how to start a business business plan

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

Noah Parsons

24 min. read

Updated April 10, 2024

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

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

• The basics of business planning

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

You understand that planning helps you: 

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

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

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

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

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

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

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

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

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

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

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

• What to include in your business plan

Executive summary

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

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

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

Your executive summary should include:

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

Dig Deeper: How to write an effective executive summary

Products and services description

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

This is usually called a problem and solution statement .

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

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

Market analysis

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

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

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

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

Related: Target market examples

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

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

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

Dig Deeper: Learn how to write a market analysis

Competitive analysis

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

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

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

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

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

Marketing and sales plan

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

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

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

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

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

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

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

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

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

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

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

Business operations

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

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

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

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

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

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

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

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

Key milestones and metrics

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

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

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

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

Possible milestones might be:

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

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

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

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

Dig Deeper: How to use milestones in your business plan

Organization and management team

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

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

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

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

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

• Sole proprietor
• Partnership

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

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

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

Financial plan

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

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

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

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

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

Dig Deeper: How to create financial forecasts and budgets

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

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

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

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

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

Your cover page should be simple and include:

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

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

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

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

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

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

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

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

• Writing tips and strategies

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

Determine why you are writing a business plan

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

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

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

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

Keep things concise

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

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

Have someone review your business plan

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

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

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

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

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

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

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

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

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

Common pitfalls and how to avoid them

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

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

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

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

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

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

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

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

Use your business plan to manage your business

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

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

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

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

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

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

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

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

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

Learn More: How to run a regular plan review

Free business plan templates and examples

Kickstart your business plan writing with one of our free business plan templates or recommended tools.

Free business plan template

Download a free SBA-approved business plan template built for small businesses and startups.

Download Template

One-page plan template

Download a free one-page plan template to write a useful business plan in as little as 30-minutes.

Sample business plan library

Explore over 500 real-world business plan examples from a wide variety of industries.

View Sample Plans

How to write a business plan FAQ

What is a business plan?

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

What are the benefits of a business plan?

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

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

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

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

What are the 5 most common business plan mistakes?

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

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

What questions should be answered in a business plan?

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

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

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

How long should a business plan be?

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

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

What are the different types of business plans?

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

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

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

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

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

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

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

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

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

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

Table of Contents

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

Related Articles

7 Min. Read

How to Write an Online Boutique Clothing Store Business Plan + Example Templates

2 Min. Read

How to Use These Common Business Ratios

12 Min. Read

How to Write a Food Truck Business Plan (2024 + Template)

6 Min. Read

How to Get and Show Initial Traction for Your Business

The Bplans Newsletter

The Bplans Weekly

Subscribe now for weekly advice and free downloadable resources to help start and grow your business.

We care about your privacy. See our privacy policy .

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

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

By Joe Weller | October 11, 2021

• Share on Facebook
• Share on LinkedIn

Link copied

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

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

What Is a Business Plan?

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

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

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

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

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

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

Business Plan Steps

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

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

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

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

Do I Need a Simple or Detailed Plan?

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

How to Choose the Right Plan for Your Business

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

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

Is the Order of Your Business Plan Important?

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

The Difference Between Traditional and Lean Business Plans

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

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

How to Write a Business Plan Step by Step

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

Step 1: Executive Summary

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

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

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

Step 2: Description of Business

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

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

Step 3: Market Analysis

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

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

Step 4: Competitive Analysis

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

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

Step 5: Description of Organizational Management

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

Step 6: Description of Products or Services

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

Questions to answer in this section are as follows:

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

Step 7: Marketing Plan

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

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

Step 8: Sales Plan

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

Start by answering the following questions:

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

Step 9: Funding Details (or Request for Funding)

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

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

Step 10: Financial Projections

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

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

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

Business Plan Template

Download Business Plan Template

Microsoft Excel | Smartsheet

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

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

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

How to Write a Simple Business Plan

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

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

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

Simple Business Plan Template

Download Simple Business Plan Template

Microsoft Excel |  Microsoft Word | Adobe PDF  | Smartsheet

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

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

How to Write a Business Plan for a Lean Startup

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

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

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

Lean Business Plan Template for Startups

Download Lean Business Plan Template for Startups

Microsoft Word | Adobe PDF

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

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

How to Write a Business Plan for a Loan

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

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

Download free financial templates to support your business plan.

Tips for Writing a Business Plan

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

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

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

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

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

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

Resources for Writing a Business Plan

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

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

How a Business Plan Helps to Grow Your Business

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

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

Streamline Your Business Planning Activities with Real-Time Work Management in Smartsheet

Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change. 

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

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

Discover why over 90% of Fortune 100 companies trust Smartsheet to get work done.

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

How to Write a Business Plan in 9 Steps (+ Template and Examples)

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

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

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

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

Let’s get started.

What Do You Need A Business Plan For?

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

1. Secure Funds

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

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

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

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

2. Monitor Business Growth

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

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

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

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

3. Measure Business Success

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

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

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

4. Document Your Marketing Strategies

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

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

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

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

How to Write a Business Plan Step-by-Step

1. create your executive summary.

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

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

A good executive summary should do the following:

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

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

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

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

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

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

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

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

2. Add Your Company Overview

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

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

Your company overview should contain the following:

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

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

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

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

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

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

• Mission Statement

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

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

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

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

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

Business Objectives

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

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

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

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

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

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

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

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

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

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

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

Market Analysis

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

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

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

• Market Research

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

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

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

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

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

How to Quantify Your Target Market

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

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

What Does a Good Market Analysis Entail?

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

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

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

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

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

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

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

Competitive Analysis

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

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

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

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

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

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

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

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

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

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

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

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

Direct vs Indirect Competition

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

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

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

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

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

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

Factors that Differentiate Your Business from the Competition

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

1. Cost Leadership

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

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

2. Product Differentiation

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

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

3. Market Segmentation

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

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

4. Define Your Business and Management Structure

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

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

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

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

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

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

Management Team

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

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

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

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

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

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

Key Questions to Answer When Structuring Your Management Team

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

Additional Tips for Writing the Management Structure Section

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

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

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

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

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

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

Organizational Chart

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

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

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

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

5. Describe Your Product and Service Offering

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1. Avoid Technical Descriptions and Industry Buzzwords

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

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

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

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

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

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

3. Long or Short Products or Services Section

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

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

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

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

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

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

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

4. Describe Your Relationships with Vendors or Suppliers

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

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

5. Your Primary Goal Is to Convince Your Readers

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

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

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

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

Key Questions to Answer When Writing your Products and Services Section

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

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

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

6. Show and Explain Your Marketing and Sales Plan

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

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

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

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

Outline Your Business’ Unique Selling Proposition (USP)

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

Target Market and Target Audience

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

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

Creating a Smart Marketing and Sales Plan

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

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

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

Your Positioning Statement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Basic Rules to Follow When Pricing Your Offering

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

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

Pricing Strategy

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

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

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

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

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

Advertising

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

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

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

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

Public Relations

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

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

Content Marketing

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

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

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

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

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

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

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

Social Media

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

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

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

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

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

Strategic Alliances

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

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

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

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

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

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

2. Evaluate Your Competition

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

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

These questions can help you know your competition.

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

3. Consider Your Brand

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

4. Focus on Benefits

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

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

5. Focus on Differentiation

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

Key Questions to Answer When Writing Your Marketing and Sales Plan

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

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

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

7. Clearly Show Your Funding Request

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

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

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

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

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

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

Funding Request: Debt or Equity?

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

Case for Equity

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

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

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

Case for Debt

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

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

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

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

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

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

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

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

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

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

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

8. Detail Your Financial Plan, Metrics, and Projections

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

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

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

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

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

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

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

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

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

Use Graphs and Charts

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

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

Address the Risk Factors and Show Realistic Financial Projections

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

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

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

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

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

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

1. Sales Forecast

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

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

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

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

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

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

2. Personnel Plan

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

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

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

3. Income Statement

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

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

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

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

4. Cash Flow Statement

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

5. Balance Sheet

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

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

6. Exit Strategy

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

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

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

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

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

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

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

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

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

9. Add an Appendix to Your Business Plan

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

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

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

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

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

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

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

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

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

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

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

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

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

Tips and Strategies for Writing a Convincing Business Plan

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

1. Know Your Audience

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

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

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

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

2. Get Inspiration from People

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

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

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

3. Avoid Being Over Optimistic

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

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

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

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

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

4. Keep it Simple and Short

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

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

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

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

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

5. Make an Outline and Follow Through

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

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

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

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

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

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

6. Ask a Professional to Proofread

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

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

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

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

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

1. hubspot's one-page business plan.

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

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

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

2. Bplan’s Free Business Plan Template

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

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

3. HubSpot's Downloadable Business Plan Template

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

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

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

4. Business Plan by My Own Business Institute

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

The comprehensive template consists of a whopping 15 sections.

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

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

5. Score's Business Plan Template for Startups

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

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

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

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

6. Minimalist Architecture Business Plan Template by Venngage

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

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

7. Small Business Administration Free Business Plan Template

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

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

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

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

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

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

9. PandaDoc’s Free Business Plan Template

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

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

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

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

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

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

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

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

Alternatives to the Traditional Business Plan

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

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

Business Model Canvas (BMC)

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

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

Segments of the Business Model Canvas

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

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

Lean Canvas

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

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

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

Startup Pitch Deck

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

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

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

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

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

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

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

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

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

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

Business Plan FAQ

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

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

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

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

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

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

Exlore Further

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

Was This Article Helpful?

Martin luenendonk.

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

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

Home > Business > Business Startup

How To Write a Business Plan

We are committed to sharing unbiased reviews. Some of the links on our site are from our partners who compensate us. Read our editorial guidelines and advertising disclosure .

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

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

Table of contents

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

By signing up I agree to the Terms of Use and Privacy Policy .

Step 1: Write your executive summary

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

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

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

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

Step 2: Do your market research homework

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

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

Step 3: Set your business goals and objectives

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

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

Step 4: Plan your business strategy

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

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

Step 5: Describe your product or service

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

Step 6: Crunch the numbers

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

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

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

Step 7: Finalize your business plan

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

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

Compare the Top Small-Business Banks

Data effective 1/10/23. At publishing time, rates, fees, and requirements are current but are subject to change. Offers may not be available in all areas.

The takeaway

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

Related content

• 5 Best Business Plan Software and Tools in 2023 for Your Small Business
• How to Get a Business License: What You Need to Know
• What Is a Cash Flow Statement?

Best Small Business Loans

5202 W Douglas Corrigan Way Salt Lake City, UT 84116

Accounting & Payroll

Point of Sale

Payment Processing

Inventory Management

Human Resources

Other Services

Best Inventory Management Software

Best Small Business Accounting Software

Best Payroll Software

Best Mobile Credit Card Readers

Best POS Systems

Best Tax Software

Stay updated on the latest products and services anytime anywhere.

By signing up, you agree to our Terms of Use  and  Privacy Policy .

Disclaimer: The information featured in this article is based on our best estimates of pricing, package details, contract stipulations, and service available at the time of writing. All information is subject to change. Pricing will vary based on various factors, including, but not limited to, the customer’s location, package chosen, added features and equipment, the purchaser’s credit score, etc. For the most accurate information, please ask your customer service representative. Clarify all fees and contract details before signing a contract or finalizing your purchase.

Our mission is to help consumers make informed purchase decisions. While we strive to keep our reviews as unbiased as possible, we do receive affiliate compensation through some of our links. This can affect which services appear on our site and where we rank them. Our affiliate compensation allows us to maintain an ad-free website and provide a free service to our readers. For more information, please see our  Privacy Policy Page . |

© Business.org 2023 All Rights Reserved.

• Search Search Please fill out this field.

What Is a Business Plan?

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

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

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

Key Takeaways

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

Investopedia / Ryan Oakley

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

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

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

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

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

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

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

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

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

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

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

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

2 Types of Business Plans

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

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

Why Do Business Plans Fail?

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

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

What Does a Lean Startup Business Plan Include?

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

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

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

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

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

• How to Start a Business: A Comprehensive Guide and Essential Steps 1 of 25
• How to Do Market Research, Types, and Example 2 of 25
• Marketing Strategy: What It Is, How It Works, and How to Create One 3 of 25
• Marketing in Business: Strategies and Types Explained 4 of 25
• What Is a Marketing Plan? Types and How to Write One 5 of 25
• Business Development: Definition, Strategies, Steps & Skills 6 of 25
• Business Plan: What It Is, What's Included, and How to Write One 7 of 25
• Small Business Development Center (SBDC): Meaning, Types, Impact 8 of 25
• How to Write a Business Plan for a Loan 9 of 25
• Business Startup Costs: It’s in the Details 10 of 25
• Startup Capital Definition, Types, and Risks 11 of 25
• Bootstrapping Definition, Strategies, and Pros/Cons 12 of 25
• Crowdfunding: What It Is, How It Works, and Popular Websites 13 of 25
• Starting a Business with No Money: How to Begin 14 of 25
• A Comprehensive Guide to Establishing Business Credit 15 of 25
• Equity Financing: What It Is, How It Works, Pros and Cons 16 of 25
• Best Startup Business Loans 17 of 25
• Sole Proprietorship: What It Is, Pros and Cons, and Differences From an LLC 18 of 25
• Partnership: Definition, How It Works, Taxation, and Types 19 of 25
• What Is an LLC? Limited Liability Company Structure and Benefits Defined 20 of 25
• Corporation: What It Is and How to Form One 21 of 25
• Starting a Small Business: Your Complete How-to Guide 22 of 25
• Starting an Online Business: A Step-by-Step Guide 23 of 25
• How to Start Your Own Bookkeeping Business: Essential Tips 24 of 25
• How to Start a Successful Dropshipping Business: A Comprehensive Guide 25 of 25

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

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

You’re our first priority. Every time.

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

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

How to Start a Business in 15 Steps

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

1. Find the right opportunity

2. write a business plan, 3. choose a business structure, 4. get a federal tax id, 5. apply for licenses and permits, 6. open a business bank account, 7. understand your startup financing options, 8. get a business credit card, 9. choose the right accounting software, 10. prepare to pay your taxes, 11. protect yourself with business insurance, 12. establish your online presence, 13. set up a payments system, 14. hire employees, 15. get financing to grow your business.

Starting a business takes research, smarts and self-confidence — and a measure of fearlessness. You may already be asking yourself: How can I start my own business with no money? What's the right equipment? Am I getting the best advice?

Here are the essential steps on how to start a business, from choosing the right business idea, creating a solid business plan and structuring your company to opening a business bank account and choosing the right accounting software.

» MORE: 5 steps to turn your side gig into a full-fledged business

ZenBusiness

What business should you start? It depends on your expertise, plus how much time and money you’re able to invest. Some small-business ideas can be launched from home with little overhead, and e-commerce and remote businesses have become increasingly common in the wake of the COVID-19 pandemic.

As you narrow your scope, you also want to be sure that your idea can actually make money . If you’re not sure what kind of business you want to run, use these lists to get the wheels turning:

50 best small-business ideas.

The 23 most profitable business ideas .

40 startup ideas to try .

16 e-commerce business ideas.

40 home business ideas to explore .

44 online business ideas you can start now .

Looking for tools to help grow your business?

Tell us where you're at in your business journey, and we'll direct you to the experience that fits.

on Nerdwallet's secure site

A strong business plan can help you prepare for every aspect of your business. Plus, you’ll need one to present to potential investors and lenders. This document should include details of the products or services you plan to offer, how you plan to make money, who you need on your team and more.

You’ll also want to include detailed financial projections, budgets and thorough explanations of how you plan to spend investor dollars or loans. Since cash flow projections will fluctuate as you adjust projected income and expenses, it helps to think of the plan’s financials as a living, changing document.

Ultimately, your business plan will help you chart a course for your business, anticipate potential roadblocks and work out how to overcome them — and will likely go through multiple iterations before your idea comes to fruition. Industry colleagues and accountants may be able to provide valuable feedback on how realistic your projections look and point out any overlooked costs.

How to write a business plan, step by step .

How to create a business budget .

Best business budgeting software tools .

5 tips to write a successful business plan . 

How to write a successful business plan for a loan .

The legal structure of your business can affect everything from your taxes to what you're liable for. For example, there’s no legal distinction between a sole proprietorship and its owner. Limited liability companies (LLCs) and their owners, however, are considered separate entities by law, which can provide more personal asset protection.

Talking with a tax professional can help you choose the right business structure for you. And you can change your structure as your business grows.

How to choose the right business structure .

Pros and cons of a limited liability company .

LLC vs. sole proprietorship: How to choose .

Partnership vs. corporation: How to choose .

Getting an employer identification number (EIN) is necessary for most businesses to file taxes, open bank accounts and perform other essential tasks. Even if you don’t have employees, there are benefits to getting an EIN. It’s free to apply and the online application only takes a few minutes.

How to apply for an employer identification number .

Benefits of getting an EIN (even if you don’t have to) .

In general, restaurants need health inspections and liquor licenses. Hair stylists need cosmetology licenses. Your city may require you to apply for a business license regardless of what field you’re in. And if you’re renovating a space to sell products or perform services, you may need to ask local officials for a zoning change.

