How To Start A Business In 11 Steps (2023 Guide)
Updated: Mar 6, 2023, 2:19am
Table of Contents
Before you begin: get in the right mindset, 1. determine your business concept, 2. research your competitors and market, 3. create your business plan, 4. choose your business structure, 5. register your business and get licenses, 6. get your finances in order, 7. fund your business, 8. apply for business insurance, 9. get the right business tools, 10. market your business, 11. scale your business, what are the best states to start a business, bottom line, frequently asked questions (faqs).
Starting a business is one of the most exciting and rewarding experiences you can have. But where do you begin? There are several ways to approach creating a business, with many important considerations. To help take the guesswork out of the process and improve your chances of success, follow our comprehensive guide on how to start a business. We’ll walk you through each step of the process, from defining your business idea to registering, launching and growing your business.
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The public often hears about overnight successes because they make for a great headline. However, it’s rarely that simple—they don’t see the years of dreaming, building and positioning before a big public launch. For this reason, remember to focus on your business journey and don’t measure your success against someone else’s.
Consistency Is Key
New business owners tend to feed off their motivation initially but get frustrated when that motivation wanes. This is why it’s essential to create habits and follow routines that power you through when motivation goes away.
Take the Next Step
Some business owners dive in headfirst without looking and make things up as they go along. Then, there are business owners who stay stuck in analysis paralysis and never start. Perhaps you’re a mixture of the two—and that’s right where you need to be. The best way to accomplish any business or personal goal is to write out every possible step it takes to achieve the goal. Then, order those steps by what needs to happen first. Some steps may take minutes while others take a long time. The point is to always take the next step.
Most business advice tells you to monetize what you love, but it misses two other very important elements: it needs to be profitable and something you’re good at. For example, you may love music, but how viable is your business idea if you’re not a great singer or songwriter? Maybe you love making soap and want to open a soap shop in your small town that already has three close by—it won’t be easy to corner the market when you’re creating the same product as other nearby stores.
If you don’t have a firm idea of what your business will entail, ask yourself the following questions:
- What do you love to do?
- What do you hate to do?
- Can you think of something that would make those things easier?
- What are you good at?
- What do others come to you for advice about?
- If you were given ten minutes to give a five-minute speech on any topic, what would it be?
- What’s something you’ve always wanted to do, but lacked resources for?
These questions can lead you to an idea for your business. If you already have an idea, they might help you expand it. Once you have your idea, measure it against whether you’re good at it and if it’s profitable.
Your business idea also doesn’t have to be the next Scrub Daddy or Squatty Potty. Instead, you can take an existing product and improve upon it. Or, you can sell a digital product so there’s little overhead.
What Kind of Business Should You Start?
Before you choose the type of business to start, there are some key things to consider:
- What type of funding do you have?
- How much time do you have to invest in your business?
- Do you prefer to work from home or at an office or workshop?
- What interests and passions do you have?
- Can you sell information (such as a course), rather than a product?
- What skills or expertise do you have?
- How fast do you need to scale your business?
- What kind of support do you have to start your business?
- Are you partnering with someone else?
- Does the franchise model make more sense to you?
Consider Popular Business Ideas
Not sure what business to start? Consider one of these popular business ideas:
- Start a Franchise
- Start a Blog
- Start an Online Store
- Start a Dropshipping Business
- Start a Cleaning Business
- Start a Bookkeeping Business
- Start a Clothing Business
- Start a Landscaping Business
- Start a Consulting Business
- Start a Photography Business
- Start a Vending Machine Business
Most entrepreneurs spend more time on their products than they do getting to know the competition. If you ever apply for outside funding, the potential lender or partner wants to know: what sets you (or your business idea) apart? If market analysis indicates your product or service is saturated in your area, see if you can think of a different approach. Take housekeeping, for example—rather than general cleaning services, you might specialize in homes with pets or focus on garage cleanups.
