Write Your Business Plan

A well-written business plan serves as a roadmap for your business. As you write, you’ll think through the most critical aspects of running a company, setting yourself up for success. If you use a business plan template, your plan can also help you structure, run, and grow your business properly.

Your business plan can even help you qualify for funding from banks or potential business partners. When you apply for loans, bankers want to see that you have a realistic plan for generating revenue and repaying your debts. Before they invest in your company, investors need to know they can trust you to make good decisions. A strong business plan gives investors more confidence in your business.

Pick a business plan format that works for you

There’s no single business plan format that works for every business. Writing a business plan that meets your needs is more important than worrying about formatting.

Most plans are based on one of two business plan templates: traditional and lean startup. Traditional plans are the most common. They follow the same recommended structure and have a lot of detail in every section. Because they’re so detailed, traditional plans require a lot of work and may be dozens of pages long when they’re finished.

Lean startup business plans are not as common as traditional business plans. Although they use a standard structure, they don’t have the same level of detail as the traditional type. Because they only cover the most critical elements of your business, a lean startup plan may be as short as one page. Lean startup business plans also take much less time to complete than traditional plans — as little as one hour in some cases.

Traditional Business Plan

• Comprehensive
• Full of details
• Takes longer to write
• Preferred by lenders and investors

Lean Startup Business Plan

• High-level focus
• Fast to write
• Contains vital elements only
• Lenders and investors may request more information after reviewing this type of plan

Traditional Business Plan Format

When you write your business plan, a traditional business plan is a good choice if you’re detail-oriented, want a comprehensive plan, or plan to request funding from traditional sources. Even if you choose a traditional business plan template, you don’t have to follow it exactly. Instead, use the sections that make the most sense for your business and your own needs. Traditional business plans have some combination of the following nine sections.

1. Executive Summary

The executive summary helps the reader understand what to expect from your business plan. It should mention what your company is and why it will be successful. You should also include the following:

• Company’s mission statement
• Description of your product or service
• Overview of your company’s leadership team, staff, and location

If you plan to ask for funding, add a summary of your financials and a high-level growth plan to this section.

2. Company Description

Use this section of the business plan template to provide a detailed overview of your company. Explain what problem your business solves, and be specific about the customers you’ll serve. What consumers, businesses, or nonprofit organizations have a need for your products or services?

Once you write a basic description, describe your company’s competitive advantages in detail. A competitive advantage is any characteristic of your business that helps you outperform your competitors. In other words, it’s something that makes your company different from the other firms in your industry.

Does your store have the perfect location for bringing in foot traffic? Do you have an industry expert on your executive team? Does your product do something that no one else’s product can do? All of these are examples of competitive advantages to include in your company description. When you write your business plan, focus on your strengths in this section.

3. Market Analysis

To succeed in business, you must have a strong understanding of your industry and target market. Taking time to research your competitors can help you find out what they’re doing and determine the best way to outperform them.

The Bureau of Labor Statistics offers industry outlook reports for more than 100 industries. These reports can help you find out how fast your industry is growing. They’ll also help you identify key trends in your industry and determine how they might affect your business.

When you research your competitors, ask yourself several important questions: What do successful companies in your industry do? Why does it work? Can you do it better? The market analysis section of your business plan is the place to answer these questions in detail.

4. Organization and Management

The next section of a traditional business plan template focuses on how your company is organized and who is managing it. Here, you’ll explain how your business is structured. Do you plan to form a limited liability company (LLC), S corporation, or C corporation? Is it a sole proprietorship, general partnership, or limited partnership?

Create an organizational chart that shows who’s in charge of the business. Then, explain how each person’s expertise will contribute to the firm’s success. Consider adding resumes for key members of the management team.

Not sure how to structure your organization? Check out Cups on a Tray: An Organizational Model and What To Do About It.

5. Service or Product Line

Selling products and services is what generates revenue for a business. When you write your business plan, this section will describe your main product or service in detail. Be sure to mention how it benefits customers and what stage of the product life cycle it’s in. The product life cycle has four stages: introduction, growth, maturity, and decline.

This section should also explain how you plan to protect your intellectual property. If you already have patents or trademarks, list them here. If you’re still doing research and development for your product and service, explain the research in detail. Let the reader know if you plan to file for patent or trademark protection at a later date.

6. Marketing and Sales

There’s no one-size-fits-all approach to marketing that works for every business. Your marketing strategy should be unique to your needs and based on the results of your market research.

The main goal of this section is to explain how you’ll attract customers and keep them coming back for more. You also need to describe your company’s sales process. Let the reader know if you plan to hire sales representatives, sell products on an e-commerce website, or use another method. You’ll refer to this section frequently when you work on your financial projections, so take the time to be as detailed as possible.

7. Funding Request

If you need funding for your business, use this section of the business plan to explain your funding requirements in detail. Be specific about how much money you’ll need over the next five years. You should also explain how you’ll use the money to grow your business.

Let the reader know if you’d like a loan or if you’d rather give up some equity in your business in exchange for funding. Then, explain your desired funding terms. Don’t forget to mention the length of time your request will cover.

