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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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Business Planning for Nonprofits: What It Is and Why It Matters

Introduction.

Mention business planning and people often think about written plans--the tangible products. The leap is natural, but it is also problematic. It short circuits the process of developing the plan, which is where many nonprofits find the greater value.[1]

The business-planning process offers a nonprofit’s decision makers a rare opportunity to step back and look at their organization as a whole. Business planning creates a time to connect the dots between mission and programs, to specify the resources that will be required to deliver those programs, and to establish performance measures that allow everyone to understand whether the desired results are being achieved. As a result, business planning encourages strategic thinking, not only while the plan is being created, but also thereafter, as implementation leads to new challenges and the need to make new decisions and tradeoffs.

To illustrate, consider the experience of MY TURN, Inc. (America’s Youth Teenage Unemployment Reduction Network), a Brockton, Massachusetts-based nonprofit acclaimed for its work with at-risk youth in small, urban communities. In 2003, the Edna McConnell Clark Foundation approached MY TURN about expanding the reach of its proven programs. Over a six-month period, MY TURN’s management team engaged with the Bridgespan Group in a rigorous business-planning process. They established a sharper definition of the population they wanted to serve, identified aspects of the program model they needed to supplement, and prioritized a list of potential expansion sites. They also developed firm estimates of how much the new initiatives were going to cost and laid out a detailed timeline for getting the work done.

The result was a clear plan to guide MY TURN’s growth over a five-year time horizon. Equally important, the management team found that the planning process changed the way they approach decision making. They feel they now know the right questions to ask when evaluating new opportunities, and have better insight into how to use data and research to inform their decisions. As Executive Director Barbara Duffy commented, "Now that we understand what we’re good at and where we’re good at it, it makes it easier to say ‘no’ to things that don’t make sense for us."

During Bridgespan’s first six years of operation, we have collaborated with more than 80 nonprofit organizations to develop business plans. While each organization approached business planning with its own particular set of questions and priorities, we’ve found that the process typically includes four distinct components:

• Strategic clarity: Developing a concrete description of the impact for which the organization will hold itself accountable over some specified period of time (its intended impact) and the cause-and-effect logic explaining how its work will lead to that impact (its theory of change);
• Strategic priorities: Determining what specific actions and activities must take place to achieve the intended impact;
• Resource implications: Understanding the resources--financial, human, and organizational--needed to pursue these priorities and mapping out a plan to secure them;
• Performance measures: Establishing the quantitative and qualitative milestones that make it possible to measure progress toward the intended impact.

In this article, we draw on client experience to illustrate each of these four components. Although we chose to discuss them individually and sequentially, in practice they are quite tightly linked. As a result, the business-planning process is rarely linear, but rather requires nonprofit leaders to circle back on critical decisions as new information emerges. It also requires significant energy and discipline from those involved, so we have included some questions readers can use to help determine if their organization is ready to take the plunge. Last but not least, in the appendix of this article we address the written document that results from the process.

Gaining Strategic Clarity

A nonprofit organization’s mission statement is its heart and soul, defining its reason for being and inspiring staff, volunteers, funders, and participants to believe that positive change is possible. But the breadth and ambition that can make mission statements so compelling are also the reasons that they are seldom good guides for allocating resources. There are simply too many activities that can fit legitimately within them.

Business planning gives you the opportunity to get underneath your mission statement to see how it plays out in the programs and activities that constitute your organization’s day-to-day work. It’s a chance to draw on qualitative and quantitative information, as well as the passion and commitment that inspire you to do your work, to articulate the specific outcomes you’re striving to achieve (the organization’s intended impact) and to clarify how your programs lead to concrete, measurable change for those you serve (its theory of change).

Larkin Street Youth Services offers a good example of how such discussions can lead to strategic clarity. Initiated in 1984 as a small, neighborhood initiative, the San Francisco-based organization operates a nationally-recognized model for helping homeless and runaway young people get off the streets and lead stable lives. By 2003 the nonprofit was operating programs at 10 sites across the city, and nearly 80 percent of those enrolled in its case management services were succeeding in exiting street life.

Larkin’s management team was ready to expand the organization’s impact even further. They had surfaced several options for doing so within two broad categories: deepening Larkin’s current activities in San Francisco (e.g., increasing its stock of temporary housing options, adding services for youth emancipating from the foster care system); and broadening Larkin’s activities outside of San Francisco (e.g., expanding to other cities in California, disseminating knowledge).

Questions to help establish strategic clarity:

• Who or what are we ultimately trying to serve?
• What are the specific outcomes for which we want to be held accountable?
• What activities must we undertake to achieve concrete, measurable results?
• How does our specific portfolio of programs and services lead to change?

All of these ideas fit within Larkin’s mission statement, "To create a continuum of services that inspires youth to move beyond the streets." But with a turbulent economy threatening to constrain funding, the organization simply couldn’t pursue every one. To weigh the options, the management team first needed to get specific about who the beneficiaries of the organization’s work should be: homeless youth in the Bay Area or homeless youth in a broader geographic area.

Data on the problem, while essential, couldn’t resolve the issue: San Francisco had a much larger population of youth in need than the 2,000 Larkin already was serving, and there were clearly many more youth elsewhere in California (and throughout the country) who could benefit from Larkin’s approach. Rather, the management team members needed first and foremost to consider whom they cared about and wanted to serve. After several rounds of intense discussion in which they candidly shared their personal motivation for doing the work, they realized that they wanted Larkin to remain in San Francisco for the foreseeable future.

Additional clarity about Larkin’s target beneficiaries came from defining what would constitute success. While the mission statement spoke broadly about moving youth off the street, management team members wanted this exit to be a permanent one. This meant Larkin would have to focus on kids who (with Larkin’s intervention) had a high likelihood of getting back on their feet and achieving independence--another hard decision, but one they hoped would increase the organization’s ability to have a lasting impact.

The team members then mapped out the theory of change that explained how Larkin’s various programs would lead to this intended impact. Years of hands-on experience had led Larkin to develop a continuum of services to get kids off the streets permanently. The continuum began by addressing a homeless youth’s immediate need for food, shelter, and medical care, and then offered transitional housing, case management, and opportunities to build life skills. The team reaffirmed this program model as the organization’s focus in light of its newly articulated intended impact.

By clarifying these three questions--what kids, what outcomes, and what activities--Larkin management found that they could rule out--and rule in--several of the options for growth. While they still had work to do in figuring out the optimal service model and the approach for rolling their programs out across the city, they were energized by this newfound clarity.[2]

Larkin’s story is not unique. Many organizations start business planning with a number of competing options, and it can be tempting to jump right into making choices without first stepping back and getting clear on what you’re trying to accomplish, for whom, and how. Once these decisions are made, however, the possibilities often don’t seem quite as endless. Moreover, they create the platform on which the rest of the business plan can be built.[3]

Determining Strategic Priorities

One of the most valuable aspects of business planning is the opportunity to look closely at current programs and to take stock of what is working well, what could work better, and what is missing. Without a clear understanding of the current state of affairs, it’s hard to think critically about what you are best positioned to do going forward or what changes in programs and services you may need to make. Making such decisions--determining your organization’s strategic priorities--is often best done while your organization’s intended impact and theory of change are taking shape, so that decisions about beneficiaries and outcomes can inform your planning.

Questions to help surface strategic priorities:

• How well does each of our current programs or activities align with our mission and intended impact?
• What are our full costs, both direct and indirect, for operating each program?
• What is our cost per outcome or positive result?
• Do all of our activities complement our core capabilities and expertise, or are we stretched too thin across different services?
• How well do we perform compared to peers?
• Are there services we should modify or add to maximize impact?

Most of the decisions makers we have worked with end up choosing among four potential options: modifying existing programs, adding new programs, discontinuing programs, and/or increasing the number of the participants served. To decide which option, or set of options, is right for your organization, it is helpful to collect evidence--empirical information about your programs, your organization, and the external context in which you operate.

The first step is essentially diagnostic: looking closely at the current operations of each of your programs to make sure you know what’s really happening on the ground, and using this internal data to determine your organization’s strengths and weaknesses. This can mean assessing fidelity to the program model and/or analyzing participant or site outcomes. If you are running programs at multiple sites, you may want to explore how well each individual site is performing and whether strong practices are being shared actively across sites.

Internal assessment can also include determining the full costs (that is, the direct costs plus an allocated share of the organization’s indirect costs, such as administrative expenses and building rent) to operate each of your programs and services. When possible, you should also determine the true cost per outcome (an estimate of the resources required to achieve your desired impact for one recipient, be that a homeless child, a disadvantaged community, or a threatened forest). Assessing current financials can help you understand whether your resource allocations are aligned with your mission and intended impact. It also provides a useful baseline against which to compare future projections.[4]

It is also important to look outside of your organization during business planning. For example, you may want to consider how well your organization is performing when compared to peers, or to research public policy or funding trends to identify changes that may affect your organization’s ability to achieve its goals.

There is no "one size fits all" approach to determining strategic priorities. In this section, we’ll look at how several organizations assessed their current programs and prioritized among competing options to determine the strategy right for them.

Modify Existing Programs or Approaches

Expeditionary Learning Schools/Outward Bound (ELS) seeks to transform public schools by providing school personnel with high-intensity professional development focused on innovative learning methods and design principles inspired by Outward Bound. When ELS’ management team embarked on business planning, they had a network of over 120 schools and were eager for more growth. As a first step, they conducted a thorough assessment of their existing operations.

For ELS’ management team, helping schools improve a little isn’t enough; their intended impact is for schools to achieve excellence . To accomplish this, the organization aims to work closely with each school for at least three years, training school personnel to deliver the core elements of its proven educational model.

When ELS’ management team analyzed internal data and interviewed field staff, however, they found that few schools were engaged as deeply as they needed to be to achieve powerful results. So even though ELS had begun the business-planning process prioritizing growth, it became clear that its first strategic priority should be to rethink the way the organization worked with its schools. Specifically, the management team committed to refocusing staff resources and financial subsidies on schools that demonstrated the potential for excellence and the commitment to achieving it. In contrast, where schools had lost interest in the ELS approach or the funding climate wasn’t viable, ELS’ management and the schools’ leadership teams decided that ending the relationship was the best course of action.

This assessment also influenced ELS’ approach to growth going forward. The management team plans to use more rigorous criteria to select schools and to make expectations about performance more explicit. While this may mean opening fewer new schools, it will enable ELS to make more progress toward the intended impact of developing a network of excellent schools.[5]

Add New Programs or Services

Sometimes assessment highlights gaps in an organization’s existing programs that would be best addressed by adding a new service or program. Take MY TURN, Inc., the youth-development organization profiled at the beginning of this article. Data the organization had collected over the years, combined with insights gleaned from interviews with case managers, showed that MY TURN’s clients needed additional GED training and more active assistance in securing employment in order to transition successfully to work or college.

Eager to avoid replicating services others could provide more cost-effectively, the management team scanned the options already available in the communities MY TURN served. They learned that GED courses were in short supply in several of the communities, and that outsourcing the vocational support function would be difficult. Accordingly, they decided to administer GED programs themselves where necessary, and to create a new in-house role for job developers. MY TURN would pilot this more comprehensive model at a handful of sites. If the results were promising, they would then roll the model out across the entire network.[6]

Discontinue Programs or Services

Business planning is not synonymous with doing more. At times a hard look at your current programs, in light of your intended impact and theory of change, will lead you to stop doing things. Consider the experience of Our Piece of the Pie, Inc. ® (formerly Southend Community Services), a large community-based organization in Hartford, Connecticut. Our Piece of the Pie had a proud history of responding to the urgent needs of its community. By 2004, when the organization engaged in business planning, it was offering nine different programs spanning childcare, youth development, and elderly support services. The management team saw the planning process as a chance to explore opportunities to refocus.

During their intended impact and theory of change discussions, team members agreed that improving the life chances of young people offered the highest potential for having a positive impact in Hartford. Management studied the results of the organization’s existing youth programming to develop a better understanding of what was working well and where enhancements might be warranted. They also interviewed community leaders and current program participants to understand which of their youth-oriented services were most valued and which needs were still unmet. The takeaway: Our Piece of the Pie needed to integrate its various youth programs and to add case management services.

Given that Our Piece of the Pie’s resources weren’t unlimited, sharpening its focus would also mean changes to its elderly and childcare programming. Through external research, management determined that the elderly services would operate more efficiently if they were absorbed by larger providers in the Hartford area. In addition, some of the childcare programs, such as preschool daycare, could be adjusted to meet the needs of youthful participants who were single parents.

Business planning positioned Our Piece of the Pie to accomplish more going forward. But it did so by first prompting the management team to transition programs that no longer fit the mission and that could be provided effectively by others in the community.