The first stage of any competition study is primary research, which entails obtaining data directly from potential customers rather than basing your conclusions on past data. You can use questionnaires, surveys and interviews to learn what consumers want. Surveying friends and family isn’t recommended unless they’re your target market. People who say they’d buy something and people who do are very different. The last thing you want is to take so much stock in what they say, create the product and flop when you try to sell it because all of the people who said they’d buy it don’t because the product isn’t something they’d actually buy.
Utilize existing sources of information, such as census data, to gather information when you do secondary research. The current data may be studied, compiled and analyzed in various ways that are appropriate for your needs but it may not be as detailed as primary research.
Conduct a SWOT Analysis
SWOT stands for strengths, weaknesses, opportunities and threats. Conducting a SWOT analysis allows you to look at the facts about how your product or idea might perform if taken to market, and it can also help you make decisions about the direction of your idea. Your business idea might have some weaknesses that you hadn’t considered or there may be some opportunities to improve on a competitor’s product.
Asking pertinent questions during a SWOT analysis can help you identify and address weaknesses before they tank your new business.
A business plan is a dynamic document that serves as a roadmap for establishing a new business. This document makes it simple for potential investors, financial institutions and company management to understand and absorb. Even if you intend to self-finance, a business plan can help you flesh out your idea and spot potential problems. When writing a well-rounded business plan, include the following sections:
- Executive summary: The executive summary should be the first item in the business plan, but it should be written last. It describes the proposed new business and highlights the goals of the company and the methods to achieve them.
- Company description: The company description covers what problems your product or service solves and why your business or idea is best. For example, maybe your background is in molecular engineering, and you’ve used that background to create a new type of athletic wear—you have the proper credentials to make the best material.
- Market analysis: This section of the business plan analyzes how well a company is positioned against its competitors. The market analysis should include target market, segmentation analysis, market size, growth rate, trends and a competitive environment assessment.
- Organization and structure: Write about the type of business organization you expect, what risk management strategies you propose and who will staff the management team. What are their qualifications? Will your business be a single-member limited liability company (LLC) or a corporation ?
- Mission and goals: This section should contain a brief mission statement and detail what the business wishes to accomplish and the steps to get there. These goals should be SMART (specific, measurable, action-orientated, realistic and time-bound).
- Products or services: This section describes how your business will operate. It includes what products you’ll offer to consumers at the beginning of the business, how they compare to existing competitors, how much your products cost, who will be responsible for creating the products, how you’ll source materials and how much they cost to make.
- Background summary: This portion of the business plan is the most time-consuming to write. Compile and summarize any data, articles and research studies on trends that could positively and negatively affect your business or industry.
- Marketing plan: The marketing plan identifies the characteristics of your product or service, summarizes the SWOT analysis and analyzes competitors. It also discusses how you’ll promote your business, how much money will be spent on marketing and how long the campaign is expected to last.
- Financial plan: The financial plan is perhaps the core of the business plan because, without money, the business will not move forward. Include a proposed budget in your financial plan along with projected financial statements, such as an income statement, a balance sheet and a statement of cash flows. Usually, five years of projected financial statements are acceptable. This section is also where you should include your funding request if you’re looking for outside funding.
Learn more: Download our free simple business plan template .
Come Up With an Exit Strategy
An exit strategy is important for any business that is seeking funding because it outlines how you’ll sell the company or transfer ownership if you decide to retire or move on to other projects. An exit strategy also allows you to get the most value out of your business when it’s time to sell. There are a few different options for exiting a business, and the best option for you depends on your goals and circumstances.
The most common exit strategies are:
- Selling the business to another party
- Passing the business down to family members
- Liquidating the business assets
- Closing the doors and walking away
Develop a Scalable Business Model
As your small business grows, it’s important to have a scalable business model so that you can accommodate additional customers without incurring additional costs. A scalable business model is one that can be replicated easily to serve more customers without a significant increase in expenses.
Some common scalable business models are:
- Subscription-based businesses
- Businesses that sell digital products
- Franchise businesses
- Network marketing businesses
Start Planning for Taxes
One of the most important things to do when starting a small business is to start planning for taxes. Taxes can be complex, and there are several different types of taxes you may be liable for, including income tax, self-employment tax, sales tax and property tax. Depending on the type of business you’re operating, you may also be required to pay other taxes, such as payroll tax or unemployment tax.