Set aside time early on to find out what licenses and permits you need before you can open your doors. While you don’t typically need a lawyer to apply for a business license, they can help you navigate the process and review other documents, like lease agreements or loans, before you sign them. Industry associations, city officials who work on economic development issues and local business associations, like your Chamber of Commerce, may be able to offer advice, too.

How to get a business license .

Do you need a business license to sell online?

How to find a startup lawyer . 

How much do you need?

with Fundera by NerdWallet

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

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

Keeping your business and personal finances separate is key to managing your business finances. It’s standard bookkeeping hygiene and makes it easier to deduct business expenses come tax time. A business bank account can help, and they’re simple to set up.

Best business bank accounts . 

Best business bank accounts for freelancers .

Best free business checking accounts .

Best business bank accounts for LLCs .

Most businesses need a little capital to get started. However, the majority of business loans are not available to businesses that have been operating for less than six months, and most online lenders prefer at least a year in business. Startups should consider alternative financing options, or try to leverage other strengths of their business, such as strong credit or collateral. If your business does qualify for a loan, be sure to pay attention to interest rates, potential prepayment fees and personal liability terms.

Found Small Business Banking

Many business owners rely on their own savings to get started. You can also look into crowdfunding, personal loans, business grants and more. High-growth-potential startups may also be eligible for equity financing, which gives partial ownership, or equity, to investors in exchange for capital.

How do business loans work?

Best startup business loans.

Startup business grants .

Asset-based lending options.

Types of startup funding.

Crowdfunding for business .

Is equity financing right for your business?

Funding your business with a personal loan .

Is your to-do list overwhelming?

Business credit cards can also be used as a short-term financing solution to help you purchase necessary supplies and pay bills while cash flow is still shaky. Just be sure to spend within your limit and pay off your balance in full each month so you don’t get into a cycle of debt. Startup financing aside, business credit cards also make it easier to keep business and personal finances separate. As an added bonus, you can also earn rewards, such as cash back, on the money you spend.

Usually, you can qualify for a business credit card based on your personal credit score.

What is a business credit card?

How to get a business credit card .

Best small-business credit cards .

Best business credit cards for new businesses .

Best 0% APR business credit cards.

It’s essential that you keep records that show how much revenue you’re bringing in and how much you’re spending. Accounting software helps you track and analyze these numbers by generating reports and recording sales trends — and there are even some free options.

As your business grows, you may want to start working with a bookkeeper . This person can help ensure your records are complete and accurate, which makes it easier to file your taxes, apply for financing and more.

Best accounting software for small businesses .

Best online bookkeeping services .

Bookkeeping basics for small businesses. 

Best free accounting software .

Know these 4 business financial metrics to track performance .

You'll have some new tax responsibilities as a business owner — including, potentially, the need to pay taxes throughout the year, not just during tax season. But you'll probably discover some new tax breaks , too.

Filing taxes can be complex, especially as a small-business owner. Developing a relationship with a tax professional early on can help set you up for success, and they can be a trusted adviser to your business later on.

A tax guide for small-business owners.

Self-employment tax, explained.

Best tax software for small businesses .

How estimated quarterly taxes work .

How to find the right tax advisor for your business .

It's important to protect your business and your personal assets, and business insurance exists to do just that. NerdWallet recommends that every business carry general liability insurance in case of legal claims.

You may also need insurance to comply with a contract, like to set up a booth at an event or work as a subcontractor on a larger project.

Best small-business insurance providers .

How much does business insurance cost?

What is general liability insurance?

What is a business owner’s policy (BOP)?

An online presence is critical for almost every business — especially if you want to sell products online. Setting up a website and social media profiles early on, even if they’re simple, can help you start developing relationships with potential customers right away.

Here’s what you need to know to start your business website:

How to build an e-commerce website .

The ultimate guide to small-business marketing .

The best ways to promote your business on social media .

6 Instagram tips for small-business owners .

8 best e-commerce website builders for small businesses .

The do’s and don’ts of using Facebook to drive business sales .

5 best places to advertise your business online .

If your business takes credit and debit cards, you'll likely need a payment processor and point-of-sale (POS) system. Lots of POS system providers double as processing companies, which can make the decision-making process simple. Remember to consider upfront hardware costs for card readers or POS registers, monthly POS software fees and processing fees. Online payments typically have higher processing fees than in-person payments, so be sure to consider the full range of fees when choosing your provider.

How to accept credit card payments.

What is credit card processing and how does it work?

Cheapest credit card processing companies.

Best point-of-sale (POS) systems .

Best credit card processing companies .

Best credit card readers for small businesses .

You may not need to hire employees right away — and some small-business owners prefer to remain solopreneurs throughout the life of their business. But if you do choose to hire, you’ll probably need workers’ compensation insurance, payroll software and more. Here’s what goes into hiring your first employees.

Ready to hire your first employee? Prep with these steps .

Strategies to attract good employees.

Tips for hiring remote workers.

Strategies to help retain employees.

How to choose the right payroll software for your business .

Best payroll software for small businesses. 

What is workers’ compensation insurance?

Once you’ve been in business for six to 12 months, you may start qualifying for business loans. Financing can help your business grow and expand — by buying equipment, renovating an office or expanding your inventory, for instance — or float you through a slow season while you prepare for increased future revenue.

Here’s what you need to know about business loans, lines of credit and other financing options.

How to get a business loan .

SBA loans: What they are and how to qualify .

Equipment financing: What it is and top lenders.

Best small-business loans .

Types of business loans.

Should you grow your business? 6 questions to help you decide .

On a similar note...

How to Build a Detailed Business Plan That Stands Out [Free Template]

Updated: March 29, 2022

Published: March 11, 2022

While starting a company may seem easier now than ever before, entrepreneurs have an uphill battle from the moment they start a business. And without a clear, actionable business plan for selling, marketing, finances, and operations, you're almost destined to face significant challenges.

This is why crafting a business plan is an essential step in the entrepreneurial process.

In this post, we'll walk you through the process of filling out your business plan template, like this free, editable version :

Download a free, editable one-page business plan template.

We know that when looking at a blank page on a laptop screen, the idea of writing your business plan can seem impossible. However, it's a mandatory step to take if you want to turn your business dreams into a reality.

That's why we've crafted a business plan template for you to download and use to build your new company. You can download it here for free . It contains prompts for all of the essential parts of a business plan, all of which are elaborated on, below.

This way, you'll be able to show them how organized and well-thought-out your business idea is, and provide them with answers to whatever questions they may have.

Free Business Plan Template

The essential document for starting a business -- custom built for your needs.

• Outline your idea.
• Pitch to investors.
• Secure funding.
• Get to work!

You're all set!

Click this link to access this resource at any time.

Building a Successful Business Plan

In the next section, we'll cover the components of a business plan , such as an executive summary and company description. But before we get to that, let's talk about key elements that should serve as building blocks for your plan.

For some entrepreneurs, the thought of writing a business plan sounds like a chore — a necessary means to an end. But that's a bad take.

A solid business plan is a blueprint for success . It's key to securing financing, presenting your business, outlining your financial projections, and turning that nugget of a business idea into a reality.

At the core, your business plan should answer two questions: why your business and why now?

Investors want to know why your business is entering the market, i.e. what problem it's solving and how it's different from what's currently out there. They also want to know why now is the right time for your type of product or service.

At a minimum, your plan should:

• Be more realistic than idealistic: Too often, business plans focus too much on how things could be instead of how they are. While having a vision is important, your plan needs to be rooted in research and data.
• Legitimize your business idea : If an idea fails on paper, it's a signal to go back to the drawing board. In doing so, you avoid losing precious time or money chasing an unrealistic idea.
• Position your business for funding: To get your business off the ground, chances are you'll need financial backing. Even with a solid business idea, investors, lenders, and banks still need convincing. An effective business plan will outline how much money you need, where it's going, what targets you will hit, and how you plan to repay any debts.
• Lay the foundation: Investors focus on risk – if anything looks shaky, it could be a dealbreaker. Ideally, your business plan will lay down the foundation for how you'll operate your business — from operational needs to financial projections and goals.
• Communicate your needs: It's nearly impossible to communicate your needs if you don't know what they are first. Of course, a business’ needs are always changing — but your plan should give you a well-rounded view of how your business will work in the short and long term.

So back to the question of why and why now – consider three things:

• Your industry – How does your product or service fit within your industry? Are you targeting a specific niche? Where do you see the industry going in the next five to 10 years?
• Your target audience – Who are you targeting? What challenges are they facing? How will your product or service help them in their daily lives?
• Your unique selling proposition (USP) – What sets you apart from your competitors? Is it your product/service features? Your company values? Price?

Once you know the answers to these questions, you'll be equipped to answer the question: why your business and why now.

How to Build a Business Plan

• Executive Summary
• Company and Business Description
• Product and Services Line
• Market Analysis
• Marketing Plan
• Legal Notes
• Financial Considerations

Featured Resource: Free Business Plan Template

1. cover page.

Your business plan should be prefaced with an eye-catching cover page. This means including a high-resolution image of your company logo, followed by your company's name, address, and phone number.

Since this business plan will likely change hands and be seen by multiple investors, you should also provide your own name, role in the business, and email address on the cover page.

At the bottom of this page, you can also add a confidentiality statement to protect against the disclosure of your business details.

The statement can read as follows: " This document contains confidential and proprietary information created by [your company name]. When receiving this document, you agree to keep its content confidential and may only reproduce and/or share it with express written permission of [your company name] ."

Remember to keep your cover page simple and concise — and save the important details for other sections.

Why it matters: First impressions are everything, and a clean cover page is the first step in the right direction.

Example of a Cover Page

2. Executive Summary

The executive summary of your business plan provides a one- to two-page overview of your business and highlights the most crucial pieces of your plan, such as your short-term and long-term goals.

The executive summary is essentially a boiled-down version of your entire business plan, so remember to keep this section to the point and filled only with essential information.

Typically, this brief section includes:

• A mission statement.
• The company's history and leadership model.
• An overview of competitive advantage(s).
• Financial projections.
• Company goals.
• An ask from potential investors.

Why it matters: The executive summary is known as the make-or-break section of a business plan. It influences whether investors turn the page or not — so effectively summarizing your business and the problem it hopes to solve is a must.

Think of the Summary as a written elevator pitch (with more detail). While your business plan provides the nitty-gritty details, your Summary describes — in a compelling but matter-of-fact language — the highlights of your plan. If it's too vague, complicated, or fuzzy, you may need to scrap it and start again.

Example of an Executive Summary Introduction

"The future looks bright for North Side Chicago, particularly the Rock Hill Neighborhood. A number of high-end commercial and residential developments are well on their way, along with two new condo developments in nearby neighborhoods.

While the completion of these developments will increase the population within the neighborhood and stimulate the economy, the area lacks an upscale restaurant where residents and visitors can enjoy fine food and drink. Jay Street Lounge and Restaurant will provide such a place."

3. Company & Business Description

In this section, provide a more thorough description of what your company is and why it exists.

The bulk of the writing in this section should be about your company's purpose – covering what the business will be selling, identifying the target market, and laying out a path to success.

In this portion of your business plan, you can also elaborate on your company's:

• Mission statement
• Core values
• Team and organizational structure

Why it matters: Investors look for great structures and teams in addition to great ideas. This section gives an overview of your businesses' ethos. It's the perfect opportunity to set your business apart from the competition — such as your team's expertise, your unique work culture, and your competitive advantage.

Example of a Values/Mission Statement

"Jay Street Lounge and Restaurant will be the go-to place for people to get a drink or bite in an elegant, upscale atmosphere. The mission is to be North Side's leading restaurant, with the best tasting food and the highest quality service."

3. Product & Services Line

Here's where you'll cover the makeup of your business's product and/or services line. You should provide each product or service's name, its purpose, and a description of how it works (if appropriate). If you own any patents, copyrights, or trademarks, it's essential to include this info too.

Next, add some color to your sales strategy by outlining your pricing model and mark-up amounts.

If you're selling tangible products, you should also explain production and costs, and how you expect these factors to change as you scale.

Why it matters: This section contains the real meat of your business plan. It sets the stage for the problem you hope to solve, your solution, and how your said solution fits in the market.

There's no one-size-fits-all formula for this section. For instance, one plan may delve into its ability to market in a more cost-effective way than the competition, whereas another plan focuses on its key products and their unique features and benefits.

Regardless of your angle, it's critical to convey how your offerings will differ from the competition.

Example of a Product/Service Offering

"The menu at Jay Street Lounge and Restaurant will focus on Moroccan cuisine. The stars of the menu (our specialties) are the Moroccan dishes, such as eggplant zaalouk, seafood bastilla, tagine, and chickpea stew. For those who enjoy American dishes, there will also be a variety of options, from burger sliders and flatbread pizza to grilled steak and salads.

The food at Jay Street will have premium pricing to match its upscale atmosphere. During the summer months, the restaurant will have extra seating on the patio where clients can enjoy a special summer menu. We will be open on all days of the week."

4. Market Analysis

It helps to reference your market research documentation in this section, like a Porter's Five Forces Analysis or a SWOT Analysis ( templates for those are available here ). You can also include them in your appendix.

If your company already has buyer personas, you should include them here as well. If not, you can create them right now using the Make My Persona Tool .

Why it matters: Having an awesome product is, well, awesome — but it isn't enough. Just as important, there must be a market for it.

This section allows you to dig deeper into your market, which segments you want to target, and why. The "why" here is important, since targeting the right segment is critical for the success and growth of your business.

It's easy to get lost (or overwhelmed) in a sea of endless data. For your business plan, narrow your focus by answering the following questions:

• What is my market? In other words, who are my customers?
• What segments of the market do I want to target?
• What's the size of my target market?
• Is my market likely to grow?
• How can I increase my market share over time?

Example of a Market Analysis

"Jay Street Lounge and Restaurant will target locals who live and work within the Rock Hill Neighborhood and the greater North Side Chicago area. We will also target the tourists who flock to the many tourist attractions and colleges on the North Side.

We will specifically focus on young to middle-aged adults with an income of $40,000 to $80,000 who are looking for an upscale experience. The general demographics of our target market are women between 20 to 50 years old.

A unique and varied Moroccan-American menu, along with our unique upscale atmosphere, differentiates us from competitors in the area. Jay Street will also set itself apart through its commitment to high-quality food, service, design, and atmosphere."

5. Marketing Plan

Unlike the market analysis section, your marketing plan section should be an explanation of the tactical approach to reaching your aforementioned target audience. List your advertising channels, organic marketing methods, messaging, budget, and any relevant promotional tactics.

If your company has a fully fleshed-out marketing plan, you can attach it in the appendix of your business plan. If not, download this free marketing plan template to outline your strategy.

Free Marketing Plan Template

Outline your company's marketing strategy in one simple, coherent plan.

• Pre-Sectioned Template
• Completely Customizable
• Example Prompts
• Professionally Designed

Why it matters: Marketing is what puts your product in front of your customers. It's not just advertising — it's an investment in your business.

Throwing money into random marketing channels is a haphazard approach, which is why it's essential to do the legwork to create a solid marketing plan.

Here's some good news — by this point, you should have a solid understanding of your target market. Now, it's time to determine how you'll reach them.

Example of a Marketing Plan Overview

"Our marketing strategy will focus on three main initiatives:

• Social media marketing. We will grow and expand our Facebook and Instagram following through targeted social media ads.
• Website initiatives. Our website will attract potential visitors by offering updated menus and a calendar of events.
• Promotional events. Jay Street will have one special theme night per week to attract new clients."

6. Sales Plan

It doesn't matter if your sales department is an office full of business development representatives (BDR) or a dozen stores with your products on their shelves.

The point is: All sales plans are different, so you should clearly outline yours here. Common talking points include your:

• Sales team structure, and why this structure was chosen.
• Sales channels.
• Sales tools, software, and resources.
• Prospecting strategy.
• Sales goals and budget.

Like with your marketing plan, it might make sense to attach your completed sales plan to the appendix of your business plan. You can download a template for building your sales plan here .

Why it matters: Among other things, investors are interested in the scalability of your business — which is why growth strategies are a critical part of your business plan.

Your sales plan should describe your plan to attract customers, retain them (if applicable), and, ultimately, grow your business. Be sure to outline what you plan to do given your existing resources and what results you expect from your work.

Example of a Sales Plan Overview

"The most important goal is to ensure financial success for Jay Street Lounge and Restaurant. We believe we can achieve this by offering excellent food, entertainment, and service to our clients.

We are not a low-cost dining option in the area. Instead, the food will have premium pricing to match its upscale feel. The strategy is to give Jay Street a perception of elegance through its food, entertainment, and excellent service."

7. Legal Notes

Your investors may want to know the legal structure of your business, as that could directly impact the risk of their investments. For example, if you're looking for business partners to engage in a non-corporation or LLC partnership, this means they could be on the line for more than their actual investment.

Because this clarification is often needed, explain if you are and/or plan to become a sole proprietor, partnership, corporation, LLC, or other.