Increase the Number of Service Recipients

For both Expeditionary Learning Schools/Outward Bound and MY TURN, the changes made to existing programs were a first step toward increasing the number of people or communities served. For other nonprofits, such as Boston-based Steppingstone Foundation, a close look at existing programs indicates that they are ready to add more participants right away.

Questions to help clarify growth goals:

• How much of the need for our services are we currently meeting? In our neighborhood? In our city? Beyond?
• What motivates us to grow? For example, do we want to attract national attention by expanding to multiple cities? Would we be satisfied if we could increase our impact where we already are?
• What are potential barriers to growth? How will these barriers affect the program model or the speed at which we grow?

When Steppingstone’s management team began business planning in 2001, the organization had been preparing disadvantaged 4th and 5th grade students for placement in top private and exam schools for more than 10 years. The model was well-defined, the cost per scholar was decreasing steadily, and the first few cohorts had successfully headed off to competitive four-year colleges. Steppingstone wanted to do more. The critical question was whether that would entail moving to other cities in the near future.

By analyzing the number of Boston-area students in their target demographic and interviewing local admissions officers, Steppingstone management discovered that they didn’t need to leave the city in order to grow. Rather, Steppingstone would aim to double the size of their Boston program over the next five years and revisit the idea of geographic expansion at a later date.[7]

Understanding Resource Implications

Once you’ve agreed on the strategic priorities that will guide your organization over the next few years, it’s time to look at the practical implications. The objective in this phase of business planning is aligning your staff, infrastructure, and finances in a way that can support sustainable implementation.

Achieving alignment begins with an honest assessment of what it will take to implement each of your priorities. Next you need to determine how much more the organization can take on, given current resource levels and where you’ll need to bring in additional personnel or invest in new infrastructure. At that point, you can create financial projections to help you understand how your budget will have to change. For most organizations, the first pass at the financials is eye-opening. They find that they need to adjust their targets and reconsider the pace of change.

To illustrate, let’s return to Steppingstone. Like many nonprofits, Steppingstone was a very lean organization. As the management team evaluated the situation, they realized that doubling the student numbers would require doubling program staff to maintain a low student-to-staff ratio, in addition to bringing in a grant writer and creating several new senior management roles, including a director of marketing and a director of organizational learning.

Aggressive expansion would also mean that Steppingstone would outgrow its program facility and need to find additional space in which to offer its summer and after-school enrichment programs. Putting it all together, the management team realized it could not realistically absorb all of the new costs at once. This led them to think about what investments were needed immediately and which ones could be postponed.

As the Steppingstone example demonstrates, iteration is one of the most valuable aspects of business planning, because it pushes the organization to think hard about what’s really possible and to create explicit links between the results it can deliver and its aspirations, capabilities, and existing capacity. Before you can commit to adding new services or growing the number of people participating in your programs, you need a firm understanding of the resources those activities will require--not just at the outset, but over time. Here we have provided a deeper explanation of each aspect of resource planning: human resource investments, infrastructure investments, and the subsequent financial implications.

Human Resource Investments

Because staff and staff-related expenses tend to comprise the largest portion of nonprofits’ annual budgets, many of the additional costs incurred when implementing a business plan relate to human resources. Hiring new program staff---either because, like MY TURN, your strategic priorities require bringing additional expertise in house or because, like Steppingstone, your organization is growing and you need to maintain key staff-to-participant ratios--is typically the most obvious need. But human resource investments frequently go beyond program staff. One of the most common decisions made during business planning is to supplement the management team by adding new expertise (such as a chief financial officer or chief operating officer) or another layer of managers.[8]

Questions to help identify required human resource investments:

• Do we have the right organizational structure in place to implement the plan?
• Does our existing staff have the skills and expertise to execute our strategic priorities?
• If so, how much capacity does our current staff have to take on new work? Do we need to add positions, or scale back our goals?
• If not, what roles do we need to create? And where will we find the right people to fill these roles?
• How soon do we need to bring new people on board? What’s a realistic timeline given our culture and ability to raise funds?

You may also decide that your organization is outgrowing its current organizational structure, and that you need to redesign its overall reporting structure. MY TURN’s business plan, for example, called for adding a new tier of regional managers to oversee local case workers in its expansion regions.

Organizations also use business planning as an opportunity to think about the development needs of existing staff members. It’s possible that you have some of the right people in place already, but will need to offer them training or other professional development support in order to carry out the new strategic priorities.

Infrastructure Investments

The temptation to allocate every available resource to program delivery can be almost irresistible. But over time, this takes a toll on the organization--particularly on its infrastructure. Common areas of under-investment include information technology systems, office space, and financial tools.

Questions to help identify necessary infrastructure investments:

• How much staff and client growth can our current office and program space accommodate?
• What new or improved systems do we need to do our work more effectively (e.g. IT performance, measurement, financial)?
• What human resource systems should we put in place to manage our organization (recruiting, orientation, training, evaluation)?

Business planning can provide a valuable opportunity to invest in the critical systems that will allow your organization to deliver services more effectively and more sustainably. Much like human resource investments, determining what infrastructure your organization needs requires that you understand both your current capacity and the new resources you’ll incur by pursuing your objectives.

MY TURN management, for instance, decided to contract with a technology firm to develop a new tracking system after assessing their existing technology in light of the new strategic priorities. This new IT capability was essential both to coordinate services for a growing number of participants and to support effective communication as MY TURN expands to new sites.

Financial Implications

Once you have a handle on the people and infrastructure, it’s time to establish the financial implications of implementing the new strategy. Is the picture that emerges reasonable? That is, when you add everything together, does this seem like a feasible rate at which to grow? To answer this question, consider both your organization and the external funding environment.

Internally, think about your organization’s capacity to manage a larger budget and the likely impact on your culture. For example, MY TURN’s management team realized that for cultural and financial reasons they couldn’t bring in all the new hires they needed at once. Rather, they needed to prioritize among the different positions. They opted to start with the vice presidents of programs and development and to phase in the other functional managers over three years.

Analyzing how the necessary investments will affect your cost per outcome is another good reality check. If you are bringing your existing service offering to more beneficiaries, for example, your unit cost may stay the same or even decrease because of greater scale, and this will flow through to your cost per outcome. If you are enhancing services, your cost per participant may very well increase; and yet if the investments translate to greater effectiveness, your cost per outcome could decrease.

Questions to help assess the financial implications:

• Can we manage the budget required by the human resource and infrastructure investments?
• How will the increased budget affect our organization’s culture?
• How will the new costs affect our cost per outcome?
• How is the funding community likely to respond to the spending plan? Can we raise the money we need?

For MY TURN, forecasting revealed that while the cost per youth served would increase, the organization still would be operating at significantly lower cost than peer organizations. This knowledge enabled MY TURN’s management team to have productive and informed discussions with current and potential funders.

Nothing is more frustrating than developing a solid plan only to find out that you can’t raise the money to implement it. Exploring the funding environment can help you gauge whether you’ll be able to raise adequate funds to support the new direction. One way to approach the question is to look at the commitments you’ve secured in the past and your fundraising prospects for the next few years. If, for example, your organization’s budget has been growing at a five-to-10 percent clip in recent years and fundraising has been difficult, it may be unrealistic to assume you will suddenly be able to double or triple that growth.

Another approach is to look into the fundraising capabilities of your peers, particularly those that have a larger budget than you currently do. This may point you toward new funders interested in supporting your strategic priorities or give you ideas for new fundraising techniques. When MY TURN’s management team decided to replicate their model in a handful of new cities, they researched the funding sources of larger peer organizations that were serving these communities, and surfaced several potential new foundation funders.

No matter how thorough your financial projections, however, there will always be a non-trivial degree of uncertainty. Short of having the money in the bank, can you know for certain that you’ll find a foundation that will fund a new initiative or that you’ll win a crucial government contract? Probably not.

Laying out two or three financial scenarios can help manage this risk, allowing you to determine in advance how you might prioritize under different funding situations. In addition to the core budget, you may want to consider a "stretch" scenario and a "delayed" scenario to help you think about what you would do in the event of a significant new funding stream or an unanticipated funding shortfall.

For example, Our Piece of the Pie’s management team developed a three-year budget to serve 1,250 youth by 2008. They then worked through "ambitious" and "delayed" fundraising scenarios, establishing what their investment priorities should be if they were able to raise funds for 2,100 youth or only half that number.

Staying on Track

Business planning requires a great deal of discipline; implementation takes even more. Many organizations find it essential to develop milestones that will help them check their progress and determine whether they’re on track as implementation ensues. A more focused set of milestones, sometimes called a dashboard, can be given to the board, so that they can help the management team monitor high-level progress. Many organizations also use a version of the milestones when communicating with funders and other supporters, in order to demonstrate their commitment to the new strategic direction and their progress in implementing it.

The organizations we have worked with tend to develop milestones across three categories: program, operations, and finance. In each case, the milestones flow directly from their strategic priorities and the decisions the team has made about the resources required to implement the plan.

Program Milestones

In its purest form, program performance measurement entails expensive multi-year studies conducted by evaluation experts. Such studies are not easy to come by; but even if they were, they would not trump the value of simple tracking of program milestones: outputs (e.g., the direct and immediate results of program activities, such as the number of children attending an after-school program) and outcomes (e.g., the benefits to the participants during and after the program activities, such as students earning better grades).[9] Systematically collecting this type of data is critical to knowing on an ongoing basis whether your organization is doing the work it intends and if that work is translating to the desired results.

Program milestones are the tangible goals associated with each of your strategic priorities. For example, if your goal is to expand a particular program, one of the key milestones probably will be the year-by-year targets for the number of recipients served. Program milestones should also include metrics designed to evaluate the effectiveness of your service delivery, so that you can track whether you are maintaining the quality of your program and having the desired impact.

In today’s funding environment, most grant applications call for some form of program metrics, so you probably have some systems for data collection and analysis in place already. However, many organizations use business planning as an opportunity to revisit their program metrics and to put in place a system that is more informative for management purposes.

A good monitoring system is one that generates valid, reliable information without overwhelming or intimidating the program staff responsible for collecting or interpreting the data. Balancing a desire for perfect data with considerations about how difficult--and expensive--the system might be to use is helpful in making certain that your approach fits the needs and capabilities of your organization.[10]

Recall Our Piece of the Pie’s decision to focus its services on youth. Our Piece of the Pie’s management established a clear set of program milestones tied to its goals of deepening its youth programs. The milestones specify not only the number of youth served, but also the hours and types of services they received. The management team also began to scope out specific targets for desired outcomes, such as the percentage of youth obtaining vocational certification or graduating from a two- or four-year college program. To gauge how Our Piece of the Pie is doing vis-a-vis these milestones, staff will track each participant on entry, throughout the youth’s involvement with the program, at exit, and one year after exit.

Operational and Financial Milestones

Like program milestones, operational and financial milestones are tangible goals related to the successful implementation of each strategic priority. Operational milestones encompass both human resources and infrastructure, while financial milestones lay out the year-by-year budget and revenue projections. In most cases, the resource implications you map to your strategic initiatives will become the milestones against which to chart your operational and financial progress.

To measure the success of their new strategy, MY TURN’s management team reconsidered many aspects of their existing metrics system. For each initiative, they laid out a detailed three-year hiring plan. In addition, they developed a timeline for the infrastructure investments, specifically the upgrade of the IT system and the newly designed system for collecting and monitoring program outcomes.

With a clear picture of when organizational and programmatic changes would take effect, MY TURN could then set yearly targets for its cost per participant and its revenue. Given that they had expanded the set of services offered to participants, MY TURN was eager to keep tabs on these figures. They were determined to remain a low-cost provider, even though the cost per participant was expected to rise, and so they agreed to review these financial milestones formally every six months in order to make sure their predictions were bearing out.

In establishing milestones, it is important to be clear about both timing and ownership. Some organizations create detailed calendars and assign various members of the organization discreet responsibilities each month. Others prefer a higher-level map in which timelines are divided into quarters or six-month increments, and the head of each program area or operating unit is responsible for mobilizing their team to get the work done on time.

Agreeing on milestones and setting them to paper is in many ways the final step in the formal business-planning process. At this point, it’s likely that your team will be excited about the strategic plan, and a bit nervous about the challenges ahead. One way to ease tensions is to remind everyone that the milestones are a guide, intended to inform decisions going forward, and not an end in and of themselves.

Returning to the milestones over time is a sign that your organization is continuing to think strategically. In some instances, organizations find the check-ins to be incredibly exhilarating, because they realize that they have achieved results faster than expected. In others, check-ins provide an opportunity to talk candidly about targets that were not met. Taking a step back and figuring out the cause of the delay may lead to new approaches or a change of course. And scheduling regular check-ins may create a safe space where your team feels comfortable voicing concerns about the next phase of the plan.