When structuring your business, it’s essential to consider how each structure impacts the amount of taxes you owe, daily operations and whether your personal assets are at risk.
An LLC limits your personal liability for business debts. LLCs can be owned by one or more people or companies and must include a registered agent . These owners are referred to as members.
- LLCs offer liability protection for the owners
- They’re one of the easiest business entities to set up
- You can have a single-member LLC
- You may be required to file additional paperwork with your state on a regular basis
- LLCs can’t issue stock
- You’ll need to pay annual filing fees to your state
Limited Liability Partnership (LLP)
An LLP is similar to an LLC but is typically used for licensed business professionals such as an attorney or accountant. These arrangements require a partnership agreement.
- Partners have limited liability for the debts and actions of the LLP
- LLPs are easy to form and don’t require much paperwork
- There’s no limit to the number of partners in an LLP
- Partners are required to actively take part in the business
- LLPs can’t issue stock
- All partners are personally liable for any malpractice claims against the business
If you start a solo business, you might consider a sole proprietorship . The company and the owner, for legal and tax purposes, are considered the same. The business owner assumes liability for the business. So, if the business fails, the owner is personally and financially responsible for all business debts.
- Sole proprietorships are easy to form
- There’s no need to file additional paperwork with your state
- You’re in complete control of the business
- You’re personally liable for all business debts
- It can be difficult to raise money for a sole proprietorship
- The business may have a limited life span
A corporation limits your personal liability for business debts just as an LLC does. A corporation can be taxed as a C-corporation (C-corp) or an S-corporation (S-corp). S-corp status offers pass-through taxation to small corporations that meet certain IRS requirements. Larger companies and startups hoping to attract venture capital are usually taxed as C-corps.
- Corporations offer liability protection for the owners
- The life span of a corporation is not limited
- A corporation can have an unlimited number of shareholders
- Corporations are subject to double taxation
- They’re more expensive and complicated to set up than other business structures
- The shareholders may have limited liability
Before you decide on a business structure, discuss your situation with a small business accountant and possibly an attorney, as each business type has different tax treatments that could affect your bottom line.
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There are several legal issues to address when starting a business after choosing the business structure. The following is a good checklist of items to consider when establishing your business:
Choose Your Business Name
Make it memorable but not too difficult. Choose the same domain name, if available, to establish your internet presence. A business name cannot be the same as another registered company in your state, nor can it infringe on another trademark or service mark that is already registered with the United States Patent and Trademark Office (USPTO).
Business Name vs. DBA
There are business names, and then there are fictitious business names known as “Doing Business As” or DBA. You may need to file a DBA if you’re operating under a name that’s different from the legal name of your business. For example, “Mike’s Bike Shop” is doing business as “Mike’s Bikes.” The legal name of the business is “Mike’s Bike Shop,” and “Mike’s Bikes” is the DBA.
You may need to file a DBA with your state, county or city government offices. The benefits of a DBA include:
- It can help you open a business bank account under your business name
- A DBA can be used as a “trade name” to brand your products or services
- A DBA can be used to get a business license
Register Your Business and Obtain an EIN
You’ll officially create a corporation, LLC or other business entity by filing forms with your state’s business agency―usually the Secretary of State. As part of this process, you’ll need to choose a registered agent to accept legal documents on behalf of your business. You’ll also pay a filing fee. The state will send you a certificate that you can use to apply for licenses, a tax identification number (TIN) and business bank accounts.
Next, apply for an employer identification number (EIN) . All businesses, other than sole proprietorships with no employees, must have a federal employer identification number. Submit your application to the IRS and you’ll typically receive your number in minutes.
Get Appropriate Licenses and Permits
Legal requirements are determined by your industry and jurisdiction. Most businesses need a mixture of local, state and federal licenses to operate. Check with your local government office (and even an attorney) for licensing information tailored to your area.