Potential investors want to know that you’ll spend their money wisely. Use this section to give a detailed description of how you’ll use the money. You may want to pay salaries or buy needed equipment. Some business owners use their funding to cover specific expenses until revenue increases. Always include a description of your future financial plans, such as paying off debt or selling the business once it’s profitable.

8. Financial Projections

Use financial projections to support your funding request. The goal is to convince the reader that your business is stable and has a good chance of succeeding.

For an established business, you should provide financial statements for the past three to five years. This includes your balance sheets, income statements, and cash flow statements. If the business has assets that could be used as collateral for a loan, list them in this section.

If your business is new, use financial projections for the next five years. Include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, include monthly or quarterly projections to give the reader as much detail as possible.

This section should clearly explain your projections and match them to your funding request. Charts and graphs are especially helpful for telling the financial story of your business.

9. Appendix

The appendix section of a business plan template is reserved for supporting documents. It may also contain information requested by potential investors. An appendix commonly contains the following:

• Credit histories
• Resumes
• Pictures of your company’s products
• Letters of reference
• Licenses
• Permits
• Patents
• Legal documents
• Contracts

Lean Startup Business Plan

A lean startup business plan template is ideal if you want to explain or start your business quickly. It’s also appropriate if your business is simple or you plan to make frequent changes.

The lean startup format uses charts to display critical information about your business. These charts include information about your company’s value proposition and customers. They also provide an overview of the firm’s infrastructure and finances.

Lean startup templates come in many versions, but one of the oldest and most common is the Business Model Canvas, developed by Alex Osterwalder. You can search the Web to find a business plan template based on this model, or you can look for other versions to help you write your business plan. We’ll discuss the nine components of the Business Model Canvas version here.

1. Key Partnerships

List the other companies or services you’ll partner with to run your business. Include suppliers, subcontractors, manufacturers, and other potential partners.

2. Key Activities

Explain how your business will gain a competitive advantage. List things like selling directly to consumers or using technology to participate in the sharing economy.

3. Key Resources

List the resources you’ll use to create value for customers. The most important are capital, staff, and intellectual property. Be sure to check out the HUBZone program. It’s full of information about funding, programs, federal contraction, business guides, and local assistance for small businesses and business owners in the following groups:

• Women
• Veterans
• Native Americans

4. Value Proposition

Write a clear and compelling statement about the value your company brings to the market.

5. Customer Relationships

Explain how customers will interact with your business. Is the process automated, or is it personalized? Plan out each interaction from start to finish.

6. Customer Segments

The goal of running a business isn’t to sell to everyone. It’s to sell to the people who need your products or services. To get a clear sense of who your business will serve, be specific about your ideal customer.

7. Channels

List all the channels you’ll use to connect with your customers. Most companies use multiple channels and optimize them over time.

8. Cost Structure

First, determine whether your company will focus on minimizing costs or maximizing value. Once you define your strategy, list the highest costs associated with pursuing it.

9. Revenue Streams

Explain how your company will make money. Examples include product sales, membership fees, and selling advertising space. If you have multiple streams of revenue, list them all.

Sample One-Page Business Plan

Use our sample one-page business plan for a simple summer business trading used boats:

Summary

Bobby’s Boat Yard

Our business concept is to opportunistically buy used boats that are clearly underpriced, clean them up and perform minor repairs as needed, and then quickly resell them for a fair price. We will focus on brand-name used outboard powerboats, especially smaller Boston Whalers that we can confidently determine the fair market value for and also quickly resell.

Market Analysis

Our target market will be boaters who likely have previously owned an outboard powerboat and understand the premium value of a better-built boat such as a Boston Whaler. Our market will be moderate-income people who don’t want to pay the high price of a new boat and live within 50 miles of our yard so that they can easily drive to see and buy a boat.

Competitive Analysis

Our primary competitors include official dealers of the boat brands that we are aiming to sell. These dealers get their used boats into top shape before selling them but charge a premium price. Our other competitors are the general public, who often price their used boats erratically and sometimes try to sell the used boat while it still needs repairs and/or cleaning.

Strategy

Our key competitive capabilities are that we have an excellent understanding of the likely resale value of the brands of used boats we are focusing on, we can move instantly to buy an underpriced used boat, and we can quickly and for very low cost do minor repairs and cleanup of used boats in our inventory.

Products and Services

We are highly specialized in that we focus only on several very well-known and respected brands of used outboard powerboats. We are pricing and positioning our boats to sell quickly by underpricing the official new boat dealers. We are also offering the public a more desirable and consistent quality of inventory than buying from the general public because we have made needed repairs to our boats and cleaned them up.

Marketing and Sales

We will primarily advertise our boats online and in the classified section of the local newspaper. We will display all boats in our boatyard with “for sale” signs visible from the road.

Operations

Bob will do most work personally, with the exception of cleaning the boats, which will be performed by hourly workers whom we will hire only as needed. Repair work will be done in the old garage on the property or, weather permitting, in the open yard.