Getting Started

"If I knew beforehand what [business planning] was going to take, I’m not sure I would have signed up for the process. But now I can’t imagine not having done it."

As the examples in this article demonstrate, business planning can be valuable on many dimensions, not least the opportunity to align everyone in the organization around the priorities with the greatest potential for impact. It is also a challenging process, however; and like many things in life, the rewards are highly correlated with the effort the participants are willing to invest. As a result, we have found it helpful for an organization’s management team and board to ask themselves a few hard questions before deciding to embark on business planning:

• Are we prepared to tackle tough questions and, if necessary, make the trade-offs that flow from the answers to those questions? Business planning requires getting crystal clear about your mission, target beneficiaries, and goals and considering how each of your programs and activities affects your impact and financial sustainability. If the management team and board lack the will to act on the results there’s little point in undertaking the analysis and debate. Are you comfortable recognizing that resources are tight and making trade-offs? Does the board agree with the management team about the need for a plan? And will the board help uphold and implement whatever decisions are made?
• Can we devote sufficient time and energy to make the business-planning process worthwhile? Depending on the complexity of your organization and the amount of strategic thinking you have already done, it typically takes between three and six months to develop an effective business plan. Moreover, the process requires a great deal of hard work and patience from all involved.Setting aside this amount of time may seem untenable, but it is essential.
• Who will we involve in the process, and what will be expected of them? Participation in the business-planning process varies from organization to organization, depending on its culture and the style of its management team. While business planning is certainly not an initiative that executive directors should take on alone, the more people you involve, the longer the process is likely to take. In our experience, a successful process draws on a variety of ideas and involves staff and board members in meaningful ways, but resists becoming so consensus-driven that no trade-offs can be made. In most cases, the planning team includes the executive director, the top finance person, and key program leaders. These individuals typically need to devote 15 to 20 percent of their time to the process for three to six months. The team also might include two or three board members, either as full members or as close advisors, depending on the role the board plays in the organization’s governance. Bringing in an external resource--someone to help organize the planning process and facilitate discussions--is frequently a good idea. This person not only can lighten the load on the executive director, but also can increase the rigor of the planning process. He or she often is in a better position than the executive director to ask the tough questions, to help surface implicit assumptions, and to elicit candid input from team members. Once the team is assembled, everyone needs to be clear about their respective roles and responsibilities. A successful planning process almost always has a champion, a person within the organization who takes responsibility for leading the rest of the team through the inevitable bumps along the way.
• How will we solicit input from others and communicate progress?   Again, the answer to this question depends on the organization’s culture. Keep in mind, however, that any potential change generates uncertainty and that, not surprisingly, staff seldom embrace business plans that simply descend from management on high. In general, it makes sense to be transparent up front about the overall process and how it might affect everyone. Preview the kinds of questions you’ll be asking and the data you’ll be seeking, and be clear about how and when you’ll want input. Let people know when active debate will be encouraged (for example, when you’re outlining your aspirations for the next five years) and when discussions might be limited to a handful of decision-makers (when you’re determining compensation or the new organizational structure).

Closing Thoughts

Business planning is a highly iterative process that has significant short- and long-term benefits. In the short term, business planning is a powerful way to align your management team, your staff, and your board on achieving significant impact. The process is a chance to dig into your mission statement and to decide what your organization is willing to hold itself accountable for. Setting strategic priorities allows you to supplement intuition and consensus-driven conversations with evidence-based decisions. Finally, by figuring out the concrete resources--organizational, infrastructure-related, and financial--needed, you enhance your ability to actually get the work done.

Moreover, many of the organizations with which we’ve worked have found business planning to be a powerful way to engage the skills and energy of their board members. It’s an opportunity to talk candidly about what you do well and what you could do better, and organizations often find that their boards are untapped sources of advice and expertise.

Business planning also can have a long-term effect on the way your organization approaches decision-making. The questions posed during business planning are not the sort you answer only once. Rather, decision makers find themselves applying the approach they took to developing their business plan to opportunities and questions that arise down the road. At the end of the day, that is why so many nonprofit organizations find business planning truly energizing and transformational.

Appendix: The Value of the Written Business Plan

In this article, we’ve focused on the strategic and organizational benefits that come from engaging in the business-planning process. Now we want to look briefly at the product of this process--the written plan which is the vehicle for sharing the new strategy with the outside world.

In any particular field, there may be dozens of organizations working toward the same ultimate impact--ensuring that all children have access to high-quality education, for instance--but each group probably has its own point of view on how to tackle the challenge. As a result, your organization’s business plan should make a compelling case for your specific goals and the resources required to achieve them.

What does a business plan look like?

A business plan is a written document that someone unfamiliar with your organization could read and understand. Most business plans follow a similar flow, relying on a standard table of contents to organize the message. This simplicity can be misleading, and it’s led some organizations to fill in a table of contents quickly with fairly generic information. While a document that looks and feels like a business plan does emerge after a few days of effort, it’s unlikely that this plan will deliver any real value or increase the organization’s ability to maximize its social impact.

Sample Table of Contents:

I. Executive Summary II. Overview of History, Mission, and Strategic Intent III. Strategic Priorities IV. Organization and Financial Implications V. Milestones and Deliverables

Business plans share a common table of contents, because they are written with the same purpose: to build a compelling case for an organization by addressing a core set of questions. As with any good argument, the best business plans make their case step-by-step, explaining the why and where before getting to the details of when and how. The goal is to capture the "answers" that your organization agreed upon during the planning process. Keep in mind the reaction of one executive director, who after several months of planning finished the written document and commented, "It seems so simple--no one will ever believe how much work went into it!" For instance, while the planning team may have spent weeks assessing the organization’s strengths and weakness and researching its peers, the written plan should only include information about the decisions you eventually made.

Uses For the Business Plan

To understand the various uses for a business plan as a product, it’s helpful to think about the audience. Just as an executive director spends the average day communicating effectively with a broad spectrum of stakeholders--board members, funders, and program staff--a strong business plan should deliver a clear and compelling message to many different groups, both external and internal.

External uses

A well-written business plan that makes a strong case for your organization and its vision of the future, while also laying out the resources needed to achieve these goals, can be a powerful tool for marketing and fundraising. On several occasions, we’ve seen a good business plan translate directly into dollars. It may also allow your organization to stand out in a crowd, because the quality and depth of the product itself convey a serious commitment to getting things done well.

You can also use the written plan as an outreach tool when looking to create new partnerships with nonprofit organizations, corporations, or government agencies. Highlighting your organization’s strengths helps other organizations understand how you might be able to work together, and identifies unmet needs or gaps that other organizations might be able to fill.

Internal uses

While the business plan is usually written with an external audience in mind, it also can and should serve as an important internal roadmap. Treated as a "living" document--one that is updated when goals are met or timelines are extended--the business plan becomes an essential resource for aligning current staff, new hires, and the board.

While staff involvement in the business-planning process varies from organization to organization, most chose to share the completed plan broadly. In our experience, it’s common for the staff to rally around the plan, expressing enthusiasm--and sometimes relief--that everyone is finally in synch. Going forward, the written plan becomes a way to stay grounded and to focus on the organization’s core agenda, helping to set transparent boundaries so that trade-offs, while still difficult, seem more reasonable to the staff involved.

Beyond current staff, the plan can be useful in recruiting and hiring new staff. It provides a clear story about where you’ve been and where you’re headed. And it helps ensure that those jumping on board understand the role they will play in helping you get there.

The written plan can also help the organization’s board become more fully engaged. Nonprofit boards are becoming increasingly accountable for their organization’s impact and financial stability, so your board members need to have a clear understanding of its day-to-day operations and long-term goals. The written business plan can also help board members understand where and when they can best contribute their particular skills or networks. It’s common for nonprofit board members to feel as though they can’t offer much beyond funding, only to read the plan and realize they have experience that is directly relevant to one (or more) of the organization’s strategic priorities. Finally, the business plan is useful in recruiting new board members. It both provides an introduction to the organization and the key initiatives they’ll be asked to help implement in the years to come, and demonstrates your commitment to focus and strategic thinking.

Sources Used for This Article

[1] We use the term "business planning" to refer to the process of developing a comprehensive document that sets forth what an organization is working to accomplish and how it intends to succeed. Others use the term "strategic planning" to encompass the same set of activities.

[2] To learn more about Larkin’s experience with business planning, see the case study, " Larkin Street Youth Services: Sustaining Success ."

[3] To learn more about intended impact and theory of change, see the Bridgespan-authored article " Zeroing in on Impact ," originally published in the Spring 2004 issue of the Stanford Social Innovation Review (SSIR).

[4] To learn more about full cost analysis, please see the article, " Costs Are Cool ."

[5] To learn more about ELS’ experience with business planning, see the case study, " Expeditionary Learning Schools/Outward Bound: Staying True to Mission ."

[6] To learn more about MY TURN’s experience with business planning, see the case study, " MY TURN, Inc: Preparing for Regional Growth ."

[7] To learn more about the Steppingstone’s experience with business planning, see the case study, " The Steppingstone Foundation: Managing Growth ."

[8] To learn more about common human resource investments as organizations grow, see the white paper, " Growth of Youth-Serving Organizations ."

[9]  Measuring Program Outcomes: A Practical Approach , United Way of America.

[10] To learn more about measurement, see the case study, "Great Valley Center: Measuring for Mission." See also The Edna McConnell Clark Foundation’s  Guide to Assessing Program Quality and Effectiveness , available free of charge on the Foundation’s website,  www.emcf.org .

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The importance of a business plan

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

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

What is a business plan?

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

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

Why is a business plan important?

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

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

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

What is the purpose of a business plan?

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

10 reasons why you need a business plan

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

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

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

1. To help you with critical decisions

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

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

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

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2. To iron out the kinks

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

3. To avoid the big mistakes

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

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

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

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

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

4. To prove the viability of the business

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

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

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

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

5. To set better objectives and benchmarks

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

6. To communicate objectives and benchmarks

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

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

7. To provide a guide for service providers

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

8. To secure financing

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

Learn what you need to get a small business loan.

9. To better understand the broader landscape

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

10. To reduce risk

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

Business plan FAQs

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

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

What industry-specific issues can business plans help tackle?

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

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

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

Understanding the importance of a business plan

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

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

Related Posts

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

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

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What is a business plan? Definition, Purpose, and Types

In the world of business, a well-thought-out plan is often the key to success. This plan, known as a business plan, is a comprehensive document that outlines a company’s goals, strategies , and financial projections. Whether you’re starting a new business or looking to expand an existing one, a business plan is an essential tool.

As a business plan writer and consultant , I’ve crafted over 15,000 plans for a diverse range of businesses. In this article, I’ll be sharing my wealth of experience about what a business plan is, its purpose, and the step-by-step process of creating one. By the end, you’ll have a thorough understanding of how to develop a robust business plan that can drive your business to success.

What is a business plan?

A business plan is a roadmap for your business. It outlines your goals, strategies, and how you plan to achieve them. It’s a living document that you can update as your business grows and changes.

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Purposes of a Business Plan

These are the following purpose of business plan:

• Attract investors and lenders: If you’re seeking funding for your business , a business plan is a must-have. Investors and lenders want to see that you have a clear plan for how you’ll use their money to grow your business and generate revenue.
• Get organized and stay on track: Writing a business plan forces you to think through all aspects of your business, from your target market to your marketing strategy. This can help you identify any potential challenges and opportunities early on, so you can develop a plan to address them.
• Make better decisions: A business plan can help you make better decisions about your business by providing you with a framework to evaluate different options. For example, if you’re considering launching a new product, your business plan can help you assess the potential market demand, costs, and profitability.

What are the essential components of a business plan?

Executive summary

The executive summary is the most important part of your business plan, even though it’s the last one you’ll write. It’s the first section that potential investors or lenders will read, and it may be the only one they read. The executive summary sets the stage for the rest of the document by introducing your company’s mission or vision statement, value proposition, and long-term goals.

Business description or overview

The business description section of your business plan should introduce your business to the reader in a compelling and concise way. It should include your business name, years in operation, key offerings, positioning statement, and core values (if applicable). You may also want to include a short history of your company.

Product and price

In this section, the company should describe its products or services , including pricing, product lifespan, and unique benefits to the consumer. Other relevant information could include production and manufacturing processes, patents, and proprietary technology.

Competitive analysis

Every industry has competitors, even if your business is the first of its kind or has the majority of the market share. In the competitive analysis section of your business plan, you’ll objectively assess the industry landscape to understand your business’s competitive position. A SWOT analysis is a structured way to organize this section.

Target market

Your target market section explains the core customers of your business and why they are your ideal customers. It should include demographic, psychographic, behavioral, and geographic information about your target market.