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Open a Business Bank Account
Keep your business and personal finances separate. Here’s how to choose a business checking account —and why separate business accounts are essential. When you open a business bank account, you’ll need to provide your business name and your business tax identification number (EIN). This business bank account can be used for your business transactions, such as paying suppliers or invoicing customers. Most times, a bank will require a separate business bank account in order to issue a business loan or line of credit.
Hire a Bookkeeper or Get Accounting Software
If you sell a product, you need an inventory function in your accounting software to manage and track inventory. The software should have ledger and journal entries and the ability to generate financial statements.
Some software programs double as bookkeeping tools. These often include features such as check writing and managing receivables and payables. You can also use this software to track your income and expenses, generate invoices, run reports and calculate taxes.
There are many bookkeeping services available that can do all of this for you, and more. These services can be accessed online from any computer or mobile device and often include features such as bank reconciliation and invoicing. Check out the best accounting software for small business, or see if you want to handle the bookkeeping yourself.
Determine Your Break-Even Point
Before you fund your business, you must get an idea of your startup costs. To determine these, make a list of all the physical supplies you need, estimate the cost of any professional services you will require, determine the price of any licenses or permits required to operate and calculate the cost of office space or other real estate. Add in the costs of payroll and benefits, if applicable.
Businesses can take years to turn a profit, so it’s better to overestimate the startup costs and have too much money than too little. Many experts recommend having enough cash on hand to cover six months of operating expenses.
When you know how much you need to get started with your business, you need to know the point at which your business makes money. This figure is your break-even point.
In contrast, the contribution margin = total sales revenue – cost to make product
For example, let’s say you’re starting a small business that sells miniature birdhouses for fairy gardens. You have determined that it will cost you $500 in startup costs. Your variable costs are $0.40 per birdhouse produced, and you sell them for $1.50 each.
Let’s write these out so it’s easy to follow:
This means that you need to sell at least 456 units just to cover your costs. If you can sell more than 456 units in your first month, you will make a profit.
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There are many different ways to fund your business—some require considerable effort, while others are easier to obtain. Two categories of funding exist: internal and external.
Internal funding includes:
- Personal savings
- Credit cards
- Funds from friends and family
If you finance the business with your own funds or with credit cards, you have to pay the debt on the credit cards and you’ve lost a chunk of your wealth if the business fails. By allowing your family members or friends to invest in your business, you are risking hard feelings and strained relationships if the company goes under. Business owners who want to minimize these risks may consider external funding.
External funding includes:
- Small business loans
- Small business grants
- Angel investors
- Venture capital
Small businesses may have to use a combination of several sources of capital. Consider how much money is needed, how long it will take before the company can repay it and how risk-tolerant you are. No matter which source you use, plan for profit. It’s far better to take home six figures than make seven figures and only keep $80,000 of it.
Funding ideas include:
- Invoice factoring: With invoice factoring , you can sell your unpaid invoices to a third party at a discount.
- Business lines of credit: Apply for a business line of credit , which is similar to a personal line of credit. The credit limit and interest rate will be based on your business’s revenue, credit score and financial history.
- Equipment financing: If you need to purchase expensive equipment for your business, you can finance it with a loan or lease.
- Small Business Administration (SBA) microloans: Microloans are up to $50,000 loans that can be used for working capital, inventory or supplies and machinery or equipment.
- Grants: The federal government offers grants for businesses that promote innovation, export growth or are located in historically disadvantaged areas. You can also find grants through local and regional organizations.
- Crowdfunding: With crowdfunding , you can raise money from a large group of people by soliciting donations or selling equity in your company.
Choose the right funding source for your business by considering the amount of money you need, the time frame for repayment and your tolerance for risk.
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You need to have insurance for your business , even if it’s a home-based business or you don’t have any employees. The type of insurance you need depends on your business model and what risks you face. You might need more than one type of policy, and you might need additional coverage as your business grows. In most states, workers’ compensation insurance is required by law if you have employees.
Work With an Agent To Get Insured
An insurance agent can help determine what coverages are appropriate for your business and find policies from insurers that offer the best rates. An independent insurance agent represents several different insurers, so they can shop around for the best rates and coverage options.
