking even on your initial spending.

9. Make a financial plan

No matter how great your idea is—and regardless of the effort, time, and money you invest—a business lives or dies based on its financial health. At the end of the day, people want to work with a business they expect to be viable for the foreseeable future.

The level of detail required in your financial plan will depend on your audience and goals, but typically you’ll want to include three major views of your financials: an income statement, a balance sheet, and a cash-flow statement. It also may be appropriate to include financial data and projections.

Here’s a spreadsheet template that includes everything you’ll need to create an income statement, balance sheet, and cash-flow statement, including some sample numbers. You can edit it to reflect projections if needed.

Let’s review the types of financial statements you’ll need.

Income statements

Your income statement is designed to give readers a look at your revenue sources and expenses over a given time period. With those two pieces of information, they can see the all-important bottom line or the profit or loss your business experienced during that time. If you haven’t launched your business yet, you can project future milestones of the same information.

Balance sheets

Your balance sheet offers a look at how much equity you have in your business. On one side, you list all your business assets (what you own), and on the other side, all your liabilities (what you owe). 

This provides a snapshot of your business’s shareholder equity, which is calculated as:

Assets - Liabilities = Equity

Cash flow statements

Your cash flow statement is similar to your income statement, with one important difference: it takes into account when revenues are collected and when expenses are paid.

When the cash you have coming in is greater than the cash you have going out, your cash flow is positive. When the opposite scenario is true, your cash flow is negative. Ideally, your cash flow statement will help you see when cash is low, when you might have a surplus, and where you might need to have a contingency plan to access funding to keep your business solvent .

It can be especially helpful to forecast your cash-flow statement to identify gaps or negative cash flow and adjust operations as required.

📚 Read more: Cash Flow Management: What It Is & How To Do It (+ Examples)

Why write a business plan?

Investors rely on business plans to evaluate the feasibility of a business before funding it, which is why business plans are commonly associated with getting a business loan. 

Business plans also help owners identify areas of weakness before launching, potentially avoiding costly mistakes down the road. “Laying out a business plan helped us identify the ’unknowns’ and made it easier to spot the gaps where we’d need help or, at the very least, to skill up ourselves,” says Jordan Barnett, owner of Kapow Meggings .

There are several other compelling reasons to consider writing a business plan, including:

• Strategic planning. Writing out your plan is an invaluable exercise for clarifying your ideas and can help you understand the scope of your business, as well as the amount of time, money, and resources you’ll need to get started.
• Evaluating ideas. If you’ve got multiple ideas in mind, a rough business plan for each can help you focus your time and energy on the ones with the highest chance of success.
• Research. To write a business plan, you’ll need to research your ideal customer and your competitors—information that will help you make more strategic decisions.
• Recruiting. Your business plan is one of the easiest ways to communicate your vision to potential new hires and can help build their confidence in the venture, especially if you’re in the early stages of growth.
• Partnerships. If you plan to collaborate with other brands , having a clear overview of your vision, your audience, and your business strategy will make it much easier for them to identify if your business is a good fit for theirs.
• Competitions. There are many business plan competitions offering prizes such as mentorships, grants, or investment capital. 

If you’re looking for a structured way to lay out your thoughts and ideas, and to share those ideas with people who can have a big impact on your success, making a business plan is an excellent starting point.

Business plan types

Business plan types can span from one page to multiple pages, with detailed graphs and reports. There’s no one right way to create a business plan. The goal is to convey the most important information about your company for readers.

Common business plans we see include, but are not limited to, the following types:

Traditional business plans

These are the most common business plans. Traditional business plans take longer to write and can be dozens of pages long. Venture capitalist firms and lenders ask for this plan. Traditional business plans may not be necessary if you don’t plan to seek outside funding. That’s where a lean business plan comes in.

Lean business plans

A lean business plan is a shorter version of a traditional business plan. It follows the same format, but only includes the most important information. Businesses use lean business plans to onboard new hires or modify existing plans for a specific target market. If you want to write a business plan purely for your own planning purposes when starting a new small business, a lean business plan is typically the way to go. 

Nonprofit business plans

A nonprofit business plan is for any entity that operates for public or social benefit. It covers everything you’ll find in a traditional business plan, plus a section describing the impact the company plans to make. For example, a speaker and headphone brand would communicate that they aim to help people with hearing disabilities. Donors often request this type of business plan.

📚 Read more: 7 Business Plan Examples to Inspire Your Own (2024)

7 tips for creating a small business plan

There are a few best practices when it comes to writing a business plan. While your plan will be unique to your business and goals, keep these tips in mind as you write.

1. Know your audience

When you know who will be reading your plan—even if you’re just writing it for yourself to clarify your ideas—you can tailor the language and level of detail to them. This can also help you make sure you’re including the most relevant information and figure out when to omit sections that aren’t as impactful.

2. Have a clear goal

When creating a business plan, you’ll need to put in more work and deliver a more thorough plan if your goal is to secure funding for your business, versus working through a plan for yourself or your team.

3. Invest time in research

Sections of your business plan will primarily be informed by your ideas and vision, but some of the most crucial information you’ll need requires research from independent sources. This is where you can invest time in understanding who you’re selling to, whether there’s demand for your products, and who else is selling similar products or services.

4. Keep it short and to the point

No matter who you’re writing for, your business plan should be short and readable—generally no longer than 15 to 20 pages. If you do have additional documents you think may be valuable to your audience and your goals, consider adding them as appendices.

5. Keep the tone, style, and voice consistent

This is best managed by having a single person write the plan or by allowing time for the plan to be properly edited before distributing it.

6. Use a business plan template

You can also use a free business plan template to provide a skeleton for writing a plan. These templates often guide you through each section—from financial projects to market research to mission statement—ensuring you don’t miss a step.

7. Try business plan software

Writing a business plan isn’t the easiest task for business owners. But it’s important for anyone starting or expanding a business. 

Fortunately, there are tools to help with everything from planning, drafting, creating graphics, syncing financial data, and more. Business plan software also has business plan templates and tutorials to help you finish a comprehensive plan in hours, rather than days.

A few curated picks include:

• LivePlan : the most affordable option with samples and templates
• Bizplan : tailored for startups seeking investment
• Go Small Biz : budget-friendly option with industry-specific templates

📚 Read more:  6 Best Business Plan Software Platforms (2024)

Common mistakes when writing a business plan

Other articles on business plans would never tell you what we’re about to tell you: Your business plan can fail. 

The last thing you want is for time and effort to go down the drain, so avoid these common mistakes:

• Bad business idea. Sometimes your idea may be too risky for potential investors or too expensive to run, or there’s no market. Aim for small business ideas that require low startup costs.
• No exit strategy. If you don’t show an exit strategy, or a plan for investors to leave the business with maximum profits, you’ll have little luck securing capital.
• Unbalanced teams. A great product is the cost of entry to starting a business. But an incredible team will take it to the top. Unfortunately, many business owners overlook a balanced team. They focus on potential profits, without worrying about how it will be done operationally. 
• Missing financial projections. Don’t forget your balance sheet, cash flow statements, P&L statements, and income statements. Include your break-even analysis and return-on-investment calculations in your financial projections to create a successful business plan.
• Spelling and grammar errors. All the best organizations have an editor review their documents. If someone spots typos while reading your business plan, sloppy errors like those can evoke a larger sense of distrust in your capabilities to run a successful company. It may seem minor, but legibility and error-free writing helps make a good impression on your business plan’s audience. 

Updating and revising a business plan

Business plans aren’t static documents. The business world moves fast and your plan will need to keep up. You don’t want it to get stale. 

Here’s a good rule of thumb for business plan revisions:

• Monthly: Update KPIs like sales, website traffic, and customer acquisition costs. Review your cash flow. Is your money situation as expected? Make the necessary changes.
• Quarterly : Are you hitting your targets? Be sure to update your financial performance, successful marketing campaigns, and any other recent milestones achieved.
• Yearly : Think of this as a big overhaul. Compare projections to actuals and update your forecasts. 

When updating your plan, don’t just go with your gut. Use data like surveys and website analytics to inform each update. Using outdated information will only lead to confusion and missed opportunities.

Remember not to just update one part of your plan—it’s all connected. Fortunately, with business plan software you can easily give your plan attention and help your business thrive. 

How to present a business plan

Here are some tips for presenting your business plan to stakeholders.

Understand your audience

Start by doing homework on who you’ll be presenting to. Are they investors, potential partners, or a bank? Each group will have different interests and expectations. 

Consider the following about your presentation audience:

• Background: What’s their professional experience?
• Knowledge level: How familiar are they with your industry?
• Interests: What aspects of your plan will excite them most?
• Concerns: What might make them hesitant about your idea?

Depending on who you’re presenting to, you can tweak your presentation accordingly. For example, if you’re presenting to a group of investors, you’d probably want to highlight financial projections and market analysis. 

Structure your presentation

Once you know your audience, you can organize your presentation. Think of this as the story you’ll tell listeners. A well-structured presentation helps listeners follow along and remember key points. 

Your opening should grab attention and give a snapshot of what’s to come. It’s kind of like an elevator pitch that gives an overview of your business idea. 

From there, break your presentation into clear sections:

• Problem: What issue are you solving?
• Solution: How does your business address this problem?
• Market: Who are your potential customers?
• Competition: Who else is in this space, and how are you different?
• Business model: How will you make money?
• Financial projections: What are your expected costs and revenues?
• Team: Who’s involved, and what makes them qualified?

Use visual aids to support your points. Graphs, charts, and even simple illustrations can make your information more digestible. Remember to practice your timing, too. A good presentation flows smoothly, giving each section the right amount of attention for its intended audience. 

Handle objections and questions

Facing objections or questions can be nerve-wracking, but it’s actually a great opportunity. It shows your listeners are engaged and thinking critically about your idea. The key is to be prepared and stay calm. 

Try to anticipate potential questions. Put yourself in the listener’s shoes: What would you want to know if you were them? Come up with clear answers to these questions ahead of time.

When handling questions:

• Listen carefully: Make sure you fully understand the question before answering.
• Stay positive: Even if the question seems critical, respond with enthusiasm.
• Be honest: If you don’t know something, it’s OK. Offer to find out and follow up. 

Use questions as a way to highlight the strengths of your business plan. If a question needs more thought or refresh, it’s perfectly fine to say, “That’s a great question. I’d love to look further into it and get back to you with a detailed answer.”

Handling questions well shows that you’re knowledgeable, thoughtful, and open to feedback—all things that will impress listeners and make them feel confident in your business plan. 

Prepare your business plan today

A business plan can help you identify clear, deliberate next steps for your business, even if you never plan to pitch investors—and it can help you see gaps in your plan before they become issues. 

Whether you’re working on starting a new online business idea , building a retail storefront, growing your established business, or purchasing an existing business , you now understand how to write a business plan that suits your business’s goals and needs.

Feature illustration by Rachel Tunstall

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Business plan FAQ

How do i write a business plan.

Learning how to write a business plan is simple if you use a business plan template or business plan software. Typically, a traditional business plan for every new business should have the following components:

• Executive summary
• Company description, including value proposition
• Market analysis and competitive analysis
• Management and organization
• Products and services
• Customer segmentation
• Marketing plan
• Logistics and operations
• Financial plan and financial projections

What is a good business plan?

A good business plan clearly communicates your company’s purpose, goals, and growth strategies. It starts with a strong executive summary, then adequately outlines idea feasibility, target market insights, and the competitive landscape. 

A business plan template can help businesses be sure to follow the typical format of traditional business plans, which also include financial projections, details about the management team, and other key elements that venture capital firms and potential investors want to see.

What are the 3 main purposes of a business plan?

The three main purposes of a business plan are: 

• To clarify your plans for growth
• To understand your financial needs
• To attract funding from investors or secure a business loan

What are the different types of business plans?

The types of business plans include startup, refocusing, internal, annual, strategic, feasibility, operations, growth, and scenario-based. Each type of business plan has a different purpose. Business plan formats include traditional, lean, and nonprofit. Find a business plan template for the type of plan you want to write.

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How to Write a Business Plan, Step by Step

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What is a business plan?

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

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

LLC Formation

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

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

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

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

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

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

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

Your business’s registered name.

Address of your business location .

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

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

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

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

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

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

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

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

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

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

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

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

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

Licenses and permits.

Equipment leases.

Bank statements.

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

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

How much do you need?

with Fundera by NerdWallet

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

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

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

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

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

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

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300+ Business Plan Examples

With over two decades of experience, Growthink has assisted more than 1 million companies in developing effective business plans to launch and expand their businesses. Trust in our expertise to guide you through developing a business plan that drives your success. In addition to our sample plans, below you’ll learn the answers to key business plan questions and gain insightful tips on writing your business plan.

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Answers to Key Sample Business Plan Questions

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1. Why is utilizing an example business plan a good idea?

Sample business plans can help you quickly and easily write a business plan for your own business. Business plans are an important tool for any business, but they can be challenging to create. A sample business plan will help you understand the business plan format , the benefit of market research, and how to write a compelling executive summary. It can also serve as a guide for creating your own business plan, outlining the key sections and providing examples of successful plans. Utilizing the best business plan template can save you time and ensure that your plan is well-structured and comprehensive.

Business plan examples may even help you with the different sections of a plan, including market analysis, business description, cash flow statements/business financial statements, and more. Business plans can also show you how a quality plan in your exact business plan category is organized and shows you the appropriate business communications style to use when writing your business plan.

2. Who would benefit from using an example business plan?

Any entrepreneur or business owner who has never written a business plan before can benefit from an example or sample plan. New business owners often start with business plan templates , which are helpful but are sometimes more useful after reviewing other sample business plans.

A good sample plan can be a step-by-step guide as you work on your business planning and business idea. Once you have a sense for the flow, specs, and details, etc. that business plans have, utilizing a business plan template will help you pull everything together, helping you create a plan investors and other stakeholders will value. A solid business plan will also help you if you need a bank loan, which may require a startup business plan. Download our free business plan template to help you get started on your own business plan.

Free Download : Free Business Plan Template PDF

3. How do you get started with a sample business plan and maximize its benefit?

First you should read the business plan thoroughly. Study both the type of information provided in key sections like the executive summary, target market analysis, summary, etc., as well as the format and style of the plan. As you read, you may find yourself thinking through things such as improving or evaluating your business planning process, your business idea, or reconsidering who you want to write your business plan for. This is OK and part of the process. In fact, when you start writing a business plan for the first time, it will be much easier because you’ve gone through this process.

After this initial read, outline your business plan and copy in from the sample plan sections that apply to your business. For instance, if the sample plan included public relations in their marketing strategy and sales plan, and you will also use this tactic, you can copy it into your plan and edit it as appropriate. Finally, answer the other questions answered in the sample plan in ways that reflect your unique business and target customers.

Writing a business plan can seem daunting. Starting your business plan writing process by reviewing a plan that’s already been created can remove a lot of mental and emotional barriers while helping you craft the best plan you can.