Marketing plan

Marketing plan describes how the company will attract and retain customers, including any planned advertising and marketing campaigns . It also describes how the company will distribute its products or services to consumers.

After outlining your goals, validating your business opportunity, and assessing the industry landscape, the team section of your business plan identifies who will be responsible for achieving your goals. Even if you don’t have your full team in place yet, investors will be impressed by your clear understanding of the roles that need to be filled.

Financial plan

In the financial plan section,established businesses should provide financial statements , balance sheets , and other financial data. New businesses should provide financial targets and estimates for the first few years, and may also request funding.

Funding requirements

Since one goal of a business plan is to secure funding from investors , you should include the amount of funding you need, why you need it, and how long you need it for.

• Tip: Use bullet points and numbered lists to make your plan easy to read and scannable.

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Types of business plan.

Business plans can come in many different formats, but they are often divided into two main types: traditional and lean startup. The U.S. Small Business Administration (SBA) says that the traditional business plan is the more common of the two.

Lean startup business plans

Lean startup business plans are short (as short as one page) and focus on the most important elements. They are easy to create, but companies may need to provide more information if requested by investors or lenders.

Traditional business plans

Traditional business plans are longer and more detailed than lean startup business plans, which makes them more time-consuming to create but more persuasive to potential investors. Lean startup business plans are shorter and less detailed, but companies should be prepared to provide more information if requested.

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How often should a business plan be reviewed and revised?

A business plan should be reviewed and revised at least annually, or more often if the business is experiencing significant changes. This is because the business landscape is constantly changing, and your business plan needs to reflect those changes in order to remain relevant and effective.

Here are some specific situations in which you should review and revise your business plan:

• You have launched a new product or service line.
• You have entered a new market.
• You have experienced significant changes in your customer base or competitive landscape.
• You have made changes to your management team or organizational structure.
• You have raised new funding.

What are the key elements of a lean startup business plan?

A lean startup business plan is a short and simple way for a company to explain its business, especially if it is new and does not have a lot of information yet. It can include sections on the company’s value proposition, major activities and advantages, resources, partnerships, customer segments, and revenue sources.

What are some of the reasons why business plans don't succeed?

• Unrealistic assumptions: Business plans are often based on assumptions about the market, the competition, and the company’s own capabilities. If these assumptions are unrealistic, the plan is doomed to fail.
• Lack of focus: A good business plan should be focused on a specific goal and how the company will achieve it. If the plan is too broad or tries to do too much, it is unlikely to be successful.
• Poor execution: Even the best business plan is useless if it is not executed properly. This means having the right team in place, the necessary resources, and the ability to adapt to changing circumstances.
• Unforeseen challenges:  Every business faces challenges that could not be predicted or planned for. These challenges can be anything from a natural disaster to a new competitor to a change in government regulations.

What are the benefits of having a business plan?

• It helps you to clarify your business goals and strategies.
• It can help you to attract investors and lenders.
• It can serve as a roadmap for your business as it grows and changes.
• It can help you to make better business decisions.

How to write a business plan?

There are many different ways to write a business plan, but most follow the same basic structure. Here is a step-by-step guide:

• Executive summary.
• Company description.
• Management and organization description.
• Financial projections.

How to write a business plan step by step?

Start with an executive summary, then describe your business, analyze the market, outline your products or services, detail your marketing and sales strategies, introduce your team, and provide financial projections.

Why do I need a business plan for my startup?

A business plan helps define your startup’s direction, attract investors, secure funding, and make informed decisions crucial for success.

What are the key components of a business plan?

Key components include an executive summary, business description, market analysis, products or services, marketing and sales strategy, management and team, financial projections, and funding requirements.

Can a business plan help secure funding for my business?

Yes, a well-crafted business plan demonstrates your business’s viability, the use of investment, and potential returns, making it a valuable tool for attracting investors and lenders.

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The Ultimate Guide to Writing a Nonprofit Business Plan

A business plan can be an invaluable tool for your nonprofit. Even a short business plan pushes you to do research, crystalize your purpose, and polish your messaging. This blog shares what it is and why you need it, ten steps to help you write one, and the dos and don’ts of creating a nonprofit business plan.

Nonprofit business plans are dead — or are they?

For many nonprofit organizations, business plans represent outdated and cumbersome documents that get created “just for the sake of it” or because donors demand it.

But these plans are vital to organizing your nonprofit and making your dreams a reality! Furthermore, without a nonprofit business plan, you’ll have a harder time obtaining loans and grants , attracting corporate donors, meeting qualified board members, and keeping your nonprofit on track.

Even excellent ideas can be totally useless if you cannot formulate, execute, and implement a strategic plan to make your idea work. In this article, we share exactly what your plan needs and provide a nonprofit business plan template to help you create one of your own.

What is a Nonprofit Business Plan?

A nonprofit business plan describes your nonprofit as it currently is and sets up a roadmap for the next three to five years. It also lays out your goals and plans for meeting your goals. Your nonprofit business plan is a living document that should be updated frequently to reflect your evolving goals and circumstances.

A business plan is the foundation of your organization — the who, what, when, where, and how you’re going to make a positive impact.

The best nonprofit business plans aren’t unnecessarily long. They include only as much information as necessary. They may be as short as seven pages long, one for each of the essential sections you will read about below and see in our template, or up to 30 pages long if your organization grows.

Why do we need a Nonprofit Business Plan?

Regardless of whether your nonprofit is small and barely making it or if your nonprofit has been successfully running for years, you need a nonprofit business plan. Why?

When you create a nonprofit business plan, you are effectively creating a blueprint for how your nonprofit will be run, who will be responsible for what, and how you plan to achieve your goals.

Your nonprofit organization also needs a business plan if you plan to secure support of any kind, be it monetary, in-kind , or even just support from volunteers. You need a business plan to convey your nonprofit’s purpose and goals.

It sometimes also happens that the board, or the administration under which a nonprofit operates, requires a nonprofit business plan.

To sum it all up, write a nonprofit business plan to:

• Layout your goals and establish milestones.
• Better understand your beneficiaries, partners, and other stakeholders.
• Assess the feasibility of your nonprofit and document your fundraising/financing model.
• Attract investment and prove that you’re serious about your nonprofit.
• Attract a board and volunteers.
• Position your nonprofit and get clear about your message.
• Force you to research and uncover new opportunities.
• Iron out all the kinks in your plan and hold yourself accountable.

Before starting your nonprofit business plan, it is important to consider the following:

• Who is your audience?  E.g. If you are interested in fundraising, donors will be your audience. If you are interested in partnerships, potential partners will be your audience.
• What do you want their response to be? Depending on your target audience, you should focus on the key message you want them to receive to get the response that you want.

10-Step Guide on Writing a Business Plan for Nonprofits

Note: Steps 1, 2, and 3 are in preparation for writing your nonprofit business plan.

Step 1: Data Collection

Before even getting started with the writing, collect financial, operating, and other relevant data. If your nonprofit is already in operation, this should at the very least include financial statements detailing operating expense reports and a spreadsheet that indicates funding sources.

If your nonprofit is new, compile materials related to any secured funding sources and operational funding projections, including anticipated costs.

Step 2: Heart of the Matter

You are a nonprofit after all! Your nonprofit business plan should start with an articulation of the core values and your mission statement . Outline your vision, your guiding philosophy, and any other principles that provide the purpose behind the work. This will help you to refine and communicate your nonprofit message clearly.

Your nonprofit mission statement can also help establish your milestones, the problems your organization seeks to solve, who your organization serves, and its future goals.

Check out these great mission statement examples for some inspiration. For help writing your statement, download our free Mission & Vision Statements Worksheet .

Step 3: Outline

Create an outline of your nonprofit business plan. Write out everything you want your plan to include (e.g. sections such as marketing, fundraising, human resources, and budgets).

An outline helps you focus your attention. It gives you a roadmap from the start, through the middle, and to the end. Outlining actually helps us write more quickly and more effectively.

An outline will help you understand what you need to tell your audience, whether it’s in the right order, and whether the right amount of emphasis is placed on each topic.

Pro tip: Use our Nonprofit Business Plan Outline to help with this step! More on that later.

Step 4: Products, Programs, and Services

In this section, provide more information on exactly what your nonprofit organization does.

• What products, programs, or services do you provide?
• How does your nonprofit benefit the community?
• What need does your nonprofit meet and what are your plans for meeting that need?

E.g. The American Red Cross carries out its mission to prevent and relieve suffering with five key services: disaster relief, supporting America’s military families, lifesaving blood, health and safety services, and international service.

Don’t skimp out on program details, including the functions and beneficiaries. This is generally what most readers will care most about.

However, don’t overload the reader with technical jargon. Try to present some clear examples. Include photographs, brochures, and other promotional materials.

Step 5: Marketing Plan

A marketing plan is essential for a nonprofit to reach its goals. If your nonprofit is already in operation, describe in detail all current marketing activities: any outreach activities, campaigns, and other initiatives. Be specific about outcomes, activities, and costs.

If your nonprofit is new, outline projections based on specific data you gathered about your market.

This will frequently be your most detailed section because it spells out precisely how you intend to carry out your business plan.

• Describe your market. This includes your target audience, competitors, beneficiaries, donors, and potential partners.
• Include any market analyses and tests you’ve done.
• Outline your plan for reaching your beneficiaries.
• Outline your marketing activities, highlighting specific outcomes.

Step 6: Operational Plan

An operational plan describes how your nonprofit plans to deliver activities. In the operational plan, it is important to explain how you plan to maintain your operations and how you will evaluate the impact of your programs.

The operational plan should give an overview of the day-to-day operations of your organization such as the people and organizations you work with (e.g. partners and suppliers), any legal requirements that your organization needs to meet (e.g. if you distribute food, you’ll need appropriate licenses and certifications), any insurance you have or will need, etc.

In the operational plan, also include a section on the people or your team. Describe the people who are crucial to your organization and any staff changes you plan as part of your business plan.

Pro tip: If you have an organizational chart, you can include it in the appendix to help illustrate how your organization operates. Learn more about the six types of nonprofit organizational charts and see them in action in this free e-book . 

Step 7: Impact Plan

For a nonprofit, an impact plan is as important as a financial plan. A nonprofit seeks to create social change and a social return on investment, not just a financial return on investment.

Your impact plan should be precise about how your nonprofit will achieve this step. It should include details on what change you’re seeking to make, how you’re going to make it, and how you’re going to measure it.

This section turns your purpose and motivation into concrete accomplishments your nonprofit wants to make and sets specific goals and objectives.

These define the real bottom line of your nonprofit, so they’re the key to unlocking support. Funders want to know for whom, in what way, and exactly how you’ll measure your impact.

Answer these in the impact plan section of your business plan:

• What goals are most meaningful to the people you serve or the cause you’re fighting for?
• How can you best achieve those goals through a series of specific objectives?

E.g. “Finding jobs for an additional 200 unemployed people in the coming year.”

Step 8: Financial Plan

This is one of the most important parts of your nonprofit business plan. Creating a financial plan will allow you to make sure that your nonprofit has its basic financial needs covered.

Every nonprofit needs a certain level of funding to stay operational, so it’s essential to make sure your organization will meet at least that threshold.

To craft your financial plan:

• Outline your nonprofit’s current and projected financial status.
• Include an income statement, balance sheet , cash flow statement, and financial projections.
• List any grants you’ve received, significant contributions, and in-kind support.
• Include your fundraising plan .
• Identify gaps in your funding, and how you will manage them.
• Plan for what will be done with a potential surplus.
• Include startup costs, if necessary.

If your nonprofit is already operational, use established accounting records to complete this section of the business plan.

Knowing the financial details of your organization is incredibly important in a world where the public demands transparency about where their donations are going.

Pro tip : Leverage startup accelerators dedicated to nonprofits that can help you with funding, sponsorship, networking, and much more.

Step 9: Executive Summary

Normally written last but placed first in your business plan, your nonprofit executive summary provides an introduction to your entire business plan. The first page should describe your non-profit’s mission and purpose, summarize your market analysis that proves an identifiable need, and explain how your non-profit will meet that need.

The Executive Summary is where you sell your nonprofit and its ideas. Here you need to describe your organization clearly and concisely.

Make sure to customize your executive summary depending on your audience (i.e. your executive summary page will look different if your main goal is to win a grant or hire a board member).

Step 10: Appendix

Include extra documents in the section that are pertinent to your nonprofit: organizational chart , current fiscal year budget, a list of the board of directors, your IRS status letter, balance sheets, and so forth.

The appendix contains helpful additional information that might not be suitable for the format of your business plan (i.e. it might unnecessarily make it less readable or more lengthy).