Basic Types of Business Insurance Coverage
- Liability insurance protects your business against third-party claims of bodily injury, property damage and personal injury such as defamation or false advertising.
- Property insurance covers the physical assets of your business, including your office space, equipment and inventory.
- Business interruption insurance pays for the loss of income if your business is forced to close temporarily due to a covered event such as a natural disaster.
- Product liability insurance protects against claims that your products caused bodily injury or property damage.
- Employee practices liability insurance covers claims from employees alleging discrimination, sexual harassment or other wrongful termination.
- Workers’ compensation insurance covers medical expenses and income replacement for employees who are injured on the job.
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Business tools can help make your life easier and make your business run more smoothly. The right tools can help you save time, automate tasks and make better decisions.
Consider the following tools in your arsenal:
- Accounting software : Track your business income and expenses, prepare financial statements and file taxes. Examples include QuickBooks and FreshBooks.
- Customer relationship management (CRM) software : This will help you manage your customer relationships, track sales and marketing data and automate tasks like customer service and follow-ups. Examples include Zoho CRM and monday.com.
- Project management software : Plan, execute and track projects. It can also be used to manage employee tasks and allocate resources. Examples include Airtable and ClickUp.
- Credit card processor : This will allow you to accept credit card payments from customers. Examples include Stripe and PayPal.
- Point of sale (POS) : A system that allows you to process customer payments. Some accounting software and CRM software have POS features built-in. Examples include Clover and Lightspeed.
- Virtual private network (VPN) : Provides a secure, private connection between your computer and the internet. This is important for businesses that handle sensitive data. Examples include NordVPN and ExpressVPN.
- Merchant services : When customers make a purchase, the money is deposited into your business account. You can also use merchant services to set up recurring billing or subscription payments. Examples include Square and Stripe.
- Email hosting : This allows you to create a professional email address with your own domain name. Examples include G Suite and Microsoft Office 365.
Many business owners spend so much money creating their products that there isn’t a marketing budget by the time they’ve launched. Alternatively, they’ve spent so much time developing the product that marketing is an afterthought.
Create a Website
Even if you’re a brick-and-mortar business, a web presence is essential. Creating a website doesn’t take long, either—you can have one done in as little as a weekend. You can make a standard informational website or an e-commerce site where you sell products online. If you sell products or services offline, include a page on your site where customers can find your locations and hours. Other pages to add include an “About Us” page, product or service pages, frequently asked questions (FAQs), a blog and contact information.
Optimize Your Site for SEO
After getting a website or e-commerce store, focus on optimizing it for search engines (SEO). This way, when a potential customer searches for specific keywords for your products, the search engine can point them to your site. SEO is a long-term strategy, so don’t expect a ton of traffic from search engines initially—even if you’re using all the right keywords.
Create Relevant Content
Provide quality digital content on your site that makes it easy for customers to find the correct answers to their questions. Content marketing ideas include videos, customer testimonials, blog posts and demos. Consider content marketing one of the most critical tasks on your daily to-do list. This is used in conjunction with posting on social media.
Get Listed in Online Directories
Customers use online directories like Yelp, Google My Business and Facebook to find local businesses. Some city halls and chambers of commerce have business directories too. Include your business in as many relevant directories as possible. You can also create listings for your business on specific directories that focus on your industry.
Develop a Social Media Strategy
Your potential customers are using social media every day—you need to be there too. Post content that’s interesting and relevant to your audience. Use social media to drive traffic back to your website where customers can learn more about what you do and buy your products or services.
You don’t necessarily need to be on every social media platform available. However, you should have a presence on Facebook and Instagram because they offer e-commerce features that allow you to sell directly from your social media accounts. Both of these platforms have free ad training to help you market your business.
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To scale your business, you need to grow your customer base and revenue. This can be done by expanding your marketing efforts, improving your product or service, collaborating with other creators or adding new products or services that complement what you already offer.
Think about ways you can automate or outsource certain tasks so you can focus on scaling the business. For example, if social media marketing is taking up too much of your time, consider using a platform such as Hootsuite to help you manage your accounts more efficiently. You can also consider outsourcing the time-consumer completely.
