If you like the idea of being your own boss, don’t forget to write a business plan. Many entrepreneurs think a business plan is only important for people who want to secure funding to launch or grow their business. But apparently, it’s crucial for everyone entering the exciting (and unpredictable) world of entrepreneurship. With a business plan on your table, you’re forced to think strategically and critically and can even identify profitable opportunities for your business. The question now is, how do you put one together? In this post, we’ll go over the definition of a business plan, how to create one from scratch, and some business plan templates you can use.
What Is a Business Plan?
A business plan is a document that maps out your business's strategic goals and how you plan to achieve them, in a concise way. Writing a business plan helps you define your brand image and gives you clarity of the niche market you plan to sell in and the potential competition your company will face. You can use your business plan to set mini-goals throughout the year to keep your business growing. A business plan can be long and detailed or short and sweet. The latter version of a business plan is referred to as a lean business plan.
What Is the Purpose of a Business Plan?
A business plan can have various purposes, but the most critical one is to provide information about your company. It lets investors, employees, and others associated with your business know things like where you want to go, what you hope to achieve, and the resources available at your disposal. Entrepreneurs can also create a business plan to identify the potential threats that could impact their company’s operations and then take a proactive approach to overcome those challenges.
Other reasons to have a business plan include:
- Commit to a roadmap for your business
- Outline the steps for launch
- Summarize your marketing plan
- Demonstrate profit potential
- Highlight your growth strategy
Although it may take you a while to develop your business plan, you will reap the rewards of having a roadmap for structuring, running, and growing your business through each phase of its life cycle.
Who Should Make a Business Plan?
As we mentioned earlier, a business plan is crucial to all types of businesses. For example, a startup business plan is important for staff members and investors as it highlights the company’s strategy. If it’s unique, the plan can be a critical factor when choosing whether to work for or finance such a business.
Likewise, an SMB can create a business plan to let its customers know that the company is doing well and what to expect from it in the future. For larger firms, like a corporation, a carefully thought out business plan can convince people to invest in the company’s stocks. This can help the business raise capital that can be used for expansion or debt payments.
How to Write a Business Plan?
Before writing a business plan, it’s important to understand who will be reading it, what you’re trying to convince them to do, and what expectations they might have. If you need a business plan for funding or other official purposes, you will need to include detailed financial forecasts and assumptions. If you need it just for you as a manifesto or mind map, you can draft a lean business plan with only the information you need. It’s important to include all the right details but make sure the document is readable and doesn’t include any waffle.
With that in mind, you can proceed to write the first draft of your business plan. Start with a structured outline and short excerpts of what you’ll include in each section. Since the outline plays an essential role in writing a business plan, we’ve shared one that most businesses use to create the document. You can copy it on your blank document to get you started.
Standard business plan outline:
- Title Page
- Table of Contents
- Executive Summary
- Company Overview
- Products and Services
- Marketing Plan
- Competitive Analysis
- Operations and Management
- Financial Plan
Here’s a breakdown of each section:
The title page is meant to introduce your business and give a clear idea about what the presented document is about. You should include your business name, tagline, and contact information on this page to make investors or readers familiar with your company. It’s also important to include a document title so that people immediately know the intended document’s purpose. Use “Business Plan” as the title so that it is clear what type of document it is.
As for the design, add your company logo (if you have one), but otherwise, keep visuals and style elements to a minimum. A business plan title page should be simple and easy-to-read.
Table of Contents
A business plan covers a lot of things, and not every single section is necessarily interesting for the reader. A table of contents makes it easier for them to find relevant parts or to revisit the sections they found interesting upon the initial reading. Again, keep the design simple and focus more on readability.
This section is where you get into the meat of your business plan. The executive summary’s purpose is to give potential investors a quick overview of your goals and vision. Think of it as your elevator pitch that persuades them to read the entire document.
Here’s what to include in your executive summary:
- Business concept. What is your business idea?
- Product description. What does your business sell?
- Unique selling position. What differentiates you?
- Goals and vision. What do you want to achieve?
- Niche market. Who do you sell to?
- Marketing plan. How do you intend to reach your customers?
- Projected financial earnings. What do you expect to make in profit?
- People. Who’s involved in the company?
Write a maximum of three lines for each section so that your executive summary fits on one page. And do this after you’ve completed the rest of your business plan. It’s a lot easier because you’ll be able to pull the best parts from the sections you’ve already written to put on the summary page.
The company overview section allows you to share the nitty-gritty details of your business. Details like:
- Business structure (sole proprietorship, corporation, etc.)