You should also outline the steps you have taken (or will need to take) to operate legally. This includes licenses, permits, registrations, and insurance.

The last thing your investor wants to hear after they've sent you a big chunk of change is that you're operating without proper approval from the local, state, or federal government.

Why it matters: The last thing your investor wants to hear after they've sent you a big chunk of change is that you're operating without proper approval from the local, state, or federal government.

Example of Legal Notes

"Jay Street Lounge and Restaurant is up-to-date on all restaurant licenses and health permits. Our business name and logo are registered trademarks, presenting the possibility of expanding locally."

8. Financial Considerations

Ultimately, investors want to know two things:

• When they will earn their money back.
• When they will start seeing returns on their initial investment.

That said, be clear, calculated, and convincing in this section. It should cover:

• Startup costs.
• Sales forecasts for the next several months/quarters.
• Break-even analysis for time and dollars.
• Projected profit and loss (P&L) statement.

Facts and figures are key here, so be as specific as possible with each line item and projection. In addition, explain the "why" behind each of these sections.

However, keep in mind that information overload is a risk, especially when it comes to data. So, if you have pages upon pages of charts and spreadsheets for this section, distill them into a page or two and include the rest of the sheets in the appendix. This section should only focus on key data points.

Why it matters: One of the most important aspects of becoming "investor ready" is knowing your numbers. More importantly, you need to understand how those numbers will enhance your business.

While it's easy to write a number down on paper, it's more important to understand (and communicate) why you need capital, where it's going, and that your evaluation makes sense.

Example of Financial Projections

"Based on our knowledge and experience in the restaurant industry, we have come up with projections for the business.

Starting with an expenditure of $400,000 in year 1, we forecast sales of $1,500,000 and $2,800,000 for years two and three. We expect to achieve a net profit of 15% by year three."

9. Appendix

A detailed and well-developed business plan can range anywhere from 20 to 50 pages, with some even reaching upward of 80.

In many cases, the appendix is the longest section. Why? Because it includes the supportive materials mentioned in previous sections. To avoid disrupting the flow of the business plan with visuals, charts, and spreadsheets, business owners usually add them in the last section, i.e. the appendix.

Aside from what we've already mentioned – marketing plan, sales plan, department budgets, financial documents – you may also want to attach the following in the appendix:

• Marketing materials
• Market research data
• Licensing documentation
• Branding assets
• Floor plans for your location
• Mockups of your product
• Renderings of your office space or location design

Adding these pieces to the appendix enriches the reader's understanding of your business and proves you've put the work into your business plan without distracting from the main points throughout the plan.

Why it matters: An appendix helps the reader do their due diligence. It contains everything they need to support your business plan.

Keep in mind, however, that an appendix is typically necessary only if you're seeking financing or looking to attract business partners.

Use a Business Plan Template to Get Started

Writing a business plan shouldn't be an insurmountable roadblock to starting a business. Unfortunately, for all too many, it is.

That's why we recommend using our free business plan template. Pre-filled with detailed section prompts for all of the topics in this blog post, we're confident this template will get your business plan started in the right direction.

Editor's note: This post was originally published in June 2017 and has been updated for comprehensiveness.

Don't forget to share this post!

Related articles.

How to Calculate Your Lead Generation Goals [Free Calculator]

What Are Direct Costs & How Do They Differ From Indirect Costs?

How to Write a Business Plan: A Step-by-Step Guide [Examples + Template]

9 Handy Business Calculators That’ll Make Your Life Easier

The Definition of CAC [In Under 100 Words]

How to Calculate Next Month's Lead Gen Goal [Quick Tip]

How to Calculate the Value of Your Social Media Followers [CALCULATOR]

A Simple Calculator to Determine Your Monthly Traffic & Leads Goals [Template]

How to Calculate & Track a Leads Goal That Sales Supports

2 Essential Templates For Starting Your Business

Marketing software that helps you drive revenue, save time and resources, and measure and optimize your investments — all on one easy-to-use platform

Everything that you need to know to start your own business. From business ideas to researching the competition.

Practical and real-world advice on how to run your business — from managing employees to keeping the books.

Our best expert advice on how to grow your business — from attracting new customers to keeping existing customers happy and having the capital to do it.

Entrepreneurs and industry leaders share their best advice on how to take your company to the next level.

• Business Ideas
• Human Resources
• Business Financing
• Growth Studio
• Ask the Board

Looking for your local chamber?

Interested in partnering with us?

Start » startup, how to write a startup business plan.

As a startup, you'll need to know how to write a business plan in order to attract investors. Here are some templates and examples to help you get started.

If you're starting a new business or executing a new plan within your company, you’ll want to have a business plan. It’s a formal document that outlines your company, your project, funding options and your means of execution. There are many resources available to help you write your business plan, including countless templates you can follow depending on your goals. Below we’ve outlined some examples, including a sample plan.

[Read: How to Write a Business Plan During a Pandemic ]

Business plan template examples

While business plans can be general, it’s helpful to gear yours toward your industry. Here are five business plan templates for specific industries or situations:

• For first-time entrepreneurs: The United States Small Business Administration (SBA) .
• For getting your ideas down: $100 Startup .
• For law firms: Cilo .
• For established businesses: SCORE .
• For additional industries: LawDepot .

Sample business plan

A one-page business plan briefly states your opportunity and timeline. It’s often used as an introduction to your longer, more robust plan. Here is a brief overview of a business plan and the nine elements that should be included.

1. The business opportunity

At the top of your plan, state the endeavor you're looking to pursue. Are you a new startup or an existing company looking to grow? Describe your challenges and how you plan to work through them. This section should be a one- or two-sentence elevator pitch of your business opportunity.

[Read: How to Refine Your Business Plan for Every Stage of Your Business ]

2. Your company description

When writing your company description, assume the reader knows nothing about your company. Briefly define who you are, identifying your values and why your company is necessary right now.

Outline your timeline for launching your business or project. Timelines are always subject to change, so make sure you account for alternative scenarios and setbacks.

3. Your talent description

In this section, you’ll want to introduce your team and demonstrate why they are the right fit for your business. Talk about their relevant skills, experience and background, getting as specific as possible. Providing their track record will reassure potential investors that your business is backed by reliable professionals.

4. The industry analysis

While writing your plan, it’s important to recognize your industry's outlook and your potential within it. This will also help you identify your competitors and analyze their offerings in comparison to yours, so you can focus on how you might stand out among them. This analysis is a great way to show investors that you’ve done your research and understand how you fit into your market.

[Read: Pivoting During the Pandemic? 16 Tools That Will Help Your Business Adapt ]

5. Your target audience

In this section, you will identify your target audience, defining their demographic, location and other specific traits. Additionally, explain how your audience will benefit from your company or project, or how you will solve common problems they share.

6. The timeline

Outline your timeline for launching your business or project. Timelines are always subject to change, so make sure you account for alternative scenarios and setbacks. For your one-page business plan, talk about your general timeline, its phases and why it’s a realistic goal.

7. Your marketing plan

How will you get the word out about your new business or project? Identify the avenues you and your company will choose to explore and how you plan to meet your target audience there. For example, consider your social media efforts, digital marketing and other methods that you seek to execute.

8. The financial summary

Clearly define your cost structure and revenue streams, describing your sales methods and post-launch goals, as well as how you will achieve them. Be sure to include both your long- and short-term financial goals and benchmarks.

[Read: Smart Strategies for Presenting Your Business Plan ]

9. Your funding requirements

One of the primary reasons you write a business plan is to help obtain funding. In this section, talk about the amount of funding you'll need from investors and where that funding will go. You should also be clear about how you plan to pay back your investors through your financial plan.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

Follow us on Instagram for more expert tips & business owners stories.

CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here .

Join us for our Small Business Day event!

Join us at our next event on Wednesday, May 1, at 12:00 p.m., where we’ll be kicking off Small Business Month alongside business experts and entrepreneurs. Register to attend in person at our Washington, D.C., headquarters, or join us virtually!

Subscribe to our newsletter, Midnight Oil

Expert business advice, news, and trends, delivered weekly

By signing up you agree to the CO— Privacy Policy. You can opt out anytime.

For more startup tips

How to change your ein, or how to fix an incorrect ein, micro-business vs. startup: what’s the difference, micro businesses: what are they and how do you start one.

By continuing on our website, you agree to our use of cookies for statistical and personalisation purposes. Know More

Welcome to CO—

Designed for business owners, CO— is a site that connects like minds and delivers actionable insights for next-level growth.

U.S. Chamber of Commerce 1615 H Street, NW Washington, DC 20062

Social links

Looking for local chamber, stay in touch.

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

• 3 years ago

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?

Brandon Boushy

Brandon Boushy lives to improve people’s lives by helping them become successful entrepreneurs. His journey started nearly 30 years ago. He consistently excelled at everything he did, but preferred to make the rules rather than follow him. His exploration of self and knowledge has helped him to get an engineering degree, MBA, and countless certifications. When freelancing and rideshare came onto the scene, he recognized the opportunity to play by his own rules. Since 2017, he has helped businesses across all industries achieve more with his research, writing, and marketing strategies. Since 2021, he has been the Lead Writer for UpFlip where he has published over 170 articles on small business success.

Related posts

• September 27, 2023

How to Start a Business: The Ultimate Guide (2024)

• August 3, 2022

Free Business Plan Template (With Examples)

• May 3, 2022

How to Get a Business License (In 3 Steps)

Join the discussion cancel reply.

Save my name, email, and website in this browser for the next time I comment.

This site uses Akismet to reduce spam. Learn how your comment data is processed .

2 thoughts on “How to Write a Business Plan (Plus Examples & Templates)”

My Name is PRETTY NGOMANE. A south African female. Aspiring to do farming. And finding a home away from home for the differently abled persons in their daily needs.

nice work https://binarychemist.com/

Compare listings

Reset Password

Please enter your username or email address. You will receive a link to create a new password via email.

How to Write a Business Plan

Last Updated: February 16, 2024, 12:05 pm by TRUiC Team

Writing a business plan can be an intimidating endeavor. Whether you’ve decided to start a business , or you already have a business and need to write a business plan to apply for a loan or to pitch to investors , we cover the process in-depth.

Recommended: Our business plan generator walks you through topics like marketing and financial projections so that your business is prepared to succeed.

What Is a Business Plan?

The traditional business plan is typically a 20 to 40-page formal document that describes what your business does, what your objectives are, and how you plan to achieve them.

It lays out your plans for operating, marketing, and managing your business, along with your goals and financial projections.

There are many different types of business plans, depending on the stage of your venture and the purpose of your business plan. In the earliest stages of your business idea, you may want to start small with a three-sentence business plan , or perhaps by sketching out a lean canvas or business model canvas .

Once your business idea has been developed, you’ll be ready to begin writing your business plan .

Why Do You Need a Business Plan?

Writing a business plan requires you to think through all of the key elements of your business. This gives you insights into the challenges you’ll face and the strengths you bring.

A business plan is also often requested by lenders or investors when you are ready to seek financing.

While many companies do not need a formal business plan unless they are planning on seeking investors or applying for a business loan , writing a business plan has extensive benefits.

The process of writing your business plan allows you to take an in-depth look at your industry , market , and competitive position . It helps you set goals , determine your keys to success , and plan your strategies . It also allows you to explore your financial projections and manage cash. So, even if you do not need a formal business plan, the process of planning may still reap huge rewards.

Your Audience

You need to think carefully about who is going to read your business plan.

Although you might begin writing a business plan only to convince yourself, there are a number of stakeholders who may end up reading your business plan.

Your plan might be read by your:

• Partners or potential partners
• Board of directors
• Senior management team
• Current employees
• Employment candidates

Outside the organization , the following stakeholders may want to read your business plan before they decide to do business with you:

• Distributors
• And independent contractors

Think about your primary audience when you are writing your business plan. What are the aspects that are most important to them? This is where you will want to put the majority of your focus.

For example, lenders will be most interested in your financial projections — your cash flow statement and balance sheet.

Investors might be most interested in your business model, the uniqueness of your product or service, and your competitive advantage.

Partners, your senior management team, and current employees might be most interested in your strategic plans- your vision, your operational plan, and your organizational plan.

Find Sample Business Plans in Your Industry

One great resource you should check out before sitting down to write your business plan are sample business plans in your industry.

Not only will you have the opportunity to gain insights on your industry and your competitors, you also might be able to find troves of industry and market research that will make conducting your own analysis of the industry and market much easier.

To find example business plans in your industry, try searching the web for “ your industry business plan example.”

Writing Your Business Plan

Once you have spent some time looking at sample business plans in your industry, it is now time to start writing your business plan . An easy place to begin is by outlining the major sections you will need in your plan.

What you need to include in your business plan will depend on the type of business you are creating, your business model, and who your intended audience is.

Common business plan sections include:

• Executive Summary — a high-level overview of your business or business idea
• Venture Overview — a description of your company, vision, mission, and goals
• Product or Service Description — a detailed description of your product or service
• Industry and Market Analysis — an analysis of the industry and market you compete in
• Marketing Plan — your overall strategy and specific plans to capture market share
• Organizational Plan — the legal form of the business and the key players
• Operational Plan — how you will operate the business and your key resources
• Goals, Milestones, and Risks — short and long-term goals, milestones, and risks
• Financial Statements — Financial statements or the projected financials of your business

Not every type of venture will require every one of these sections to be included in their business plans. However, most business plans will at least include an executive summary, venture overview, a description of the products and services, and some form of financial projections.

Executive Summary

As suggested in its name, an executive summary is a summary of the key points in your business plan . This is your first chance to convey to readers the what, why, who, and how of your business or business idea.

Although there is no set structure for an executive summary, a good executive summary should summarize :

• The problem you are solving
• Your solution
• Your target market
• Any competitive advantages
• The team you’ll build
• Goals and objectives
• An overview of your financials or financial forecast

If you are writing your business plan for the purpose of acquiring funding , you will also need to discuss the amount of funding required, the purpose of the funds, as well as how your investors will get paid back.

The executive summary should be clear and concise . Ideally, this section should be one to two pages and typically follows either a synopsis or story approach, depending on the intended audience.

In the synopsis approach, you would provide a brief summary of each of the key sections of your business plan. In the story approach, your executive summary reads like a narrative, allowing you to tell the “story” of your business or idea.

With either approach to writing the executive summary, the information you want to convey remains the same. The executive summary needs to provide an overall picture of your current business or business idea.

The executive summary should include:

• A brief description of you and your venture,
• The problem your product or service is solving,
• Some information on your target market, including size, potential, & competition, and
• The solution you are offering.

The executive summary should also include:

• A statement of where you are now,
• A statement of your objectives and future plans,
• A list of what you see as keys to your success, and (if you are seeking investors)
• Any relevant financial information such as start-up costs, funding required, and how you will use investor funding.

Although the executive summary is the first section in the business plan, because it is a summary of the rest of your business plan, it is often written last.

Venture Overview

The venture overview is a top-level depiction of your company.

It contains the:

Description of the Venture

• Vision Statement
• Mission Statement
• Goals & Objectives
• Keys to Your Success

The first part of your venture overview is a description of your venture.

The description of your venture should include what you do (a brief description of your products or services), the value you provide to customers, your current operating status or a brief history of the venture, and a short description of the industry or niche in which you compete.

How to Write a Vision Statement

After describing your venture, a vision statement is a very simple, 5 to 10 word sentence or tagline that expresses the fundamental goals of your firm. Good vision statements reflect your company’s long term passion and purpose, often in a way that evokes emotion.

Take a look at the vision statements below for some inspiration:

Disney —  To make people happy. Oxfam —  A world without poverty. Stanford —  To become the Harvard of the West. Marriott —  To be the #1 hospitality company in the world. Microsoft —  A computer on every desk and in every home; all running Microsoft software.

How to Write a Mission Statement

After having crafted your vision statement, you should also create a mission statement. A mission statement explains your company's goals in terms of what you do for your customers. A good mission statement should tell your reader what your company does, who you do it for, and why you do what you do.

Check out these excellent examples of compelling mission statements:

Patagonia —  “Our Reason For Being: Build the best products, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” Trader Joes —  “Our mission is to give our customers the best food and beverage values that they can find anywhere and to provide them with the information required to make informed buying decisions. We provide these with a dedication to the highest quality of customer satisfaction delivered with a sense of warmth, friendliness, fun, individual pride, and company spirit.” Facebook —  "Founded in 2004, Facebook's mission is to give people the power to build community and bring the world closer together. People use Facebook to stay connected with friends and family, to discover what's going on in the world, and to share and express what matters to them."

Goals and Objectives

In this section of the business plan, break down your most important short-term and long-term goals and objectives.

Aim for five to seven of your most important short and long term goals.

This subsection of your venture description should be kept short. You will come back to your goals at the end of your business plan.

However, your key short-term and long-term goals should be highlighted early on in your business plan as well. The rest of your business plan will act as evidence of how you plan on achieving your goals.

Keys to Success

Your keys to success are your insights into what it takes to be successful in your industry, market, or niche.

Your keys to success can include several of the most important milestones that you will need to accomplish in order to achieve your goals.