4. When should you not use a sample business plan?

If your business is unlike any other, using a sample business plan will not be as effective. In this situation, writing a business plan from scratch utilizing a business plan template is probably your best path forward.

As an example, Facebook’s early business plan was unlike others since it was paving a new path and way of doing business. But, groundbreaking new businesses like Facebook are not the norm, and the vast majority of companies will benefit from utilizing sample business plans.

5. How do you choose the right type of business plan for your venture?

Selecting the appropriate type of business plan depends on your business’s stage, needs, and goals. Let’s explore the different types of business plans and how to determine which business plan format is right for you.

• Startup Business Plan : This type of plan is for businesses just starting out and seeking funding or investment. It typically includes a detailed analysis of the market, target audience, competition, and financial projections.
• Traditional Business Plan : Traditional business plans are the most common type of business plan, used by established businesses to outline their goals and strategies. It includes all the key sections such as market analysis, company description, and financial statements.
• Internal Business Plan : Internal business plans are used for internal purposes, to guide the day-to-day operations and decision making of the business. It may not be as detailed as a traditional business plan, but still includes important information such as company mission, objectives, and key performance indicators.
• Feasibility Business Plan : A feasibility business plan is used to assess the viability of a new product or service in the market. It includes detailed research and analysis to determine if the business idea is feasible and profitable.
• One-Page Business Plan : As the name suggests, this type of business plan is condensed into one page and includes the most critical information about the business. It can be a useful tool for pitching to potential investors or partners.
• Strategic Business Plan : A strategic plan looks at the big picture and long-term business goals of a company. It may include the company’s mission statement, core values, and overarching strategies for achieving success.

Ultimately, the type of business plan you choose will depend on your business’s specific needs and goals. It may also be beneficial to combine elements from different types of plans to create a customized plan that best fits your business. Carefully consider your objectives and resources before deciding on the right type of plan for your venture.

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With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

The business plan example below is for Shoutmouth, a company that enjoyed much success in the early 2000’s and which was able to raise funding. While the plan’s premise (social networking) is not as unique now as it was then, the format and structure of this business plan still holds.

I. Executive Summary

Business Overview

Launched in late February 2007, Shoutmouth.com is the most comprehensive music news website on the Internet .

Music is one of the most searched and accessed interests on the Internet. Top music artists like Akon receive over 3 million searches each month. In addition, over 500 music artists each receive over 25,000 searches a month.

However, music fans are largely unsatisfied when it comes to the news and information they seek on the artists they love. This is because most music websites (e.g., RollingStone.com, MTV.com, Billboard.com, etc.) cover only the top eight to ten music stories each day – the stories with mass appeal. This type of generic coverage does not satisfy the needs of serious music fans. Music fans generally listen to many different artists and genres of music. By publishing over 100 music stories each day, Shoutmouth enables these fans to read news on all their favorite artists.

In addition to publishing comprehensive music news on over 1200 music artists, Shoutmouth is a social network that allows fans to meet and communicate with other fans about music, and allows them to:

• Create personal profiles
• Interact with other members
• Provide comments on news stories and music videos
• Submit news stories and videos
• Recommend new music artists to add to the community
• Receive customized news and email alerts on their favorite artists

Success Factors

Shoutmouth is uniquely qualified to succeed due to the following reasons:

• Entrepreneurial track record : Shoutmouth’s CEO and team have helped launch numerous successful ventures.
• Affiliate marketing track record : Online affiliate marketing expertise has been cited as one of MySpace’s key success factors. Over the past two years, Shoutmouth’s founders have run one of the most successful online affiliate marketing programs, having sold products to over 500,000 music customers online.
• Key milestones completed : Shoutmouth’s founders have invested $500,000 to-date to staff the company (we currently have an 11-person full-time team), build the core technology, and launch the site. We have succeeded in gaining initial customer traction with 50,000 unique visitors in March, 100,000 unique visitors in April, and 200,000 unique visitors in May 2007.

Unique Investment Metrics

The Shoutmouth investment opportunity is very exciting due to the metrics of the business.

To begin, over the past two years, over twenty social networks have been acquired. The value in these networks is their relationships with large numbers of customers, which allow acquirers to effectively sell to this audience.

The sales price of these social networks has ranged from $25 to $137 per member. Shoutmouth has the ability to enroll members at less than $1 each, thus providing an extraordinary return on marketing expenditures. In fact, during an April 2007 test, we were able to sign-up 2,000 members to artist-specific Shoutmouth newsletters at a cost of only 43 cents per member.

While we are building Shoutmouth to last, potential acquirers include many types of companies that seek relationships with music fans such as music media/publishing (e.g., MTV, Rolling Stone), ticketing (e.g., Ticketmaster, LiveNation) and digital music sales firms (e.g., iTunes, The Orchard).

Financial Strategy, Needs and Exit Strategy

While Shoutmouth’s technological, marketing and operational infrastructure has been developed, we currently require $3 million to execute on our marketing and technology plan over the next 24 months until we hit profitability.

Shoutmouth will primarily generate revenues from selling advertising space. As technologies evolve that allow us to seamlessly integrate music sampling and purchasing on our site, sales of downloadable music are also expected to become a significant revenue source. To a lesser extent, we may sell other music-related items such as ringtones, concert tickets, and apparel.

Topline projections over the next three years are as follows:

II. Shoutmouth Overview

What is Shoutmouth?

Shoutmouth is an operating company of The Kisco Group Inc. (TKG). Since 2003, TKG has capitalized on web-based marketing opportunities via launching targeted websites and generating web-based leads. TKG revenues in 2005 exceeded $1.3 million and grew to $3.5 million in 2006. Shoutmouth is currently the sole focus of TKG; all other TKG business units have been divested.

Development of Shoutmouth began in August 2006 and the site officially launched on February 21, 2007. Shoutmouth (located at www.shoutmouth.com) is the most comprehensive music news community on the Internet. The website covers 1,200 popular bands and music artists and offers more than 100 new music articles each day. In addition to providing news, Shoutmouth is a web community. That is, Shoutmouth members can actively participate on the site, by doing things such as commenting on news stories and submitting their own stories.

The Market Size and Need for Shoutmouth

The music market is clearly vast. According to IFPI, which represents the recording industry worldwide, global music sales were $33.5 billion in 2005, with the U.S. accounting for $12.3 billion of that amount. Importantly, digitally music sales are seeing substantial growth, with IFPI reporting sales of $400 million in 2004, $1.1 billion in 2005 and $2 billion in 2006.

Online, music is the one of the most frequently searched and accessed interests. For example, according to Wordtracker, the music artist Eminem received over 1.7 million web searches in December 2006, while band Green Day received 534,000 searches.

To put these figures in perspective, top celebrities in other entertainment fields receive but a fraction of this search volume. For example, December 2006 search volumes for select sports stars and actors were as follows: Kobe Bryant, 122K; Tiger Woods, 88K; Cameron Diaz, 332K; and Tom Cruise, 82K.

Conversely, 225 music artists received over 100,000 searches in December 2006, and over 500 music artists received over 25,000 searches.

This data is corroborated by Nielsen BuzzMetrics which plots the most popular topics bloggers are posting about. The chart to the right plots September 25, 2006 to March 25, 2007 and shows how music dominates other entertainment sectors online.

When searching for music artists online, fans, which are primarily between the ages of 13 and 35, are looking for news, pictures, lyrics, videos and audio files. In addition, fans enjoy publicly voicing their opinions about music and interacting with other fans.

There is currently no website besides Shoutmouth that provides comprehensive music news. Currently, to get the latest news on their favorite artists, fans must visit the official websites or fan websites of each of the artists they like . Even then, it is unlikely that the fan will get all the news that has occurred. To solve this problem, Shoutmouth scours the web and uncovers news from thousands of web sites.

What Shoutmouth Does and Will Offer

As of May 2007, the site covers the 1,200 most popular music artists (popularity primarily based on the number of web searches over the past 12 months for each artist).

Shoutmouth currently offers members the ability to:

• Read over 500 new music articles each week
• Read special features such as album reviews, interviews, new album release dates, top quotes of the week and other special reports
• Watch and rate music videos
• Listen to select music audio clips
• Comment on news stories and music videos
• Submit news stories that they see/hear of elsewhere
• Suggest new music artists to add to the site
• View articles by music artist or by genre (current genres include Rock, Pop, Rap, R&B, Country, and Electronic)
• Create a user profile that includes their favorite music artists, Shoutmouth friends, news stories submitted to Shoutmouth, and comments made. Members have the ability to find other members based on their favorite artists and via our search functions.
• Receive customized news and email alerts. Members can customize their “My News” page to include only artists they specify. Likewise, they can choose to receive email alerts whenever there is a new story on one of their favorite artists.

While establishing itself as the premier music news community, Shoutmouth will embark on the more aggressive goal of becoming the premier music community online . To accomplish this, Shoutmouth will begin to offer additional content (more videos, audio, pictures, lyrics, etc.) and additional functionality (music compatibility testing (e.g., if you like this, you’ll like this), voting capabilities, member-to-member messaging, etc.). We have already begun mapping out our content and technology growths plans to achieve this goal upon financing.

Importantly, Shoutmouth expects to be able to add massive amounts of relevant content (e.g., lyrics, reviews, pictures, video files, audio files, etc.) via member submissions and moderation. This is the same way that YouTube has been able to quickly add millions of videos and Wikipedia has been able to add millions of articles. Importantly, since established music websites (e.g., MTV, RollingStone.com, Billboard.com, etc.) are not community based, they would have to hire thousands of staff members to rival the content that Shoutmouth will have.

How We Get and Publish Our News

Currently, news stories that appear on Shoutmouth are gathered from numerous online sources. Shoutmouth’s staff writers find these stories by using RSS and News feeds that cover thousands of websites. In addition, Shoutmouth community members have the ability to submit stories they find elsewhere.

Typical stories include factual information plus the insight of the author. Shoutmouth editors ensure that all stories are properly classified by artist and genre, and that duplicate articles are filtered out.

Over the past three months, Shoutmouth has developed a solid infrastructure, which we consider a core competitive advantage, that that allows us to provide comprehensive music news . This infrastructure includes:

• Setting up hundreds of RSS feeds based on comprehensive research regarding sites from which to receive feeds
• Training our editorial team regarding identifying a story and weeding out duplicates
• Assigning music artists among our five-person editorial team to better manage work flow and avoid duplicate articles

We are working on a system to ensure that member-submitted articles are automatically routed to the appropriate member of Shoutmouth’s editorial team to improve our efficiencies further.

Shoutmouth’s Goal to Break News First

The majority (approximately 90%) of Shoutmouth’s articles are currently developed by our in-house editorial team, while the balance is submitted by members. In addition, virtually all of our articles are based on information gleaned from other websites. As such, we are generally not the first to publish news; however we are the first and only site to publish all the news in one easily-accessible place. The one current exception is news which is published on bands’ official MySpace pages; Shoutmouth generally publishes articles on this news 24 to 48 hours before it is reported by other news or music sites (due to our efficiencies in finding news).

Shoutmouth realizes that it will gain a key competitive advantage, and will generate significant market buzz, if it is able to report on music news stories before other media sources . To accomplish this, we have begun contacting publicity departments at record labels to gain direct access to music news. We expect these contacts to enable us to gain immediate and sometimes exclusive access to news which will help further establish Shoutmouth as the canonical source for music news. We also plan to more aggressively solicit member submissions of new, buzzworthy news events and will consider offering rewards for unique substantiated news (much the way paparazzi are compensated).

III. Competition in the Online Music Market

This section of the business plan provides a competitive analysis, which is an overview of the competitive landscape, discusses both indirect and direct competitors and then details Shoutmouth’s competitive advantages.

Because consumer demand for music on the Internet is so great, there are a vast number of music websites. In summary, we consider most sectors of the online music market (which are discussed below) to be indirect competitors and potentially partners, rather than direct competitors, because none of them focus on music news.

The reason we believe that no one focuses on music news is that it is very difficult to do. Because news is very important to music fans, most music websites offer news. However, they primarily get their news from organizations such as CNN, Reuters, the Associated Press and BBC. These large organizations only write about the music stories that have mass appeal, which traditionally amounts to 8-10 music news stories per day. However, since music fans are often zealots when it comes to their favorite artists, they are not merely interested in cover stories. For instance, a U2 fan cares about any U2 news, particularly news that a non-U2 fan might consider insignificant.

In fact, because Shoutmouth is the sole one-stop shop for getting comprehensive music news, there might be an opportunity to license our content to other music websites.

Sectors of the Online Music Market

Shoutmouth specifically comPs in the community-based music news market. While players in this market represent direct competitors, Shoutmouth faces indirect competitors in the following markets:

• Community-Based Sites
• Community-Based News Sites
• Community-Based Music Sites
• Traditional Music Websites
• Official Artist and Fan Sites

Each of these markets is described below.

A. Community-Based Sites

Community-based sites, also known as social networking sites, are websites in which members can create profiles, leave comments throughout the site, and communicate with other members among other features.

A June 2006 report by Piper Jaffray entitled “Silk Road: Social Networking is Here to Stay” effectively sums up the power and longevity of social networking:

“We believe social networking sites have become a permanent part of the fabric of web applications and are rapidly becoming one of the most popular activities online, potentially impacting how other popular services such as email, IM, and maybe even search are accessed.

As a clear indication of the growth rate and scale of social networking, consider this: MySpace monthly page views have now surpassed MSN or AOL in the U.S. and are nearly 75% of the size of Yahoo!. Social networking has filled a gap that was left by all the existing portals and web services and it is fulfilling a very important and basic function for millions of users: allowing them to express themselves and connect with their friends, with the two functions tightly integrated.

The leading sites such as MySpace (News Corp), Facebook, and others are amassing significant power in the new landscape of the Internet and the existing Internet companies are likely to have to work with these newcomers as they may yield material control on the flow of traffic to other applications.”

Social networking sites such as MySpace.com, Facebook.com, Tagged.com, and TagWorld.com have educated consumers regarding the value of these sites and how to use them. Their success has spurred genre-specific social networks such as community-based/social networking news sites and music sites, which are discussed below.

Shoutmouth doesn’t view established social networking sites as competitors since these sites have a general focus. That is, members talk about all aspects of life, from dating to music to movies, etc. Conversely, Shoutmouth is solely focused on music.

B. Community-Based News Sites

Community-based news sites are sites in which members decide what’s newsworthy and what’s not. For instance, on Digg.com, the most prominent community-based news site, members “Digg” stories that they feel are most newsworthy. The stories that the community feels are most important rise to Digg’s homepage, while less important stories get little attention.

Digg’s one million members can submit stories, “digg” stories, and comment on stories. Digg focuses on general news with a slant towards technology, gaming and unique/sensational news. While Digg does have a Music area within its Entertainment section, this receives little focus. In fact, at the time of the writing of this plan, Digg’s music home page only includes one article submitted within the past 48 hours. Furthermore, Digg doesn’t pare down the music category into sub-categories such as Rock and individual music artists. Conversely, these sub-categories are the entire focus of Shoutmouth.