- Tax ID information
- Ownership information
- Number of employees
And then it covers the higher-level stuff, such as your mission statement, values and philosophy, short- and long-term goals, and your current positioning in the market. Keep your information consistent as these are the details you’ll use each time you create a company profile on business directories, social media, and other places.
Products and Services
Here, you detail what you plan to sell to customers. Create a list of each product or service you intend to sell, the pain points your offering solves for customers, your pricing strategy and expected profit margin, and the production and delivery process. You can also include any value propositions for specific items or product groupings, such as exclusive agreements with suppliers, low production costs, the ability to source units when the item is short in supply based on your industry connections, or other advantages.
What if a business is selling hundreds of products? For such firms, the owner can detail the main categories of items and the number of products they intend to offer within each category. Doing this makes it easier to visualize the inventory as a whole to determine if you need to add more to a specific category or trim down a product line.
Now that you know what you’re selling, it’s time to get people excited about your products. Outline the digital and offline marketing strategies you intend to use to get the word out about your offerings. Today’s businesses need to be on various channels, reaching potential customers via social media, SEO, content, email, advertising, and print.
If you’re unsure about which channels to prioritize, analyze your competitors for some insight. Evaluating your customer’s platform choice will help you refine your own strategy for building a multi-channel marketing funnel. Pay special attention to the tactics your competitors use to convert people they reach with their marketing messages. It’s also a good idea to include your after-sales support and remarketing plans in this section – investors may want to know how you plan to retain the customers you acquire.
There’s always going to be competition in the market, so it’s important to include a competitive analysis in your business plan. The simplest way to do this is to list a few businesses you consider direct competitors and how you plan to differentiate your brand from theirs. For example, suppose you’re selling fishing gear online. In that case, your unique differentiation could be that, unlike other fishing websites, you offer free shipping or donate a percentage of your proceeds to a local charity.
Your business could also differentiate itself from the competitors by targeting a very specific or niche market. Businesses like Bee’s Wrap and TomboyX are great examples of this approach. They’re focused on building traction in a smaller market through products that speak to their audience’s values.
Operations and Management
Operations and Management outline the inner structure of your business. Here, you describe:
- The legal structure of your business venture
- Backgrounds of the key members of your company (including their education and relevant experience)
- Your supply chain and order fulfillment process
- Which assets, equipment, and storage facilities you’ll need
- Your day-to-day operations (what tools are you using to automate specific processes? What’s your hiring process like?)
Consider this part as a great way to evaluate the different processes required to run your business. You’ll be able to identify the aspects that’ll be easier to manage and which ones can be delegated to employees, freelancers, and 3PL companies. Mention any workflows you’ll implement to optimize your processes so that the reader knows that you’ve got a solid growth plan in place.
Now for the money part. In the Financial Plan, share your projected expenses and revenue for the first or next five years of your operations. This can be challenging for new businesses because you don’t have historical trends or data to base your forecasts on. This is where you factor in the other research you’ve done and use that to make financial projections for your business.
If you’re looking for funding, you’ll also need to create a projected profit and loss statement, balance sheet, and cash flow statement. But even if you’re not, it doesn’t hurt to create these statements as they’ll come in handy down the road. As part of the business plan, these statements help to demonstrate that the revenue you’re projecting will easily provide a return on any investment.
For a funding request, it’s important to outline how you’ll spend the money, i.e., where you’ll inject it into your business. Plus, you have to explain how this capital injection will fuel additional growth for your company.
Business Plan Examples [Templates]
If you’re new to business planning and not sure what information to include in your document, then consider downloading a free business plan to help you finish the process. Below are some free business plan templates for you to use.
Smartsheet Free One-Page Business Plan Template
This one-page business plan is designed to be organized, simple, and easy to implement. You can use it to jot down your ideas and thoughts as you evaluate whether your business model is feasible.
HubSpot’s One-Page Business Template
HubSpot offers a free business plan that guides you through the steps of writing the company overview, creating product descriptions, setting marketing objectives, and brainstorming legal and financial logistics.
The benefit of using a template is that you can create a business plan quickly and cheaply. The outline is already there – you just fill in the fields with the information you have. Plus, you can insert or remove fields based on the data you have available.
Completing a business plan is an incredible achievement and marks the beginning of an exciting journey. So if you haven't already, take the time to create one to measure your business model's viability. When writing the plan, keep your audience in mind, use a non-technical language where possible, and ensure the details you include are concise, clear, and realistic. Lastly, treat your business plan as a living document – in other words, keep updating it to reflect the changes you're making to keep your company relevant in a constantly evolving business climate.