These may include providing high quality products and services, your ability to attract customers or users and gain market share, or even your ability to develop the technology to deliver your products or services.

Your keys to success may also include the major milestones that you will need to reach along the way in order to achieve your vision. You will come back to your milestones and objectives at the end of your business plan.

Product or Service Description

The product or service description section is where you will go into detail in describing your products or services.

Not only will you describe your product in more detail, you should also discuss the uniqueness of your product, and what gives you an advantage over your competitors.

These are the three main parts of the Product (or Service) Description:

Description of Products or Services

Uniqueness of product, competitive advantage.

In this subsection of your business plan, describe the products or services you will provide, why they are a fit in the market, and how you will compete with similar products and services.

Begin by clearly describing the products or services you will provide. Make sure to explain the features and characteristics of your products and services. Your product or service description does not have to be highly technical. Rather, in addition to describing the features, focus on highlighting the advantages and benefits associated with your products or services.

Also, let your reader know why your product or service is needed. How does your product or service differ from those offered by your competitors? How does it better fill your customers wants and needs?

This is where you tell your reader why your solution is unique. Is it different from everything else out there? How is it different? Why would potential users choose your product or service over your competitors? In order to stand out, you need to distinguish yourself in some way.

To describe your product or service’s uniqueness, you may want to come up with a unique value proposition (or unique selling point). A value proposition is a short description of what you do, who you do it for, and how this benefits them.

A value proposition is similar to a mission statement. However, it differs in that a mission statement is written from the perspective of the company, while a value proposition is written from the perspective of the customer.

Your value proposition should be the center of your customer messaging. It should be front and center on your website, in your marketing materials, and in your advertising.

Here a few examples of great value propositions:

Dollar Shave Club —  A Great Shave for a Few Bucks a Month. No Commitment. No Fees. No B.S. Unbounce —  Build, Publish, & A/B Test Landing Pages Without IT Freshbooks —  Small Business Accounting Software Built for You, the Non-Accountant Skype —  Skype Keeps the World Talking, for Free. Share, Message, and Call - Now with Group Video on Mobile and Tablet Too.

What makes you better than competitors?

Does your competitive advantage come from superior products and services, customer service, technical support, logistics, price? What are the factors that give you an advantage over your competitors?

Clearly defining your competitive advantage is important.

Your competitive advantage is not just some abstract concept. It is at the core of how you deliver value to your customers. Your competitive advantage lays the foundation for your business model and should be a key component of your strategic plans.

Common areas where businesses find competitive advantages include:

• Intellectual Property
• Resources/Capital
• Economies of Scale
• Knowledge/Experience
• Connections and Network
• Customer Service
• Technical Support
• Customization
• Brand Recognition/Loyalty

Industry and Market Analyses

The industry and market analysis is the “big picture” view of your industry and market.

Conducting an industry and market analysis is going to take a good deal of research. You will likely need to research your industry, your competitors, and your customers. But do not rush through this section of your business plan.

A good understanding of your industry and market is critical to your success. By understanding the forces at play within your industry, you will be better able to find additional ways to create value that will allow you to succeed in the current and anticipated competitive environment.

Conducting an industry and market analysis can be intimidating, especially if you do not know what to look for or how to find the information you need. In the next section, we will discuss what should be included in your industry analysis. Then, we will tell you where to begin looking.

Industry Analysis

The industry analysis is a big picture analysis of the industry you will compete in. What does your overall industry look like today? There are a number of insights that will help you assess the attractiveness of your idea and form a big picture view of the industry and segment you are considering competing in.

Key insights to be alert for include:

• The dominant economic features of the industry
• The industry’s driving forces
• The industry’s competitive environment
• The competitive position of major players and key competitors
• Key industry success factors

To arrive at meaningful insights from your industry analysis, try to find answers to the following questions:

• What primary products or services are provided by your industry?
• What is the size and trajectory of the industry?
• What was the annual growth rate of the industry over the past year? Three years? Five years? Ten years?
• What is the forecasted annual growth rate over the next three years? Five years? Ten years?
• What is the average profitability of firms in your industry?
• What trends are affecting your industry?
• Who are the major customer segments served by your industry?
• Who are the major players in your industry?
• Who will be your key competitors in your industry?
• What key factors determine success or failure?

Industry Research

Now that you have a better idea of what to look for, you will need to know where to begin your search. There are a number of great free resources to begin looking for industry research. However, the first step is to determine the industry you are in.

While by this point, you should have some idea of the industry you are in, it is not always so clear. You could try an internet search to see what information you can find on your industry, but you will also want to find the NAICS code. You can do a NAICS Code Lookup and find the NAICS Code for LLC that matches your industry.

Here, you use the NAICS identification tool to drill-down through a list of industries to find the appropriate NAICS code for your business.

Once you know your industry, you can begin collecting more information about the industry trends and trajectory.

www.Bizstats.com provides free industry statistics including industry averages for income statement revenues and expenses, balance sheets, and key financial ratios. This is very helpful in making financial forecasts and setting benchmarks.

The US Census Bureau also provides several tools to help you conduct industry research:

• The Economic Census provides information on employer businesses, including data sorted by industry, state, region, and more.
• Statistics of US Businesses (SUSB) provides additional data on US businesses by enterprise size and industry. Both of these tools may help in conducting your industry analysis.

Target Market Analysis

Once you have a better understanding of the industry, you can begin to narrow down to your target market. In this section of the business plan you describe who your target market is and what you know about them.

What is a target market? Your target market is the specific group of customers to whom your product is intended. And no, it is not everyone. Although many new venture founders would like to sell their product or service to everyone, you should focus your efforts on your most likely customers.

Narrowing your target market requires understanding the three types of markets for your products or services. Your venture’s market can be narrowed down into three categories, the TAM, the SAM, and the SOM.

The total available market (TAM) is the total market for your products and services. Everyone in the universe who might be your customer.

The serviceable available market (SAM) is the subset of the total market that you can actually reach. Although anyone in your universe might be your customer, you are limited in your ability to reach them all.

The share of market (SOM) is the subset of the serviceable available market that you will actually reach. These are your most likely customers. Your target market.

Target markets can be segmented in many different ways. The idea is to narrow down to your most likely customers. This is where your focus should be.

Ways you can segment the market include:

• Demographic (e.g., age, gender, family size, education, income)
• Geographic (e.g., country, state, region, city, neighborhood)
• Psychographic (e.g., benefits sought, personality, social class, lifestyle)
• Behavioral (e.g., benefits sought, usage, attitude, loyalty)

Once you understand who your target market segments are, you will be able to start determining how you can reach them. To do this, consider:

• Where does your target market get information to make purchasing decisions?
• What is it they are looking for when considering buying this product/service?
• What will your target market pay attention to?

Market Research

To determine your target market and conduct a market analysis, you will most likely have to do market research.

Market research is the collection, analysis, and interpretation of data related to your target market and target customer to support strategic decision making.

There are two types of market research : secondary market research, and primary market research.

Secondary market research is the collection, analysis, and interpretation of data that has already been collected for other purposes. Secondary market research may include the collection of data from a number of sources such as the U.S. Census Bureau, consumer agencies, and for-profit organizations.

Primary market research is the collection of new information to gain a further understanding of the problem at hand. Primary market research involves you collecting the data or hiring a market research firm to collect data for you. This is you going out and actually collecting the opinions of your potential customers.

Common methods of primary market research include customer observation, focus groups, customer surveys, and customer interviews .

Because primary market research typically takes more time to complete and may incur significant costs , secondary market research is often conducted before conducting primary market research. This allows you to gather enough insights that you can narrow your primary market research to those more likely to be your customers.

To begin conducting secondary market research, consider these sources:

Think with Google provides a number of free tools and resources to help you find and understand your target market. From tools like Find My Audience and an Insights Library to a wealth of information on customer trends and the consumer journey, Think with Google is a valuable tool in conducting your market analysis.

City Town Info provides free statistics on people and places, colleges and universities, and jobs and careers. You can search for data on more than 20,000 U.S. communities at the city and state levels.

Google Trends is another useful tool for conducting market research. Google Trends allows you to explore what people are searching on the internet. You can examine trending topics, see trends by year, or search your own topic to discover interest over time, by region, or by related queries.

Social Mention allows you to conduct a real-time social media search for topics across more than 100 social media platforms. Social Mention provides you with information on the sentiment behind topic mentions, top keywords, top hashtags, and the social media platforms where these topics are being discussed.

Needless to say, there are several other great sources for both industry and market research. The key is to get creative to find the data and information to both guide your strategy as well as justify your business opportunity.

Competitive Analysis

Once you understand your industry and market, you should also include an analysis of your major competitors.

Your competitors may include anyone offering alternatives to your solution that people are using now to solve the same problem.

You will want to understand and explain who your competitors are along with their market share , price, major competitive advantages and disadvantages, and what makes your product unique from theirs.

Start by identifying the major competitors within your industry. You should focus on your closest competitors. Those that compete with you directly.

Next, for each competitor, describe their strategies, their strengths, and their weaknesses. In doing so, try to answer the following questions:

• What are their primary products and or services?
• Who are their target customers?
• What differentiates your product or service from theirs?
• What is their pricing strategy?
• What is their marketing strategy?
• What is their main message or value proposition?
• What are their strengths and weaknesses?
• What are their competitive advantages?

You should complete a competitive analysis for your top three to five competitors. Doing so will allow you to gain a much better perspective on the competitive landscape and may provide insight into how you can distinguish yourself from your competitors and even how you can take advantage of areas where your competitors fall short.

Marketing Plan

The marketing plan depicts the overall strategy your venture pursues to capture market share.

The marketing plan describes all aspects of marketing for your venture, including the product, price, place, and promotion . This includes a big picture view of your marketing strategy, your planned marketing mix, as well as your pricing strategy, sales strategy, and advertising strategy.

The marketing plan should be well informed by your industry and market analysis. By now, you have a plethora of knowledge about who your target customer is, the problem and pain points that you are alleviating for them, and how your competitors are positioned. All of this knowledge allows you to hone your marketing plan to reach your target market with the right message in the channels they turn to for information.

Marketing Strategy

The first section of your marketing plan is your marketing strategy. Your marketing strategy refers to your overall strategy of how you will market your product. How will you get your message out to your potential customers?

Your marketing strategy should consider the four essential elements of marketing:

The 4 Ps of Marketing:

The product is everything the customer gets, whether it be a physical product, a service, or an experience.

It is what you deliver. This includes the product or service itself, along with its branding, packaging, labeling, and even benefits.

The price is what you charge. What the customer gives you. Your business plan should discuss your pricing strategy and where this fits in your marketing mix.

Are you competing on price and thus offer low pricing? Or are you focusing on value at a medium price point? Or maybe you are positioned as a luxury label or item, and compete at a high price point? Why did you choose this strategy? Does it fit with your target market and within your marketing mix?

Location refers to where your customers find you, or where you find them.

While much of today’s marketing is done online, location is still as important as ever. Once you understand the place, you will have a much better idea on how to deploy your marketing mix. Where do your ideal customers get their information? Where do they shop? What forms of social media do they use?

Promotion is how you tell customers about your products and services.

Simply put, promotion is how you raise awareness of your products, services, or brand. Promotion strategies may include public relations, content creation and curation, marketing, and advertising.

But, keep in mind, your promotional strategies should be focused on one thing: your target customer and the strategies and messaging that works for them.

Your Marketing Mix

Your marketing mix is how you allocate resources to the marketing channels that you plan to pursue. In this section of your marketing plan, you will describe the marketing messaging and channels that you plan to use, and why these are appropriate for your target market.

Inbound Marketing

Inbound marketing, or content marketing, is a form of marketing designed to draw traffic to your website by providing valuable content to your target market. This is often achieved by posting useful web content, content, videos, and blogs.

The idea behind inbound marketing is pretty simple- by providing knowledge and information on your products, services, and other information that is valuable to your customers, you generate more leads and, hopefully, more sales.

Social Media Marketing

With over 3.5 billion people around the world using social media, social media marketing is another powerful tool to reach potential customers.

Social media marketing has many advantages, including allowing you to get your message in front of your specified target audience at little to no cost.

Although there is an overabundance of social media channels to choose from. Focus on the ones that your target market uses to get their information.

For instance, if your target market is middle age or older people, you may want to focus on platforms that are more popular with these demographics such as Facebook, Twitter, and Pinterest. However, if your target market is teen agers and young adults, you are more likely to find them on platforms such as Instagram and TikTok.

The Power of Video Marketing

Do not forget to discuss the use of video marketing in your marketing mix.

In both inbound and social media marketing, video has begun to play an increasingly important role. Video marketing can be employed in inbound marketing, email marketing, and social media marketing to serve a variety of purposes. The most common uses of video marketing include explainer videos, presentation videos, testimonial videos, sales videos, and video ads.

Not only can video marketing be used in a variety of methods and contexts, it is a highly consumed type of advertising. In fact, in 2020, 96% of consumers watched an explainer video to find out more about a product or service. Video works. And marketers believe this too. 92% of marketers who utilize video marketing say that it is a key part of their marketing strategy.

Email Marketing

Depending on the type of venture your company is, email marketing may also be an important element in your marketing mix. A good email marketing strategy balances gaining new customers with keeping your existing customers engaged with your company.

Although you do not want to overdo it, and a lot of email marketing seems “spammy”, email marketing can be very effective in the right form. Welcome notes, confirmation emails, informational emails, newsletters, digital magazines, promotional emails, and seasonal and birthday campaigns are just a few of the many types of email marketing.

Referral Marketing

Another common type of marketing in a company's marketing mix is referral or recommendation marketing. Referral or recommendation marketing can take many forms. Referral marketing might include good old organic word-of-mouth marketing wherein you ask customers for referrals, or even a formal system for rewarding customers who refer new clients.

Pricing Strategy

The Marketing Plan section of the business plan should also describe your pricing strategy. How are you going to price your products and services?

There are a number of ways you can approach pricing:

Markup Pricing —  Markup pricing is pricing based on your costs, plus a predetermined markup. The amount you mark up your product or service is usually expressed as a percentage, known as the gross margin. Markup pricing is most often found in high volume manufacturing industries where manufacturers must cover the cost of the products they are making.

Competitive Pricing —  Competitive pricing is pricing based on your competitors prices for similar products or services. Competitive pricing is most often seen in products or services where there are numerous competitors or substitutes.

Value Pricing —  Value pricing is pricing based on the value or perceived value that you deliver to your customers. In value-based pricing, you set the prices of your products and services in line with what the customer believes your product or service is worth. Value-based pricing is most often seen in higher value products and services, those that cater to self-image, or those that are niche or unique.

Penetration Pricing —  Penetration pricing is setting a low initial price, and then raising it as demand increases. Penetration pricing is designed to capture market share. It is a strategy often used by a new business or in launching new products and services. The idea is to set the price low enough to draw customers from your competition.

Price skimming —  Price skimming pricing is setting a high initial price and then reducing this price as the market evolves. Price skimming is most often used on new or trendy products and services. As initial demand slows and alternatives or competitors emerge, the high initial pricing must then be lowered to stay competitive in the market.

Sales Strategy

A sales strategy is how you plan on selling your products or services to your target market. This includes your sales channels (where will your product or service be available for sale) as well as how you will sell your product or service.

Your sales strategy depends on your business model and the nature of your business. If your business involves retailing, food services, or personal services where your customers come to you to make a purchase, your sales strategy may be quite simple (or even unnecessary to income). However, if your business involves personal selling, you may need a more thought-out sales strategy.

Some questions to ask to determine and document your sales strategy in your business plan:

• Will your products or services be available on your website?
• On a third-party website?
• In retail locations?
• In your own stores?
• In other retail stores?
• Directly to consumers? (Business to Consumer or B2C)
• To businesses? (Business to Business or B2B)
• Cold calling?
• Networking?
• Inside salespeople?
• Outside sales representatives?
• Sales through strategic partners?

Advertising Strategy

An advertising strategy is how you plan to use sponsored, non-personal messaging to reach and inform potential customers of your product, service, or brand.

Your advertising plan should describe the mediums you are going to advertise in , who you are targeting advertising in these mediums, your advertising message(s), and your advertising budget. A good advertising plan is also measurable, so be sure to consider how you are going to measure the effect of your advertising strategy to see if it is working.

Advertising Mediums

The most common advertising mediums typically fall into the categories of traditional advertising and digital advertising.

Traditional advertising includes print advertising such as newspapers, magazines, flyers, direct mail, and even billboards, as well as radio and tv advertising.

Digital advertising includes email advertising, search engine advertising, website advertising, social media advertising, influencer advertising, among many, many more.

The secret to finding the right advertising strategy and advertising mediums for your business is knowing where to find your most likely customers. Where is your target market, and where do they go to get their information?

Organizational Plan

The organizational (or management) plan describes:

• The legal form of the business
• Its organizational structure
• The background and roles of the leadership team
• Key personnel that are already in place or you will need to fill.

Organizational Type and Structure

The first part of your organizational plan describes your organizational type and structure . Who owns your company? And what is its legal business structure?

