How To Write a Business Plan: A Step-By-Step Guide

No matter how unique your ideas are, launching a successful business without a well-crafted plan is tough. That’s why learning how to write a business plan is key to seeing success from the start. 

An actionable business plan helps you and potential investors understand exactly where you want to go and how to get there. And if you aren’t trying to secure funding, a lean business plan can summarize the highlights to help you in other areas. Here’s everything you need to write a business plan that clarifies your company’s vision.

Business Plan Basics

A business plan outlines the company’s products or services, how it makes money, and its customers. It should also identify the business’s long-term goals and how it’ll achieve them.

But what does a business plan look like? There’s no singular format, but most contain the following core elements:

• Executive Summary. The executive summary is a high-level summary of your business plan’s key points. Include this early in the document, but write it last so you can accurately describe what’s in it.
• Company Description. This section covers your company’s mission, leadership team, and goals. If your business has operated for several years, include a history.
• Market Analysis. This is where you’ll write out your market research. Gather data on your industry. That includes target customer segments and the current competitive landscape. This info demonstrates the viability of your business idea. 
• Product and Service Offerings. Describe your company’s offerings and what sets them apart from competitors. This is your unique value proposition.
• Marketing Plan. Outline your marketing tactics and overall strategy. Mention your plan for pricing, promoting, selling, and distributing your products. This helps investors know you have a strategy in place to grow your business. 
• Logistics and Operations Plan. After describing your products and how you plan to generate demand, lay out how you intend to drive, accept payment for, and support sales.
• Management Overview. Potential investors want to know who they’re betting on. This section provides crucial information about who’s in charge. Include their track records of success, relevant expertise, and roles and responsibilities.
• Financial Analysis and Projections. If you have them, include any historical financial details and performance metrics. This includes assets, liabilities, expenses, projected financial statements, cash flow statements, and anything else offering insights.
• Appendix. This final section is a catch-all for any miscellaneous but valuable background information. Examples might be licenses or patents.’

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How To Create a Business Plan

With a clear understanding of these documents, it’s time to learn how to write one. Here’s how to put together a strong business plan for your company:

1. Carry out a Market Analysis on target demographics, competitors, industry trends, and market.
2. In the Company Description and Products and Service Offerings sections, explain what makes your offerings unique.
3. Outline your Marketing Plan and sales strategy. Describe your target market and ideal customer. Include factors like geographic region, age range, and education level.
4. Map out your Financial Analysis and Projections. If you’re an established business, include data like profit-and-loss statements, a balance sheet delineating your assets and liabilities, and cash flow statements or projections. If you’re still in the early stages, focus just on financial projections instead. Mention anticipated startup costs and your current cash flow.
5. Your Logistics and Operations Plan explains how you’ll execute your ideas. Describe any relationships with suppliers, office space, or equipment. Make sure to mention production logistics and any shipping and fulfillment plans. This demonstrates that you understand the day-to-day operations of producing your product.
6. Introduce yourself and/or your Management Team and principal hires. Emphasize past successes in related sectors and any unique expertise your staff has.
7. Regardless of what order you prepare your business plan in, write the Executive Summary last. Do this by turning your market research and value proposition into tangible objectives and key milestones. This section is typically the first your readers see, so it should make them want to read more.

Be sure to get feedback from colleagues, industry contacts, and friends and family. The more eyes you get on your business plan, the less likely you are to make mistakes or leave out details.

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What Are Business Plans For?

Writing and adhering to a business plan allows you to think through every aspect of your business. This helps you clarify your vision and shows where your ideas aren’t as developed.

But business plans don’t just clarify the company’s mission and direction. Entrepreneurs hope to answer this tough question with a business plan: how to attract investors. A well-written document can instill confidence by showing how supported it is. This is the main reason many business owners create a comprehensive overview.

And investors aren’t the only ones you’re trying to impress. An inspiring business plan attracts top talent in your industry. It proves that your team is organized, knows what it wants, and has ideas for the future.

Exploring Different Types of Business Plans

Business plans can be categorized based on type and style. Let’s explore three of the most common types.

A traditional business plan is the most common. This is what lenders and investment funds want to see before making any decisions. Traditional business plans are typically long. That’s because they provide a thorough overview of your company’s abilities, finances, and prospects

If you’re not courting investors, you might prefer a lean business plan. This type of document is shorter, focusing on the highlights instead of completeness. A lean business plan is great for brainstorming or onboarding new team members with reduced time and effort. But, because they’re less comprehensive, lean business plans aren’t ideal for seeking outside investment. Investors might not see how viable your business is without the added details. 

Finally, if your organization is a nonprofit, focus on the impact you hope to make for your chosen cause, not how you’ll grow revenue. But donors may want to see a more detailed business plan before making sizable donations.

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Caveats To Watch Out For

An actionable step-by-step business plan requires a strong understanding of how it will help you reach your company’s goals. Now that you know how to start a business plan, here are some common mistakes to avoid when you start writing:

• Putting on Rose-colored Glasses. When you believe in your company and its mission, it’s easy to be too optimistic about future prospects. You might also overlook potential roadblocks. Be sure to keep one foot on the ground to avoid misrepresenting your company’s potential.
• Focusing Too Much on the Details. If your company is new or not yet established, focus on high-level strategy and vision. Save the details for when you’ve generated some actionable data.
• Setting Fuzzy Goals. Keep milestones concrete and measurable to meaningfully track progress.
• Overcomplicating. There’s nothing wrong with being comprehensive, but creating an overly intricate strategy makes it harder to execute. Keep it simple.
• Setting It in Stone. Your business plan won’t be much of a guide if you’re constantly making changes. But it’s important to move on from ineffective strategies or unachievable goals. Striking the right balance between stable ideas and flexible methods ensures your business plan is a help, not a hindrance.

5 Tips for an Effective Business Plan

Now that you know what to avoid, let’s learn some tips for making your business plan as effective as possible:

1. Clearly Articulate Your Value Proposition. What unsolved problem does your company provide the solution for?
2. Don’t Skimp on Market Research. A seemingly great idea won’t sell if no one is interested in buying it.
3. Set Quantifiable Goals You Can Track. It’s difficult to measure progress toward vague, qualitative milestones.
4. Hype up Your Team. Lenders and investors want to see that qualified personnel run your company.
5. Manage Expectations. Don’t make promises you can’t keep. Surpassing your targets is impressive; falling short isn’t.

Business Expense Tracker

Make it painless to include expenses in your business plan by tracking them using our in-app receipt scanner.