Other sites that are similar to Digg include Newsvine.com, Spotback.com and Gabbr.com. Of most relevance is the Digg-like site for music, Noisetap.com, which was launched by Ticketmaster in January 2007.

Like Digg, Noisetap.com allows members to submit and vote for music stories. Noisetap.com is organized by music genre and not by music artist. This most likely will not satisfy the needs of many music fans since they don’t have the ability to find news on the specific artists they care most about. Likewise, without a full-time staff actively researching and publishing news stories at the artist-level, Noisetap.com will never be able to offer the comprehensive news that Shoutmouth does.

While Shoutmouth is currently similar to community-based news sites in that members can submit stories and comment on the news they find most interesting, no established player in the market provides a comprehensive focus on music. In addition, Shoutmouth sees these sites as marketing partners as we have and will continue to submit our stories on them to increase our readership.

C. Community-Based Music Sites

There are many community-based music websites, although none focuses on music news such as Shoutmouth. Conversely, these sites generally give members the ability to create and listen to song play lists. The community acts to help individual members find new music and new friends based on similarities in their music tastes. Prominent sites in this genre include Last.fm, Finetune, Pandora, RadioBlogClub, MyStrands, iLike[1] and iJigg.

Last.fm is the most prominent community-based music site and is a good model with which to compare Shoutmouth. Likewise, we will benchmark our performance against Last.fm as we reach of goal of becoming the premier music news community and focus on becoming the premier music community.

According to Alexa, Last.fm is the 359th most visited site on the Internet. While Last.fm focuses on allowing members to create customized Internet stations based on their music tastes, the site has much additional content and social networking features. For instance, for each artist, Last.fm includes pictures, a bio, concert dates, discography, fans on Last.fm, and similar artists. Fans are also able to create journals and communicate with other fans. Key features that Last.fm doesn’t currently focus on include news and video.

D. Traditional Music Websites

Traditional music websites such as MTV.com, RollingStone.com, Billboard.com, NME.com, AOL Music, and Yahoo! Music tend to have many features such as news, reviews, pictures, videos and audio. While these sites are generally very well done and extremely popular, they are under-serving visitors in two core areas: music news and community .

These sites’ lack of music news stems from the difficulty in creating this news, specifically that it requires filtering through thousands of articles and websites to find relevant stories. Likewise, as discussed, these firms might wish to license our news content in the future.

Regarding community , none of the top music sites are thriving communities. Rather, either these sites offer no community features or they recently began offering select features (e.g., submitting reviews or commenting on articles). Even when available, the community features on these sites are afterthoughts and are not engrained within the core fabric of the sites.

While they haven’t been able to transform their current sites into communities, top music websites clearly understand the power of online music communities and have an appetite for them. For example, in January 2007, MTV invested in social networking website TagWorld. MTV also acquired RateMyProfessors.com and Quizilla.com (teen social network) in January 2007 and October 2006 respectively.

As mentioned previously, our vision is to build and incorporate additional technologies, and use our “army” of members to publish vast amounts of music content on Shoutmouth, in order to fully satisfy music fans and leapfrog traditional music sites in terms of their music content.

E. Official Artist and Fan Sites

Shoutmouth com’s with official music artist websites and fan websites. These sites often include news about the specific artist as well as pictures, videos and other relevant information.

On one hand, official music artist and fan websites are direct competitors to Shoutmouth. This is because some of these sites offer comprehensive news on the specific artist they cover. In addition, many offer forums, discussion boards or other ways to communicate with other fans.

However, two factors separate Shoutmouth from these types of sites: 1) breadth and 2) sophistication.

• Breadth : Most music fans love more than one artist. As such, in order to get the news they want, they would have to visit/join multiple fan or artist websites rather than getting all of their news from Shoutmouth.
• Sophistication : While some official music artist websites are technologically sophisticated, offering forums, networking and other worthwhile features, the majority of artist and fan websites have limited usability, functionality and networking ability. In fact, this deficiency has lead to the success of MusicToday, which provides front and back-end technology to power artist websites.

Specifically, MusicToday offers web design and hosting, develops sophisticated online stores, builds online fan clubs and offers web ticketing among other services to select top music artists such as Dave Matthews Band, Christina Aguilera, Kenny Chesney, Britney Spears and Usher. While offering sophisticated tools for select music artist websites, MusicToday offers little to no music news nor advanced social networking functions. For instance, the official Dave Matthews Band website offers less than one news story per month.

F. Direct Competitors: Community-Based Music News Sites

Shoutmouth’s direct competitors are other music news websites that have social or community features that allow users to join the site, submit articles, comment on articles, create public profiles and/or communicate with other members. Shoutmouth has identified one significant player who offers this service, AbsolutePunk.net.

AbsolutePunk.net has done a good job of building a user base (the site claims 125,000+ registered members and nearly 500,000 un-registered members). In addition, the user base is very active — the average story on their site receives approximately 20 comments. AbsolutePunk.net offers music news, reviews, pictures and interviews among other features.

On the negative side, AbsolutePunk.net’s articles are generally posted by one staff writer (as opposed to Shoutmouth’s five writers), most articles are simply one sentence posts rather than full articles, and no attempt seems to have been made to cover all news stories. In addition, the site only covers the punk music genre. Although “punk” is broadly defined on the site, the site doesn’t cater to genres such as R&B, rap and country among others, failing to satisfy the broader market.

AbsolutePunk.net is owned by Indieclick, a Los Angeles-based media company. According to the AbsolutePunk.net website, the site:

• Has developed a loyal (72% return rate) reader base
• 5,182,147 Posts
• 163,535 Threads
• 126,448 Members
• 1,711 Artist Profiles
• 20,774 Multimedia Files
• Approx 76,000 visits per day.
• Approx 276,000 pageviews per day.

Shoutmouth’s Competitive Advantage

In addition to being the first to fill the untapped market void for comprehensive music news, Shoutmouth’s competitive advantage in the market primarily includes the following:

Online Marketing Sophistication

Content Development Experience and Expertise

Shoutmouth’s team, primarily team members DL and PF, has operated an affiliate marketing business focusing on music for the past four years. Affiliate marketing is defined as a system of revenue sharing between one site (the affiliate) which features an ad or content designed to drive traffic to another site (the merchant). The affiliate receives a fee based on traffic to the merchant which converts to sales.

Our affiliate business has focused on connecting music fans, primarily aged 13 to 30, with music offers such as iPods and ringtones. Over the past two years, we have successful sold affiliated offers to over 500,000 customers. We have become a significant online advertiser, receiving Google’s “over 1 million leads” award, and are recognized as a major player among the top affiliate networks.

It is important to note that affiliate marketing success has been credited with part of MySpace’s success. This is because effective affiliate marketers understand how to drive and convert on Internet traffic.

Shoutmouth will employ its affiliate marketing techniques to drive traffic to Shoutmouth.com and enroll members. We will utilize technologies and proprietary techniques that allow us to monitor multiple metrics such as the cost per visitor, cost per member sign-up, etc., so that we can set and maintain profitable metrics.

Another venture that Shoutmouth team members, primarily PK and DL, launched was the development of over 3,000 niche websites. To create the content for these websites, we employed a virtual work force of over 90 researchers in India and 30 writers and editors in the US.

This experience taught us how to manage a large workforce, train writers to improve content quality and motivate a large group of people. These skill sets will be critical in allowing Shoutmouth to grow the content of the site, as developed by both staff and members, while maintaining quality standards.

IV. Marketing Plan

Shoutmouth’s marketing plan includes the following:

Online Advertising : Shoutmouth will initiate pay-per-click advertising campaigns on Google and Yahoo! in order to inexpensively drive traffic to the site. Specifically, Shoutmouth believes it can drive qualified traffic to the site for 20 cents per visitor and achieve a 20% member conversion rate, thus generating members at a cost of $1.00 per member.

Keys to Shoutmouth’s success in achieving this metric include:

• Conducting thorough keyword research and advertising on appropriate keywords and keyword groups
• Creating advertising text that maximizes click through rates
• Creating landing pages that maximize conversions while maintaining the highest Google AdWords quality score possible
• Closely monitoring conversions to quickly stop and/or modify unprofitable campaigns
• Getting individuals to enter their email address to join the newsletter is much easier than getting them to join a site where they have to create a username, select a password, etc. As such, step one will be to get visitors to sign up for artist-specific newsletters.
• Once on the newsletter distribution list, members will constantly receive messages (embedded in their daily newsletter) regarding the benefits of participating more on Shoutmouth.
• Active Shoutmouth Membership: the constant reminders regarding Shoutmouth’s value proposition in the daily newsletters will influence members to participate more actively on the site (e.g., customize their profile, visit the site more often, etc.).

Invite-A-Friend : Shoutmouth is in the process of creating an aggressive invite-a-friend/member referral program. In doing so, we are following the lead of social movie community, Flixster, which grew to 5 million members within 10 months. It did this by encouraging members, during their initial registration process, to upload and send an invitation to multiple contacts in their email address books. The technology to develop this process is fairly complex and we expect to be completed with and to rollout this program in June 2007.

Direct Email Marketing : Shoutmouth will directly contact bloggers and prominent music fans we find online to tell them about Shoutmouth, encourage them to join, and encourage them to write about Shoutmouth on their blogs and online journals .

Creating/Distributing Buzzworthy/Viral Content : Shoutmouth plans to have several buzzworthy/viral articles (i.e., content that people would want to email to their friends since it is funny, interesting, etc.) on the site each day. With a single click, visitors will be able to send these articles to social bookmarking sites such as Digg.com or Fark.com, where these articles could receive widespread attention. In addition to our traditional news stories, Shoutmouth will also periodically create special reports/features in order to satisfy our members and visitors and to try to get widespread exposure.

An example of the power of such buzzworthy content, Shoutmouth has already succeeded in having two stories accepted by Fark and Digg, which have brought in over 50,000 unique visitors.

Super Fans/Street Team Development : Shoutmouth also plans to recruit “super fans.” Super fans are individuals who are passionate about a certain music artist/band and actively contribute articles and/or comments on Shoutmouth. We will recruit these fans, reward them with status (e.g., adding a gold Shoutmouth headphones image to their profile page) and encourage them to more aggressively promote the site by:

• Submitting more news to Shoutmouth
• Commenting on more articles on Shoutmouth
• Growing the Shoutmouth community around their favorite artist(s) by actively recruiting new members to join the site (such as actively posting Shoutmouth-related comments on their MySpace pages, on other music forums, etc.)

Public Relations : Upon financing, Shoutmouth will hire a public relations firm to help us get mentions in media sources ranging from magazines, newspapers, radio, television and blogs. To date, we have developed and issued press releases via Billboard Publicity Wire which have been syndicated throughout the web. An effective PR firm will enable Shoutmouth to quickly reach a wide audience.

Widgets : Shoutmouth will create artist-specific and genre-specific music news widgets. For example, our U2 widget (see example on right) would include all of the recent U2 articles published on Shoutmouth. The widget can easily be placed on MySpace pages, blogs, etc. Each story title in the widget links to the full article on Shoutmouth.

Shoutmouth has great expectations for our widget. To begin, no such widget currently exists as there is no one place to get comprehensive news for specific music artists. Secondly, each time someone places a Shoutmouth widget on their blog or social networking page, it will effectively market Shoutmouth to a wide audience at zero cost to us.

V. Technology/Site Development Plan

This section provides a brief roadmap of the initial and future functionality of Shoutmouth.

Initial Site Functionality

The initial Shoutmouth website will include the following features:

• Ability to submit and comment on news stories
• Ability to suggest new music artists to add to the site
• Ability to create user profiles
• Ability to receive customized news and email alerts
• Articles categorized by artist and core genre (e.g., Rock, Rap, Pop, etc.)
• Music artist sections which includes News, Bio and Fans

Future Site Functionality

Shoutmouth will use news and basic functionality as the platform though which we will build a thriving music community. After initial launch, the Shoutmouth technology team will work on incorporating additional features such as:

• Ability to message other members via the site (e.g., members will have an Inbox on the site)
• Event calendars: members will receive online calendars. With the click of a button, the member will be able to add tour dates of their favorite artists/bands to their calendar.
• Articles also categorized by sub-genre (e.g., Alternative Rock, West Coast Rap, etc.)
• Music artist sections to also include videos, audio files, photo galleries, reviews and event calendars to which members can upload files and vote on top content.
• Forums and member blogs
• Music compatibility testing (suggestions on song/artists members might like)
• Trivia quizzes
• Music playlists

VI. Financial Plan

Revenue Model

During the first six months, Shoutmouth will not generate any revenues as it will not sell advertising space nor offer products for sale. This decision has been made to spur the growth of the Shoutmouth community. By initially positioning Shoutmouth more as a non-profit, for-the-people-by-the-people venture, members will be more prone to promote the site and invite their friends than if the site looks too commercial.

Starting in September 2007, Shoutmouth will primarily generate revenues from selling advertising space. As technologies (such as the Snocap music widget) evolve that allow us to seamlessly integrate music sampling and purchasing on our site, sales of downloadable music are also expected to be a significant revenue source. To a lesser extent, we may sell other music-related items such as ringtones, concert tickets, and apparel.

Funding To Date

To date, Shoutmouth’s founders have invested $500,000 in Shoutmouth, with which we have accomplished the following:

• Built the site’s core technology
• Hired and trained our core staff (we currently maintain an 11-person full-time team)
• Populated the website with content (over 10,000 articles and 1,200 artist bios)
• Generated brand awareness among music fans, including driving 50,000 unique visitors in March, 100,000 unique visitors in April, and 200,000 unique visitors in May 2007.

Funding Requirements/Use of Funds

Shoutmouth is currently seeking $3 million to provide funding for the next 24 months. At this point, the site will be profitable and can grow organically, or additional capital may be sought to more aggressively expand our member base.

The capital will be used as follows:

• Execution of Marketing plan : in order for Shoutmouth to grow its visitor and member base, we need to invest dollars in online advertising and public relations. With regards to online advertising, we are confident that we can enroll members at a cost of $1 per member, which is a fraction of the value of the members to an acquirer (minimum $25 per member), thus providing a significant return on our marketing investments.
• Execution of Technology plan : in order to build a thriving community, Shoutmouth needs to offer its visitors a “stickier” website and enhanced features. We currently maintain a vast “wish list” of features, such as members uploading and rating pictures and videos, trivia quizzes, and member-to-member messaging, that will significantly improve the site’s functionality and value proposition.
• Staffing : In order to reach our goals, we will have to hire additional technical and operations personnel.

Financial Projections

Below is an overview of Shoutmouth’s Financial Projections for the next three years. Please see the Appendix for the full financial projections and key assumptions.