There are four primary types of organizational structures:

Sole Proprietorships

Partnerships.

• Limited Liability Companies (LLCs)

Corporations

Sole Proprietorships and Partnerships are informal business structures , while LLCs and Corporations are more formal business structures .

The best type of structure for your business will depend on your business’s particular characteristics and needs. A partnership structure may be the best choice for some businesses, while an LLC or a corporation might work better for others.

Sole proprietorships are an informal type of business structure. While many businesses start out as sole proprietorships because they are an informal business structure the owner is liable for 100% of the business's liabilities and risks. Thus sole proprietorships are typically not the preferred ownership structure for small businesses.

Similar to a sole proprietorship, a partnership is also an informal type of business structure. While a sole proprietorship involves only one owner, a partnership is a business structure with two or more partners where there is still no legal distinction between the owners of a partnership and their business.

An LLC is a formal business structure that distinguishes the owners from the business itself.

LLCs offer the personal liability protection of a corporation with the pass-through taxation of a sole proprietorship or partnership.

It is the simplest way of structuring your business to protect your personal assets in the event your business is sued.

LLCs can be owned by one or more people, who are known as LLC “members.” An LLC with one owner is known as a single-member LLC, and an LLC with more than one owner is a multi-member LLC.

LLCs require operating agreements . Operating agreements are legal documents that outline the ownership and member duties of your LLC. This agreement allows you to set out the financial and working relations among business owners ("members") and between members and managers.

Recommended: Learn how to form an LLC in your state using our free guides.

A corporation is a legal business entity that is owned by shareholders, run by a board of directors, and created through registration with the state.

Corporations offer limited liability and tax benefits but are required to follow more complex operating procedures than their counterpart, the limited liability company (LLC).

Ownership and Executive Team

Now it’s time to sell the single most important element in your business plan. You!

This subsection of your business plan tells readers who is in your ownership and executive team and outlines the accomplishments of your team.

You should include a short profile on each member of your ownership and executive team that will play a role in company decision making.

Who is on your ownership and executive team? What roles will each perform? What knowledge, experience, and accomplishments do you and your team bring to the table? What roles do you still need to fill, and how and when do you plan on filling them?

It is well known that many investors consider the experience and ability of the ownership and management team to be just as important as the idea itself. Do not pass over this opportunity to highlight how your knowledge, experience, and accomplishments set you up to succeed.

Also, remember that when you are writing your descriptions of your ownership team, talk about your accomplishments- as opposed to experience. Accomplishments signify that you have a track record and can get things done.

Key Personnel

This section of the business plan highlights the key personnel associated with the business . This may include members of the management team outside of the owners and executive management, the board of directors, and any outside advisors.

Here, include profiles on each key figure associated with your company, focusing on their accomplishments and the knowledge and skill they bring to the business.

Operational Plan

The operational plan describes how you will operate. The processes, strategies, and resources that you will use to operate your business on a daily basis.

This includes descriptions of production (if you produce a product) or the process you will use to carry out your service. The operational plan may also include, as necessary, descriptions of your logistics and supply chain, physical resources and needs, human resources and needs, technological resources and needs, and timetables for carrying out your plan.

Production Plan or Service Description

The production plan or service description explains how you are going to make and deliver your product(s) or provide your service(s). Although the production plans for products and services may look slightly different, both describe how your company will operate in the day-to-day.

If you are making a product , the production plan is where you will describe the process for making the product. What are your methods of production? What are the steps in your processes? How will you ensure quality? Maintain inventory? Handle Logistics?

If you are providing a service , the production plan is where you can describe the process you go through providing that service. What are your service methods? What will your sales and customer service look like? What is the customer experience like?

Most importantly, which of these might give you an advantage over your competitors? If you have any superior methods, processes, or other advantages, make sure to highlight them in your production plan or service description.

Logistics and Supply Chain

This section of the business plan describes your logistics and where you fall within the supply chain in your industry.

If you produce a product , you should discuss how you source materials, where your materials come from, and who your suppliers are. You will also need to discuss how you handle inventory, how you warehouse, and how you distribute your product(s).

If you are a service business , you may still have to discuss how you source materials used in your service, who your suppliers are, and how you handle inventory.

Physical Resources

In this section of the operational plan, you describe the physical resources that you have and the physical resources that you need to acquire. Think through everything you might need. This will become important when it is time to make financial projections.

• What facilities, machinery, equipment, and supplies do you require?
• Do you require raw materials?
• Who will be your primary suppliers?
• Secondary suppliers?
• Do you have back up suppliers and contingency plans if you cannot acquire raw materials?

Technological Resources

You should discuss the technological resources that you are developing, have, or need to create or acquire. Technological resources may include any software, applications, or websites that you have or will need to create, outsource, or purchase.

• What hardware or machinery will you require?
• What software or applications will you require?
• Can you purchase the software and applications you need?
• Are the software and applications you will need off-the-shelf or specialty?
• Will you have to create the software and applications you need?
• Do you need a website?
• Will you create and maintain your website inside the company or have it created and maintained by someone else?

Human Resources

Here, you describe the people that are a part of your team, and the human resources that you need to add to your team, hire, or outsource. Since you have already described the ownership and management team as well as key personnel, this section is more focused on production level workers and lower management.

• How much staffing will you need?
• What skills will your staff require?
• What will your staffing typically look like?
• How will you recruit, train, and retain employees?

Goals, Milestone, and Risk

The goals, milestones, and risks section of your business plan is the place to outline your goals, set key milestones, and explore and explain your preparation for the risks you will face.

Goals lay the foundation of where you intend to take your company and how you are going to get there. It is important to ascertain the short and long-term goals for your company.

Your goals should be connected to your mission and vision, your business model, and your strategic plans. They should also reflect your ambition to move the company forward and are often reflected in key performance indicators (KPIs) , such as numbers of users and customers, revenues, expenses, retention, satisfaction, and other indicators of performance.

Here are some questions to help you develop the goals for your company:

• When do you expect to break even?
• What do you expect your revenue to be in one year? Three years? Five years?
• What market share do you expect to capture in the next year? Three years? Five years?
• Where do you plan to expand from here?
• What KPIs do you need to achieve or improve?
• When do you expect to implement major objectives?
• What level of customer satisfaction do you hope to achieve?

When developing your goals, in addition to defining what your goals are, you also need to consider the how , the when , and the who . First, consider how your goals will get accomplished? What actions need to be taken to achieve your goals? What milestones do you need to accomplish along the way?

Your goals should also include your plan on when you plan on attaining each goal . Not only will your readers be curious about when you plan to achieve your goals, due dates and deadlines make for really powerful motivators.

Finally, you should also determine who is going to be responsible for working toward each goal. In a sole-proprietorship or startup it may be you, the business owner, or your founding team. However, as your organization grows, it will become more and more important to define who is responsible for pushing toward and achieving each goal.

SMART Goals

Your goals should be SMART: S pecific, M easurable, A ttainable, R ealistic, and T imely.

• Specific —  Your goals should be clear and specific. They should be narrow enough that you can determine the appropriate steps to attain them. In addition to what , in planning your goals, do not forget to be specific about how , when , and who . How will your goals be attained? When do you anticipate achieving them? Who is going to be responsible?
• Measurable —  Your goals should be measurable. There should be some objective metric or performance indicator by which you can tell if you have met your goals? How are you going to measure your goals? What metrics or performance indicators will you use? How will you know if you achieve your goals?
• Attainable —  Your goals must also be realistic and attainable. For a goal to be attainable you must be able to achieve it. Do not be afraid to push yourself, but setting unrealistic goals will cast doubt on your entire business plan. Ask yourself, can your goals be accomplished? By you? What will it take to attain them?
• Relevant —  Your goals also need to be relevant. To be relevant, they should contribute to the mission, vision, and success of your venture. Do your goals align with your company’s values? Are they within the scope of and aligned with your operational plan? Your marketing plan? Are they within the budget?
• Timely —  Your goals should also be timely and time-bound. Their process and progress should be clearly defined and they should have a starting and ending date. Without a timeframe, there is no sense of urgency, or motivation to get started. Make your goals time-bound. How long do you expect it to take? When do you plan on getting started? When do you anticipate achieving each goal?

Milestones are important events in your venture’s growth that mark significant change or stage of development.

Creating a list of milestones can act as a checklist of what you need to accomplish for your venture to reach its goals. They tell the story of how you are going to get from where you are to where you are going.

Milestones might include major events and accomplishments, such as:

• Forming an LLC
• Writing a Business Plan
• Securing Seed Capital
• Develop a Prototype
• Begin Production
• First Major Sale
• Reach 10,000 Downloads
• Achieve 1,000 Paying Customers

It is alright to list a few milestones that you have already completed. Or to leave them in your business plan once you complete them. Accomplished milestones show that you are making traction.

Milestones act as a signal to potential investors and other stakeholders what to expect from your venture and when to expect it. They also signal whether the venture is progressing and growing as expected.

Implementation Timeline

The implementation timeline is where you describe where your company is in its lifespan . You should set a timeline to reach your goals and milestones. This should include a short-term timeframe as well as where you anticipate being in the long term.

This section of the business plan should not be long. A simple chart will do. You can find several free timeline templates online to plug in your milestones and the time frame you expect to achieve them.

You will also want to include a section in your business plan showing that you understand the critical risks that your business may be subject to . The risks you will face in your business include both internal and external risks. These are any areas that expose your venture to any kind of loss- assets, customers, sales, profits, and reputation, among others.

By exploring your assumptions and identifying possible risks in those assumptions, you can show that you have assessed and are prepared to handle risks and threats that may arise. There are several tools available to analyze business risks, including SWOT Analysis and contingency planning .

SWOT Analysis

You may want to conduct a SWOT analysis or even include it in your business plan. A SWOT analysis is an analysis of your strengths, weaknesses, opportunities, and threats.

A SWOT analysis can help you understand your industry and market, your venture, and the strategies that you should pursue.

To conduct a SWOT analysis, you will need to assess factors both inside and outside your venture.

Here is how to conduct your own:

• What does your company do well?
• What are your company’s advantages?
• What do you do better than your competitors?
• What unique or low-cost assets do you have access to?
• What does your company not do well?
• What are your company’s disadvantages?
• What do your competitors do better than you?
• What needs to be improved?
• Where can you improve?
• Where can you grow?
• How can you turn your strengths into opportunities?
• How can you turn your weaknesses into opportunities?
• Do the trends of the industry or market represent a threat?
• Is the number of competitors growing?
• Do changes in technology or regulation threaten your success?
• Do your weaknesses represent a threat?

Contingency Plans

After assessing your risks and your SWOT analysis, you should address any major threats or risks that your venture faces with contingency plans.

Contingency plans are plans to help mitigate these risks by establishing a plan of action should an adverse event happen.

Contingency plans show that you understand the threats and risks to your venture, and you have a plan in place to lessen the damage should these risks emerge. There are various ways to prepare for adverse events. One is through planning- identifying alternatives and determining the best course of action. Another is business insurance.

Business Insurance

Business insurance protects against risk from several sources. The type of business insurance you will need varies greatly depending on the nature of your business.

While there are standard types of coverage like general liability insurance , professional liability insurance , workers’ compensation , insurance for commercial property and commercial auto insurance , there are also insurance policies that cover specific business activities and specialized equipment.

You can bundle most of these into what is called a Business Owner’s Policy (BOP) by a trusted insurance provider to get you started doing business.

Financial Statements

Your financial statements should include detailed projections of your income statement , cash flow statement, and balance sheet for the first year. You should also provide quarterly projections for the first three (or preferably five) years as well.

You also will likely need to include some sort of financial statement in your business plan. If you are a new venture, you will supply pro forma financial statements. Pro forma financial statements are simply financial projections.

Financial statements can help you to evaluate the cash needs of your venture, determine whether your venture is feasible and desirable, compare your expected returns with the alternatives, identify milestones and benchmarks, and demonstrate the value of your venture to investors.

Financial Assumptions

Before you begin completing your financial statements, you should first sit down and list the assumptions you will rely on to project your financial statements .

These should include projections concerning your:

• Initial revenue level per month
• Your growth and factors affecting growth
• Your inventory and inventory turnover
• And your operating expenses.

One of the biggest mistakes new ventures make is in making unrealistic assumptions .

Remember, revenue assumptions are key assumptions in determining whether your business will be viable. However, many entrepreneurs are overly optimistic about their revenue assumptions and tend to underestimate their expenses.

In order to make more accurate financial assumptions, back up your assumptions with data whenever possible. To find data to back up your assumptions, look for things like industry averages, market trends, and comparisons with similar ventures. You should already have a substantial amount of this data from your industry and market research.

Pro Forma Income Statements

The income statement , also known as the profit and loss statement , is a statement that shows the projections of your venture’s income and expenses over a fiscal year. On the income statement, you will detail your revenue and sources of revenue based on the assumptions you have made. You will also detail your anticipated expenses and use these to estimate your net income.

The typical income statement includes:

• Revenue —  the total amount of sales, or revenue, projected to be brought in by your business.
• Cost of Goods Sold —  the total direct cost of producing your product or delivering your service.
• Gross Margin —  the difference between revenue and cost of goods sold.
• Operating Expenses —  this section of your income statement details all of the expenses associated with operating your business. Common operating expenses might include rent, utilities, office
• expenses, salary expenses, and marketing and advertising expenses, among others.
• Total Operating Expenses —  the total of your operating expenses, excluding interest, depreciation, and taxes.
• Operating Income —  the difference between your gross margin and operating expenses.
• Interest, Depreciation, and Taxes —  this section of your income statement lists your non-operating expenses- expenses such as interest, depreciation, amortization, and taxes.
• Net Profit —  the total of how much you actually made. This is calculated by subtracting interest, depreciation, and taxes from your operating income.

Pro Forma Cash Flow Statements

The cash flow statement is a financial statement that shows when and where cash (and cash equivalents) flow in and out of your venture. This tells you how much cash you will have on hand at any single point in time.

• Cash from Operating —  Cash flowing into and out of your venture from operating, beginning with “cash on hand.” Cash flowing into your venture from operating includes cash from sales, payments from credit sales, investment income, and any other types of cash income related to operations. Cash flowing out of your venture from operations, your expenses, includes costs of raw goods, materials, inventory, salary expenses, office expenses, marketing and advertising expenses, rent, interest, taxes, insurance, or any other expenses that are paid by the venture.
• Capital Cash Flow —  Cash flow, in or out of the venture, for capital assets such as the purchase or sale of fixed assets.
• Cash from Financing —  Cash flow from financing includes cash flowing in or out of your venture relating to venture financing activities. Inflows of cash from financing include the investments by founders or owners, any loans taken out during the period, or the issuance of any equity. The outflow of cash from financing may include the payment of the principal of any loans, along with the repurchase of any outstanding equity.

Pro Forma Balance Sheet

The balance sheet is a financial statement that balances a venture's finances at a specific point in time. It describes how much the company is worth. The balance sheet uses the accounting equation: assets = liabilities + equity . In fact, these are the main components of the balance sheet:

• Assets —  Resources that hold economic value. A business's assets include current assets and fixed assets. Current assets are resources that can be accessed in the short term. These include cash, accounts receivable, inventory, and other currently available resources. Fixed assets are resources that are intended for long-term use but hold economic value. These include land and buildings, machinery and equipment, furniture and fixtures, vehicles, and other fixed resources.
• Liabilities —  What the business owes. Like assets, a business’s liabilities are also current liabilities and long-term liabilities. Current liabilities are liabilities that are due within 12 months. Current liabilities include accounts payable, loans, and taxes. Long-term liabilities are liabilities that are due after one year. These include long-term loans, notes, and other long-term debts.
• Equity —  What the owners or shareholders own. Equity is also composed of two parts: Capital and Retained Earnings. Retained earnings is the amount of profit that has been retained by the company over the life of the venture. Capital earnings , then, is what’s left. It is what has been invested. For new ventures, this may be the founder’s or early investors’ initial investments. For larger corporations, this would be the value of their shares of stock.

Break-Even Analysis

The break-even analysis shows you how much you have to sell before you break even. The break-even analysis uses fixed and variable costs in order to determine the sales volume you have to attain to reach a break-even point. This is the point where your sales volume covers both your fixed costs and your variable costs.

The break-even point is most often expressed as a number of units. You can calculate the break-even point by dividing fixed cost by the average profit per unit (average price per unit minus the variable cost).

Break-Even Point = Fixed Costs/ Profit Per Unit (Avg. Price - Avg. Variable Costs)

You can also calculate the break-even point in terms of $ of sales. To calculate the break-even point in $ of sales, you can divide total fixed costs for the period by the contribution margin ratio (net sales minus total variable cost / net sales).

Break-Even Point ($ of Sales) = Fixed Costs / Contribution Margin Ratio Contribution Margin Ratio = (Net Sales - Total Variable Cost) / Net Sales

Startup/Funds Required

If you are writing your business plan for the purpose of seeking funding, you should conclude your business plan by describing the investment opportunity.

With your financial projections in place, you will now be able to determine the amount of startup capital or investment you require.

