A well-written business plan holds a lot of value. It’s where your ideas start to take shape and the direction of your new enterprise becomes clear – but it can seem intimidating.
Business plans require focus: you’re stating why you’re doing what you’re doing, and how you expect to do it. There can be a lot to note down.
Ultimately, though, your business plan is going to become an essential guide for you, your team, and anyone involved in your company.
So let’s uncover what it takes to write a business plan, and find out how it can benefit you.
What is a business plan?
In short, a business plan is a description of your business and everything that goes into it.
As well as helping to clarify the business idea that you have, it brings into focus elements like financing, staffing, revenue targets, and marketing strategies.
Business plans aren’t exclusive to startups, either. If you’re regenerating an existing company, a detailed and structured plan is enormously useful.
Key concepts for writing a business plan
Not all success stories have required business plans, but a comprehensive plan will help you to identify any immediate routes to failure.
Although you’re putting a business concept on paper and announcing your mission statement, a plan has to be structured, not fanciful.
The first person it’s trying to convince is you. Are you ready to spend time and money on this?
After that, you should be considering any potential investors and your team members. Will they be motivated and excited? You’ll need to achieve the following with your business plan:
- A clear vision and purpose for the business – why is it important?
- A guide that can be used as a reference throughout the company’s growth.
- An objective outlook on the market potential of what it is your business is doing.
Main components of a business plan
There is no one-size-fits-all business plan template, but the most successful plans have the same key components.
For small business owners writing a business plan, whether it’s during the startup process or further down the road during a period of change, these are the essentials to include:
1. Executive summary
Think of your executive summary as an elevator pitch: it should be a concise, engaging, and persuasive overview of your business.
Keep this section to less than one page in length – after all, it is a summary.
While it’s the opening to your business plan, we recommend writing it last. That way, you can collate all of the key points raised in the rest of the document.
Here’s what you should summarize in this part of your business plan:
- A quick description – Outline what your business is about – if it’s a new business, what’s the mission? If you’re changing direction, what’s the concept?
- The products or services you’ll provide – Offer a brief value proposition – what makes your business idea unique?
- A picture of your target market – Give evidence that you’ve carried out market research and know who the end user should be.
- Your marketing strategy – Write a few lines about your intended marketing efforts to provide an idea of business reach.
- A snapshot of the company’s financial health – What’s the current business revenue and what are you forecasting to earn?
- A clear view of your financial needs – If you’re raising money, how much does the business require?
- The company’s key personnel – Whether you’re a startup business or an existing operation, who are the employees to mention?
2. Company description and overview
Next up, give a more detailed description of your business. Even if you’ve decided to write a business plan only for your own benefit, imagine what other people would want to know.
Make clear what you think is going to bring your business success in the long run.
This should help to demonstrate that the ideas you have are worth pursuing. For example, what problem can you solve? What experience can you bring to the table?
Here’s how to structure the company description part of your business plan:
Pinpoint the industry that your business is in, plus any insights or industry trends that you intend to adopt or disrupt.
Describe your business model and its structure – is it incorporated, a limited partnership, or perhaps a sole proprietorship?
Mention your target audience and highlight which problems or opportunities you have identified for the business.
Clarify your mission statement and value proposition to ensure that everyone is on the same page when it comes to business focus.
Provide some background on the company, like when it was founded, who by, and where it’s based.
Highlight the key employees in your team. If it’s a small business, that could be everyone, or maybe just a select few people.
It can be tricky to take a step back and consider your overall business goals and objectives, but remember that this is the whole point of writing a business plan.
Business plans can be great tools to use if you’re not even sure whether the venture is worth doing – writing an ambitious company description will help you to find that out.
3. Market analysis and opportunities
Whether you run a small business or a big business, you’ll have competitors. Knowing about the other companies in your industry will be invaluable.
That knowledge can inform your marketing plans, pricing decisions, and product selections.
You’ll also need to know about your target market. An understanding of your customer profile will help your business reach the right people and maintain a competitive advantage.
So, how does all of your market research come together in a business plan? Here’s how:
Illustrate your market analysis – Use charts and graphs to show where the business is going to sit within its industry. In terms of your price points, product offer, and service proposition, how will it compare to other businesses?
Explain who your potential customers are – Use survey tools to help you specify key demographics like age, profession, and location – if you’re only just starting out, it’s fine to make informed guesses about your ideal customer profile.
Include a SWOT analysis – Identifying the key strengths, weaknesses, opportunities, and threats of a business is at the heart of every competitive analysis. Present this part in a grid layout to draw attention to it within your business plan.
Be clear about the competition – It’s tough to find a market that isn’t already saturated, so show how your product or service will be different. Although it’s useful to have friendly rivals, you’ll need some competitive advantages.
4. Products and services
Earlier in your business plan, you hinted at what you’ll be selling, and now’s the time to describe it. It’s worth remembering at this point that industry jargon should be avoided.
Explaining the products or services your business offers should be clear, but exciting.
This section should describe why and how your product exists, how much money it will cost to develop, and how much business planning has gone into your decisions.
Whether you keep it brief, or go into detail about manufacturing, here’s how to shape this part:
- Outline the development process – If you’re selling products, will you be manufacturing them too, or sourcing from elsewhere? What’s the timeline?
- Overview the business model – This is particularly important for retailers, as you’ll need to clarify how your products will reach your customers.