Exit Strategy / Valuation Metric

Shoutmouth’s most likely exit strategy is to be acquired by a traditional music website or property (e.g., Viacom/MTV, Ticketmaster, Rolling Stone), an entertainment/media conglomerate (e.g., Yahoo!, IAC/InterActiveCorp, NBC), or a large social networking site (e.g., News Corp/MySpace).

This strategy is supported by the significant M&A activity in the social networking market, which includes the following transactions over the past 24 months:

Regarding valuation, below are the estimated valuations of social networking companies on a per member basis upon exit:

• Del.icio.us: $50 – $100 per member
• MySpace: $25 per member
• Xing (business social network): $137 per member at IPO in 10/06
• Flickr: $56 – $130 per member
• Grouper: $130 per member

Based on this data, not only are social networking sites a promising investment, but sites that can acquire members for less than $25 each (a conservative valuation estimate based on the figures above), should earn a solid return on investment. As discussed above, Shoutmouth’s goal is to acquire members for no more than $1 each.

In addition, per the membership projections above, Shoutmouth’s valuation at the end of 2009, at a $25 valuation per member, is expected to be $239 million. A more conservative, using a 24.4 time EBITDA multiple (the average multiple of tech M&A deals in 2006 according to The M&A Advisor), yields a $121 million valuation in 2009.

Shoutmouth’s founding team includes entrepreneurs and managers with a track record of success and a history of successfully working together.

Management Team

DL, Co-Founder and CEO

D has a history of successfully launching and growing businesses of all sizes. As president and co-founder of an entrepreneurial services firm., D has personally assisted in the launch and development of over 100 ventures.

Over the past three years, D founded and has managed The Kisco Group which includes an affiliate marketing division (2006 revenues exceeded $3 million), a search engine optimization business which includes a network of 3,000 websites (2006 revenues exceeded $500,000) and an e-commerce business (which includes TopPayingKeywords.com and ShowerHeadsEtc.com).

D earned his Bachelors degree from the University of South Carolina.

PK, Co-Founder and Vice President of Operations

For the past two years, P has managed The Kisco Group’s search engine optimization business where he hired, trained and managed nearly 100 employees and a dozen outside firms. During this time, P has honed his management skills with regards to content development, marketing and operations.

P has had a passion for music since childhood and has been a semi-professional drummer for the past 15 years.

P earned his Bachelors of Arts degree, magna cum laude, from Clemson University.

PF, Co-Founder and Vice President of Technology

For the past year, P has managed The Kisco Group’s affiliate marketing business. In addition to setting up and managing widespread marketing campaigns, P has developed sophisticated analytic techniques to precisely analyze web traffic in order to optimize profitability.

Since August 2006, P has shifted his efforts and leveraged his technology skills in developing the Shoutmouth website. P has been instrumental in selecting the Content Management Platform upon which Shoutmouth is built, and finding and managing the technology team.

P earned his Bachelor of Arts degree from Swarthmore College.

AB, Marketing Manager

A’s background in music includes being a singer, songwriter, guitarist and producer. He has also worked on the marketing side of music, having marketed Veritas Records through the development and distribution of promotional materials.

A’s career also includes psychological research and administration, having served as a Research Assistant with the Interpersonal Perception And Communication Laboratory in Cambridge, MA.

A earned his Bachelor of Arts degree in Psychology from Ohio State University.

M, Lead Technology Developer

M is an experienced web programmer with expertise in web design, application development and database development among others.

M’s work experience includes serving as a Senior Developer at Spheres. M has also engaged in multiple, long term freelance projects including serving as a Database Developer Consultant with The Penn Group and a Web Developer Consultant with Volution Media Group and Allied Online Consulting Group.

M earned his Bachelors degree in Computer Science with a minor in Cognitive Science from Rutgers University.

Content Development Team

Shoutmouth’s writing team, managed by PK, includes the following members:

• JS, Editorial Manager: former content manager and copywriter for Scholastic Inc. and Promotions.com.
• TZ: former music intern (Virgin Records and WRRV) and author of the blog, The Tom Z Show .
• ML: former assistant editor for Adventure Publishing; author of the blog Certified Gangsta ; and former editor-in-chief of Fordham University’s newspaper The Paper .
• SB: former staff writer for Paste Magazine , The Clarion Ledger , and Nightclub and Bar Magazine among others.
• CSJ: former editorial intern for Rolling Stone and Editorial Assistant for Psychology Today .

Outsourced Technology Team

Shoutmouth works very closely with 2skies, a technology firm based in Australia with staff in Australia and the United States. 2skies is run by JDN, one of the co-founding developers of XE, the platform upon which Shoutmouth is built.

XE is an extensible, Open Source web application framework written in PHP and licensed under the GNU General Public License. XE delivers the requisite infrastructure and tools to create custom web applications that include fully dynamic multi-platform Content Management Solutions (CMS).

VIII. Appendix: Shoutmouth Financial Projections   3-Year Income Statement

3-Year Balance Sheet

As of December 31

3-Year Cash Flow Statement

What is a Business Plan? Definition, Tips, and Templates

Published: June 28, 2024

Years ago, I had an idea to launch a line of region-specific board games. I knew there was a market for games that celebrated local culture and heritage. I was so excited about the concept and couldn't wait to get started.

But my idea never took off. Why? Because I didn‘t have a plan. I lacked direction, missed opportunities, and ultimately, the venture never got off the ground.

And that’s exactly why a business plan is important. It cements your vision, gives you clarity, and outlines your next step.

In this post, I‘ll explain what a business plan is, the reasons why you’d need one, identify different types of business plans, and what you should include in yours.

Table of Contents

What is a business plan?

What is a business plan used for.

• Business Plan Template [Download Now]

Purposes of a Business Plan

What does a business plan need to include, types of business plans.

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A business plan is a comprehensive document that outlines a company's goals, strategies, and financial projections. It provides a detailed description of the business, including its products or services, target market, competitive landscape, and marketing and sales strategies. The plan also includes a financial section that forecasts revenue, expenses, and cash flow, as well as a funding request if the business is seeking investment.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

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5. Competitive Analysis

Just about every industry has more than one player in the market. Even if your business owns the majority of the market share in your industry or your business concept is the first of its kind, you still have competition.

In the competitive analysis section, you’ll take an objective look at the industry landscape to determine where your business fits. A SWOT analysis is an organized way to format this section.

6. Target Market

Who are the core customers of your business and why? The target market portion of your business plan outlines this in detail. The target market should explain the demographics, psychographics, behavioristics, and geographics of the ideal customer.

7. Marketing Plan

Marketing is expansive, and it’ll be tempting to cover every type of marketing possible, but a brief overview of how you’ll market your unique value proposition to your target audience, followed by a tactical plan, will suffice.

Think broadly and narrow down from there: Will you focus on a slow-and-steady play where you make an upfront investment in organic customer acquisition? Or will you generate lots of quick customers using a pay-to-play advertising strategy?

This kind of information should guide the marketing plan section of your business plan.

8. Financial Summary

Money doesn’t grow on trees. Even the most digital, sustainable businesses have expenses. Outlining a financial summary of where your business is currently and where you’d like it to be in the future will substantiate this section.

Consider including any monetary information that will give potential investors a glimpse into the financial health of your business. Assets, liabilities, expenses, debt, investments, revenue, and more are all useful additions here.

So, you’ve outlined some great goals, the business opportunity is valid, and the industry is ready for what you have to offer. Who’s responsible for turning all this high-level talk into results?

The “team” section of your business plan answers that question by providing an overview of the roles responsible for each goal.

Don’t worry if you don’t have every team member on board yet. Knowing what roles to hire for is helpful as you seek funding from investors.

10. Funding Requirements

Remember that one of the goals of a business plan is to secure funding from investors, so you’ll need to include funding requirements you’d like them to fulfill.

Considering that global funding fell 61% from 2021 to 2023 , it’s very important to be clear in this section. Include the amount your business needs, for what reasons, and for how long.

• Startup Business Plan
• Feasibility Business Plan
• Internal Business Plan
• Strategic Business Plan
• Business Acquisition Plan
• Business Repositioning Plan
• Expansion or Growth Business Plan

There’s no one size fits all business plan as there are several types of businesses in the market today. From startups with just one founder to historic household names that need to stay competitive, every type of business needs a business plan that’s tailored to its needs. Below are a few of the most common types of business plans.

For even more examples, check out these sample business plans to help you write your own .

1. Startup Business Plan

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

Written by: Chloe West

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

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

Ready to get started?

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

8-Step Process for Writing a Business Plan

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

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

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

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

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

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

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

We’re here to tell you that it is.

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

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

Reason #1: Set Realistic Goals and Milestones

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

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

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

Reason #2: Grow Your Business Faster

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

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

Reason #3: Minimize Risk

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

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

Reason #4: Secure Funding

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

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

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

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

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

Your executive summary should include:

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

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

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

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

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

Mission Statement

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

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

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

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

History or Overview

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

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

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

Your market analysis needs to look at things like:

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

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

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

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

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

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

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

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

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

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

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

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

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

Your financial plan should include at least five major sections:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

If you're pressed for time, Visme's AI business plan generator can churn out compelling business plans in minutes. Just input a detailed prompt, choose the design, and watch the tool generate your plan in a few seconds.

Template #1: Photography Business Plan Template

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

Template #2: Real Estate Business Plan Template

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

Template #3: Nonprofit Business Plan Template

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

Template #4: Restaurant Business Plan Template

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

Template #5: Fashion Business Plan Template

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

Template #6: Daycare Business Plan Template

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

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

Template #7: Consulting Business Plan Template

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

Template #8: Coffee Shop Business Plan Template

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

Template #9: SaaS Business Plan Template

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

Template #10: Small Business Plan Template

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

Template #11: Ecommerce Business Plan Template

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

Template #12: Startup Business Plan Template

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

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

Template #13: One-Page Business Plan Template

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

Template #14: Salon Business Plan Template

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

Create Your Own Business Plan Today

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

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About the Author

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

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Blog Business How to Write a Business Plan Outline [Examples + Templates] 

How to Write a Business Plan Outline [Examples + Templates] 

Written by: Letícia Fonseca Aug 11, 2023

When starting a business plan, the first hurdle is often getting started. And how do you avoid spending hours staring at a blank page? Start with a business plan outline. An outline helps provide clarity and direction, especially for important documents like a business plan.

I get that the idea of outlining a business plan can feel overwhelming, which is why I’ve gathered all the information you need to make it easier. Don’t worry, you’ve got this!

And if you’re seeking further assistance, a business plan maker and readily available business plan templates can offer valuable support in shaping your comprehensive plan.

Read on for answers to all your business plan outline questions or jump ahead for some handy templates. 

Click to jump ahead:

What is a business plan outline?

7 steps to writing a business plan outline, business plan outline examples.

• Writing tips to ace your outline 

What format should you choose for your business plan outline?

A business plan outline is the backbone of your business plan. It contains all the most important information you’ll want to expand on in your full-length plan. 

Think of it this way: your outline is a frame for your plan. It provides a high-level idea of what the final plan should look like, what it will include and how all the information will be organized. 

Why would you do this extra step? Beyond saving you from blank page syndrome, an outline ensures you don’t leave any essential information out of your plan — you can see all the most important points at a glance and quickly identify any content gaps. 

It also serves as a writing guide. Once you know all the sections you want in your plan, you just need to expand on them. Suddenly, you’re “filling in the blanks” as opposed to writing a plan from scratch!

Incidentally, using a business plan template like this one gives you a running head start, too: 

Perhaps most importantly, a business plan outline keeps you focused on the essential parts of your document. (Not to mention what matters most to stakeholders and investors.)  With an outline, you’ll spend less time worrying about structure or organization and more time perfecting the actual content of your document. 

If you’re looking for more general advice, you can read about  how to create a business plan here . But if you’re working on outlining your plan, stick with me.

Your business plan outline should include all the following sections. The level of detail you choose to go into will depend on your intentions for your plan (sharing with stakeholders vs. internal use), but you’ll want every section to be clear and to the point. 

1. Executive summary

The executive summary gives a high-level description of your company, product or service. This section should include a mission statement, your company description, your business’s primary goal, and the problem it aims to solve. You’ll want to state how your business can solve the problem and briefly explain what makes you stand out (your competitive advantage).

Having an executive summary is essential to selling your business to stakeholders , so it should be as clear and concise as possible. Summarize your business in a few sentences in a way that will hook the reader (or audience) and get them invested in what you have to say next. In other words, this is your elevator pitch.

2. Product and services description

This is where you should go into more detail about your product or service. Your product is the heart of your business, so it’s essential this section is easy to grasp. After all, if people don’t know what you’re selling, you’ll have a hard time keeping them engaged!

Expand on your description in the executive summary, going into detail about the problem your customers face and how your product/service will solve it. If you have various products or services, go through all of them in equal detail. 

3. Target market and/or Market analysis

A market analysis is crucial for placing your business in a larger context and showing investors you know your industry. This section should include market research on your prospective customer demographic including location, age range, goals and motivations. 

You can even  include detailed customer personas  as a visual aid — these are especially useful if you have several target demographics. You want to showcase your knowledge of your customer, who exactly you’re selling to and how you can fulfill their needs.

Be sure to include information on the overall target market for your product, including direct and indirect competitors and how your industry is performing. If your competitors have strengths you want to mimic or weaknesses you want to exploit, this is the place to record that information. 

4. Organization and management

You can think of this as a “meet the team” section — this is where you should go into depth on your business’s structure from management to legal and HR. If there are people bringing unique skills or experience to the table (I’m sure there are!), you should highlight them in this section. 

The goal here is to showcase why your team is the best to run your business. Investors want to know you’re unified, organized and reliable. This is also a potential opportunity to bring more humanity to your business plan and showcase the faces behind the ideas and product. 

5. Marketing and sales

Now that you’ve introduced your product and team, you need to explain how you’re going to sell it. Give a detailed explanation of your sales and marketing strategy, including pricing, timelines for launching your product and advertising.

This is a major section of your plan and can even live as a separate document for your marketing and sales teams. Here are some  marketing plan templates to help you get started .

Make sure you have research or analysis to back up your decisions — if you want to do paid ads on LinkedIn to advertise your product, include a brief explanation as to why that is the best channel for your business. 

6. Financial projections and funding request

The end of your plan is where you’ll look to the future and how you think your business will perform financially. Your financial plan should include results from your income statement, balance sheet and cash flow projections. 

State your funding requirements and what you need to realize the business. Be extremely clear about how you plan to use the funding and when you expect investors will see returns.

If you aren’t presenting to potential investors, you can skip this part, but it’s something to keep in mind should you seek funding in the future. Covering financial projections and the previous five components is essential at the stage of business formation to ensure everything goes smoothly moving forward.

7. Appendix

Any extra visual aids, receipts, paperwork or charts will live here. Anything that may be relevant to your plan should be included as reference e.g. your cash flow statement (or other financial statements). You can format your appendix in whatever way you think is best — as long as it’s easy for readers to find what they’re looking for, you’ve done your job!