This is because the funding you need is highly dependent on your profit and loss, cash flow, and break-even point. With well-researched assumptions and the evidence to back them up, you are ready to make the case that your business is worth the investment and will be able to pay it back or reward investors in the future.

In this section of the business plan, you will need to explain the amount of funding you are requesting as well as describe what those funds will be used for. The startup funding request will need to cover all expenses (maybe even your own personal expenses) at least until you reach your break-even point.

Business Plan Appendices (Optional)

If you have additional evidence to support your business idea, your business model, or your ability to achieve your goals and meet your financial objectives, you may want to consider including it as an appendix to your business plan.

Additional / Optional Evidence

Owners’ Resumes —  One thing you may want to consider including in your business plan is the resume for each owner. Investors often invest as much in the startup team as they do in the idea itself. Illustrations of Product —  Another helpful appendix is pictures or illustrations of your product. These are especially helpful for new products or those which are difficult to depict with words. Storyboard of Customer Experience — If your business is a service business, you could also consider including a storyboard depicting your customer’s experience. Customer Survey Results — You can also include any market research that you have conducted in an appendix. Showing that you have solicited feedback from real customers or potential customers provides further credence to your venture and venture idea.

Develop Your Business Idea

Before writing your business plan, it is important to take some time to develop your business idea .

If you are starting a new company, there are likely many details of the venture that have not been fully worked through. If you already have an existing venture, the following tools can also be useful in evaluating your business model:

• A three-sentence business plan

The Lean Canvas

The business model canvas, three-sentence business plan.

An easy place to start is with a three-sentence business plan . The three-sentence business plan is easy to construct, and consists of three parts:

• your product or service
• your market and marketing
• your revenue model.

Your Product or Service

The first sentence of your business plan clearly yet simply states your business's primary product or service. This includes the what and the where.

Example: “CoffeeMe is an upscale bakery and coffee shop specializing in imported coffees and international delicacies that will be located in downtown Atlanta.”

Your Market(ing)

The second sentence of your three-sentence business plan describes who your target market is and how you will promote to them.

Example: “CoffeeMe’s target market is urban professionals living and working in downtown Atlanta, marketed and promoted through traditional advertising, company partnerships, and social media.”

Your Revenue Model

The third sentence of your three-sentence business plan explains your revenue model. How will you make money?

Example: “CoffeeMe’s revenue model includes one-time retail sales as well as a unique subscription model featuring all-you-can-drink coffee for subscribers.”

Put it all together, and you have your three-sentence business plan:

Example: “CoffeeMe is an upscale bakery and coffee shop specializing in imported coffees and international delicacies that will be located in downtown Atlanta. CoffeeMe’s target market is urban professionals living and working in downtown Atlanta, marketed and promoted through traditional advertising, company partnerships, and social media. Our revenue model includes one-time retail sales as well as a unique subscription model featuring all-you-can-drink coffee for subscribers.”

Another useful tool for developing your business idea is the Lean Canvas . The Lean Canvas takes a problem-solution approach to helping you plan your business, focusing on the problems you are solving for your customers.

The Lean Canvas helps you describe and visualize your problem, solution, customers, value proposition, key performance indicators, and competitive advantage.

The steps to complete the Lean Canvas are:

• Define your target customers or users
• List the problems you are solving for them and how they are currently solving those problems today
• Describe your solution
• Explain your unique value proposition
• Describe your revenue streams
• Depict how you will reach customers
• Define the key metrics that will tell if you are doing well
• Detail your cost structure
• Explain your unfair advantage

The Lean Canvas, created by Ash Maurya, and licensed under Creative Commons Attribution-Share Alike 3.0 Unported License: https://leanstack.com/lean-canvas

The Business Model Canvas helps you describe and visualize the key aspects of your venture including your customers, value proposition, infrastructure, and revenue and cost models.

If you have already completed a Lean Canvas, you will already have several of the central parts of the Business Model Canvas complete.

The steps to complete the Business Model Canvas are:

• Explain your value proposition
• Describe how you interact with customers
• List the key activities that you will need to do to deliver on your value proposition
• List the key assets that you will need to deliver on your value proposition
• Describe the key partnerships that you will need to put in place to deliver on your value proposition

Related Articles

Best llc services.

How to Build a Website

Small Business Credit Cards

Be Stress Free and Tax Ready 🙌 70% Off for 4 Months. BUY NOW & SAVE

70% Off for 4 Months Buy Now & Save

Wow clients with professional invoices that take seconds to create

Quick and easy online, recurring, and invoice-free payment options

Automated, to accurately track time and easily log billable hours

Reports and tools to track money in and out, so you know where you stand

Easily log expenses and receipts to ensure your books are always tax-time ready

Tax time and business health reports keep you informed and tax-time ready

Automatically track your mileage and never miss a mileage deduction again

Time-saving all-in-one bookkeeping that your business can count on

Track project status and collaborate with clients and team members

Organized and professional, helping you stand out and win new clients

Set clear expectations with clients and organize your plans for each project

Client management made easy, with client info all in one place

Pay your employees and keep accurate books with Payroll software integrations

• Team Management

FreshBooks integrates with over 100 partners to help you simplify your workflows

Send invoices, track time, manage payments, and more…from anywhere.

• Freelancers
• Self-Employed Professionals
• Businesses With Employees
• Businesses With Contractors
• Marketing & Agencies
• Construction & Trades
• IT & Technology
• Business & Prof. Services
• Accounting Partner Program
• Collaborative Accounting™
• Accountant Hub
• Reports Library
• FreshBooks vs QuickBooks
• FreshBooks vs HoneyBook
• FreshBooks vs Harvest
• FreshBooks vs Wave
• FreshBooks vs Xero
• Free Invoice Generator
• Invoice Templates
• Accounting Templates
• Business Name Generator
• Estimate Templates
• Help Center
• Business Loan Calculator
• Mark Up Calculator

Call Toll Free: 1.866.303.6061

1-888-674-3175

• All Articles
• Productivity
• Project Management
• Bookkeeping

Resources for Your Growing Business

13 steps on how to start a business (2024).

Starting your own business can be an exciting and rewarding opportunity. With careful planning and the proper legal considerations, it can be a straightforward process. This is especially true if you have an entrepreneurial mindset, a positive attitude, persuasive communication skills, and self-motivation. You’ll also need the right information to set you up for success. In this article, we’ll discuss how to start a business in 13 steps.

Key Takeaways 

• Your business idea should have unlimited earning potential.
• Competitor research helps you determine product viability.
• A business plan can help you acquire funding or partners.
• Your business structure has tax, legal, and liability implications.
• You’ll need a business bank account, EIN, registered business name, and business number.
• Use business tools to help streamline your processes and simplify tax time.

Table of Contents 

• Determine Your Business Idea
• Research Competitors and Market Trends
• Build Your Business Plan
• Select Your Business Structure
• Register Your Business and Get Licenses
• Set Up a Business Account for Your Business
• Secure Funding for Your Venture
• Obtain a Business Credit Card
• Prepare for Tax Obligations
• Get Business Insurance
• Invest in the Right Business Tools
• Market Your Business
• Make Your Business Scalable

1. Determine Your Business Idea 

To start your own business, you need to have an idea. Your idea creates the foundation for the business. The more you expand on the concept, the stronger your base is. 

Your idea must have earning potential. It can be a one-time project, like developing an app or an invention you plan to sell. But in most cases, it should have unlimited earning potential and be something people will pay for. 

Your business idea should be something you have some skill at or a strong interest in. One of the top markers of a successful entrepreneur is motivation and determination. Your business is unlikely to succeed if you lose interest or faith in your product. 

Ask yourself if your business idea solves a problem. You are more likely to succeed if there’s a market gap that your business can fill. A diluted market drives down the value and increases your marketing overhead.

While you’re developing your idea, keep an open mind. Review and critique your idea often and ask for feedback from friends and trusted experts in the field.

A great business idea is the cornerstone of how to start a successful business. Take your time with this step and think it through carefully.

2. Research Competitors and Market Trends

A critical step in how to start a company is performing due diligence. Start with primary research by exploring the market. Connect with your potential market and perform interviews. Use social media or footwork to conduct surveys about consumer interest. Observe how the lack of your product impacts your market or how consumers use similar products. Utilize focus groups and contract research services, if applicable.

Move on to secondary research by collecting and analyzing existing data. Find and examine any competitors, including variations on your theme. Note their price point, marketing scheme, delivery methods, storefronts, and locations in your market area. Review all their iterations, versions, color options, size choices, flavors, and other options that might reflect their market research. Read their customer and peer reviews, where applicable. 

Run a thorough SWOT analysis by exploring your strengths, weaknesses, opportunities, and threats. Use your primary and secondary research to support your results. This data can help you focus your idea and make the necessary adjustments before settling on a concept. 

Complete a financial viability analysis to determine if you can produce the product in a way that allows for continuity and reasonable profit. Consider supply chain issues (shipping, flights, trains, etc.), resource trends (lumber, steel, gold), and common staffing issues. Many people assume it’s easy to find employees, but the reality can be different in many markets.

Perform a minimum viable product (MVP) test. This means you create a prototype or simplified version of your product and launch it to a select group of potential clients. Observe whether they find it valuable, how they use it, and whether or not it fills the market gap. 

3. Build Your Business Plan 

Writing a business plan is often the most overwhelming of the steps to starting a business. It is a key document used to attain financing, stakeholders, and partners. Even if you don’t want partners or need a loan, your business plan acts as a written foundation. 

If you were thorough during steps 1 and 2, creating a business plan is easier than you think. In many cases, it’s as simple as filling in the blanks with the data you’ve already collected. Follow this outline for the key components of a business plan:  

• Executive Summary: This is a short overview of the main aspects of your business. It’s meant to capture attention and interest in your project. 
• Company Description: Use this section to describe your company. Give an overview of your vision and answer the five W’s—what, where, when, why, and how. You’ll have a chance to go into detail later. Keep it concise. 
• Market Analysis: In this section, you’ll distill your market research into key points. Demonstrate that you’ve completed a thorough market analysis without going into too much detail about your process. 
• Management and Organization: Outline your organization structure and business type. Include how and who will make decisions and an organizational chart if it’s relevant.
• Products and Services: List your products and or services in detail, including descriptions and pricing.
• Customer Segmentation: Divide your customer base into segments with shared characteristics or preferences.
• Marketing Plan: Include your marketing plan in detail. How to create a marketing plan is discussed later in this article. 
• Logistics and Operations Plan: Add a section that discusses how you’ll achieve the end product.
• Financial Plan: Include a detailed financial plan. It’s likely to be the most scrutinized section if you’re applying for funding or seeking partners.
• Appendix: Include any other detailed information on the aspects you outlined earlier in the business plan, particularly about your logistics and market research. 

4. Select Your Business Structure 

Many small businesses start as sole proprietorships 1 IRS. “ Sole proprietorships ” Accessed on March 20, 2024 2 IRS. “ Business structures ” Accessed on March 20, 2024 for the ease of establishment and financial benefits. Sole proprietorships don’t require legal consultation to establish, they’re easy to dismantle, have fewer upfront fees, and reporting taxes is as simple as completing a personal tax return. You also don’t need to share the profits.

The major drawback to a sole proprietorship is personal liability. Your business is not registered as a separate, legal entity, so you have no protection against lawsuits and tax implications. 

Partnerships 3 IRS. “ Partnerships ” Accessed on March 20, 2024. are a business structure type that’s suitable if you choose to work with one or more other people. Partnerships include general, limited, or limited liability partnership (LLP) structures. In a general partnership, all parties share the profits, debts, and liabilities. A limited partnership combines both structures in that one person takes on the liability while the other remains a silent partner. An LLP is common among doctors and lawyers who share a practice. Personal assets are siloed against liability in an LLP. 

In a partnership, both parties can pool labor and resources. They can act as sounding boards for each other, helping to bring new ideas to life. However, with a partnership comes the opportunity for disagreement or mismanagement, additional debts or liabilities, and increased difficulty in selling or dissolving the business.   

A corporation is a legal entity of its own. 4 IRS. “ Incorporating ” Accessed on March 20, 2024 It separates the individual business owner, shareholders, and board members from any legal liability and business assets . Starting a corporation involves a significant amount of paperwork and ongoing annual filings. 

It’s easier for an incorporated business to raise capital, sell shares, and divest ownership. While corporations can enjoy decreased tax rates, you are essentially taxed twice, first as a corporate entity on profits, then personally on your dividend income and capital gains. 

Small businesses that start as sole proprietorships can always scale up to a partnership, corporation, or limited liability entity.

5. Register Your Business and Get Licenses

This step in starting a small business has a lot of variation. As a sole proprietor, you don’t need to register a business name if you do business under your own name. You also don’t need an employer identification number (EIN) if you don’t have employees, but it helps when it comes time to open a business bank account and pay taxes. Visit the IRS website to register for an EIN 5 IRS. “ Apply for an employer identification number online ” Accessed on March 20, 2024 when and if you decide to hire employees.

You will need to register your business and apply for a license or permit depending on your state and the nature of your business. A state tax ID can also help protect sole proprietorships against identity theft. 6 SBA. “ Get federal and state tax ID numbers ” Accessed on March 20, 2024 Visit your local municipal, state, or county website for more information. 

To stand out as a business entity, it’s important to choose the right business name. Research other businesses with similar names to see if your name infringes on their registered identity. The US Small Business Administration (SBA) can help you determine if you need to register your name with the local, state, and federal government. 

6. Set Up a Bank Account for Your Business

Setting up a business bank account 7 SBA. “ Open a business bank account ” Accessed on March 20, 2024 can make managing your business finances much simpler. A business bank account can also help you remain legally compliant. It’s easier to attain a business credit card and merchant services with a business checking or savings account. You receive limited personal liability protection and better purchasing power. 

Shop around for a bank with lower fees, introductory offers, and good benefits. When you’ve made your choice, you’ll need your social security number (SSN) or employer identification number (EIN), business license, ownership agreement, and proof of business address. If you are incorporated, you’ll need your articles of incorporation and proof of address for the named director.

7. Secure Funding for Your Venture 

Acquiring funding is one of the most important steps in how to start a small business. This financial decision can affect your business structure and the operation of your business. Draw on the financial section of your business plan to determine how much funding you’ll need. 

Self-funding through personal investments, mortgages, and family or personal loans can ensure you remain in control of the business. Speak to your mortgage advisor and financial planner about all the risks associated with leveraging your real estate assets or tapping into your retirement investments to fund a business venture. You take on all the risks with self-funding.

Venture capital from investors offers upfront financing for a share in the business and participation in the business decisions. It’s not a loan but an exchange for equity. It can also change your business structure.

Crowdfunding is another option that requires low risk for the reward. Crowdfunders donate or give money to your business in return for an acknowledgment rather than a share of your company.

A small business loan from a bank or professional lender is the perfect opportunity to pull out the business plan you worked so hard on. Be prepared to shop around for the best rates and terms for your loan. You’ll likely use the same bank or credit union for your business bank account and credit card.

You can also double your odds with a US SBA-guaranteed loan. Lender Match can pair you with a partner bank that offers SBA-guaranteed loans.

The US SBA also offers several investment programs 8 SBA. “ Fund your business ” Accessed on March 20, 2024 , including the Small Business Investment Company (SBIC), the Small Business Innovation Research (SBIR) program, and the Small Business Technology Transfer (STTR) program. Each program offers funding to specific small businesses.

8. Obtain a Business Credit Card 

A business credit card helps establish lines of credit with your suppliers and for large purchases required for product development. Getting a business credit card is difficult without an adequate credit history. 

Some banks will put you on a probation period with a business-secured card that acts like a credit card but needs to carry a balance to make purchases. As you regularly make work-related purchases and payments to the card, the bank reports your history to various credit bureaus. It’s a good way to build credit history for your business when you are just starting out.

Credit card companies require the same information the bank asks for when you open your business account. And, just like with your bank and loan, you’ll want to shop around for a good rate, terms, and benefits.

9. Prepare for Tax Obligations

Small business owners operating general partnerships or sole proprietorships have the same tax responsibilities as regular taxpayers. You are responsible for filing your tax returns and paying your taxes owed on time—failure to do so results in penalties.

A corporation or LLC business structure will have additional obligations, including filing annual reports. However, corporations can file in calendar years or fiscal years. 

Filing your taxes as a small business owner can be easy with the right support. You’ll want to get as much for each deduction as possible. Tracking your expenses, billable hours, and invoices is easier with expense-tracking software .

10. Get Business Insurance

Business insurance 10 SBA. “ Get Business Insurance ” Accessed on March 20, 2024 offers protection against unforeseen costs like natural disasters, lawsuits, death, and accidents. 

Some types of business, loan, bank, and lease agreements require insurance. If you have employees, you are federally required to have Workers’ Compensation, Unemployment, and Disability Insurance. Other insurance requirements vary by state.

