A business plan sets the path for your company’s future. Just as you wouldn’t travel without a map (or a GPS), you wouldn’t launch a business without first developing a business plan. Although there are many components to include, a new business owner can write a business plan by following a few key tips.
How to Write a Business Plan
If you’ve researched a sample business plan or two from your industry, you may have noticed that the business plan does not need to be novel-length.
Investors and others who want to see your business plan should be able to get an idea of its contents after a brief browse.
Some business plans may only run about 10 pages. For others, 30 to 40 pages will suffice. The page count is less important than compiling easily accessible information. Bullet points, illustrations, and short summaries throughout the plan break up text and make for a more engaging read.
Pinpoint Your Audience
Keep your audience in mind. If you work in a highly specialized or technical industry, you may need to simplify the language so that the readers, no matter who they are, will understand your business focus.
Chronicle one-year goals as well as three- to five-year goals in your plan, and explain how you plan to achieve those goals. You will likely update your business plan annually as your business evolves. This will give you an opportunity to fine-tune your short- and long-term goals as well as include new accomplishments.
The Business Plan Outline
A standard business plan contains several common components that apply regardless of the nature of the business. Investors, bankers and others expect most business plans to follow a certain format, so it’s best to stick to the standard outline when making a business plan. A standard business plan contains the following:
- Executive summary. In one to two pages, introduce yourself, your company, and your team in a way that will entice the reader to keep reading. Describe the purpose of your plan. Highlight projected sales and profits—charts and bar graphs are helpful here—and steps to success. Consider the executive summary as your “elevator pitch.” If you sell a product, what need does it fill? For a service business, what problems does it solve? Also, be sure to address how your business and team stand above the competition.
- Company overview. Simply summarize who you are and what you do. The company overview should provide basics such as the date the company formed, the owners and where it does business, but should also discuss the company’s mission and what it plans to deliver to the market.
- Products and services. What do you sell? How much does it cost? Identify the customer need that the product or service fills.
- Market strategies. Analyze market needs, trends and growth. Discuss customer buying patterns and define your main competitors. Most importantly, determine and describe your target market in this section.
- Sales and marketing plan. How will you price and promote your products and/or services? How will you reach your target customers? How will you position your brand? Describe your general marketing plan, including traditional and social media.
- Milestones and metrics. What are your one-year goals? What are your three- to five-year goals? What milestones must the business accomplish to achieve those goals?
- Management team. Describe the organization of the business and identify the key management team members. Include short biographies of each team member and describe his or her company role.
- Financial plan. The specifics of this section varies, but the financial section of the business plan should generally include a cash flow plan, profit and loss statement, balance sheet, sales forecast, personnel plan, business ratios (such as return on investment and sales), a break-even analysis and a market forecast. Graphs and charts add visual appeal to this section.
- Appendix. Not every business plan needs an appendix. Elements reserved for the appendix include credit history, copies of leases and permits, article citations, letters of reference, product pictures, contracts and contact information for the business’s attorney and accountant.
A well-crafted business plan can make the process of starting your business easier. Spend some time creating a business plan, making sure to include the common components, and you will be on the right road to achieving your goals.