Typically, the best way to start your outline is to list all these high-level sections. Then, you can add bullet points outlining what will go in each section and the resources you’ll need to write them. This should give you a solid starting point for your full-length plan.

Looking for a shortcut? Our  business plan templates  are basically outlines in a box! 

While your outline likely won’t go into as much detail, these templates are great examples of how to organize your sections.

Traditional format examples

A strong template can turn your long, dense business plan into an engaging, easy-to-read document. There are lots to choose from, but here are just a few ideas to inspire you… 

You can duplicate pages and use these styles for a traditional outline, or start with a lean outline as you build your business plan out over time:

Lean format examples

For lean format outlines, a simpler ‘ mind map ’ style is a good bet. With this style, you can get ideas down fast and quickly turn them into one or two-page plans. Plus, because they’re shorter, they’re easy to share with your team.

Writing tips to ace your business plan outline

Business plans are complex documents, so if you’re still not sure how to write your outline, don’t worry! Here are some helpful tips to keep in mind when drafting your business plan outline:

• Ask yourself why you’re writing an outline. Having a clear goal for your outline can help keep you on track as you write. Everything you include in your plan should contribute to your goal. If it doesn’t, it probably doesn’t need to be in there.
• Keep it clear and concise. Whether you’re writing a traditional or lean format business plan, your outline should be easy to understand. Choose your words wisely and avoid unnecessary preambles or padding language. The faster you get to the point, the easier your plan will be to read.
• Add visual aids. No one likes reading huge walls of text! Make room in your outline for visuals, data and charts. This keeps your audience engaged and helps those who are more visual learners. Psst,  infographics  are great for this.
• Make it collaborative. Have someone (or several someones) look it over before finalizing your outline. If you have an established marketing / sales / finance team, have them look it over too. Getting feedback at the outline stage can help you avoid rewrites and wasted time down the line.

If this is your first time writing a business plan outline, don’t be too hard on yourself. You might not get it 100% right on the first try, but with these tips and the key components listed above, you’ll have a strong foundation. Remember, done is better than perfect. 

Most business plans fit into one of two formats. 

The format you choose largely depends on three factors: (1) the stage of your business, (2) if you’re presenting the plan to investors and (3) what you want to achieve with your business plan. 

Let’s have a closer look at these two formats and why you might choose one over the other.

Traditional format

Traditional business plans  are typically long, detailed documents. In many cases, they take up to 50-60 pages, but it’s not uncommon to see plans spanning 100+ pages. 

Traditional plans are long because they cover  every aspect  of your business. They leave nothing out. You’ll find a traditional business plan template with sections like executive summary, company description, target market, market analysis, marketing plan, financial plan, and more. Basically: the more information the merrier.

This business plan template isn’t of a traditional format, but you could expand it into one by duplicating pages:

Due to their high level of detail, traditional formats are the best way to sell your business. They show you’re reliable and have a clear vision for your business’s future. 

If you’re planning on presenting your plan to investors and stakeholders, you’ll want to go with a traditional plan format. The more information you include, the fewer doubts and questions you’ll get when you present your plan, so don’t hold back. 

Traditional business plans require more detailed outlines before drafting since there’s a lot of information to cover. You’ll want to list all the sections and include bullet points describing what each section should cover. 

It’s also a good idea to include all external resources and visuals in your outline, so you don’t have to gather them later. 

Lean format

Lean business plan formats are high level and quick to write. They’re often only one or two pages. Similar to a  business plan infographic , they’re scannable and quick to digest, like this template: 

This format is often referred to as a “startup” format due to (you guessed it!) many startups using it. 

Lean business plans require less detailed outlines. You can include high-level sections and a few lines in each section covering the basics. Since the final plan will only be a page or two, you don’t need to over prepare. Nor will you need a ton of external resources. 

Lean plans don’t answer all the questions investors and stakeholders may ask, so if you go this route, make sure it’s the right choice for your business . Companies not yet ready to present to investors will typically use a lean/startup business plan format to get their rough plan on paper and share it internally with their management team. 

Here’s another example of a lean business plan format in the form of a financial plan: 

Create a winning business plan by starting with a detailed, actionable outline

The best way to learn is by doing. So go ahead, get started on your business plan outline. As you develop your plan, you’ll no doubt learn more about your business and what’s important for success along the way. 

A clean, compelling template is a great way to get a head start on your outline. After all, the sections are already separated and defined for you! 

Explore Venngage’s business plan templates  for one that suits your needs. Many are free to use and there are premium templates available for a small monthly fee. Happy outlining!

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

By Joe Weller | October 11, 2021

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

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

What Is a Business Plan?

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

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

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

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

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

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

Business Plan Steps

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

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

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

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

Do I Need a Simple or Detailed Plan?

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

How to Choose the Right Plan for Your Business

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

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

Is the Order of Your Business Plan Important?

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

The Difference Between Traditional and Lean Business Plans

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

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

How to Write a Business Plan Step by Step

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

Step 1: Executive Summary

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

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

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

Step 2: Description of Business

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

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

Step 3: Market Analysis

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

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

Step 4: Competitive Analysis

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

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

Step 5: Description of Organizational Management

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

Step 6: Description of Products or Services

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

Questions to answer in this section are as follows:

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

Step 7: Marketing Plan

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

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

Step 8: Sales Plan

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

Start by answering the following questions:

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

Step 9: Funding Details (or Request for Funding)

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

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

Step 10: Financial Projections

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

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

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

Business Plan Template

Download Business Plan Template

Microsoft Excel | Smartsheet

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

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

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

How to Write a Simple Business Plan

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

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

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

Simple Business Plan Template

Download Simple Business Plan Template

Microsoft Excel |  Microsoft Word | Adobe PDF  | Smartsheet

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

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

How to Write a Business Plan for a Lean Startup

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

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

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

Lean Business Plan Template for Startups

Download Lean Business Plan Template for Startups

Microsoft Word | Adobe PDF

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

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

How to Write a Business Plan for a Loan

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

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

Download free financial templates to support your business plan.

Tips for Writing a Business Plan

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

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

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

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

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

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

Resources for Writing a Business Plan

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

Additionally, you can use business plan software to house data, attach documentation, and share information with stakeholders. Popular options include LivePlan, Enloop, BizPlanner, PlanGuru, and iPlanner.

How a Business Plan Helps to Grow Your Business

A business plan — both the exercise of creating one and the document — can grow your business by helping you to refine your product, target audience, sales plan, identify opportunities, secure funding, and build new partnerships. 

Outside of these immediate returns, writing a business plan is a useful exercise in that it forces you to research the market, which prompts you to forge your unique value proposition and identify ways to beat the competition. Doing so will also help you build (and keep you accountable to) attainable financial and product milestones. And down the line, it will serve as a welcome guide as hurdles inevitably arise.

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When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

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Business Plan Example and Template

Learn how to create a business plan

What is a Business Plan?

A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing .

A business plan should follow a standard format and contain all the important business plan elements. Typically, it should present whatever information an investor or financial institution expects to see before providing financing to a business.

Contents of a Business Plan

A business plan should be structured in a way that it contains all the important information that investors are looking for. Here are the main sections of a business plan:

1. Title Page

The title page captures the legal information of the business, which includes the registered business name, physical address, phone number, email address, date, and the company logo.

2. Executive Summary

The executive summary is the most important section because it is the first section that investors and bankers see when they open the business plan. It provides a summary of the entire business plan. It should be written last to ensure that you don’t leave any details out. It must be short and to the point, and it should capture the reader’s attention. The executive summary should not exceed two pages.

3. Industry Overview

The industry overview section provides information about the specific industry that the business operates in. Some of the information provided in this section includes major competitors, industry trends, and estimated revenues. It also shows the company’s position in the industry and how it will compete in the market against other major players.

4. Market Analysis and Competition

The market analysis section details the target market for the company’s product offerings. This section confirms that the company understands the market and that it has already analyzed the existing market to determine that there is adequate demand to support its proposed business model.

Market analysis includes information about the target market’s demographics , geographical location, consumer behavior, and market needs. The company can present numbers and sources to give an overview of the target market size.

A business can choose to consolidate the market analysis and competition analysis into one section or present them as two separate sections.

5. Sales and Marketing Plan

The sales and marketing plan details how the company plans to sell its products to the target market. It attempts to present the business’s unique selling proposition and the channels it will use to sell its goods and services. It details the company’s advertising and promotion activities, pricing strategy, sales and distribution methods, and after-sales support.

6. Management Plan

The management plan provides an outline of the company’s legal structure, its management team, and internal and external human resource requirements. It should list the number of employees that will be needed and the remuneration to be paid to each of the employees.

Any external professionals, such as lawyers, valuers, architects, and consultants, that the company will need should also be included. If the company intends to use the business plan to source funding from investors, it should list the members of the executive team, as well as the members of the advisory board.

7. Operating Plan

The operating plan provides an overview of the company’s physical requirements, such as office space, machinery, labor, supplies, and inventory . For a business that requires custom warehouses and specialized equipment, the operating plan will be more detailed, as compared to, say, a home-based consulting business. If the business plan is for a manufacturing company, it will include information on raw material requirements and the supply chain.

8. Financial Plan

The financial plan is an important section that will often determine whether the business will obtain required financing from financial institutions, investors, or venture capitalists. It should demonstrate that the proposed business is viable and will return enough revenues to be able to meet its financial obligations. Some of the information contained in the financial plan includes a projected income statement , balance sheet, and cash flow.

9. Appendices and Exhibits

The appendices and exhibits part is the last section of a business plan. It includes any additional information that banks and investors may be interested in or that adds credibility to the business. Some of the information that may be included in the appendices section includes office/building plans, detailed market research , products/services offering information, marketing brochures, and credit histories of the promoters.

Business Plan Template

Here is a basic template that any business can use when developing its business plan:

Section 1: Executive Summary

• Present the company’s mission.
• Describe the company’s product and/or service offerings.
• Give a summary of the target market and its demographics.
• Summarize the industry competition and how the company will capture a share of the available market.
• Give a summary of the operational plan, such as inventory, office and labor, and equipment requirements.

Section 2: Industry Overview

• Describe the company’s position in the industry.
• Describe the existing competition and the major players in the industry.
• Provide information about the industry that the business will operate in, estimated revenues, industry trends, government influences, as well as the demographics of the target market.

Section 3: Market Analysis and Competition

• Define your target market, their needs, and their geographical location.
• Describe the size of the market, the units of the company’s products that potential customers may buy, and the market changes that may occur due to overall economic changes.
• Give an overview of the estimated sales volume vis-à-vis what competitors sell.
• Give a plan on how the company plans to combat the existing competition to gain and retain market share.

Section 4: Sales and Marketing Plan

• Describe the products that the company will offer for sale and its unique selling proposition.
• List the different advertising platforms that the business will use to get its message to customers.
• Describe how the business plans to price its products in a way that allows it to make a profit.
• Give details on how the company’s products will be distributed to the target market and the shipping method.

Section 5: Management Plan

• Describe the organizational structure of the company.
• List the owners of the company and their ownership percentages.
• List the key executives, their roles, and remuneration.
• List any internal and external professionals that the company plans to hire, and how they will be compensated.
• Include a list of the members of the advisory board, if available.

Section 6: Operating Plan

• Describe the location of the business, including office and warehouse requirements.
• Describe the labor requirement of the company. Outline the number of staff that the company needs, their roles, skills training needed, and employee tenures (full-time or part-time).
• Describe the manufacturing process, and the time it will take to produce one unit of a product.
• Describe the equipment and machinery requirements, and if the company will lease or purchase equipment and machinery, and the related costs that the company estimates it will incur.
• Provide a list of raw material requirements, how they will be sourced, and the main suppliers that will supply the required inputs.

Section 7: Financial Plan

• Describe the financial projections of the company, by including the projected income statement, projected cash flow statement, and the balance sheet projection.

Section 8: Appendices and Exhibits

• Quotes of building and machinery leases
• Proposed office and warehouse plan
• Market research and a summary of the target market
• Credit information of the owners
• List of product and/or services

Related Readings

Thank you for reading CFI’s guide to Business Plans. To keep learning and advancing your career, the following CFI resources will be helpful:

• Corporate Structure
• Three Financial Statements
• Business Model Canvas Examples
• See all management & strategy resources
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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, 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.

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A business plan is a document that outlines a company's goals and the strategies to achieve them. It's valuable for both startups and established companies. For startups, a well-crafted business plan is crucial for attracting potential lenders and investors. Established businesses use business plans to stay on track and aligned with their growth objectives. This article will explain the key components of an effective business plan and guidance on how to write one.

Key Takeaways

• A business plan is a document detailing a company's business activities and strategies for achieving its goals.
• Startup companies use business plans to launch their venture and to attract outside investors.
• For established companies, a business plan helps keep the executive team focused on short- and long-term objectives.
• There's no single required format for a business plan, but certain key elements are essential for most companies.

Investopedia / Ryan Oakley

Any new business should have a business plan in place before beginning operations. Banks and venture capital firms often want to see a business plan before considering making a loan or providing capital to new businesses.

Even if a company doesn't need additional funding, having a business plan helps it stay focused on its goals. Research from the University of Oregon shows that businesses with a plan are significantly more likely to secure funding than those without one. Moreover, companies with a business plan grow 30% faster than those that don't plan. According to a Harvard Business Review article, entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don't.

A business plan should ideally be reviewed and updated periodically to reflect achieved goals or changes in direction. An established business moving in a new direction might even create an entirely new plan.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. It allows for careful consideration of ideas before significant investment, highlights potential obstacles to success, and provides a tool for seeking objective feedback from trusted outsiders. A business plan may also help ensure that a company’s executive team remains aligned on strategic action items and priorities.

While business plans vary widely, even among competitors in the same industry, they often share basic elements detailed below.

A well-crafted business plan is essential for attracting investors and guiding a company's strategic growth. It should address market needs and investor requirements and provide clear financial projections.

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, gathering the basic information into a 15- to 25-page document is best. Any additional crucial elements, such as patent applications, can be referenced in the main document and included as appendices.

Common elements in many business plans include:

• 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 : Describe the products and services the company offers or plans to introduce. Include details on pricing, product lifespan, and unique consumer benefits. Mention production and manufacturing processes, relevant patents , proprietary technology , and research and development (R&D) information.
• Market analysis : Explain the current state of the industry and the competition. Detail where the company fits in, the types of customers it plans to target, and how it plans to capture market share from competitors.
• Marketing strategy : Outline the company's plans to attract and retain customers, including anticipated advertising and marketing campaigns. Describe the distribution channels that will be used to deliver products or services to consumers.
• Financial plans and projections : Established businesses should include financial statements, balance sheets, and other relevant financial information. New businesses should provide financial targets and estimates for the first few years. This section may also include any funding requests.

Investors want to see a clear exit strategy, expected returns, and a timeline for cashing out. It's likely a good idea to provide five-year profitability forecasts and realistic financial estimates.