Common types of business insurance include:

• General Liability Insurance : Suitable for any business, general liability covers financial loss from settlements, judgments, bodily function loss, libel, slander, medical expenses, and property damage.
• Product Liability Insurance : This type of insurance protects businesses that manufacture, wholesale, distribute, or retail a product from financial loss resulting from a defective product.
• Professional Liability Insurance : Suitable for service businesses, this insurance protects against financial loss from malpractice, negligence, and errors.
• Commercial Property Insurance : This type of insurance protects businesses with property and physical assets from loss and damage resulting from weather, vandalism, and riots.
• Home-Based Business Insurance : This is a rider added to home insurance for business owners who operate out of their homes.
• Business Owner’s Policy : This policy suits all small business owners and combines other typical coverages into one convenient, low-cost option. 

Not all business owner’s policies cover everything. Your business location can also influence your coverage and rates. Carefully read your proposed policy and discuss the details with your provider before purchasing.

11. Invest in the Right Business Tools

Investing in business tools can streamline your small business administration and processes, leaving you more time to focus on aspects of your life you can’t automate, like self-care.

Accounting Software 

Accounting software can help streamline your financial processes. FreshBooks accounting software is cloud-based for your convenience. It offers industry-standard double-entry accounting, invoicing, bookkeeping features, and expense tracking. 

Project Management Software 

Utilize project management software to create professional documents, RFPs, SOWs, and project plans. FreshBooks project management software includes templates, collaboration tools, and web-based centralized file storage.

Payment Processor 

Payment processors allow you to take online and in-person payments for invoices and services. FreshBooks Payments can do all that and more, integrating with multiple payment providers and making it easier for clients to pay for your products or services. Send invoices directly from the FreshBooks app or your online account. Invoices contain links and one-click payment options to streamline the process for your clients. 

CRM Software 

Client/Customer Relationship Management (CRM) software combines all your client data into one cloud-based location. FreshBooks software offers multiple CRM integration partners to make collaboration and customer management easy.

Scheduling Software 

Scheduling software can save time and streamline your small business administration. You can manage shifts, clock in and out, assign salaries and permission, and more. FreshBooks integrates with several top-rated scheduling products to help simplify your business processes.

Inventory Software

Inventory software helps you to track incoming and outgoing inventory, identify weaknesses in production, and streamline production efficiency.

12. Market Your Business 

In this digital age, there are more ways of marketing your new business than ever before. Start by developing your brand package. It can be as simple as selecting a font and colors for your business name. Your brand will be the most recognized feature of your online presence. It’s worth taking the time to consult a professional to develop a brand package. Professionally developed brand packages should include original logos in digital and print-ready format. 

When it comes to an online presence, at a minimum, you should have a Facebook page or website. These platforms allow you to inform people about your services, hours of operation, and contact information. Facebook offers step-by-step instructions on how to set up your page and best practices to maximize the platform.

When creating a website, you get what you pay for. Some companies offer free websites but charge you to unlock features like using your own domain name and adding payment options. 

You can also use social media platforms like Instagram and TikTok to put your brand in front of prospective buyers. Paid social media advertising can ensure customers in your preferred demographic see your product by utilizing data mining and algorithms.

Advanced online marketing techniques use search engine optimization (SEO) techniques. These methods use keyword and phrase strategies to boost your position in browser searches.

Analog marketing includes talking about your product at service groups, church functions, and other public speaking opportunities. Print advertising in specialized or location-specific magazines can provide long-term visual exposure, depending on the display location.

13. Make Your Business Scalable 

A common mistake small businesses make is failing to plan for success. Breaks in production or delays in promised services can cause the consumer to move on to other options. Design your new business so that you can expand production, add partners to help manage workload, or develop collaborative relationships with other creators that give you options when you need to pivot.

Your upscale plan should include tools that help your growing small business administration needs.

Introducing your products in phases is another way to scale your business, rather than rushing all your products to market at once. 

You can also expand your marketing plan in phases to allow you to reach broader markets as your brand gains recognition.

How To Start a Business With No Money 

Starting your own new business can seem like a fantasy when finances are tight or in a deficit. But before you give up hope, know there are ways to do it. 

The first recommendation is to keep your current job. It provides you with an income while you get your business plan together. Another step is evaluating your financial needs and what it will take to make your entrepreneurial dreams come true. For example, you might need to take out a small business loan.  

Don’t forget the power of experience. Talk to someone who’s succeeded in small business ownership, knows about money lending and leveraging capital, or has experience in the field of business you want to get into, or all three. 

Finally, get out into the community and meet people. Networking with the right people can open doors you may not know about.

You can learn more in our article on How to Start a Business with No Money . It outlines the steps to starting your own business and explores which businesses are the cheapest to start. 

Launch Your Business Dreams 

Small business ownership can put you in control of your destiny. With careful planning and the proper support, starting a small business can be an exciting and rewarding endeavor. Follow the steps outlined in this article to begin your entrepreneurial journey. 

Set yourself up for success by utilizing tools designed for small businesses. FreshBooks business suite of software tools offers features, integrations, and solutions for small business owners.

Article Resources

• IRS. “ Sole proprietorships ” Accessed on March 20, 2024
• IRS. “ Business structures ” Accessed on March 20, 2024 
• IRS. “ Partnerships ” Accessed on March 20, 2024.
• IRS. “ Incorporating ” Accessed on March 20, 2024
• IRS. “ Apply for an employer identification number online ” Accessed on March 20, 2024
• SBA. “ Get federal and state tax ID numbers ” Accessed on March 20, 2024
• SBA. “ Open a business bank account ” Accessed on March 20, 2024
• SBA. “ Fund your business ” Accessed on March 20, 2024
• IRS. “ Filing and paying your business taxes ” Accessed on March 20, 2024
• SBA. “ Get Business Insurance ” Accessed on March 20, 2024

Sandra Habiger, CPA

About the author

Sandra Habiger is a Chartered Professional Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Alongside her accounting practice, Sandra is a Money and Life Coach for women in business.

RELATED ARTICLES

Save Time Billing and Get Paid 2x Faster With FreshBooks

Want More Helpful Articles About Running a Business?

Get more great content in your Inbox.

By subscribing, you agree to receive communications from FreshBooks and acknowledge and agree to FreshBook’s Privacy Policy . You can unsubscribe at any time by contacting us at [email protected].

👋 Welcome to FreshBooks

To see our product designed specifically for your country, please visit the United States site.

Small Business Trends

How to start a food truck business.

If you buy something through our links, we may earn money from our affiliate partners. Learn more .

If you’re interested in starting a food service business but don’t want to spend the time and money to set up a dedicated location, a food truck may be the way to go. Here’s a guide on how to start a food truck business to help aspiring food truck owners get started.

How to Start a Food Truck Business in 21 Simple Steps

Every food truck may look and operate a bit differently. Here are some common steps you can use to get started.

• Read More: Food Truck Business Plan

1. Research Food Trucks Locally

If you want to be a successful food truck owner, you need to understand your competition. Identify what cuisines are popular and what’s missing in the market. Research other food trucks in your area to find a unique niche and learn the hot spots and trends in your local food truck scene. Consider attending local food truck events to gather insights.

2. Choose a Niche and Know Your Target Market

Food truck customers often like unique menu items. Analyze demographic data to better understand customer preferences. Find something that sets your business apart, like interesting toppings on classics like burgers and tacos. Develop a menu that caters to local tastes and dietary preferences.

3. Name and Brand Your Business

A catchy name and brand will make your business more memorable. Ensure your brand reflects the culinary experience you offer. Choose consistent design elements that are easy to read and communicate a style that appeals to your target customers. Your brand should align well with the vibe of your food truck.

A catchy name and brand will make your business more memorable. Choose consistent design elements that are easy to read and communicate a style that appeals to your target customers.

4. Write a Food Truck Business Plan

Every business needs a plan; here are some things to include in your food truck business plan:

• Market analysis: Look at other food truck owners in your area and consider demand from local customers.
• Product and service list: What types of food will you offer? Consider ingredient cost and what you’ll charge for items; include any extra revenue streams like private catering.
• Marketing strategies: How will you market your business? And what expenses might come with your strategy?
• Financial projections: Based on your market and price list, what can you expect to earn? How does that compare to your projected expenses?

5. Look into Small Business Grants

Food truck owners may benefit from extra funds. Research local business development programs offering financial assistance. Look for available grants for new businesses in your area for extra support. Explore industry-specific grants, particularly those focused on culinary enterprises.

6. Develop a Menu and Set Your Prices

Within your niche, create a short list of items you can make with limited ingredients. Incorporate seasonal specialties to attract customers. Price items based on demand and costs. Consider the local economic landscape to set competitive and profitable prices.

7. Secure a Truck

You need a truck that’s large enough to prepare and serve food. Assess the layout for efficient food preparation and customer service. So, you have to find where to buy a food truck . You can find old vans or trucks in local classified ads and have them furbished with equipment. Evaluate the condition and potential modifications needed. Or buy an existing food truck from a business broker. You can also seek expert advice to make a cost-effective decision.

Read More: food truck ideas

8. Form a Legal Entity and Register Your Business

All businesses need a legal entity; here are some for food truck operators to consider:

• Sole proprietor: This can work for those who operate individually, but it offers no liability protection.
• LLC: Offers liability and low startup costs; this is quite common for food truck operations.
• Corporation: This offers liability protection and a different tax structure, but can be more complicated and costly to start.

9. Open a Business Bank Account

Keep your business and personal assets separate to simplify bookkeeping and build credit. Consider business credit cards for monthly purchases.

10. Get Business Insurance

Insurance can protect your assets if your business experiences any losses. Here are some common types for a mobile food business.

• General liability
• Commercial auto
• Workers comp
• Property coverage
• Read More: food truck name ideas

11. Get the Necessary Food Truck Equipment

The exact equipment needed depends on your niche and how much food you work with, but here are some common categories:

• Cooking equipment like a griddle or fryers
• Refrigeration equipment
• Shelves or cabinets to store ingredients
• Food containers
• Cleaning supplies

12. Get a POS System

A point of sale system helps successful food trucks manage transactions. Common options include TouchBistro, Toast, and Square .

13. Source Your Ingredients

Find wholesale suppliers for all the items you need to create your menu. These are often the same food industry suppliers that work with restaurants with a brick and mortar location.

14. Apply for Permits and Food Truck Licenses

Food trucks often need business licenses, vehicle registration and commercial driver’s license, parking permits for specific locations, and mobile food service permits. Check with your local health department to see what paperwork is required.

15. Prepare for Health Inspectors to Visit

Local officials will also likely visit to check for cleanliness and food safety.

• Read More: food truck festival

16. Sort Out Your Taxes

Taxes vary by state. But many food truck owners must pay:

• Business income taxes
• Payroll taxes
• State sales taxes

17. Create a Website and Market Your Business

Customers often research their local food truck community online. So create an online presence with your menu and social profiles to update your locations.

18. Decide Where to Park

Food truck vendors should seek out spots with lots of customers, like high foot traffic areas and special events. Make sure parking spots are approved through your local motor vehicle department.

19. Employ Staff

You may need a small team to make food and serve customers. Apply for a NIE number and meet other requirements of your state before interviewing and training.

20. Maintain Your Truck

Your food truck needs oil changes, tire rotations, and fluid flushes just like any vehicle.

21. Market Your Business and Expand

To bring in more customers, promote your brand on social media accounts, update your location on food truck finder apps, and set up at popular food truck festivals. Once you gain popularity, create a franchise to market your tasty food in new locations.

• Read More: food truck finder

Why You Should be Part of the Food Truck Industry

Food trucks offer plenty of exciting opportunities for entrepreneurs. Here are some benefits of choosing this niche:

• Location independence: Your truck can go wherever potential customers are. If there’s a big event or area with lots of foot traffic on any given night, you can set up there to reach more people.
• Low startup costs: You don’t need a dedicated location or a huge team to run a food truck. So it can be easier to break into the industry.
• Built-in advertising: When you set up at an event or drive across town, your truck gets seen. If you have a catchy logo or design, this automatically helps you build brand recognition without extra advertising.
• Multiple income streams: Food trucks don’t have to only offer food at festivals and high-traffic areas. You can also offer catering to diversify your income streams.

How Much Does it Cost to Start a Food Truck Business?

The cost of starting a food truck business can vary significantly based on numerous factors. In the United States, you can generally expect to spend from $28,000 to $180,000, with an average cost hovering around $100,000. This variation in cost is influenced by factors such as location, local licensing requirements, kitchen setup, and cooking equipment. The type of truck you choose plays a significant role in the overall cost. Options include:

• New Truck with a New Kitchen Setup : An all-new setup can cost between $120,000 to $200,000. This option is free from maintenance or hidden costs initially.
• Used Truck with a New Kitchen Setup : Opting for this setup could range from $80,000 to $115,000. While the initial cost is lower, a used truck may require more maintenance and repairs over time.
• Used Truck with a Used Kitchen Setup : This is the most cost-effective option, with costs ranging from $55,000 to $90,000. However, it comes with the risk of higher maintenance and repair costs.
• Renting a Food Truck : If you’re starting on a tight budget, renting a food truck is a viable option, generally costing $2,000 to $4,000 a month.

Additional expenses to consider include kitchen equipment and supplies (estimated at $10,000 to $25,000), inventory and food costs (around $1,000 to $3,000 initially), marketing and advertising expenses, professional service fees (legal, accounting, etc.), employee salaries and benefits, maintenance and fuel costs, commissary or storage fees, point-of-sale system and payment processing fees.

Moreover, mobile app development for enhanced branding and customer engagement can start at $5,000, with more complex apps costing upwards of $20,000. Accounting software like QuickBooks or Xero can add monthly costs of $20 to $60. Efficient inventory management is crucial, including costs for food ingredients, disposable supplies, cleaning supplies, fuel, propane, menu specials, and beverages. Marketing and branding efforts can also significantly impact your startup costs, with expenses for website development, advertising, branding materials, promotions, events, and food truck wrapping.

Securing the necessary licenses and permits is a must for legal operation. These include food service licenses, mobile food vendor permits, health department permits, fire department permits, parking permits, business licenses, sales tax permits, and commissary agreements. Utility costs such as electricity, water, and waste disposal also add to the operational expenses.

Finally, consider the cost of labor and talent required to run the food truck, including chefs, servers, and cleaners. Overall, a detailed budget and a robust business plan are crucial for a successful launch and sustainable operation of a food truck business

Is Owning a Food Truck Profitable?

Yes, starting your own food truck can be profitable. Many food trucks make over $100,000 per year. Once startup costs and ongoing expenses are factored in, an annual profit of about $50,000 is usually possible. However, the exact amount you earn depends on your food truck concept, operating hours, menu, and locations. You can also look into food truck franchise options to cut your initial startup cost.

Image: Depositphotos, Envato Elements

Very informative content. Thanks for sharing

Your email address will not be published. Required fields are marked *

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

• Starting a Business
• Growing a Business
• Small Business Guide
• Business News
• Science & Technology
• Money & Finance
• For Subscribers
• Write for Entrepreneur
• Entrepreneur Store
• United States
• Asia Pacific
• Middle East
• South Africa

Copyright © 2024 Entrepreneur Media, LLC All rights reserved. Entrepreneur® and its related marks are registered trademarks of Entrepreneur Media LLC

Free Webinar | May 7: How to Write Your One-Page Business Plan Workshop Did you know entrepreneurs with business plans are 260% more likely to launch? Join our workshop on May 7th and learn how to create a one-page business plan that will help you get your business off the ground. Register now!

By Entrepreneur Staff • Apr 16, 2024

Do you wish you could run a business that would make the most of your skills, experience and earn you the money that you're really worth?

Or perhaps you've already started your own business but it seems like no matter how hard you work you're no closer to the dream that inspired you to start your company in the first place.

If you're not hitting your goals, it's not due to a lack of ambition, you just need a better plan to make it happen.

Specifically, a business plan.

Related: Join our workshop on May 7th and learn how to create a one-page business plan that will help you get your business off the ground. Register now!

A study from BusinessDIT revealed that:

Entrepreneurs with business plans are 260% more likely to launch

71% of fast-growing businesses have plans

With the right business plan, you'll be more likely to launch and grow faster once you do.

So, why don't you have an updated plan? There are a few common reasons.

"I'm too busy"

"It's too confusing"

"I have too much else going on"

It's time to end the excuses so you can achieve predictable revenue growth without going back to school for an MBA.

Join Our Free How to Write Your Business Plan Workshop

During this workshop, you'll learn how to create a one-page business plan that will help you perfect your strategy, marketing and business processes.

You're just one hour away from having the clarity needed to reduce confusion, improve your offer and maximize your revenue potential.

You'll also receive a customizable one-page business plan so you can immediately apply what you've learned.

Now is the time to work on your business so the time you spend working in your business will be more efficient and rewarding.

Imagine knowing that at any given time, you're taking the right actions that are directly aligned with the vision you had when you first started your business.

There's no need to imagine. Just sign up for the workshop and then commit to applying what you've learned.

All registered attendees will get a recording of the presentation and a copy of the one-page business plan template. And if you know of anyone else who should attend, share this with them so they can hold you accountable.

Sign up now and turn your business idea into action.

