When you have a new business idea, are trying to manage your operations for growth, or want to secure funding from investors, you need a business plan.
If you’ve never written a business plan before, that’s OK. Lots of people write their own business plans every day, including new entrepreneurs and established successful business owners who are moving operations in a new direction.
In this step-by-step guide, we’ll go over the two main types of business plans, the information your plan should include, and how to get started writing your first business plan today.
Table of contents: How to write a business plan
- What is a business plan?
- What should every business plan include?
- What you need in order to write a business plan
- How to write a business plan in 9 steps
What is a business plan?
A business plan is a document that outlines your company’s mission, management, goals, operation plan, marketing strategy, market share, finances, and more. Business plans don’t have to be fancy—a simple text document is fine.
Small and large businesses find value in having a written plan, as this document can be used as a roadmap for business operations and development and help organizations prepare for growth or weather recessions. In fact, entrepreneurs who create and use business plans are 16% more likely to succeed than those who don’t.
These plans are also an essential component of securing funding for your business idea, either from lenders or potential investors.
A business plan typically falls into one of two categories: a lean plan, which is one or two pages, and a traditional business plan, which is long and detailed—often 20 pages or more.
Sole proprietorships, microbusinesses, and bootstrapped startups may be able to launch with a lean business plan. If you’re trying to secure funding for your business, you’ll typically need a traditional plan.
What should every business plan include?
At minimum, every business plan should include:
- An executive summary
- Your management team’s bios
- An industry and market share analysis
- Details about your target market
- A timeline to implement your business plan
- Your marketing plan
- A financial summary
If you’re creating a one-page lean business plan, the above details may be enough. If you need to create a traditional business plan, though, you’ll want to include all of the following as well:
- An operational plan
- An organization chart
- Competitor data
- Your pricing strategy
- Pro forma financial statements
- A financial plan, including how you plan to use any funding
- Details about important logistics
What you need in order to write a business plan
In order to write a good business plan, you’ll need to have established, or have access to, the following:
- Your company’s mission statement
- Management team bios, if applicable
- Buyer personas
- A competitive analysis
- Market research data and metrics
- Financial information
- Business goals you’d like to hit over the next three to five years
- A completed SWOT analysis, which examines strengths, weaknesses, opportunities, and threats to your business
Once you have all of this information, you can begin drafting a business plan. You can write it up from scratch as a simple text document or use one of the many business plan templates available online.
How to write a business plan in 9 steps
If you’d like to write your business plan yourself, with or without the aid of a template, these are the steps you’ll want to follow.
1. Describe your company
First, you’ll want to describe your company. This is important, as it gives anyone reading your business plan (such as a potential investor) an idea of what your company does.
When writing your company description, be sure to include:
- Its mission statement
- Your company vision
- What your company does
- The names—and short bios—of your entire management team
- An organization chart
- Information about your company’s legal structure
If you aren’t yet able to fully describe your company or business idea, you may need to go back and do more brainstorming before writing up your formal business plan.
2. State your business goals
Next, it’s time to state your company’s goals. This section lays the groundwork for why you’re asking for money or working to promote your business. It’s also something you can continually revisit to make sure you’re making decisions that align with your initial goals.
It’s often useful to include the following when writing out your business goals:
- A three- to five-year plan
- Key milestones you want to hit along the way
- A summary of how achieving these goals supports your company’s mission and vision
Your business’ goals may change over time, and that’s OK. Keep your business plan focused on the next five years, at most—you can always update and revise your plan later on.
3. Summarize your market research
When planning your products and services—or getting ready to write this business plan—your company should have conducted a market analysis to support its business model and products or services. You’ll want to organize that data and synthesize it into an easily digestible summary for the purposes of this plan.
The market research portion of a business plan might include:
- A defined service area
- Buyer personas that represent potential customers
- Key demographics about your target market
- An analysis of top competitors
- A SWOT analysis
If you haven’t already prepared this data for your business, a market research analyst can help you do so.
4. Describe your products and services
Once you’ve explained your business and its goals, it’s time to provide an overview of the products or services that you offer. This information illustrates how your company will generate revenue and serve its target market’s needs.
When describing your products and services, remember to talk about:
- An analysis of common problems faced by your target market
- How your products or services solve those pain points
- Any research and development you’re doing for your new product line
- How you plan to protect your intellectual property
- Your product or service lifecycle
5. Define your sales and marketing plans
You’ve explained your target market—now you need to detail how you’ll reach them through marketing. While you don’t need to get too granular here, it’s important to provide a top-level overview of your overall sales plan, marketing strategy, and marketing channels.
Try to include:
- The marketing channels you intend to use
- What your company’s key competitive advantage is
- How you intend to communicate that advantage to a target audience
- The key value proposition that drives your sales strategy
- Your pricing strategy
A marketing strategist can help you develop a well-rounded marketing plan that investors will like—and that you can comfortably execute.
6. Include pro forma financial statements
A pro forma financial statement is a projection, or a forecast, of what your company’s finances will look like in the future. If your company plans to seek funding from external sources, you’ll need to have your pro forma financial statements (covering the next three to five years) in place. Potential investors will use these financial forecasts to consider the risks and rewards they may encounter by funding your company.
You can still create, and benefit from, pro forma financial statements even if you aren’t seeking funding. You can use financial projections internally to model different outcomes for your business.
A complete pro forma financial statement can include:
- Income statements
- Balance sheets
- Cash flow statements
7. Outline a logistics, manufacturing, and operations plan
If your business model involves the shipping and transfer of products, you’ll need a logistics plan. This is relevant if your business:
- Drop-ships products directly from manufacturers to customers
- Manufactures products
- Orders inventory to sell in a retail store
- Sends inventory from your distribution facility to customers
Your plan should summarize how you’ll handle logistics, such as:
- Establishing your company’s expected inventory, warehousing, and transportation needs
- Handling logistics in-house or working with a third-party company
- Designating responsibility for resolving any unexpected logistics challenges
If your business strictly provides a service, without any transportation of goods, you can use this step to detail how your business will run its services and handle any interruptions to normal operations.
8. State your funding request
Any business that intends to seek funding should include details such as:
- How much money you’re seeking
- How you’ll use the funds
- Whether you’re interested in a loan or investment
- If an investment, whether you’re interested in a debt or equity arrangement
- How you plan to pay off debts
- Your three- to five-year plan for using the funds to grow your business
If you’re writing a business plan for internal use, and aren’t seeking a business loan or investments, you can use this section as an overview of where your current funding comes from and how you plan to use it.
9. Write an executive summary
The last thing you’ll write for your business plan actually goes all the way at the top in the finished document—the executive summary. Even though the summary will be the first section of your business plan, it’s a good idea to write your executive summary last. This is because the executive summary provides a concise overview of what the business plan document contains.
You can think of the executive summary as your business plan’s elevator pitch—anyone reading your plan should be able to get essential top-level takeaways from this summary.
An executive summary should include:
- An engaging introduction
- Specific data points or statements about your business
- The purpose of the entire document
- Positive outcomes and scenarios
Should you find there’s extra information you’d like to include in your business plan, but it doesn’t fit into one of the above sections, you can create an appendix. The appendix of your business plan is where you can put additional information, citation references, charts, data tables, and more.
You can reference sections of the appendix throughout your business plan if necessary.
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Writing a business plan is definitely a time-intensive process. Whether you simply don’t have the space in your schedule to write a plan or would prefer to hand the task to a professional, Upwork can help.
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