2 Types of Business Plans

Business plans can vary in format, often categorized into traditional and lean startup plans. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These are detailed and lengthy, requiring more effort to create but offering comprehensive information that can be persuasive to potential investors.
• Lean startup business plans : These are concise, sometimes just one page, and focus on key elements. While they save time, companies should be ready to provide additional details if requested by investors or lenders.

Why Do Business Plans Fail?

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

How Often Should a Business Plan Be Updated?

How frequently a business plan needs to be revised will depend on its nature. Updating your business plan is crucial due to changes in external factors (market trends, competition, and regulations) and internal developments (like employee growth and new products). While 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 ideal for quickly explaining a business, especially for new companies that don't have much information yet. Key sections may include a value proposition , major activities and advantages, resources (staff, intellectual property, and capital), partnerships, customer segments, and revenue sources.

A well-crafted business plan is crucial for any company, whether it's a startup looking for investment or an established business wanting to stay on course. It outlines goals and strategies, boosting a company's chances of securing funding and achieving growth.

As your business and the market change, update your business plan regularly. This keeps it relevant and aligned with your current goals and conditions. Think of your business plan as a living document that evolves with your company, not something carved in stone.

University of Oregon Department of Economics. " Evaluation of the Effectiveness of Business Planning Using Palo Alto's Business Plan Pro ." Eason Ding & Tim Hursey.

Bplans. " Do You Need a Business Plan? Scientific Research Says Yes ."

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

Harvard Business Review. " How to Write a Winning Business Plan ."

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

SCORE. " When and Why Should You Review Your Business Plan? "

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How to Write the Perfect Business Plan: A Comprehensive Guide

Thinking of starting a business here's the best step-by-step template for writing the perfect business plan when creating your startup..

Maybe you think you don't need a step-by-step guide to writing a great business plan . Maybe you think you don't need a template for writing a business plan. After all, some entrepreneurs succeed without writing a business plan. With great timing, solid business skills, entrepreneurial drive, and a little luck , some founders build thriving businesses without creating even an  informal business plan . 

But the odds are greater that those entrepreneurs will fail.

Does a business plan make startup success inevitable? Absolutely not. But great planning often means the difference between success and failure. Where your entrepreneurial dreams are concerned, you should do everything possible to set the stage for success.

And that's why a great business plan is one that helps you  succeed .

The following is a comprehensive guide to creating a great business plan. We'll start with an overview of key concepts. Then we'll look at each section of a typical business plan:

Executive Summary

Overview and objectives, products and services, market opportunities, sales and marketing.

• Competitive Analysis

Management Team

Financial analysis.

So first let's gain a little perspective on why you need a business plan.

Key Concepts

Many business plans are fantasies. That's because many aspiring entrepreneurs see a business plan as simply a tool--filled with strategies and projections and hyperbole--that will convince lenders or investors the business makes sense.

That's a huge mistake.

First and foremost, your business plan should convince  you  that your idea makes sense--because your time, your money, and your effort are on the line.

So a solid business plan should be a blueprint for a successful business . It should flesh out strategic plans, develop marketing and sales plans, create the foundation for smooth operations, and maybe--just maybe--persuade a lender or investor to jump on board.

For many entrepreneurs, developing a business plan is the first step in the process of deciding whether to actually start a business. Determining if an idea fails on paper can help a prospective founder avoid wasting time and money on a business with no realistic hope of success.

So, at a minimum, your plan should:

• Be as objective and logical as possible. What may have seemed like a good idea for a business can, after some thought and analysis, prove not viable because of heavy competition, insufficient funding, or a nonexistent market. (Sometimes even the best ideas are simply ahead of their time.)
• Serve as a guide to the business's operations for the first months and sometimes years, creating a blueprint for company leaders to follow.
• Communicate the company's purpose and vision, describe management responsibilities, detail personnel requirements, provide an overview of marketing plans, and evaluate current and future competition in the marketplace.
• Create the foundation of a financing proposal for investors and lenders to use to evaluate the company.

A good business plan delves into each of the above categories, but it should also accomplish other objectives. Most of all, a good business plan is  convincing . It proves a case. It provides concrete, factual evidence showing your idea for a business is in fact sound and reasonable and has every chance of success.

Who  must  your business plan convince?

First and foremost, your business plan should convince  you  that your idea for a business is not just a dream but can be a viable reality. Entrepreneurs are by nature confident, positive, can-do people. After you objectively evaluate your capital needs, products or services, competition, marketing plans, and potential to make a profit, you'll have a much better grasp on your chances for success.

And if you're not convinced, fine: Take a step back and refine your ideas and your plans.

Who  can  your business plan convince?

1. Potential sources of financing.   If you need seed money from a bank or friends and relatives, your business plan can help you make a great case. Financial statements can show where you have been. Financial projections describe where you plan to go.

Your business plan shows how you will get there. Lending naturally involves risk, and a great business plan can help lenders understand and quantity that risk, increasing your chances for approval.

2. Potential partners and investors. Where friends and family are concerned, sharing your business plan may not be necessary (although it certainly could help).

Other investors--including angel investors or venture capitalists--generally require a business plan in order to evaluate your business.

3. Skilled employees . When you need to attract talent, you need  something  to show prospective employees since you're still in the startup phase. Early on, your business is more of an idea than a reality, so your business plan can help prospective employees understand your goals--and, more important, their place in helping you achieve those goals.

4. Potential joint ventures. Joint ventures are like partnerships between two companies. A joint venture is a formal agreement to share the work--and share the revenue and profit. As a new company, you will likely be an unknown quantity in your market. Setting up a joint venture with an established partner could make all the difference in getting your business off the ground.

But above all, your business plan should convince  you  that it makes sense to move forward.

As you map out your plan, you may discover issues or challenges you had not anticipated.

Maybe the market isn't as large as you thought. Maybe, after evaluating the competition, you realize your plan to be the low-cost provider isn't feasible since the profit margins will be too low to cover your costs.

Or you might realize the fundamental idea for your business is sound, but how you implement that idea should change. Maybe establishing a storefront for your operation isn't as cost-effective as taking your products directly to customers--not only will your operating costs be lower, but you can charge a premium since you provide additional customer convenience.

Think of it this way. Successful businesses do not remain static. They learn from mistakes, and adapt and react to changes: changes in the economy, the marketplace, their customers, their products and services, etc. Successful businesses identify opportunities and challenges and react accordingly.

Creating a business plan lets you spot opportunities and challenges without risk. Use your plan to dip your toe in the business water. It's the perfect way to review and revise your ideas and concepts before you ever spend a penny.

Many people see writing a business plan as a "necessary evil" required to attract financing or investors. Instead, see your plan as a no-cost way to explore the viability of your potential business and avoid costly mistakes.

Now let's look at the first section of your business plan: The Executive Summary.

The Executive Summary is a brief outline of the company's purpose and goals. While it can be tough to fit on one or two pages, a good Summary includes:

• A brief description of products and services
• A summary of objectives
• A solid description of the market
• A high-level justification for viability (including a quick look at your competition and your competitive advantage)
• A snapshot of growth potential
• An overview of funding requirements

I know that seems like a lot, and that's why it's so important you get it right. The Executive Summary is often the make-or-break section of your business plan.

A great business solves customer problems. If your Summary cannot clearly describe, in one or two pages, how your business will solve a particular problem and make a profit, then it's very possible the opportunity does not exist--or your plan to take advantage of a genuine opportunity is not well developed.

So think of it as a snapshot of your business plan. Don't try to "hype" your business--focus on helping a busy reader get a great feel for what you plan to do, how you plan to do it, and how you will succeed.

Since a business plan should above all help you start and grow your business, your Executive Summary should first and foremost help you do the following.

1. Refine and tighten your concept.

Think of it as a written elevator pitch  (with more detail, of course). Your Summary describes the highlights of your plan, includes only the most critical points, and leaves out less important issues and factors.

As you develop your Summary, you will naturally focus on the issues that contribute most to potential success. If your concept is too fuzzy, too broad, or too complicated, go back and start again. Most great businesses can be described in several sentences, not several pages.

2. Determine your priorities.

Your business plan walks the reader through your plan. What ranks high in terms of importance? Product development? Research? Acquiring the right location? Creating strategic partnerships?

Your Summary can serve as a guide to writing the rest of your plan.

3. Make the rest of the process easy.

Once your Summary is complete, you can use it as an outline for the rest of your plan. Simply flesh out the highlights with more detail.

Then work to accomplish your secondary objective by focusing on your readers. Even though you may be creating a business plan solely for your own purposes, at some point you may decide to seek financing or to bring on other investors, so make sure your Summary meets their needs as well. Work hard to set the stage for the rest of the plan. Let your excitement for your idea and your business shine through.

In short, make readers want to turn the page and keep reading. Just make sure your sizzle meets your steak by providing clear, factual descriptions.

How? The following is how an Executive Summary for a bicycle rental store might read.

Introduction

Blue Mountain Cycle Rentals will offer road and mountain bike rentals in a strategic location directly adjacent to an entrance to the George Washington National Forest. Our primary strategy is to develop Blue Mountain Cycle Rentals as the most convenient and cost-effective rental alternative for the thousands of visitors who flock to the area each year.

Once underway, we will expand our scope and take advantage of high-margin new equipment sales and leverage our existing labor force to sell and service those products. Within three years we intend to create the area's premier destination for cycling enthusiasts.

Company and Management

Blue Mountain Cycle Rentals will be located at 321 Mountain Drive, a location providing extremely high visibility as well as direct entry and exit from a primary national park access road. The owner of the company, Marty Cycle, has over 20 years experience in the bicycle business, having served as a product manager for Acme Cycles as well as the general manager of Epic Cycling.

Because of his extensive industry contacts, initial equipment inventory will be purchased at significant discounts from OEM suppliers as well by sourcing excess inventory from shops around the country.

Because of the somewhat seasonal nature of the business, part-time employees will be hired to handle spikes in demand. Those employees will be attracted through competitive wages as well as discounts products and services.

460,000 people visited the George Washington National Forest during the last 12 months. While the outdoor tourism industry as a whole is flat, the park expects its number of visitors to grow over the next few years.

• The economic outlook indicates fewer VA, WV, NC, and MD cycling enthusiasts will travel outside the region
• The park has added a camping and lodging facilities that should attract an increased number of visitors
• The park has opened up additional areas for trail exploration and construction, ensuring a greater number of single-track options and therefore a greater number of visitors

The market potential inherent in those visitors is substantial. According to third-party research data, approximately 30 percent of all cyclists would rather rent than transport their own bicycles, especially those who are visiting the area for reasons other than cycling.

Competitive Advantages

The cycling shops located in Harrisonburg, VA, are direct and established competitors. Our two primary competitive advantages will be location and lower costs.

Our location is also a key disadvantage where non-park rentals are concerned. We will overcome that issue by establishing a satellite location in Harrisonburg for enthusiasts who wish to rent bicycles to use in town or on other local trails.

We will also use online tools to better engage customers, allowing them to reserve and pay online as well as create individual profiles regarding sizes, preferences, and special needs.

Financial Projections

Blue Mountain Cycle Rentals expects to earn a modest profit by year two based on projected sales. Our projections are based on the following key assumptions:

• Initial growth will be moderate as we establish awareness in the market
• Initial equipment purchases will stay in service for an average of three to four years; after two years we will begin investing in "new" equipment to replace damaged or obsolete equipment
• Marketing costs will not exceed 14 percent of sales
• Residual profits will be reinvested in expanding the product and service line

We project first-year revenue of $720,000 and a 10 percent growth rate for the next two years. Direct cost of sales is projected to average 60 percent of gross sales, including 50 percent for the purchase of equipment and 10 percent for the purchase of ancillary items. Net income is projected to reach $105,000 in year three as sales increase and operations become more efficient.

And so on ...

Keep in mind this is just a made-up example of how your Summary might read. Also keep in mind this example focused on the rental business, so a description of products was not included. (They'll show up later.) If your business will manufacture or sell products, or provide a variety of services, then be sure to include a Products and Services section in your Summary. (In this case the products and services are obvious, so including a specific section would be redundant.)

Bottom line:  Provide some sizzle in your Executive Summary, but make sure you show a reasonable look at the steak, too.

Providing an overview of your business can be tricky, especially when you're still in the planning stages. If you already own an existing business, summarizing your current operation should be relatively easy; it can be a lot harder to explain what you plan to  become .

So start by taking a step back.

Think about what products and services you will provide, how you will provide those items, what you need to have in order to provide those items, exactly who will provide those items, and most important, whom you will provide those items to.

Consider our bicycle rental business example. It's serves retail customers. It has an online component, but the core of the business is based on face-to-face transactions for bike rentals and support.

So you'll need a physical location, bikes, racks and tools and supporting equipment, and other brick-and-mortar related items. You'll need employees  with a very particular set of skills  to serve those customers, and you'll need an operating plan to guide your everyday activities.

Sound like a lot? It boils down to:

• What you will provide
• What you need to run your business
• Who will service your customers, and
• Who your customers are.

In our example, defining the above is fairly simple. You know what you will provide to meet your customer's needs. You will of course need a certain quantity of bikes to service demand, but you will not need a number of different types of bikes. You need a retail location, furnished to meet the demands of your business. You need semi-skilled employees capable of sizing, customizing, and repairing bikes.

And you know your customers: cycling enthusiasts.

In other businesses and industries, answering the above questions can be more difficult. If you open a restaurant, what you plan to serve will in some ways determine your labor needs, the location you choose, the equipment you need to purchase. And, most important, it will help define your customer. Changing any one element may change other elements; if you cannot afford to purchase expensive kitchen equipment, you may need to adapt your menu accordingly. If you hope to attract an upscale clientele, you may need to invest more in purchasing a prime location and creating an appealing ambience.

So where do you start? Focus on the basics first:

• Identify your industry. Retail, wholesale, service, manufacturing, etc. Clearly define your type of business.
• Identify your customer. You cannot market and sell to customers until you know who they are.
• Explain the problem you solve. Successful businesses create customer value by solving problems. In our rental example, one problem is cycling enthusiasts who don't--or can't--travel with bikes. Another problem is casual cyclists who can't--or choose not to--spend significant sums on their own bikes. The rental shop will solve that problem by offering a lower-cost and convenient alternative.
• Show how you will solve that problem. Our rental shop will offer better prices and enhanced services like remote deliveries, off-hours equipment returns, and online reservations.

If you are still stuck, try answering these questions. Some may pertain to you; others may not.

• Who is my average customer? Who am I targeting? (Unless you plan to open a grocery store, you should be unlikely to answer, "Everyone!")
• What pain point do I solve for my customers?
• How will I overcome that paint point?
• Where will I fail to solve a customer problem, and what can I do to overcome that issue? (In our rental example, one problem is a potential lack of convenience; we will overcome that issue by offering online reservations, on-resort deliveries, and drive-up equipment returns.)
• Where will I locate my business?
• What products, services, and equipment do I need to run my business?
• What skills do my employees need, and how many do I need?
• How will I beat my competition?
• How can I differentiate myself from my competition in the eyes of my customers? (You can have a great plan to beat your competition, but you also must win the perception battle among your customers. If customers don't feel you are different, then you aren't truly different. Perception is critical.)