Do’s and Dont’s of Nonprofit Business Plans – Tips

• Write clearly, using simple and easy-to-understand language.
• Get to the point, support it with facts, and then move on.
• Include relevant graphs and program descriptions.
• Include an executive summary.
• Provide sufficient financial information.
• Customize your business plan to different audiences.
• Stay authentic and show enthusiasm.
• Make the business plan too long.
• Use too much technical jargon.
• Overload the plan with text.
• Rush the process of writing, but don’t drag it either.
• Gush about the cause without providing a clear understanding of how you will help the cause through your activities.
• Keep your formatting consistent.
• Use standard 1-inch margins.
• Use a reasonable font size for the body.
• For print, use a serif font like Times New Roman or Courier. For digital, use sans serifs like Verdana or Arial.
• Start a new page before each section.
• Don’t allow your plan to print and leave a single line on an otherwise blank page.
• Have several people read over the plan before it is printed to make sure it’s free of errors.

Nonprofit Business Plan Template

To help you get started we’ve created a nonprofit business plan outline. This business plan outline will work as a framework regardless of your nonprofit’s area of focus. With it, you’ll have a better idea of how to lay out your nonprofit business plan and what to include. We have also provided several questions and examples to help you create a detailed nonprofit business plan.

Download Your Free Outline

At Donorbox, we strive to make your nonprofit experience as productive as possible, whether through our donation software  or through our advice and guides on the  Nonprofit Blog . Find more free, downloadable resources in our Library .

Many nonprofits start with passion and enthusiasm but without a proper business plan. It’s a common misconception that just because an organization is labeled a “nonprofit,” it does not need to operate in any way like a business.

However, a nonprofit is a type of business, and many of the same rules that apply to a for-profit company also apply to a nonprofit organization.

As outlined above, your nonprofit business plan is a combination of your marketing plan , strategic plan, operational plan, impact plan, and financial plan. Remember, you don’t have to work from scratch. Be sure to use the nonprofit business plan outline we’ve provided to help create one of your own. 

It’s important to note that your nonprofit should not be set in stone—it can and should change and evolve. It’s a living organism. While your vision, values, and mission will likely remain the same, your nonprofit business plan may need to be revised from time to time. Keep your audience in mind and adjust your plan as needed.

Finally, don’t let your plan gather dust on a shelf! Print it out, put up posters on your office walls, and read from it during your team meetings. Use all the research, data, and ideas you’ve gathered and put them into action!

If you want more help with nonprofit management tips and fundraising resources, visit our Nonprofit Blog . We also have dedicated articles for starting a nonprofit in different states in the U.S., including Texas , Minnesota , Oregon , Arizona , Illinois , and more.

Learn about our all-in-one online fundraising tool, Donorbox, and its simple-to-use features on the website here .

Raviraj heads the sales and marketing team at Donorbox. His growth-hacking abilities have helped Donorbox boost fundraising efforts for thousands of nonprofit organizations.

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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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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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What is a Business Plan? Definition and Resources

9 min. read

Updated July 29, 2024

If you’ve ever jotted down a business idea on a napkin with a few tasks you need to accomplish, you’ve written a business plan — or at least the very basic components of one.

The origin of formal business plans is murky. But they certainly go back centuries. And when you consider that 20% of new businesses fail in year 1 , and half fail within 5 years, the importance of thorough planning and research should be clear.

But just what is a business plan? And what’s required to move from a series of ideas to a formal plan? Here we’ll answer that question and explain why you need one to be a successful business owner.

• What is a business plan?

A business plan lays out a strategic roadmap for any new or growing business.

Any entrepreneur with a great idea for a business needs to conduct market research , analyze their competitors , validate their idea by talking to potential customers, and define their unique value proposition .

The business plan captures that opportunity you see for your company: it describes your product or service and business model , and the target market you’ll serve. 

It also includes details on how you’ll execute your plan: how you’ll price and market your solution and your financial projections .

Reasons for writing a business plan

If you’re asking yourself, ‘Do I really need to write a business plan?’ consider this fact: 

Companies that commit to planning grow 30% faster than those that don’t.

Creating a business plan is crucial for businesses of any size or stage. It helps you develop a working business and avoid consequences that could stop you before you ever start.

If you plan to raise funds for your business through a traditional bank loan or SBA loan , none of them will want to move forward without seeing your business plan. Venture capital firms may or may not ask for one, but you’ll still need to do thorough planning to create a pitch that makes them want to invest.

But it’s more than just a means of getting your business funded . The plan is also your roadmap to identify and address potential risks. 

It’s not a one-time document. Your business plan is a living guide to ensure your business stays on course.

Related: 14 of the top reasons why you need a business plan

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What research shows about business plans

Numerous studies have established that planning improves business performance:

• 71% of fast-growing companies have business plans that include budgets, sales goals, and marketing and sales strategies.
• Companies that clearly define their value proposition are more successful than those that can’t.
• Companies or startups with a business plan are more likely to get funding than those without one.
• Starting the business planning process before investing in marketing reduces the likelihood of business failure.

The planning process significantly impacts business growth for existing companies and startups alike.

Read More: Research-backed reasons why writing a business plan matters

When should you write a business plan?

No two business plans are alike. 

Yet there are similar questions for anyone considering writing a plan to answer. One basic but important question is when to start writing it.

A Harvard Business Review study found that the ideal time to write a business plan is between 6 and 12 months after deciding to start a business. 

But the reality can be more nuanced – it depends on the stage a business is in, or the type of business plan being written.

Ideal times to write a business plan include:

• When you have an idea for a business
• When you’re starting a business
• When you’re preparing to buy (or sell)
• When you’re trying to get funding
• When business conditions change
• When you’re growing or scaling your business

Read More: The best times to write or update your business plan

How often should you update your business plan?

As is often the case, how often a business plan should be updated depends on your circumstances.

A business plan isn’t a homework assignment to complete and forget about. At the same time, no one wants to get so bogged down in the details that they lose sight of day-to-day goals. 

But it should cover new opportunities and threats that a business owner surfaces, and incorporate feedback they get from customers. So it can’t be a static document.

Related Reading: 5 fundamental principles of business planning

For an entrepreneur at the ideation stage, writing and checking back on their business plan will help them determine if they can turn that idea into a profitable business .

And for owners of up-and-running businesses, updating the plan (or rewriting it) will help them respond to market shifts they wouldn’t be prepared for otherwise. 

It also lets them compare their forecasts and budgets to actual financial results. This invaluable process surfaces where a business might be out-performing expectations and where weak performance may require a prompt strategy change. 

The planning process is what uncovers those insights.

Related Reading: 10 prompts to help you write a business plan with AI

• How long should your business plan be?

Thinking about a business plan strictly in terms of page length can risk overlooking more important factors, like the level of detail or clarity in the plan. 

Not all of the plan consists of writing – there are also financial tables, graphs, and product illustrations to include.

But there are a few general rules to consider about a plan’s length:

• Your business plan shouldn’t take more than 15 minutes to skim.
• Business plans for internal use (not for a bank loan or outside investment) can be as short as 5 to 10 pages.

A good practice is to write your business plan to match the expectations of your audience. 

If you’re walking into a bank looking for a loan, your plan should match the formal, professional style that a loan officer would expect . But if you’re writing it for stakeholders on your own team—shorter and less formal (even just a few pages) could be the better way to go.

The length of your plan may also depend on the stage your business is in. 

For instance, a startup plan won’t have nearly as much financial information to include as a plan written for an established company will.

Read More: How long should your business plan be?  

What information is included in a business plan?

The contents of a plan business plan will vary depending on the industry the business is in. 

After all, someone opening a new restaurant will have different customers, inventory needs, and marketing tactics to consider than someone bringing a new medical device to the market. 

But there are some common elements that most business plans include:

• Executive summary: An overview of the business operation, strategy, and goals. The executive summary should be written last, despite being the first thing anyone will read.
• Products and services: A description of the solution that a business is bringing to the market, emphasizing how it solves the problem customers are facing.
• Market analysis: An examination of the demographic and psychographic attributes of likely customers, resulting in the profile of an ideal customer for the business.
• Competitive analysis: Documenting the competitors a business will face in the market, and their strengths and weaknesses relative to those competitors.
• Marketing and sales plan: Summarizing a business’s tactics to position their product or service favorably in the market, attract customers, and generate revenue.
• Operational plan: Detailing the requirements to run the business day-to-day, including staffing, equipment, inventory, and facility needs.
• Organization and management structure: A listing of the departments and position breakdown of the business, as well as descriptions of the backgrounds and qualifications of the leadership team.
• Key milestones: Laying out the key dates that a business is projected to reach certain milestones , such as revenue, break-even, or customer acquisition goals.
• Financial plan: Balance sheets, cash flow forecast , and sales and expense forecasts with forward-looking financial projections, listing assumptions and potential risks that could affect the accuracy of the plan.
• Appendix: All of the supporting information that doesn’t fit into specific sections of the business plan, such as data and charts.

Read More: Use this business plan outline to organize your plan

• Different types of business plans

A business plan isn’t a one-size-fits-all document. There are numerous ways to create an effective business plan that fits entrepreneurs’ or established business owners’ needs. 

Here are a few of the most common types of business plans for small businesses:

• One-page plan : Outlining all of the most important information about a business into an adaptable one-page plan.
• Growth plan : An ongoing business management plan that ensures business tactics and strategies are aligned as a business scales up.
• Internal plan : A shorter version of a full business plan to be shared with internal stakeholders – ideal for established companies considering strategic shifts.

Business plan vs. operational plan vs. strategic plan

• What questions are you trying to answer? 
• Are you trying to lay out a plan for the actual running of your business?
• Is your focus on how you will meet short or long-term goals? 

Since your objective will ultimately inform your plan, you need to know what you’re trying to accomplish before you start writing.

While a business plan provides the foundation for a business, other types of plans support this guiding document.

An operational plan sets short-term goals for the business by laying out where it plans to focus energy and investments and when it plans to hit key milestones.

Then there is the strategic plan , which examines longer-range opportunities for the business, and how to meet those larger goals over time.

Read More: How to use a business plan for strategic development and operations

• Business plan vs. business model

If a business plan describes the tactics an entrepreneur will use to succeed in the market, then the business model represents how they will make money. 

The difference may seem subtle, but it’s important. 

Think of a business plan as the roadmap for how to exploit market opportunities and reach a state of sustainable growth. By contrast, the business model lays out how a business will operate and what it will look like once it has reached that growth phase.

Learn More: The differences between a business model and business plan

• Moving from idea to business plan

Now that you understand what a business plan is, the next step is to start writing your business plan . 

The best way to start is by reviewing examples and downloading a business plan template . These resources will provide you with guidance and inspiration to help you write a plan.

We recommend starting with a simple one-page plan ; it streamlines the planning process and helps you organize your ideas. However, if one page doesn’t fit your needs, there are plenty of other great templates available that will put you well on your way to writing a useful business plan.

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

Table of Contents

• Reasons to write a business plan
• Business planning research
• When to write a business plan
• When to update a business plan
• Information to include
• Business vs. operational vs. strategic plans

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Table of Contents

How to make a business plan

How to make a good business plan: step-by-step guide.

A business plan is a strategic roadmap used to navigate the challenging journey of entrepreneurship. It's the foundation upon which you build a successful business.

A well-crafted business plan can help you define your vision, clarify your goals, and identify potential problems before they arise.

But where do you start? How do you create a business plan that sets you up for success?

This article will explore the step-by-step process of creating a comprehensive business plan.

What is a business plan?

A business plan is a formal document that outlines a business's objectives, strategies, and operational procedures. It typically includes the following information about a company:

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

A business plan serves as a roadmap for a company's success and provides a blueprint for its growth and development. It helps entrepreneurs and business owners organize their ideas, evaluate the feasibility, and identify potential challenges and opportunities.

As well as serving as a guide for business owners, a business plan can attract investors and secure funding. It demonstrates the company's understanding of the market, its ability to generate revenue and profits, and its strategy for managing risks and achieving success.

Business plan vs. business model canvas

A business plan may seem similar to a business model canvas, but each document serves a different purpose.

A business model canvas is a high-level overview that helps entrepreneurs and business owners quickly test and iterate their ideas. It is often a one-page document that briefly outlines the following:

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

On the other hand, a Business Plan Template provides a more in-depth analysis of a company's strategy and operations. It is typically a lengthy document and requires significant time and effort to develop.

A business model shouldn’t replace a business plan, and vice versa. Business owners should lay the foundations and visually capture the most important information with a Business Model Canvas Template . Because this is a fast and efficient way to communicate a business idea, a business model canvas is a good starting point before developing a more comprehensive business plan.

A business plan can aim to secure funding from investors or lenders, while a business model canvas communicates a business idea to potential customers or partners.