- Cover off the costs – Financial projections and cost management will come up a lot in your business plan. In this part, discuss your profit margin expectations.
- Explain what sets your business apart – Chances are there will be versions of your product or service on the market – what’s your unique selling point (USP)?
- Talk about intellectual property – Mention any patents or copyrights you have applied for and emphasise how your work will be protected.
5. Business management and organization
By this part of your business plan, you will have described in detail the ideas behind your company or its expansion. The next step is to explain how you plan to execute them.
Start by talking about the people in your business and how they’ll contribute to its success.
You will have highlighted key employees at the start of the business plan document, so use this opportunity to go into more detail about the team.
After all, they’ll be driving the business with you – here’s what you can show:
An organizational chart – This will be a great way to sense check the structure you have created – are there too many people in senior roles? How does the team work together? Is there enough room for growth?
The backgrounds of your key players – A strong management team requires people with a range of skills and expertise. Although your employees don’t need to have years of experience, they should be bringing something interesting to the table.
Your hiring strategies – A big part of business planning is finding the right people – after all, salaries form part of the fixed costs you have to pay for. How do you expect to reach the right talent pool as you grow the company?
The company’s legal structure – If you are creating a startup, go into more detail about how your business will be run. For example, will it be a limited liability company (LLC), sole proprietorship, or partnership?
6. Marketing strategy
You have a customer profile, so now you need to think about how you’re going to manage customer relationships. Nailing this in your business plan is a really smart move.
First of all, understanding your marketing objectives will help you find the right channels.
It will also uncover the financial data around your company’s promotional efforts. What will your campaigns cost? What can you afford to spend on marketing?
Here are the key marketing components that you will need to consider:
Your website – While social media is effective, websites are essential. They’re easy to get – a website builder like Zyro or Squarespace will help you to create a bespoke platform and get online quickly and at a low cost.
Its marketing tools – The other major advantage to website builders is that they provide users with integrations, software, and insights to help drive marketing strategies. You’ll be getting an online presence and the tools to promote your business.
Third-party assistance – You can also use online marketing services to help you structure each marketing plan and drive a difference between you and your competitors. Who would you work with, and what will that cost?
Other marketing channels – Where will your audience be? You’ll most likely benefit from using social media platforms, but which ones? Find out if it’s worth investing time into Instagram, or if LinkedIn will be more profitable.
How your business will stand out – When you write a business plan, you’re making predictions about the future – what will you do if your marketing strategy fails? Understand some key digital marketing trends to help inform your ideas.
7. Business operations and logistics
Now we’re getting really granular. Breaking down the proposed logistics in your business plan will be incredibly useful for you as you work out financial projections.
Getting a clear picture of business operations will also help you formulate a contingency plan.
It may be that your business model is very niche and needs testing – how will you account for any failures? While it isn’t fun to think about worst case scenarios, it’s better to do this now.
Plus, if you need to secure funding, this section is important. Here’s what to cover:
- Business facilities – If the company plans to open retail spaces or venues, where are they and how big are they? Will there be an office for employees?
- Supply chain – Will you be sourcing products or materials from manufacturers? Explain where they are based and what policies you will implement
- Inventory management – Retailers should describe how and where they plan to manage stock and customer orders
- Fulfillment model – Another vital component for retail businesses, this covers how you expect to receive products and ship them out to customers
- Business equipment – Even small business administration costs money. How will you source office supplies? Will you need a bank loan?
- Financial operations – Before you delve into this part of the business plan, mention how you plan to track and manage cash flow
8. Financial plan
Whether you need to secure funding, take out a business loan, or simply take note of your income statements, every business plan needs to cover financial planning.
It helps to take a look at your finance software options to construct this part of the document.
Being upfront about your company’s financial outlook is critical, both for you and anyone else who is planning to invest in the organization.
There are three key components that you’ll need to include in your business plan:
An income statement, which shows the most accurate picture (or estimation) of your company’s profit and loss over a period of time.
A cash flow statement. To understand how much money you need to scale the business, and if it’s viable, you’ll need to provide cash flow statements.
Balance sheets. A balance sheet discloses your business assets and liabilities – in other words, what you owe to others.
On top of your financial statements, you should also include a breakeven analysis of your company in your business plan.
Critical for startups, this shows at what point you expect to start making a profit and for what duration you anticipate to be running at a loss.
Tips for writing a business plan
Once you know what goes into a good business plan, you’ll need to know how to make it a document that people actually want to read.
In addition to the main segments, you can include supporting documents to help people further contextualize what it is you’re doing.
That will also help you to keep track of your plans, especially if you’re only writing the document to help yourself and your team, not investors.
Either way, you want to avoid writing a total snooze-fest. While a lot of detail goes into a business plan, it also needs to be engaging and exciting throughout.
So, to write a really solid business plan, remember to:
- Keep it brief – Nobody wants to have to flick through a 100-page manifesto, not even future you. An effective business plan is concise and memorable
- Make it shareable – Business plans written on paper won’t really go anywhere – make sure yours is published in an easily transferable format
- Be clear – Only use industry jargon when it’s totally unavoidable, otherwise you risk alienating (and boring) the readers of your business plan
- Show your research – Implement charts, provide supporting documents, and make sure that it’s abundantly clear how much thought you put into your business
- Remember your passion – Don’t be put off by traditional business plans with bland statements – make it clear in your own business plan how exciting this venture is