Once you work through this list you will probably end up with a lot more detail than is necessary for your business plan. That is not a problem: Start summarizing the main points. For example, your Business Overview and Objectives section could start something like this:

History and Vision

Blue Mountain Cycle Rentals is a new retail venture that will be located at 321 Mountain Drive, directly adjacent to an extremely popular cycling destination. Our initial goal is to become the premier provider for bicycle rentals. We will then leverage our customer base and position in the market to offer new equipment sales as well as comprehensive maintenance and service, custom equipment fittings, and expert trail advice.

• Achieve the largest market share bicycle rentals in the area
• Generate a net income of $235,000 at the end of the second year of operation
• Minimize rental inventory replacement costs by maintaining a 7 percent attrition rate on existing equipment (industry average is 12 percent)

Keys to Success

• Provide high-quality equipment, sourcing that equipment as inexpensively as possible through existing relationships with equipment manufacturers and other cycling shops
• Use signage to attract visitors traveling to the national forest, highlighting our cost and service advantage
• Create additional customer convenience factors to overcome a perceived lack of convenience for customers planning to ride roads and trails some distance away from our shop
• Develop customer incentive and loyalty programs to leverage customer relationships and create positive word of mouth

You could certainly include more detail in each section; this is simply a quick guide. And if you plan to develop a product or service, you should thoroughly describe the development process as well as the end result.

The key is to describe what you will do for your customers--if you can't, you won't  have  any customers.

In the Products and Services section of your business plan, you will clearly describe--yep--the products and services your business will provide.

Keep in mind that highly detailed or technical descriptions are not necessary and definitely not recommended. Use simple terms and avoid industry buzzwords.

On the other hand, describing how the company's products and services will differ from the competition is critical. So is describing why your products and services are needed if no market currently exists. (For example, before there was Federal Express, overnight delivery was a niche business served by small companies. FedEx had to define the opportunity for a new, large-scale service and justify why customers needed--and would actually  use --that service.)

Patents, copyrights, and trademarks you own or have applied for should also be listed in this section.

Depending on the nature of your business, your Products and Services section could be very long or relatively short. If your business is product-focused, you will want to spend more time describing those products.

If you plan to sell a commodity item and the key to your success lies in, say, competitive pricing, you probably don't need to provide significant product detail. Or if you plan to sell a commodity readily available in a variety of outlets, the key to your business may not be the commodity itself but your ability to market in a more cost-effective way than your competition.

But if you're creating a new product (or service), make sure you thoroughly explain the nature of the product, its uses, and its value, etc.--otherwise your readers will not have enough information to evaluate your business.

Key questions to answer:

• Are products or services in development or existing (and on the market)?
• What is the timeline for bringing new products and services to market?
• What makes your products or services different? Are there competitive advantages compared with offerings from other competitors? Are there competitive disadvantages you will need to overcome? (And if so, how?)
• Is price an issue? Will your operating costs be low enough to allow a reasonable profit margin?
• How will you acquire your products? Are you the manufacturer? Do you assemble products using components provided by others? Do you purchase products from suppliers or wholesalers? If your business takes off, is a steady supply of products available?

In the cycling rental business example we've been using, products and services could be a relatively simple section to complete or it could be fairly involved. It depends on the nature of the products the company plans to rent to customers.

If Blue Mountain Cycling Rentals plans to market itself as a provider of high-end bikes, describing those bikes--and the sources for those bikes--is important, since "high-end cycling rentals" is intended to be a market differentiation. If the company plans to be the low-cost provider, then describing specific brands of equipment is probably not necessary.

Also, keep in mind that if a supplier runs out of capacity--or goes out of business altogether--you may not have a sufficient supply to meet your demand. Plan to set up multiple vendor or supplier relationships, and describe those relationships fully. 

Remember, the primary goal of your business plan is to convince  you  that the business is viable--and to create a road map for you to follow.

The Products and Services section for our cycling rental business could start something like this:

Product Description

Blue Mountain Cycle Rentals will provide a comprehensive line of bicycles and cycling equipment for all ages and levels of ability. Since the typical customer seeks medium-quality equipment and excellent services at competitive prices, we will focus on providing brands like Trek bikes, Shimano footwear, and Giro helmets. These manufacturers have a widespread reputation as mid- to high-level quality, unlike equipment typically found in the rental market.

The following is a breakdown of anticipated rental price points, per day and per week:

• Bicycle $30/$120
• Helmet $6/$30
• Customers can extend the rental term online without visiting the store.
• A grace period of two hours will be applied to all rentals; customers who return equipment within that two-hour period will not be charged an additional fee.

Competition

Blue Mountain Cycle Rentals will have clear advantages over its primary competitors, the bike shops located in Harrisonburg, VA:

• Newer equipment inventory with higher perceived quality
• Price points 15 percent below the competition
• Online renewals offering greater convenience
• A liberal return grace period that will reinforce our reputation as a customer-friendly rental experience

Future Products

Expansion will allow us to move product offerings into new equipment sales. We will also explore maintenance and fitting services, leveraging our existing maintenance staff to provide value-added services at a premium price.

When you draft your Products and Services section, think of your reader as a person who knows little to nothing about your business. Be clear and to the point.

Think of it this way: The Products and Services section answers the "what" question for your business. Make sure you fully understand the "what" factor; you may run the business, but your products and services are its lifeblood.

Market research is critical to business success. A good business plan analyzes and evaluates customer demographics, purchasing habits, buying cycles, and willingness to adopt new products and services.

The process starts with understanding your market and the opportunities inherent in that market. And that means you'll need to do a little research. Before you start a business you must be sure there is a viable market for what you plan to offer.

That process requires asking, and more importantly answering, a number of questions. The more thoroughly you answer the following questions, the better you will understand your market.

Start by evaluating the market at a relatively high level, answering some high-level questions about your market and your industry:

• What is the size of the market? Is it growing, stable, or in decline?
• Is the overall industry growing, stable, or in decline?
• What segment of the market do I plan to target? What demographics and behaviors make up the market I plan to target?
• Is demand for my specific products and services rising or falling?
• Can I differentiate myself from the competition in a way customers will find meaningful? If so, can I differentiate myself in a cost-effective manner?
• What do customers expect to pay for my products and services? Are they considered to be a commodity or to be custom and individualized?

Fortunately, you've already done some of the legwork. You've already defined and mapped out your products and services. The Market Opportunities section provides a sense-check of that analysis, which is particularly important since choosing the right products and services is such a critical factor in business success.

But your analysis should go further: Great products are great, but there still must be a market for those products. (Ferraris are awesome, but you're unlikely to sell many where I live.)

So let's dig deeper and quantify your market. Your goal is to thoroughly understand the characteristics and purchasing ability of potential customers in your market. A little Googling can yield a tremendous amount of data.

For the market you hope to serve, determine:

• Your potential customers. In general terms, potential customers are the people in the market segment you plan to target. Say you sell jet skis; anyone under the age of 16 and over the age of 60 or so is unlikely to be a customer. Plus, again in general terms, women make up a relatively small percentage of jet ski purchasers. Determining the total population for the market is not particularly helpful if your product or service does not serve a need for the entire population. Most products and services do not.
• Total households. In some cases determining the number of total households is important depending on your business. For example, if you sell heating and air conditioning systems, knowing the number of households is more important than simply knowing the total population in your area. While people purchase HVAC systems, "households" consume those systems.
• Median income. Spending ability is important. Does your market area have sufficient spending power to purchase enough of your products and services to enable you to make a profit? Some areas are more affluent than others. Don't assume every city or locality is the same in terms of spending power. A service that is viable in New York City may not be viable in your town.
• Income by demographics. You can also determine income levels by age group, by ethnic group, and by gender. (Again, potential spending power is an important number to quantify.) Senior citizens could very well have a lower income level than males or females age 45 to 55 in the prime of their careers. Or say you plan to sell services to local businesses; in that case, try to determine the amount they currently spend on similar services.

The key is to understand the market in general terms and then to dig deeper to understand whether there are specific segments within that market--the segments you plan to target--that can become customers and support the growth of your business.

Also keep in mind that if you plan to sell products online the global marketplace is incredibly crowded and competitive. Any business can sell a product online and ship that product around the world. Don't simply assume that just because "the bicycle industry is a $62 billion business" (a number I just made up) that you can capture a meaningful percentage of that market.

On the other hand, if you live in an area with 50,000 people and there's only one bicycle shop, you may be able to enter that market and attract a major portion of bicycle customers in your area.

Always remember it's much easier to serve a market you can define and quantify.

After you complete your research you may feel a little overwhelmed. While data is good, and more data is great, sifting through and making sense of too much data can be daunting.

For the purposes of your business plan, narrow your focus and focus on answering these main questions:

• What is your market? Include geographic descriptions, target demographics, and company profiles (if you're B2B). In short: Who are your customers?
• What segment of your market will you focus on? What niche will you attempt to carve out? What percentage of that market do you hope to penetrate and acquire?
• What is the size of your intended market? What is the population and spending habits and levels?
• Why do customers need and why will they be willing to purchase your products and services?
• How will you price your products and services? Will you be the low cost provider or provide value-added services at higher prices?
• Is your market likely to grow? How much? Why?
• How can you increase your market share over time?

The Market Opportunities section for our cycling rental business could start something like this:

Market Summary

Consumer spending on cycling equipment reached $9,250,000 in the states of VA, WV, MD, and NC last year. While we expect sales to rise, for the purposes of performing a conservative analysis we have projected a zero growth rate for the next three years.

In those states 2,500,000 people visited a national forest last year. Our target market includes customers visiting the Shenandoah National Forest; last year 120,000 people visited the area during spring, summer, and fall months.

Over time, however, we do expect equipment rentals and sales to increase as the popularity of cycling continues to rise. In particular we forecast a spike in demand in 2015 since the national road racing championships will be held in Richmond, VA.

Market Trends

Participation and population trends favor our venture:

• Recreational sports in general and both family-oriented and "extreme" sports continue to gain in exposure and popularity.
• Western VA and eastern WV have experienced population growth rates nearly double that of the country as a whole.
• Industry trends show cycling has risen at a more rapid rate than most other recreational activities.

Market Growth

According to the latest studies, recreation spending in our target market has grown by 14 percent per year for the past three years.

In addition, we anticipate greater than industry-norm growth rates for cycling in the area due to the increase in popularity of cycling events like the Alpine Loop Gran Fondo.

Market Needs

Out target market has one basic need: The availability to source bicycle rentals at a competitive price. Our only other competition are the bike shops in Harrisonburg, VA, and our location will give us a competitive advantage over those and other companies who try to serve our market.

You may want to add other categories to this section based on your particular industry.

For example, you might decide to provide information about Market Segments. In our case, the cycling rental business does not require much segmentation. Rentals are typically not broken down into segments like "inexpensive," "midrange," and "high-end." For the most part rental bikes are more of a commodity. (Although you'll notice in our Products and Services section, we decided to provide "high-end" rentals.)

But say you decide to open a clothing store. You could focus on high fashion, or children's clothes, or outdoor wear, or casual--you could segment the market in a number of ways. If that's the case, provide detail on segmentation that supports your plan.

The key is to define your market--and then show how you will serve your market.

Providing great products and services is wonderful, but customers must actually know those products and services exist. That's why marketing plans and strategies are critical to business success. (Duh, right?)

But keep in mind marketing is not just advertising. Marketing--whether advertising, public relations, promotional literature, etc.--is an investment in the growth of your business.

Like any other investment you would make, money spent on marketing must generate a return. (Otherwise why make the investment?) While that return could simply be greater cash flow, good marketing plans result in higher sales and profits.

So don't simply plan to spend money on a variety of advertising efforts. Do your homework and create a smart marketing program .

Here are some of the basic steps involved in creating your marketing plan:

• Focus on your target market. Who are your customers? Who will you target? Who makes the decisions? Determine how you can best reach potential customers.
• Evaluate your competition. Your marketing plan must set you apart from your competition, and you can't stand out unless you  know  your competition. (It's hard to stand out from a crowd if you don't know where the crowd stands.) Know your competitors by gathering information about their products, service, quality, pricing, and advertising campaigns. In marketing terms, what does your competition do that works well? What are their weaknesses? How can you create a marketing plan that highlights the advantages you offer to customers?
• Consider your brand. How customers perceive your business makes a dramatic impact on sales. Your marketing program should consistently reinforce and extend your brand. Before you start to market your business, think about how you want your marketing to reflect on your business and your products and services. Marketing is the face of your to potential customers--make sure you put your best face forward.
• Focus on benefits. What problems do you solve? What benefits do you deliver? Customers don't think in terms of products--they think in terms of benefits and solutions. Your marketing plan should clearly identify benefits customers will receive. Focus on what customers  get  instead of on what you provide. (Take Dominos; theoretically they're in the pizza business, but really they're a delivery business.)
• Focus on differentiation. Your products and services have to stand out from the competition in some way. How will you compete in terms of price, product, or service?

Then focus on providing detail and backup for your marketing plan.

• What is your budget for sales and marketing efforts? 
• How will you determine if your initial marketing efforts are successful? In what ways will you adapt if your initial efforts do not succeed?
• Will you need sales representatives (inside or external) to promote your products?
• Can you set up public relations activities to help market your business?

The Sales and Marketing section for our cycling rental business could start something like this:

Target Market

The target market for Blue Mountain Cycling Rentals is western VA, eastern WV, southwestern MD, and northern NC. While customers in the counties surrounding the George Washington National Forest make up 35 percent of our potential customer base, much of our market travels from outside that geographic area.

Marketing Strategy

Our marketing strategy will focus on three basic initiatives:

• Road signage. Access to the forest is restricted to a few primary entrances, and visitors reach those entrances after traveling on one of several main roadways. Since customers currently rent bicycles in the local town of Harrisonburg, road signage will communicate our value proposition to all potential customers.
• Web initiatives. Our website will attract potential visitors to the resort. We will partner with local businesses that serve our target market to provide discounts and incentives.
• Promotional events. We will hold regular events with professional cyclists, like demonstrations and autograph signings, to bring more customers to the store as well as to extend the athletes' "brand" to our brand.

Pricing Strategy

We will not be the low-cost provider for our target market. Our goal is to provide mid- to high-end equipment. However, we will create web-based loyalty programs to incent customers to set up online profiles and reserve and renew equipment rentals online, and provide discounts for those who do. Over time we will be able to market specifically to those customers.

Just as in the Market Opportunity section, you may want to include a few more categories. For example, if your business involves a commission-compensated sales force, describe your Sales Programs and incentives. If you distribute products to other companies or suppliers and those distribution efforts will impact your overall marketing plans, lay out your Distribution Strategy.