About the Speaker:

Terry Rice is a high-performance coach to entrepreneurs, keynote speaker and journalist at Entrepreneur magazine. He's also the host of Reclaim + Advance, a podcast that helps entrepreneurs overcome setbacks and perform at their highest level.

Prior to becoming a creator-entrepreneur, Terry's previous experience includes internal consulting roles at Adobe and Meta.

In addition to his role as Director of Growth and Partnerships at Good People Digital, Terry is an instructor at New York University, speaks at events for leading companies - including Amazon and Google - and has been featured as a subject matter expert by Good Morning America, Fast Company and the Wall Street Journal.

Based in Brooklyn, he is a husband, father of five children, and is an advocate for mental and physical fitness.

Entrepreneur Staff

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick Red Arrow

• This 103-Year-Old Doctor Opened Her Medical Practice Before Women Could Have Bank Accounts — Here Are Her 6 Secrets to a Healthy, Successful Life
• Lock 5 Ways You Might Be Cheating on Your Taxes — And Why You Will Get Caught
• I've Had a Secret Side Hustle for Decades. It Keeps Tens of Thousands of Dollars in My Pocket — and Gets Me Into Places I Wouldn't Go Otherwise .
• Lock Here's How Steve Jobs Dealt With Negative Press and Avoided Brand Disasters
• One Factor Is Helping This Entrepreneur Tackle Business Ownership Later in Life. Now, She's Jumping Into a $20 Billion Industry .
• Lock Narcissism Can Help You Be Successful — Here's How to Harness It Without Going Too Far, According to an Ivy League-Trained Psychotherapist

Most Popular Red Arrow

Treat a co-worker to a discounted movie.

This Regal Premiere Movie e-ticket lets you get 33 percent off the price of admission.

How CEO Favoritism Contributes to Workplace Toxicity — and How to Create a Fair and Inclusive Work Environment

CEO favoritism undermines company culture, but these effective strategies for fostering fairness and engagement can help avoid favoritism pitfalls.

This Flexible Side Hustle Is Helping Millions Earn Extra Cash — and Might Be 'More Attractive' Than an Office Job

Side hustles remain popular for additional income — and have many questioning the 9-5 model altogether.

Target Slammed With Lawsuit for Allegedly Collecting, Storing Customers' 'Sensitive' Personal Data Without Consent

The class action lawsuit was filed in Illinois.

Building a Culture of Quality — How to Ensure Your Products, Processes and Teams Meet the Highest Standards

Quality should be at the center of your organization. Here's how to define and maintain quality standards in every aspect of your business.

Apple Is No Longer the Top Phonemaker in the World as AI Pressure and Competition Intensifies

Apple's iPhone shipments declined 10% from January through March.

Successfully copied link

Upmetrics AI Assistant: Simplifying Business Planning through AI-Powered Insights. Learn How

Entrepreneurs & Small Business

Accelerators & Incubators

Business Consultants & Advisors

Educators & Business Schools

Students & Scholars

AI Business Plan Generator

Financial Forecasting

AI Assistance

Ai Pitch Deck Generator

Strategic Planning

See How Upmetrics Works  →

• Sample Plans
• WHY UPMETRICS?

Customers Success Stories

Business Plan Course

Small Business Tools

Strategic Canvas Templates

E-books, Guides & More

How to Start a Home Healthcare Business

10 Min Read

Ever dream of a job where you make a real difference, have the freedom you crave, and earn good money? Starting a home care business could be your golden ticket!

The best part about the home health care industry is that there are quick startup options, so there’s no need to reinvent the wheel.

But why join the home care revolution? Because:

• As our population ages and the demand for in-home care is growing, you can address a growing societal need with real impact.
• Home care is often more affordable than traditional facilities.
• Over 1.4 million jobs already exist, demonstrating stability.

So, if you’re ready to claim your piece of the pie, then this comprehensive guide will break down the journey in 8 simple steps, guiding you to launch your own successful home healthcare business. Let’s get started!

Why start a home healthcare business?

Starting a home care business isn’t just about helping others – it’s about helping yourself, too!

Here’s why it might be the perfect fit:

Demand will increase

Millions of older adults want to stay home, not in a hospital. In fact, by 2060, the number of senior citizens will increase to 94.7 million.

So, for that reason, families will be looking for someone to help their loved ones live happy, independent lives. You’d be their hero!

Flexibility

Be your own boss and set your own schedule. This opportunity offers the flexibility to create a work-life balance that suits you.  Plus, with services charging $30-$60 per hour, the income potential is significant.

More Than a Job, A Mission

But it’s not just money. Helping seniors stay home is incredibly rewarding.

You’re not just providing care but giving them the gift of independence, laughter, and familiar surroundings. It’s a special kind of magic.

Build Your Business, Strengthen Your Community

And the best part? As your business grows, you’ll create jobs in your community. More happy people, more opportunities – that’s a win-win for everyone!

You’ll be in the driver’s seat

Choose the services you want to offer and how hands-on you want to be.

Don’t want to provide care yourself? No problem! Hire a skilled registered manager and excellent care staff.

They’ll handle the day-to-day care while you focus on building your successful business.

How to start home healthcare: a quick checklist

• Conduct market research
• Create a business plan 
• Prepare a budget and figure out financing
• Legal registration of your home healthcare
• Determine your service offerings
• Get business insurance
• Hire the right employees
• Outline a marketing plan

1. Conduct market research

The need is HUGE! With millions of people already caring for senior citizens at home and 10,000 adults turning 65 daily, there’s a real opportunity to help.

It’s a growing industry, spending tons of money ( $123 billion !), so there’s room for your business to thrive.

But before you jump, do some research!

Here are some tips:

Conduct Market Analysis

• Ask around: Talk to potential clients, families, and professional caregivers to understand their needs.
• Check online maps: See how many other home care businesses are in your area.
• Specialize or go broad: Do they offer medical care, wound care, personal care, or all of them?

Gain Practical Insights

Have you ever wondered what a day in a caregiver’s life is like? Shadow one! This firsthand experience will help you:

• Decide if this business is right for you.
• Figure out what services to offer.
• Empathize with your future employees and clients.

Talk to the pros

Connect with people who already run home care businesses. Ask about their experiences, challenges, and successes.

Remember, this is just a starting point. Do your research and tailor the services to your community’s specific needs.

2. Create a business plan

Having a solid business plan is like having a GPS for your company. Starting a home health care agency is even more important – whether you’re fine-tuning your idea or looking for extra support.

If you don’t know where to begin, a good home health care business plan template can give you a great head start!

Your business plan is the master layout of your business operations – how it’ll be built and managed and how you’ll make it successful.

But here’s the best part: a great business plan doesn’t just help you. It’s your secret weapon for getting investors or partners excited about joining your mission.

Right now, your focus should be on the heart of your agency – deciding exactly what kind of care you’ll offer and the specific services that make you unique.

Not very good at writing? Need help with your plan?

Write your business plan 10X faster with Upmetrics AI

Plans starting from $7/month

3. Prepare a budget and figure out financing

Let’s be honest, most new businesses don’t start making money right away. It can take a couple of years, so you must be smart about your money while building your own home care business.

That means budgeting for your business needs and your own life. Costs like office space, hiring great people, and getting the right equipment add up fast.

Depending on the kind of agency you want to build, here’s a rough idea of the startup costs:

Non-skilled Private Pay: Think around $40,000 to $80,000

Licensed Home Health (non-Medicare): Closer to $60,000 to $100,000

Medicare Certified: This can range from $150,000 to $350,000 (depending on your state)

Okay, so how do you make this happen? Here are a few ideas:

Your Savings: Tempting, but remember – life throws curveballs! It’s best not to risk going totally broke.

Friends & Family: Sometimes a great option, but it can get awkward if things don’t go perfectly.

Outside Funding

• Government Grants
• Crowdfunding

4. Legal registration of your home health care agency

Before you start helping your first client, you’ve got to get the official side of your home care business sorted.

It may seem dry, but these steps ensure you run a strong, legal operation.

Step #1: Choose your business structure

Should you go solo as a sole proprietor? Partner up? Form an LLC? Each option has its own quirks, so take a little time to see what’s best for you.

Step #2: Get your EIN

This is basically your home health care agency identification number. You’ll need it for taxes, hiring people – all the official stuff. Luckily, the Internal Revenue Service (IRS) website makes getting one pretty simple.

Step #3: Register with your state

This mostly means claiming your unique business name and ensuring it’s all official locally. You can do this through your state’s website and even check if your dream website name is free!

Once you’re set, you can get your letterheads and business cards printed.

Step #4: Licenses & certifications

This is where it gets super specific to your location. Healthcare rules change from state to state, so it’s all about figuring out precisely what you need where you are.

Contact your state and local health departments; they’ll guide you through everything. Also, remember the 21st Century Cures Act – you might need a special system called EVV, depending on your services.

5. Determine your service offerings

It’s time to get into the nitty-gritty of how your home care agency will work! This is where you figure out the specific services you’ll shine at, how you’ll manage your excellent staff and the practical stuff like scheduling and payments.

To get those wheels turning, ask yourself:

• What kind of care is your focus? Where will you specialize, and are there types of services you won’t offer?
• How will you find and keep your dream team? What’s your plan for hiring professional caregivers, training them, and making them feel appreciated?
• What are the basic ground rules for clients? Will there be a minimum number of hours needed each week?
• What happens when schedules need to change? How flexible will you be when things don’t go exactly to plan?
• How will you get new clients started? What will make them feel comfortable and informed?

Now for those less exciting but super-important policies. They protect you, your staff, and your clients! Think about stuff like:

• What’s the plan if someone’s payment is late?
• How will you find and train those perfect new caregivers?
• Do you provide equipment, or do clients need their own?
• How far are you willing to travel to see clients? Will you go further for an extra fee?
• What do clients need to understand and agree to upfront?

6. Get business insurance

Working with people is rewarding, but things can get messy (accidents, equipment breaks, even lawsuits!). That’s why having the right insurance for your home health care agency is like having a superpower – it protects your business from unexpected costs that could knock you down.

But how do you know which insurance to choose? Here are a few options:

Professional Liability Insurance: Covers you if someone claims you made a mistake that caused harm.

General Liability: Got a client who trips on your shoelace? This covers injuries and property damage your business might cause (accidents happen!).

Cybersecurity: Protects you if hackers steal client data. Imagine a shield against online bad guys.

In addition, it’s important to consider insurance that’s often required by law, like:

• Unemployment insurance
• Workers’ Compensation
• Disability Insurance.

These policies can protect your employees if they get hurt on the job.

7. Hire the right employees

As a business owner, your staff is your greatest asset. To succeed, you need skilled medical professionals who provide excellent medical care and build genuine client relationships.

So, Who are the key players?

Clinical Supervisor

This position is usually filled by a doctor or experienced nurse and is required by most states and Medicare. They act as a resource and guide for your front-line care team.

Front-line Caregivers

Front-line caregivers often include certified nursing assistants (CNAs) and home health aides (HHAs). You can either hire medical professionals directly or partner with outside agencies for specialized services. Consider a mix of core staff and contracted specialists as needed.

8. Outline a marketing plan

Okay, you’ve built an excellent business plan, jumped through all the licensing hoops, and have a fantastic team. Now, it’s the fascinating part – finding those first clients!

This is where things get a bit more familiar – you need solid marketing and a lot of determination to make it happen.

So, how do you make this happen?

Here are some of the best ways to get your first clients:

A Simple Website: Your patients might not be browsing the web, but their kids and grandkids sure are! A website is how they’ll find you and check you out.

Get Out There & Network: Connect with doctors, senior centers, hospitals – anyone who might have folks needing your help. Building those relationships early is key.

Find your niche: What Makes You Special? Do you specialize in certain conditions or care? Shout it from the rooftops! This sets you apart from the competition.

Join the Community: Groups like your local Chamber of Commerce or national organizations for home care are great ways to connect with potential clients and other helpful businesses.

Hit those Trade Shows: These events are perfect for networking with doctors, nurses, and folks who might know someone who could use your help.

Running a home health care business is challenging, but the rewards are incredible. You’re not just making a living; you’re helping people live better lives. Think of the connections you’ll make with your clients and their families! And as you provide excellent care, those good reviews and referrals will naturally lead to more success.

You’ve got the knowledge – now it’s time to take action! Start building that business plan, and prepare to provide the best home health care services in your area.

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks, AI-assistance, and automatic financials make it easy.

Frequently Asked Questions

Is a home health care business profitable.

Yes, experts predict massive job growth over the next decade – some estimates are as high as 22% ! Plus, with average profit margins of around 35% , this is a field where you can do well while doing good.

Which home care service pays the most?

General nursing services (provided by nurses and therapists with specialized training) typically pays the best. Other well-paying home care services include:

• Personal care: Helping with bathing, dressing, etc.
• Companionship: Socializing and providing company
• Homemaking: Cleaning, cooking, laundry, etc

How can I make money with home care?

There are two main ways:

• Start your own business: This involves getting licensed, building a team, and finding clients.
• Work for an agency: They’ll handle the business side while you focus on providing care to patients in their homes. Agencies usually provide training, too!

How do I make my home healthcare business stand out?

To stand out from competitors, focus on a niche. This could be specialized care (like dementia), exceptional personal service, or using technology to improve the client experience.

Which home health care services are seeing the biggest increase in demand?

The demand for private caregiver services is rapidly increasing in the United States. This growth is primarily due to the aging baby boomer population (over 73 million people), who represent a significant portion of the country’s population.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

Reach Your Goals with Accurate Planning

No Risk – Cancel at Any Time – 15 Day Money Back Guarantee

Popular Templates

Want to see the next total solar eclipse in 2026? An expert recommends booking travel now.

• 2026 will be Europe's first total solar eclipse in 27 years.
• Travelers worldwide will likely head to Spain, Iceland, and Greenland for the event.
• A hotel expert encouraged travelers to start planning and booking their trips now.

It'll be two decades before the next total solar eclipse hits the US .

Another option: hop on a plane to Europe and turn the 2026 total solar eclipse into a viewing vacation.

Eclipse cartographer Michael Zeiler at GreatAmericanEclipse.com told Space.com that up to 3.7 million people likely traveled for the solar eclipse on Monday.

HotelPlanner's chief communication officer, Philip Ballard, told Business Insider that the eclipse was a major revenue generator for many cities. For places like Austin, Texas, and Rochester, New York, it could have created $1 billion in revenue, Vox reported.

"I would say the total solar eclipse has become a global phenomenon," Ballard said.

Ballard added that the next solar eclipse , which will pass through Iceland, Greenland, and Spain on August 12, 2026, could result in similar tourism and revenue influxes.

And if travelers are considering a trip to Europe for the solar eclipse, Ballard recommends planning your trip now.

Determine your eclipse viewing destination

According to Space.com , 2026 will be Europe's first total solar eclipse in 27 years. Its path will go through Greenland, parts of western Iceland, and northern Spain.

Choosing where to watch the eclipse will be a tough and important decision for travelers.

Iceland and Greenland have some positives. These regions will experience longer totality times, so viewers can watch the eclipse longer. Plus, the sun will be higher in the sky, so finding a spot to watch the eclipse will be less challenging, Space.com reported.

The downside is that these regions are more likely to be cloudy, according to the outlet.

Related stories

While parts of Spain are likely to offer clearer skies, the eclipse's timing will be shorter and closer to the horizon, which means travelers will need to plan and track down a viewing location with unobstructed views of the western horizon, Space.com reported.

Regardless of the destination, according to the outlet, one bonus is that the strongest meteor shower in the Northern Hemisphere will happen the following night, so travelers can pack two events into one trip.

Book flights and hotels far in advance

Ballard encouraged people to book their hotels in their destination of choice as far in advance as possible.

"You should start looking now and booking hotels now because those cities in the path are already going to be at peak season," Ballard said.

Ballard said it's similar to when a Super Bowl city is determined or a Taylor Swift tour date is announced — you immediately see spikes in bookings. He predicts hotel occupancy rates will hit near-record highs, and room prices may double around the solar eclipse date.

Ballard's general rule of thumb is to book international travel at least three months in advance, but since this is such an anticipated event, booking earlier is smart. His advice is to start discussing plans with friends and family. If you decide on a destination, book a refundable room to keep your options open if plans change.

Regarding purchasing a plane ticket, a study from Expedia states that international travel's sweet spot is at least six months in advance.

According to Expedia, travelers who book six months in advance save an average of 10% more than travelers booking within two months or less.

Skip the hassle of planning altogether and book a solar eclipse tour

Another option is to let a tour operator do the work for you. A handful of tour companies have seen the increased interest in the solar eclipse and launched tours designed around the event.

These tours will have predetermined locations to view the eclipse, hotel blocks reserved, and itineraries highlighting both the region and the eclipse.

However, these can sell out quickly. For example, Space and Telescope created an 11-day tour of Spain around viewing the 2026 solar eclipse. The tour has already sold out as of Wednesday, and the waitlist is full.

Other operators, such as Wilderness Travel and Eclipse Traveler, have similar itineraries for the total eclipse in 2026.

Watch: A small Australian town was treated to a rare hybrid solar eclipse

• Main content