Why is a business plan important?

A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success.

Here are some of the many benefits of having a thorough business plan.

Helps to define the business goals and objectives

A business plan encourages you to think critically about your goals and objectives. Doing so lets you clearly understand what you want to achieve and how you plan to get there.

A well-defined set of goals, objectives, and key results also provides a sense of direction and purpose, which helps keep business owners focused and motivated.

Guides decision-making

A business plan requires you to consider different scenarios and potential problems that may arise in your business. This awareness allows you to devise strategies to deal with these issues and avoid pitfalls.

With a clear plan, entrepreneurs can make informed decisions aligning with their overall business goals and objectives. This helps reduce the risk of making costly mistakes and ensures they make decisions with long-term success in mind.

Attracts investors and secures funding

Investors and lenders often require a business plan before considering investing in your business. A document that outlines the company's goals, objectives, and financial forecasts can help instill confidence in potential investors and lenders.

A well-written business plan demonstrates that you have thoroughly thought through your business idea and have a solid plan for success.

Identifies potential challenges and risks

A business plan requires entrepreneurs to consider potential challenges and risks that could impact their business. For example:

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

By identifying these potential challenges, entrepreneurs can develop strategies to mitigate risks and overcome challenges. This can reduce the likelihood of costly mistakes and ensure the business is well-positioned to take on any challenges.

Provides a basis for measuring success

A business plan serves as a framework for measuring success by providing clear goals and financial projections . Entrepreneurs can regularly refer to the original business plan as a benchmark to measure progress. By comparing the current business position to initial forecasts, business owners can answer questions such as:

Are we where we want to be at this point?

Did we achieve our goals?

If not, why not, and what do we need to do?

After assessing whether the business is meeting its objectives or falling short, business owners can adjust their strategies as needed.

How to make a business plan step by step

The steps below will guide you through the process of creating a business plan and what key components you need to include.

1. Create an executive summary

Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.

Keep your executive summary concise and clear with the Executive Summary Template . The simple design helps readers understand the crux of your business plan without reading the entire document.

2. Write your company description

Provide a detailed explanation of your company. Include information on what your company does, the mission statement, and your vision for the future.

Provide additional background information on the history of your company, the founders, and any notable achievements or milestones.

3. Conduct a market analysis

Conduct an in-depth analysis of your industry, competitors, and target market. This is best done with a SWOT analysis to identify your strengths, weaknesses, opportunities, and threats. Next, identify your target market's needs, demographics, and behaviors.

Use the Competitive Analysis Template to brainstorm answers to simple questions like:

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

These questions should give you valuable insights into the current market and where your business stands.

4. Describe your products and services

Provide detailed information about your products and services. This includes pricing information, product features, and any unique selling points.

Use the Product/Market Fit Template to explain how your products meet the needs of your target market. Describe what sets them apart from the competition.

5. Design a marketing and sales strategy

Outline how you plan to promote and sell your products. Your marketing strategy and sales strategy should include information about your:

Pricing strategy

Advertising and promotional tactics

Sales channels

The Go to Market Strategy Template is a great way to visually map how you plan to launch your product or service in a new or existing market.

6. Determine budget and financial projections

Document detailed information on your business’ finances. Describe the current financial position of the company and how you expect the finances to play out.

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

Define how your company is structured and who will be responsible for each aspect of the business. Use the Business Organizational Chart Template to visually map the company’s teams, roles, and hierarchy.

As well as the organization and management structure, discuss the legal structure of your business. Clarify whether your business is a corporation, partnership, sole proprietorship, or LLC.

8. Make an action plan

At this point in your business plan, you’ve described what you’re aiming for. But how are you going to get there? The Action Plan Template describes the following steps to move your business plan forward. Outline the next steps you plan to take to bring your business plan to fruition.

Types of business plans

Several types of business plans cater to different purposes and stages of a company's lifecycle. Here are some of the most common types of business plans.

Startup business plan

A startup business plan is typically an entrepreneur's first business plan. This document helps entrepreneurs articulate their business idea when starting a new business.

Not sure how to make a business plan for a startup? It’s pretty similar to a regular business plan, except the primary purpose of a startup business plan is to convince investors to provide funding for the business. A startup business plan also outlines the potential target market, product/service offering, marketing plan, and financial projections.

Strategic business plan

A strategic business plan is a long-term plan that outlines a company's overall strategy, objectives, and tactics. This type of strategic plan focuses on the big picture and helps business owners set goals and priorities and measure progress.

The primary purpose of a strategic business plan is to provide direction and guidance to the company's management team and stakeholders. The plan typically covers a period of three to five years.

Operational business plan

An operational business plan is a detailed document that outlines the day-to-day operations of a business. It focuses on the specific activities and processes required to run the business, such as:

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

The primary purpose of an operational business plan is to ensure that the business runs efficiently and effectively. It helps business owners manage their resources, track their performance, and identify areas for improvement.

Growth-business plan

A growth-business plan is a strategic plan that outlines how a company plans to expand its business. It helps business owners identify new market opportunities and increase revenue and profitability. The primary purpose of a growth-business plan is to provide a roadmap for the company's expansion and growth.

The 3 Horizons of Growth Template is a great tool to identify new areas of growth. This framework categorizes growth opportunities into three categories: Horizon 1 (core business), Horizon 2 (emerging business), and Horizon 3 (potential business).

One-page business plan

A one-page business plan is a condensed version of a full business plan that focuses on the most critical aspects of a business. It’s a great tool for entrepreneurs who want to quickly communicate their business idea to potential investors, partners, or employees.

A one-page business plan typically includes sections such as business concept, value proposition, revenue streams, and cost structure.

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

A template can help you organize your thoughts and effectively communicate your business ideas and strategies. Starting with a template can also save you time and effort when formatting your plan.

Miro’s extensive library of customizable templates includes all the necessary sections for a comprehensive business plan. With our templates, you can confidently present your business plans to stakeholders and investors.

Be practical

Avoid overestimating revenue projections or underestimating expenses. Your business plan should be grounded in practical realities like your budget, resources, and capabilities.

Be specific

Provide as much detail as possible in your business plan. A specific plan is easier to execute because it provides clear guidance on what needs to be done and how. Without specific details, your plan may be too broad or vague, making it difficult to know where to start or how to measure success.

Be thorough with your research

Conduct thorough research to fully understand the market, your competitors, and your target audience . By conducting thorough research, you can identify potential risks and challenges your business may face and develop strategies to mitigate them.

Get input from others

It can be easy to become overly focused on your vision and ideas, leading to tunnel vision and a lack of objectivity. By seeking input from others, you can identify potential opportunities you may have overlooked.

Review and revise regularly

A business plan is a living document. You should update it regularly to reflect market, industry, and business changes. Set aside time for regular reviews and revisions to ensure your plan remains relevant and effective.

Create a winning business plan to chart your path to success

Starting or growing a business can be challenging, but it doesn't have to be. Whether you're a seasoned entrepreneur or just starting, a well-written business plan can make or break your business’ success.

The purpose of a business plan is more than just to secure funding and attract investors. It also serves as a roadmap for achieving your business goals and realizing your vision. With the right mindset, tools, and strategies, you can develop a visually appealing, persuasive business plan.

Ready to make an effective business plan that works for you? Check out our library of ready-made strategy and planning templates and chart your path to success.

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What Is a Business Plan? Definition and Planning Essentials Explained

Posted august 1, 2024 by kody wirth.

What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance. 

A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner. 

Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed. 

What is a business plan?

A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.  

Why do you need a business plan?

The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster , and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis. 

These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential. 

The biggest mistake you can make is not writing a business plan, and the second is never updating it. By regularly reviewing your plan, you can understand what parts of your strategy are working and those that are not.

That just scratches the surface of why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .  

What can you do with your plan?

So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.

Test an idea

Writing a plan isn’t just for those who are ready to start a business. It’s just as valuable for those who have an idea and want to determine whether it’s actually possible. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful. 

Market and competitive research alone can tell you a lot about your idea. 

• Is the marketplace too crowded?
• Is the solution you have in mind not really needed? 

Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability, and you can paint a pretty clear picture of your business’s potential.

Document your strategy and goals

Understanding where you’re going and how you’re going to get there is vital for those starting or managing a business. Writing your plan helps you do that. It ensures that you consider all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen. 

With a plan in place, you’ll know where you want your business to go and how you’ve performed in the past. This alone prepares you to take on challenges, review what you’ve done before, and make the right adjustments.

Pursue funding

Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors. 

So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can keep it up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.

The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but also easily report on how it’s been used. 

Better manage your business

A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.

Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.

What should your business plan include?

The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see. 

Executive summary

The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover:

• The problem you’re solving
• A description of your product or service
• Your target market
• Organizational structure
• A financial summary
• Necessary funding requirements.

This will be the first part of your plan, but it’s easiest to write it after you’ve created your full plan.

Products & Services

When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table. 

Lastly, outline the steps or milestones you’ll need to hit to launch your business successfully. If you’ve already achieved some initial milestones, like taking pre-orders or early funding, be sure to include them here to further prove your business’s validity. 

Market analysis

A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the industry’s overall state and potential, who your ideal customers are, the positioning of your competition, and how you intend to position your own business.

This helps you better explore the market’s long-term trends, what challenges to expect, and how you will need to introduce and even price your products or services.

Check out our full guide for how to conduct a market analysis in just four easy steps.  

Marketing & sales

Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add them. 

Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.

Check out our full write-up to learn how to create a cohesive marketing strategy for your business. 

Organization & management

This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history.

Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.

Financial projections

Possibly the most important piece of your plan, your financials section is vital for showcasing your business’s viability. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex, but it can be far easier than you think. 

Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate. 

Here are the statements you should include in your financial plan:

• Sales and revenue projections
• Profit and loss statement
• Cash flow statement
• Balance sheet

The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first; only add documentation that you think will benefit anyone reading your plan.

Types of business plans explained

While all business plans cover similar categories, the style and function depend on how you intend to use your business plan . So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering. 

Traditional business plan

The tried-and-true traditional business plan (sometimes called a detailed business plan ) is a formal document meant for external purposes. It is typically required when applying for a business loan or pitching to investors. 

It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual. 

A traditional 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. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information. 

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. 

The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update and much easier for you, your team, and anyone else to visualize your business operations. 

The business model canvas is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan . Sometimes referred to as a lean plan, this format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.

By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan. 

A one-page business plan is 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.

Growth plan

Now, the option that we here at LivePlan recommend is a growth plan . However, growth planning 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 holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . 

However, it’s even easier to convert into a more detailed business plan thanks to how heavily it’s tied to your financials. The overall goal of growth planning isn’t to just produce documents that you use once and shelve. Instead, the growth planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.

It’s faster, concise, more focused on financial performance, and ensures that your plan is always up-to-date.

How can you write your own business plan?

Now that you know the definition of a business plan, it’s time to write your own.

Get started by downloading our free business plan template or try a business plan builder like LivePlan for a fully guided experience and an AI-powered Assistant to help you write, generate ideas, and analyze your business performance.

No matter which option you choose, writing a business plan will set you up for success. You can use it to test an idea, figure out how you’ll start, and pursue funding.  And if you review and revise your plan regularly, it can turn into your best business management tool.

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Writing a business plan

Business plan.

The style of a business plan can be very diverse. Remember it should be proportionate to what it is you want to do. For example, if you are taking on a small piece of land or a storage shed you will not need to produce a huge detailed document. 

You need to show who you are, what you want to do and how you are going to pay the bills.  If you are taking on a big asset then your business plan will be much more detailed so that you can ensure that the plans for developing and running a land or building asset are robust and realistic.

Presentation -  whatever sort of presentation you choose, it is important to bring the plan alive. Do not write a plan that consists of page after page of unbroken text! Readers absorb information in a variety of ways: through text, graphically, numerically and visually. 

• Use headings and sub-headings to break up the text and tables, graphics or pictures to illustrate key points anad bring the plan to life. 
• Using tables and figures can significantly reduce the amount of text and picture or diagram can tell a vivid story. Be sure that every table, figure and picture is numbered, titled and referred to in the text.   

Be relevant to your type of business -  the presentation is in your control and should be relevant to your type of business. For example, if this is an artistic venture, you might want to consider your style of presentation as part of your marketing or brand.

Be relevant to your audience -  a business plan, with a new asset at its heart, will have a number of different audiences and readers eg the relevant authority (transferring organisation), funders, members of the group and other stakeholders. Each type of reader will consider a business plan from a different viewpoint, so it may be necessary to modify the content of a business plan to meet the needs of the reader. An overview of what different readers look for is outlined below.