The key is to show you understand your market and you understand how you will reach your market. Marketing and promotions must result in customers--your goal is to thoroughly describe how you will acquire and keep your customers.

Also keep in mind you may want to include examples of marketing materials you have already prepared, like website descriptions, print ads, web-based advertising programs, etc. While you don't need to include samples, taking the time to create actual marketing materials might help you better understand and communicate your marketing plans and objectives.

Make sure your Sales and Marketing section answers the "How will I reach my customers?" question.

Competitive Advantage

The Competitive Analysis section of your business plan is devoted to analyzing your competition--both your current competition and potential competitors who might enter your market.

Every business has competition. Understanding the strengths and weaknesses of your competition--or potential competition--is critical to making sure your business survives and grows. While you don't need to hire a private detective, you do need to thoroughly assess your competition on a regular basis even if you plan to run only a small business.

In fact, small businesses can be especially vulnerable to competition, especially when new companies enter a marketplace.

Competitive analysis can be incredibly complicated and time-consuming, but it doesn't have to be. Here is a simple process you can follow to identify, analyze, and determine the strengths and weaknesses of your competition.

Profile  Current  Competitors

First, develop a basic profile of each of your current competition. For example, if you plan to open an office supply store, you may have three competing stores in your market.

Online retailers will also provide competition, but thoroughly analyzing those companies will be less valuable unless you also decide you want to sell office supplies online. (Although it's also possible that they--or, say, Amazon--are your  real  competition. Only you can determine that.)

To make the process easier, stick to analyzing companies you will directly compete with. If you plan to set up an accounting firm, you will compete with other accounting firms in your area. If you plan to open a clothing store, you will compete with other clothing retailers in your area.

Again, if you run a clothing store, you also compete with online retailers, but there is relatively little you can do about that type of competition other than to work hard to distinguish yourself in other ways: great service, friendly salespeople, convenient hours, truly understanding your customers, etc.

Once you identify your main competitors, answer these questions about each one. And be objective. It's easy to identify weaknesses in your competition, but less easy (and a lot less fun) to recognize how they may be able to outperform you:

• What are their strengths? Price, service, convenience, and extensive inventory are all areas where you may be vulnerable.
• What are their weaknesses? Weaknesses are opportunities you should plan to take advantage of.
• What are their basic objectives? Do they seek to gain market share? Do they attempt to capture premium clients? See your industry through their eyes. What are they trying to achieve?
• What marketing strategies do they use? Look at their advertising, public relations, etc.
• How can you take market share away from their business?
• How will they respond when you enter the market?

While these questions may seem like a lot of work to answer, in reality the process should be fairly easy. You should already have a feel for the competition's strengths and weaknesses--if you know your market and your industry.

To gather information, you can also:

• Check out their websites and marketing materials. Most of the information you need about products, services, prices, and company objectives should be readily available. If that information is not available, you may have identified a weakness.
• Visit their locations. Take a look around. Check out sales materials and promotional literature. Have friends stop in or call to ask for information.
• Evaluate their marketing and advertising campaigns. How a company advertises creates a great opportunity to uncover the objectives and strategies of that business. Advertising should help you quickly determine how a company positions itself, who it markets to, and what strategies it employs to reach potential customers.
• Browse. Search the Internet for news, public relations, and other mentions of your competition. Search blogs and Twitter feeds as well as review and recommendation sites. While most of the information you find will be anecdotal and based on the opinion of just a few people, you may at least get a sense of how some consumers perceive your competition. Plus you may also get advance warning about expansion plans, new markets they intend to enter, or changes in management.

Keep in mind competitive analysis does more than help you understand your competition. Competitive analysis can also help you identify changes you should make to  your  business strategies. Learn from competitor strengths, take advantage of competitor's weaknesses, and apply the same analysis to your own business plan.

You might be surprised by what you can learn about your business by evaluating other businesses.

Identify  Potential  Competitors

It can be tough to predict when and where new competitors may pop up. For starters, regularly search for news on your industry, your products, your services, and your target market.

But there are other ways to predict when competition may follow you into a market. Other people may see the same opportunity you see. Think about your business and your industry, and if the following conditions exist, you may face competition does the road:

• The industry enjoys relatively high profit margins
• Entering the market is relatively easy and inexpensive
• The market is growing--the more rapidly it is growing the greater the risk of competition
• Supply and demand is off--supply is low and demand is high
• Very little competition exists, so there is plenty of "room" for others to enter the market

In general terms, if serving your market seems easy you can safely assume competitors will enter your market. A good business plan anticipates and accounts for new competitors.

Now distill what you've learned by answering these questions in your business plan:

• Who are my current competitors? What is their market share? How successful are they?
• What market do current competitors target? Do they focus on a specific customer type, on serving the mass market, or on a particular niche?
• Are competing businesses growing or scaling back their operations? Why? What does that mean for your business?
• How will your company be different from the competition? What competitor weaknesses can you exploit? What competitor strengths will you need to overcome to be successful?
• What will you do if competitors drop out of the marketplace? What will you do to take advantage of the opportunity?
• What will you do if new competitors enter the marketplace? How will you react to and overcome new challenges?

The Competitive Analysis section for our cycling rental business could start something like this:

Primary Competitors

Our nearest and only competition is the bike shops in Harrisonburg, VA. Our next closest competitor is located over 100 miles away.

The in-town bike shops will be strong competitors. They are established businesses with excellent reputations. On the other hand, they offer inferior-quality equipment and their location is significantly less convenient.

Secondary Competitors

We do not plan to sell bicycles for at least the first two years of operation. However, sellers of new equipment do indirectly compete with our business since a customer who buys equipment no longer needs to rent equipment.

Later, when we add new equipment sales to our operation, we will face competition from online retailers. We will compete with new equipment retailers through personalized service and targeted marketing to our existing customer base, especially through online initiatives.

Opportunities

• By offering mid- to high-end quality equipment, we provide customers the opportunity to "try out" bikes they may wish to purchase at a later date, providing additional incentive (besides cost savings) to use our service.
• Offering drive-up, express rental return services will be seen as a much more attractive option compared with the hassle of renting bikes in Harrisonburg and transporting them to intended take-off points for rides.
• Online initiatives like online renewals and online reservations enhances customer convenience and positions us as a cutting-edge supplier in a market largely populated, especially in the cycling segment, by customers who tend to be early technology adapters.
• Renting bikes and cycling equipment may be perceived by some of our target market as a commodity transaction. If we do not differentiate ourselves in terms of quality, convenience, and service, we could face additional competition from other entrants to the market.
• One of the bike shops in Harrisonburg is a subsidiary of a larger corporation with significant financial assets. If we, as hoped, carve out a significant market share, the corporation may use those assets to increase service, improve equipment quality, or cut prices.

While your business plan is primarily intended to convince  you  that your business makes sense, keep in mind most investors look closely at your competitive analysis. A common mistake made by entrepreneurs is assuming they will simply "do it better" than any competition.

Experienced businesspeople know you will face stiff competition: showing you understand your competition, understand your strengths and weaknesses relative to that competition, and that you understand you will have to adapt and change based on that competition is critical.

And, even if you do not ever plan to seek financing or bring in investors, you absolutely must know your competition.

The Competitive Analysis section helps you answer the "Against whom?" question.

The next step in creating your business plan is to develop an Operations Plan that will serve your customers, keep your operating costs in line, and ensure profitability . Your ops plan should detail strategies for managing, staffing, manufacturing, fulfillment, inventory--all the stuff involved in operating your business on a day-to-day basis.

Fortunately, most entrepreneurs have a better handle on their operations plan than on any other aspect of their business. After all, while it may not seem natural to analyze your market or your competition, most budding entrepreneurs tend to spend a lot of time thinking about how they will  run  their businesses.

Your goal is to answer the following key questions:

• What facilities, equipment, and supplies do you need?
• What is your organizational structure? Who is responsible for which aspects of the business?
• Is research and development required, either during start up or as an ongoing operation? If so, how will you accomplish this task?
• What are your initial staffing needs? When and how will you add staff?
• How will you establish business relationships with vendors and suppliers? How will those relationships impact your day-to-day operations?
• How will your operations change as the company grows? What steps will you take to cut costs if the company initially does not perform up to expectations?

Operations plans should be highly specific to your industry, your market sector, and your customers. Instead of providing an example like I've done with other sections, use the following to determine the key areas your plan should address:

Location and Facility Management

In terms of location, describe:

• Zoning requirements
• The type of building you need
• The space you need
• Power and utility requirements
• Access: Customers, suppliers, shipping, etc.
• Specialized construction or renovations
• Interior and exterior remodeling and preparation

Daily Operations

• Production methods
• Service methods
• Inventory control
• Sales and customer service
• Receiving and Delivery
• Maintenance, cleaning, and re-stocking
• Licenses and permits
• Environmental or health regulations
• Patents, trademarks, and copyrights

Personnel Requirements

• Typical staffing
• Breakdown of skills required
• Recruiting and retention
• Policies and procedures
• Pay structures
• Anticipated inventory levels
• Turnover rate
• Seasonal fluctuations in demand
• Major suppliers
• Back-up suppliers and contingency plans
• Credit and payment policies

Sound like a lot? It can be, but not all of the above needs to be in your business plan.

You should think through and create a detailed plan for each category, but you won't need to share the results with the people who read your business plan

Working through each issue and developing concrete operations plans helps you in two major ways:

• If you don't plan to seek financing or outside capital, you can still take advantage of creating a comprehensive plan that addresses all of your operational needs.
• If you do seek financing or outside capital, you may not include all the detail in your business plan--but you will have answers to any operations questions at your fingertips.

Think of Operations as the "implementation" section of your business plan. What do you need to do? How will you get it done? Then create an overview of that plan to make sure your milestones and timeline make sense.

That way the operations section answers the "How?" question.

Many investors and lenders feel the quality and experience of the management team is one of the most important factors used to evaluate the potential of a new business.

But putting work into the Management Team section will not only benefit people who may read your plan. It will also help  you  evaluate the skills, experiences, and resources your management team will need . Addressing your company's needs during implementation will make a major impact on your chances for success.

• Who are the key leaders? (If actual people have not been identified, describe the type of people needed.) What are their experiences, educational backgrounds, and skills?
• Do your key leaders have industry experience? If not, what experience do they bring to the business that is applicable?
• What duties will each position perform? (Creating an organization chart might be helpful.) What authority is granted to and what responsibilities are expected in each position?
• What salary levels will be required to attract qualified candidates for each position? What is the salary structure for the company, by position?

The Management Team section for our cycling rental business could start something like this:

Jim Rouleur, Owner and Manager

Joe has over 20 years experience in the cycling business. He served for 10 years as a product manager for Acme Bikes. After that he was the operations manager of Single Track Cycles, a full-service bike shop located in Bend, Oregon. He has an undergraduate degree in marketing from Duke University and an MBA from Virginia Commonwealth University. (A complete resume for Mr. Rouleur can be found in the Appendix.)

Mary Gearset, Assistant Manager

Mary was the 2009 U.S. Mountain Biking National Champion. She worked in product development for High Tec frames, creating custom frames and frame modifications for professional cyclists. She also has extensive customer service and sales experience, having worked for four years as the online manager of Pro Parts Unlimited, an online retailer of high-end cycling equipment and accessories.

In some instances you may also wish to describe your staffing plans.

For example, if you manufacture a product or provide a service and will hire a key skilled employee, describe that employee's credentials. Otherwise, include staffing plans in the Operations section.

One key note: Don't be tempted to add a "name" to your management team in hopes of attracting investors. Celebrity management team members may attract the attention of your readers, but experienced lenders and investors will immediately ask what role that person will actually play in the running of the business--and in most cases those individuals won't play any meaningful role.

If you don't have a lot of experience--but are willing to work hard to overcome that lack of experience--don't be tempted to include people in your plan who will not actually work in the business.

If you can't survive without help, that's okay. In fact, that's expected; no one does anything worthwhile on their own. Just make plans to get help from the  right  people.

Finally, when you create your Management section, focus on credentials but pay extra attention to what each person actually will  do . Experience and reputation are great, but action is everything.

That way your Management section will answer the "Who is in charge?" question.

Numbers tell the story. Bottom line results indicate the success or failure of any business.

Financial projections and estimates help entrepreneurs, lenders, and investors or lenders objectively evaluate a company's potential for success. If a business seeks outside funding, providing comprehensive financial reports and analysis is critical.

But most important, financial projections tell you whether your business has a chance of being viable--and if not let you know you have more work to do.

Most business plans include at least five basic reports or projections:

• Balance Sheet: Describes the company cash position including assets, liabilities, shareholders, and earnings retained to fund future operations or to serve as funding for expansion and growth. It indicates the financial health of a business.
• Income Statement: Also called a Profit and Loss statement, this report lists projected revenue and expenses. It shows whether a company will be profitable during a given time period.
• Cash Flow Statement: A projection of cash receipts and expense payments. It shows how and when cash will flow through the business; without cash, payments (including salaries) cannot be made.
• Operating Budget: A detailed breakdown of income and expenses; provides a guide for how the company will operate from a "dollars" point of view.
• Break-Even Analysis: A projection of the revenue required to cover all fixed and variable expenses. Shows when, under specific conditions, a business can expect to become profitable.

It's easy to find examples of all of the above. Even the most basic accounting software packages include templates and samples. You can also find templates in Excel and Google Docs. (A quick search like "google docs profit and loss statement" yields plenty of examples.)

Or you can work with an accountant to create the necessary financial projections and documents. Certainly feel free to do so, but first play around with the reports yourself. While you don't need to be an accountant to run a business, you do need to understand your numbers, and the best way to understand your numbers is usually to actually work with your numbers.

But ultimately the tools you use to develop your numbers are not as important as whether those numbers are as accurate as possible--and whether those numbers help you decide whether to take the next step and put your business plan into action.

Then Financial Analysis can help you answer the most important business question: "Can we make a profit?"

Some business plans include less essential but potentially important information in an Appendix section. You may decide to include, as backup or additional information:

• Resumes of key leaders
• Additional descriptions of products and services
• Legal agreements
• Organizational charts
• Examples of marketing and advertising collateral
• Photographs of potential facilities, products, etc.
• Backup for market research or competitive analysis
• Additional financial documents or projections

Keep in mind creating an Appendix is usually only necessary if you're seeking financing or hoping to bring in partners or investors. Initially the people reading your business plan don't wish to plow through reams and reams of charts, numbers, and backup information. If one does want to dig deeper, fine--he or she can check out the documents in the Appendix.

That way your business plan can share your story clearly and concisely.

Otherwise, since you created your business plan, you should already have the backup.

Tying It All Together

While you may use your business plan to attract investors, partners, suppliers, etc., never forget that the goal of your business plan is to convince  you  that your idea makes sense. 

Because ultimately it's your time, your money, and your effort on the line.

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