Financials

Projected Profit and Loss, First Summer

Number of Used Boats Sold: 20
Average Sales Price: $3,500
Total Sales Projection: $70,000

Average Purchase Price: $2,800
Average Other Cost of Goods: $100
Total Cost of Goods Sold: $58,000

Gross Profit Margin: $12,000

Marketing Costs: $2,500
All Other Operating Costs: $1500
Total Operating Costs: $4,000

Profit Projection: $8,000

Recommended: How to Write a Construction Company Business Plan

What do investors want to see in a business plan?

At the end of the day, investors are looking for a business with profitability potential. They’re different from bank lenders, who are primarily worried about credit history. They want you to convince them that your company will make them money. That’s why your business plan should be easy to understand, well-thought-out, and plausible. 

A good business plan will walk an investor through your company’s road to success. Investors are risk-takers, but they want to take calculated risks. You need to show them that your business is their best bet through four key areas:

• Clear direction
• Competence within the team
• Competitive advantage
• Financials that add up 

Clear Direction

One of the first things an investor will want to know is where your business is headed and how it will get there. A clear direction guides all your business decisions to make sure they bring you closer to your goals. That’s why it’s important that your executive summary is straightforward and concise. 

This section is where you’ll want to grab the investor’s attention. Be direct and succinct. You may be tempted to describe your business opportunity in depth, but you want to keep the investor’s attention. Instead, try to describe your business opportunity in two sentences.

If an investor can’t understand your executive summary, they may not even read the rest of your business plan. That’s why it can be a good idea to write your summary last; you’ll have a better idea of what a clear summary entails after you’ve finished the rest of your business plan.

Competence Within the Team

If an investor is putting money into your business, they’ll want to know that it’s run by capable and devoted people. Your management team is just as important as the service you’re selling. In your business and team structure section, go over your team members’ qualifications and the reason they’re involved. Show why they’re the best at what they do. 

You can mention each member’s position (for example, CEO, CFO, manager), past experience, accomplishments, or advanced degrees and certifications. Add a quote or blurb on why each person is passionate about the industry.  Even if you have a sole proprietorship, you’ll still want to highlight your qualifications and strengths. 

Be sure to clarify anything an investor might not be familiar with. For example, they might not know that, as a master electrician, you’ve received the highest certification in your industry (and have at least 4,000 hours of experience).

Be professional. Backers aren’t keen on fun facts or personal details. All they want to know is that everyone has the skills to get the job done. Save details like “favorite ice cream flavor” for your PR material when you’re trying to relate to your target market. 

Competitive Advantage

Investors need to know that your new company can compete in your field. When you’re presenting your market analysis, be sure to show what problem your service is designed to solve. You’ll also need to describe the obstacles that might keep other companies from taking some of your market share.

Let’s say you’re starting a business as a freelance digital marketing consultant. Here’s how you might lay out your company’s competitive analysis:

• Problem your business solves: Companies without a strong online presence aren’t able to reach broad demographics and market segments like those that can market online efficiently.
• Barriers to entry for competitors: You have an advanced OMCP (Online Marketing Certified Professional) certification that requires 5,000 hours of experience and additional training. Your competitors don’t have the experience or qualifications that you have.

Back up any claims you make with actual research. For the above example, you could explain that landing pages are underutilized in most digital marketing plans. While they have the highest conversion rate, companies use them less than other types of registration forms, like pop-ups. With your skill set, you can help companies use landing pages to increase conversions.

There might be many other obstacles that could lock out competitors. You might reference things like high material costs, intellectual property your company owns, or a unique geographical area you service.

Financials That Add Up

The ultimate goal of an investor is to make money. They want to know how much profit they can expect for the amount of ownership they buy. The more specific you can be, the better. Project how much revenue you’ll expect to generate in the next five years, and break it down further than that if you can (for example, monthly income).

There are a lot of factors that influence the revenue your company will make. When you’re projecting your company’s future earnings, take into account things like your expenses, your price points, and how often you think your target customers will buy from you. Compensate for the future costs of growing your new business. If you’re an artist, for example, you might plan to move into a larger studio after two years. You can’t predict the future, so you’ll adjust your financial projections as your business runs.

Before you can sell part of your company to an investor, you’ll need to estimate what your company is worth. There are several methods for evaluating your business’s worth. One way is to research the amount that similar businesses have sold for recently. Still, accurately valuing your company can be complicated. It might be best to seek the help of a qualified business appraiser. Potential investors will need to agree on your valuation.

Investors want to see finances that make sense. If you tell an investor that they can expect to make $500,000 in five years by purchasing 15% of your company, you’d better have the numbers on your financial statement to back it up.

Attracting Investor Attention

To make the most of their money, investors look for businesses with smart leadership, clear goals, solid financial plans and records, and a competitive edge. If you want backing, you need to communicate that your business idea has all four components. Drafting a great business plan is the first step toward getting an investor’s attention.

That doesn’t mean it’s the only way to get on an investor’s radar. Methods like networking are still important and can help you build the right connections to get your business funded. In fact, venture capital firms rarely let business owners they don’t have mutual connections with to the pitch deck. Use every strategy you can.

You love running your small business, but it seems like the work is never-ending.  ZenBusiness has great resources that will make taking on your administration much easier. This is your dream; don’t let extra paperwork take the fun out of it.