What different readers look for: 

 Business Plan Don’ts Don’t make claims you can’t back up Don’t waffle Don’t assume the reader knows the industry Don’t leave out relevant facts and figures Don’t overload on information Don’t oversimplify Don’t struggle with trying to make your plan fit a generic template

The following table provides an example template to guide the content of your business plan. 

Related Resources

Business Plan Template

A Business Plan template which will help to ensure that the plans for developing and running a land or building asset are robust and realistic.

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How To Write a Business Plan

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Starting a business is a wild ride, and a solid business plan can be the key to keeping you on track. A business plan is essentially a roadmap for your business — outlining your goals, strategies, market analysis and financial projections. Not only will it guide your decision-making, a business plan can help you secure funding with a loan or from investors .

Writing a business plan can seem like a huge task, but taking it one step at a time can break the plan down into manageable milestones. Here is our step-by-step guide on how to write a business plan.

Table of contents

• Write your executive summary
• Do your market research homework
• Set your business goals and objectives
• Plan your business strategy
• Describe your product or service
• Crunch the numbers
• Finalize your business plan

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Step 1: Write your executive summary

Though this will be the first page of your business plan , we recommend you actually write the executive summary last. That’s because an executive summary highlights what’s to come in the business plan but in a more condensed fashion.

An executive summary gives stakeholders who are reading your business plan the key points quickly without having to comb through pages and pages. Be sure to cover each successive point in a concise manner, and include as much data as necessary to support your claims.

You’ll cover other things too, but answer these basic questions in your executive summary:

• Idea: What’s your business concept? What problem does your business solve? What are your business goals?
• Product: What’s your product/service and how is it different?
• Market: Who’s your audience? How will you reach customers?
• Finance: How much will your idea cost? And if you’re seeking funding, how much money do you need? How much do you expect to earn? If you’ve already started, where is your revenue at now?

Step 2: Do your market research homework

The next step in writing a business plan is to conduct market research . This involves gathering information about your target market (or customer persona), your competition, and the industry as a whole. You can use a variety of research methods such as surveys, focus groups, and online research to gather this information. Your method may be formal or more casual, just make sure that you’re getting good data back.

This research will help you to understand the needs of your target market and the potential demand for your product or service—essential aspects of starting and growing a successful business.

Step 3: Set your business goals and objectives

Once you’ve completed your market research, you can begin to define your business goals and objectives. What is the problem you want to solve? What’s your vision for the future? Where do you want to be in a year from now?

Use this step to decide what you want to achieve with your business, both in the short and long term. Try to set SMART goals—specific, measurable, achievable, relevant, and time-bound benchmarks—that will help you to stay focused and motivated as you build your business.

Step 4: Plan your business strategy

Your business strategy is how you plan to reach your goals and objectives. This includes details on positioning your product or service, marketing and sales strategies, operational plans, and the organizational structure of your small business.

Make sure to include key roles and responsibilities for each team member if you’re in a business entity with multiple people.

Step 5: Describe your product or service

In this section, get into the nitty-gritty of your product or service. Go into depth regarding the features, benefits, target market, and any patents or proprietary tech you have. Make sure to paint a clear picture of what sets your product apart from the competition—and don’t forget to highlight any customer benefits.

Step 6: Crunch the numbers

Financial analysis is an essential part of your business plan. If you’re already in business that includes your profit and loss statement , cash flow statement and balance sheet .

These financial projections will give investors and lenders an understanding of the financial health of your business and the potential return on investment.

You may want to work with a financial professional to ensure your financial projections are realistic and accurate.

Step 7: Finalize your business plan

Once you’ve completed everything, it's time to finalize your business plan. This involves reviewing and editing your plan to ensure that it is clear, concise, and easy to understand.

You should also have someone else review your plan to get a fresh perspective and identify any areas that may need improvement. You could even work with a free SCORE mentor on your business plan or use a SCORE business plan template for more detailed guidance.

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The takeaway

Writing a business plan is an essential process for any forward-thinking entrepreneur or business owner. A business plan requires a lot of up-front research, planning, and attention to detail, but it’s worthwhile. Creating a comprehensive business plan can help you achieve your business goals and secure the funding you need.

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When Community Becomes Your Competitive Advantage

by Jeffrey Bussgang and Jono Bacon

Summary .   

If a company can transition from simply delivering a product to building a community, they can unlock extraordinary competitive advantages and create a superior business model. In fact, strong communities help support the ideal business model. Specifically: • Enthusiastic members help acquire new members, resulting in lower customer acquisition costs and a tight viral loop. • Members of a community are loath to abandon it, resulting in increased member retention and therefore improved lifetime value. • Members of a community support other members in that community, resulting in high gross margins due to a lower cost of service.

The result of this are very real network effects: as engagement grows, the community gets smarter, faster to respond, more globally available, and generates more value.

We’ve seen a precipitous decline in participation in civic organizations in recent years; membership numbers are down for religious groups, labor organizations and non-profits. A cynic could interpret these trends as a sign that we have all become digital hermits, with our noses buried in our highly personalized screens. The reality is that powerful communities are not just alive and well but also booming. They just look different than they did 50—even 20—years ago. They are organized around businesses and brands and providing profound opportunities for companies around the world.

Partner Center

Finding Investors

How Funding Works

Idea Validation Bootcamp

Pitch Deck Bootcamp

Pitching Investors

Product MVP

Product/MVP

Idea Validation

• Customer Acquisition

Emotional Support

What Is a Business Plan: An Introductory Guide

The Startups Team

Introduction

It’s been said that a goal without a plan is just a wish.

In the same way, a startup idea without a business plan is little more than just that: an idea — no matter how earth-shatteringly innovative that idea might be.

Whether you’ve committed to starting a business for the first time or you’re still tiptoeing around the idea , chances are you’ve described your startup concept to your friends or family. And chances are you’ve been told by someone that having a well-thought-out business plan in place is absolutely vital for every entrepreneur.

But what you might not have been told was why having a business plan is so important, what critical elements to include, how much of it to include, and how to put it all together in a way that gets potential investors fired up about your idea and eager to get involved.

If that’s the case, then you’re in luck — we’re about to break all of this down for you step by step.

If you'd like to see some samples - we've got 4 awesome business plans for you here.

Business Plan, Defined

First things first. What is a business plan, exactly?

Quite simply, a business plan is a detailed roadmap of your business — a written document that communicates to readers and potential investors what your business goals are and the steps that you plan on taking to achieve them.

You’ll often hear startup origin stories that begin with Founders sitting at a bar or in a restaurant when suddenly they’re struck by that “aha!” moment of inspiration and begin furiously scribbling down their concept on a cocktail napkin.

This has become something of a romanticized idea in the startup world. But if you’ve had an experience similar to this, then you’ve got the makings of a business plan in its most basic, stripped-down form. And while the shorter, one-page business plan can be ideal in certain situations (more on that later), fleshing out a hastily-scrawled cocktail napkin blueprint into a comprehensive, actionable business plan requires a bit more work (and fewer drinks).

We say “actionable” because the very best business plans do more than just inform readers about what your company does — they excite and persuade them about jumping on the opportunity to get involved (and mutually benefit) in helping your company succeed.

How do you do this?

By answering at a very high level the big, fundamental questions your readers will have about your business going in. These questions fall into two key categories: the WHY questions and the HOW questions.

The WHY Questions:

The HOW Questions:

• How will you make money?
• How will you get customers?
• How will you grow your business?

In the process of answering these questions, your business plan should illustrate that your company has:

• The right product/service
• The right market (at the right time)
• The right team
• The right strategy

Why You Need a Business Plan (And How it Can Help You)

Making sure that you have a polished business plan at the ready might seem like one of those things that you’re just kind of expected to do as a Founder. But it really is about more than just going through the motions. You’ve been beaten over the head with the assertion that you need one of these things.

Now here’s a few reasons why.

A. To Optimize Your Strategies

Laying out your objectives and researching your market helps you uncover trends that could help or harm your forward progress and allow you to tailor your growth strategies accordingly.

B. To Give You Direction

A business plan can help you organize your ideas so you can figure out which goals to set, which to prioritize, and how to reach them without spreading yourself too thin.

C. To Convince Investors To Fund Your Business

Investors want to see evidence for why they should risk their time and money in your business and how they’ll recoup their investment. Your business plan helps you make that case.

D. To Secure A Business Loan

If you’re trying to secure a business loan from the bank, if the lender doesn’t already request it (which they probably will), you can bolster your loan application using your business plan.

E. To Forge Strategic Alliances

Your plan can be used to communicate specific parts of your business to lock down potential partnerships.

F. To Sell Your Business

In the event that you find yourself in acquisition discussions, your business plan can be instrumental in helping the buyer better understand the best possible price for the sale of your business .

Who Needs a Business Plan?

A lot of people assume that the only businesses that need business plans are startups seeking funding, and that once they’ve secured said funding their business plan gets stuffed into a filing cabinet where it lives out the rest of its days collecting dust.

Not entirely. So who needs a business plan?

A. Startups Seeking Funding

If you’re a startup with the chief goal of raising capital to fund your growth, then yes, as previously mentioned, a business plan is a must. Simply having one doesn’t necessarily mean you’ll get funding. But not having one reduces the likelihood precipitously.

B. Established Companies Managing Their Business

Unlike startups, existing businesses use business plans more with an eye toward guiding the business and accelerating and tracking growth. Established businesses also use business plans to convince buyers to acquire the company or to bring potential partners or employees into the fold.

How to Choose the Right Kind of Business Plan

Depending on your growth stage and what you intend on using it for, business plans can come in a few different form factors.

If you’re a startup looking to raise investment capital, for example, your business plan is going to look a bit different than that of an established company more concerned with internal strategic planning and actually running the business.

Let’s take a quick look at a handful of the most common examples.

A. Standard Business Plan

If your goal is to convince investors to financially back your business, the standard business plan — or “external business plan”, as it’s sometimes called — is the most commonly-requested iteration you’ll need.

Standard business plans are much more fine-tuned and focused on showing investors how your vision translates into big returns versus an internal business. For our purposes, we’ll be focusing our discussion strictly on the standard business plan for this article.

B. One-Page Business Plan

The one-page business plan is essentially an executive summary — in other words, the TL;DR version of your business plan where you distill down each of the core sections of your business plan to a paragraph or two, giving investors an at-at-glance look at the key takeaways.

The one-pager is a great asset to break out when you establish early discussions with a potential investor. Investors are incredibly busy, so the one-pager is a perfect go-to when you’re trying to spark interest and set the stage for more in depth discussions about your business after you’ve made first contact.

C. Internal Business Plan

As its name implies, internal business plans generally stay within the confines of the office and are meant to act essentially as a management tool to help business owners set and meet goals.

Internal business plans are less concerned with covering things like team overview or outlining the problem you’re solving and more geared toward business strategy, which milestones to reach next, budgeting, and forecasting. This kind of business plan tends to be used more frequently by more established companies than startups.

The Key Components of a Business Plan

Whether you’re starting a brewery, launching a cryptocurrency business, or setting up a subscription box service for your homemade cupcake operation, there are several common elements that are absolute musts to include in virtually every business plan — regardless of your industry.

These include:

• Executive Summary
• Company Description
• Problem, Solution & Market Size
• Product (How it Works)
• Revenue Model
• Operating Model
• Competitive Analysis
• Customer Definition
• Management Team

A. Executive Summary

Your Executive Summary is essentially a brief overview of your business plan as a whole. The goal is to break down each key section into a sentence or two to convey a birds-eye view of your business and prepare the reader for the content to come.

B. Company Description

The Company Description will serve as a “big idea” statement that introduces your company, what it does, and why it matters. It conveys to your readers the direction your company is going, and the scope of the business you’re building.

Every great product or service starts with a clear and specific problem that it’s setting out to solve. What problems do your target customers face that your product/service solves for them?

If you don’t articulate the problem you’re solving really well, then the solution (and rest of your plan) falls by the wayside.

D. Solution

Once you’ve explained the painful problem you’re setting out to solve, highlight how your product/service connects back directly to that problem and solves it beautifully.

E. Market Size

• How big is your total addressable market?
• Is it growing? By how much?
• Is the market big enough for potential investors to get excited about?
• Have there been any notable exits from similar companies in your space?

F. Product (How it Works)

Give readers an overview of your company’s products and services, their key features, with a special emphasis on what makes them unique from existing solutions in the market.

G. Revenue Model

• How does (or will) your company make money?
• How are you pricing your product/service?
• How does your pricing compare with similar products in the market?
• What are your revenue projections for the next 5 years?

H. Operating Model

While your Revenue Model explains the ways you’re going to make money, your Operating Model is all about the clever ways you’re going to manage costs and efficiencies to earn it.

I. Competitive Analysis

Identify other similar companies working in your same space:

• What are your their strengths and how do you plan to neutralize those strengths?
• What are their weaknesses and how do they translate into an advantage for your company?

J. Customer Definition

Define your customer to help readers get a crystal clear understanding of who is most likely to use and buy your product:

• What are their personas?
• What are their demographics?
• What motivates them to take action (make a purchase)?

K. Customer Acquisition

• What strategies will you implement to actually acquire your customers?
• What acquisition channels will you explore ( direct sales , paid ads , SEO , social media , etc.)?
• What are the cost assumptions for each channel?

L. Traction

List any accomplishments that signal to readers that your company is making moves:

• Where are you in the product development process?
• Have you established a production or manufacturing partner?
• Have you secured any notable partnerships?
• Do you have any patents for the technology or ideas behind your company?

M. Management Team

Introduce your team and how you’ll work together to bring the business to life. Each team member bio should include:

• The team member’s name
• Their title and position at the company
• Their professional background
• Any special skills they’ve developed as a result of their prior experience
• What makes them uniquely qualified to drive success at your company
• How much money do you need to meet your next milestone?
• What are your terms (in other words, what will investors get in exchange for their investment)?
• How will you use the funding that you secure?

O. Financials

Determine what assumptions you need to target in order to make the business viable. Typical assumptions include:

• Sale Price per Product
• Cost of Goods Sold
• Customer Acquisition Costs
• Staff Costs

How Long Should Your Business Plan Be?

To get a better sense of what a 21st century business plan is, it’s best to look at what it’s not. Or, more specifically, what it’s not anymore.

When most people think about a business plan, the first thing that usually comes to mind is an incredibly dense, 50-plus-page manifesto that’s as hard to write as it is to read.

There’s a reason why people think this. It’s because for a long time, that’s pretty much what a business plan was. Thankfully for the writer and the reader, that’s no longer the case.

At a certain point, it became clear that the number of investors who actually took the time (let alone had the time) to read these glassy eye-inducing paperweights front to back was approximately 0.

Which is why the modern business plan as we know it today is far more concise — a mere fraction of the length of its long-winded predecessor.

A good rule of thumb is shooting for around 15 pages.

This should give you more than enough room to provide color to each of the required sections of your business plan while also leaving some room for visual elements to break up the copy and make your business plan much more digestible (and aesthetically engaging)  for readers.

If you find yourself exceeding 20 pages, there’s probably opportunities where you can go back through your plan and eliminate redundant or superfluous information.

How to Approach Writing a Business Plan

Remember sitting at your computer back in college, opening up a blank word document, and staring at the blinking cursor as you tried mustering the courage and motivation to dive into your final essay?

For a lot of Founders, that’s kind of what it feels like getting ready to commit their business plan to paper, but even more daunting.

The thing is, if you approach this with a solid understanding of what information you need to cover, how to cover it, and how to make everything flow properly, it doesn’t have to be .

Here are some useful tips to help you get organized and give you the confidence to tackle this head on .

A. Nail The Research First

Going into this knowing everything there possibly is to know about the market you will be competing in, who your audience is, and how you will make money will always be the first step in the business planning process.

Conducting the necessary fact gathering will also help you prove or disprove any assumptions you have about your market fit — either validating what you initially thought, or telling you it’s time to go back to the drawing board.

B. Create a Business Plan Outline

We talked before about the key components that you’ll want to include in your business plan. Instead of jumping in willy-nilly, draft a very basic outline of each of the sections that you will touch on in your business plan.

Not only will this make it significantly easier to stay laser focused on only detailing the relevant information you need for each specific section, but it will help the writing process feel much more manageable by breaking it up into bite-sized pieces.

C. Organize Your Goals and Objectives

Start dividing up all of the information that you need to include in your business plan by section.

The best way to do this is by thinking about each section as if it were comprised of a series of questions that your readers will want answered.

For example, in the Customer Acquisition section, some of the key questions you want to address are:

• How will you reach your target customers?
• What marketing strategies will you use?
• What will it cost to acquire customers?

Once you’ve laid this out for each section, you now have a good jumping-off point to go in and start shedding light on each of these key questions .

Business Planning Tools

Whether you’re doing this for the first time or the tenth time, building a plan from scratch is time and energy-consuming.

Luckily, there are some great business planning software tools available online designed to make this whole business planning process a whole lot easier for you.

In fact, we’ve got one of them!

Our business planning software lets you break down this big undertaking into bite-sized pieces that you can complete in any order you like and in collaboration with your team.

All of the most important sections of a business plan are conveniently built into drag-and-drop templates. Plus, you get everything you need to generate investor-ready financial reports — balance sheets, income statements, break even analysis, you name it.

You can even share your finished product with investors online. You should check it out if you need a leg up with this.

Who Needs to See Your Business Plan (and When)?

Congratulations!

You’ve overcome the odds and succeeded in what frequently proves to be an insurmountable task for many startups: you’ve reached out to a prospective investor and they actually got back to you saying that they’re interested in learning more about your project.

If you find yourself in the fortunate position of pitching an investor, this is precisely the right time to have your business plan on hand.

Most of the time, you’ll start by providing a pitch deck — a presentation (PowerPoint, Keynote) version of your business plan highlighting the most basic elements of your plan in a handful of highly visual slides.

Most investors will want to start here because it’s much quicker to read up front than poring over your business plan.

Assuming that you’ve blown your pitch out of the water and have the investor(s) on the edge of their seat, they may ask for the longer-form narrative to start getting into the nitty-gritty of your plan — which you will be able to easily provide courtesy of your finely-tuned business plan.

The Dos and Don’ts of Writing a Business Plan

If you’re learning this stuff for the first time, it might feel a bit overwhelming being asked to remember which specific pitfalls to avoid here and which strategies to follow there.

To make this all a bit more digestible and help you stay on the right track, we’ve compiled a list of some of the top dos and don’ts to keep in mind when you launch into writing your business plan.

• Do your research before you start writing to demonstrate that you have a firm understanding of your market, competitors, and audience.
• Do update your plan as you go to keep information relevant and up to date.
• Do write in clear, plain language that anyone can easily understand, whether it’s an investor or your elderly neighbor.
• Do cite your sources where necessary.
• Do create an engaging narrative around the problem your customers face and why your product or service is the perfect solution to that problem.
• Do explain how you arrived at your financial assumptions.
• Do keep your business plan concise, compelling, and persuasive.
• Do make it more personal and immediate by writing in the 1st person grammatical point of view (write as if it were your team having a conversation about the company to the reader in person “Our team is on the forefront of innovation…”).
• Don’t assume that your reader is already familiar with your industry.
• Don’t overload your plan with industry-specific jargon.
• Don’t exceed 20 pages (or 15 if possible).
• Don’t write lengthy walls of copy.
• Don’t repeat the same information ad nauseum throughout your plan.
• Don’t refer to yourself as “The Company” or use 3rd person grammatical point of view (this is a bit of an outdated approach).
• Don’t claim you have “no competitors” (#1: your investors won’t buy it, and #2: no matter how unique your solution, there’s almost always someone competing with you either directly or indirectly. Really dig in and do your homework on this).
• Don’t forget to proofread (make sure you’ve gone back and corrected any spelling or grammatical errors and that your formatting remains consistent throughout).

We’ve thrown a ton of information at you in this crash course introduction to the business plan. You should now have a fairly good grasp of what a business plan is, what goes into it, and how to use it to maximum effect.

The key thing to take away here is to remain calm and not rush this. Business planning isn’t something that you just casually knock out in a day and walk away with the perfect finished product your first time around.

Founders can spend numerous cycles repositioning their strategies based on discoveries made during research, rethinking how to best boil down their vision and value proposition, and refining their overall story. Such is the nature of the ever-evolving business plan.

As you dive into crafting your own business plan, remember that you’re not alone in this. We’ve got a boatload of other great resources created specifically to help you conquer this every step of the way!

Sharen Rose Lumogdang

The several components shared for creating the business plan would be very helpful especially for startups business owners like me. Thank you!

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

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

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

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

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

What Is a Business Plan?

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

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

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

Get a Business Idea

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

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

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

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

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

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

Conduct Market Analysis

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

Product and Service Demand

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

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

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

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

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

Identify Demographics of Target Market

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

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

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

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

How to Write a Business Plan

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

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

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

SWOT Analysis

• Competitor Data
• Competitive Analysis
• Marketing Expenses Strategy 

Pricing Strategy

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

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

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

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

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

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

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

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

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

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

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

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

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

Mike told us,

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

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

It consists of three basic parts:

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

Example of an informal executive summary 

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

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

What should I include in an executive summary for investors?

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

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

Successful business plan examples

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

Here’s the interview with the owner of Urbanity:

When to write an executive summary?

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

What mistakes do people make when writing an executive summary?

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

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

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

How to Write a Business Plan Step 4. Company Description

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

• Mission statement
• Philosophy and vision
• Company goals

Target market

• Legal structure

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

Mission Statement

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

Company Philosophy and Vision

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

What makes your company different?

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

Examples of core values

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

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

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

What is a vision statement?

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

Example vision statements

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

A world without Alzheimer’s Disease and other dementia.

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

Business Goals

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

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

How far in advance should a business plan?

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

Example of great business goals

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

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

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

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

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

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

Industry resources

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

• Trade Associations
• Federal Reserve
• Bureau of Labor Statistics

Legal Structure

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

• Sole proprietorships
• Limited Liability Companies (LLC)

Partnerships

Corporations.

• Franchises.

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

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

Sole Proprietorship

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

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

Limited Liability Company (LLC)

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

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

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

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

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

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

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

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

Questions to answer about your products and services

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

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

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

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

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

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

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

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

SWOT Examples

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

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

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

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

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

Include Competitor Data in Your Business Plan

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

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

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

Marketing Strategy

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

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

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

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

Advertising Strategy

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

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

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

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

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

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

Some common pricing strategies are:

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

HubSpot has a great calculator and blog on pricing strategies.

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

Distribution Plan

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

Supply Chain Examples

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

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

Examples of Supply Chains

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

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

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

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

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

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

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

Quality Control

• Legal environment

Let’s look at each for some insight.

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

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

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

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

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

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

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

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

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

Legal Environment

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

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

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

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

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

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

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

How to Write a Business Plan Step 8. Financial Statements 

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

Provide All Financial Income from an Existing Business

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

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

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

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

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

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

Financial Projections For A Startup Business Plan

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

Mike gave the following advice in his interview:

Financial Forecasting Mistakes

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ways to get funding for a small business

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

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

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

How funding will be used

When asking for business financing make sure to include:

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

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

How to Write a Business Plan Resources

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

• Sample plan

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

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

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

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

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

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

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

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

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Harris Tells the Business Community: I’m Friendlier Than Biden

The vice president on Wednesday proposed an increase on the capital gains tax that was far less than what President Biden has floated, one of several moves meant to win over business owners.

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By Nicholas Nehamas Andrew Duehren and Reid J. Epstein

Nicholas Nehamas reported from North Hampton, N.H., and Andrew Duehren and Reid J. Epstein from Washington.

• Sept. 4, 2024

Vice President Kamala Harris on Wednesday sought to put daylight between herself and President Biden on tax policy, making it the first issue on which she is trying to stand apart from an administration in which she holds a key role.

Stepping up her efforts to win over the business community, Ms. Harris announced that she would increase the capital gains tax at a far lower rate than what Mr. Biden had proposed — a move that came after pressure from her campaign’s biggest donors to back off some of its most aggressive tax proposals.

Ms. Harris’s proposal, which she introduced at a campaign event in New Hampshire, was directed squarely at business owners and wealthier Americans who are skeptical of Democrats and have gravitated toward former President Donald J. Trump. In the same speech, she rolled out her new plan for an expanded tax break for start-ups .

Mr. Biden had proposed taxing capital gains at 39.6 percent for Americans who make more than $1 million a year. Ms. Harris said on Wednesday that she would tax investment income for those Americans at a rate of 28 percent, a reversal from her earlier support for the tax increases included in the White House budget released this spring .

“If you earn a million dollars a year or more, the tax rate on your long-term capital gains will be 28 percent under my plan,” Ms. Harris said at a brewery in North Hampton, N.H. “Because we know when the government encourages investment, it leads to broad-based economic growth and it creates jobs, which makes our economy stronger.”

Ms. Harris’s proposed rate of 28 percent does not include an additional surtax on investment income, according to two people familiar with the campaign’s proposal. One of those people said a 5 percent surtax would apply on top of the 28 percent, bringing the total rate to 33 percent. With the surtax, Mr. Biden’s proposal would have raised the top capital-gains rate to 44.6 percent. The top capital-gains tax rate now is 23.8 percent, inclusive of a 3.8 percent surtax.

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