You can also use technology to automate certain business processes, including accounting, email marketing and lead generation. Doing this will give you more time to focus on other aspects of your business.
When scaling your business, it’s important to keep an eye on your finances and make sure you’re still profitable. If you’re not making enough money to cover your costs, you need to either reduce your expenses or find ways to increase your revenue.
Build a Team
As your business grows, you’ll need to delegate tasks and put together a team of people who can help you run the day-to-day operations. This might include hiring additional staff, contractors or freelancers.
Resources for building a team include:
- Hiring platforms: To find the right candidates, hiring platforms, such as Indeed and Glassdoor, can help you post job descriptions, screen résumés and conduct video interviews.
- Job boards: Job boards such as Craigslist and Indeed allow you to post open positions for free.
- Social media: You can also use social media platforms such as LinkedIn and Facebook to find potential employees.
- Freelance platforms: Using Upwork, Freelancer and Fiverr can help you find talented freelancers for one-time or short-term projects. You can also outsource certain tasks, such as customer service, social media marketing or bookkeeping.
You might also consider partnering with other businesses in your industry. For example, if you’re a wedding planner, you could partner with a florist, photographer, catering company or venue. This way, you can offer your customers a one-stop shop for all their wedding needs. Another example is an e-commerce store that partners with a fulfillment center. This type of partnership can help you save money on shipping and storage costs, and it can also help you get your products to your customers faster.
To find potential partnerships, search for businesses in your industry that complement what you do. For example, if you’re a web designer, you could partner with a digital marketing agency.
You can also search for businesses that serve the same target market as you but offer different products or services. For example, if you sell women’s clothing, you could partner with a jewelry store or a hair salon.
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To rank the best states to start a business in 2023, Forbes Advisor analyzed 18 key metrics across five categories to determine which states are the best and worst to start a business in. Our ranking takes into consideration factors that impact businesses and their ability to succeed, such as business costs, business climate, economy, workforce and financial accessibility in each state. Check out the full report .
Starting a small business takes time, effort and perseverance. But if you’re willing to put in the work, it can be a great way to achieve your dreams and goals. Be sure to do your research, create a solid business plan and pivot along the way. Once you’re operational, don’t forget to stay focused and organized so you can continue to grow your business.
How do I start a small business with no money?
There are several funding sources for brand new businesses and most require a business plan to secure it. These include the SBA , private grants, angel investors, crowdfunding and venture capital.
What is the best business structure?
The best business structure for your business will depend entirely on what kind of company you form, your industry and what you want to accomplish. But any successful business structure will be one that will help your company set realistic goals and follow through on set tasks.
Do I need a business credit card?
You don’t need one, but a business credit card can be helpful for new small businesses. It allows you to start building business credit, which can help you down the road when you need to take out a loan or line of credit. Additionally, business credit cards often come with rewards and perks that can save you money on business expenses.
Do I need a special license or permit to start a small business?
The answer to this question will depend on the type of business you want to start and where you’re located. Some businesses, such as restaurants, will require a special permit or license to operate. Others, such as home daycare providers, may need to register with the state.
How much does it cost to create a business?
The cost of starting a business will vary depending on the size and type of company you want to create. For example, a home-based business will be less expensive to start than a brick-and-mortar store. Additionally, the cost of starting a business will increase if you need to rent or buy commercial space, hire employees or purchase inventory. You could potentially get started for free by dropshipping or selling digital goods.
How do I get a loan for a new business?
The best way to get a loan for a new business is to approach banks or other financial institutions and provide them with a business plan and your financial history. You can also look into government-backed loans, such as those offered by the SBA. Startups may also be able to get loans from alternative lenders, including online platforms such as Kiva.
Do I need a business degree to start a business?
No, you don’t need a business degree to start a business. However, acquiring a degree in business or a related field can provide you with the understanding and ability to run an effective company. Additionally, you may want to consider taking some business courses if you don’t have a degree in order to learn more about starting and running a business. You can find these online and at your local Small Business Administration office.
What are some easy businesses to start?
One of the easiest businesses to start also has the lowest overhead: selling digital goods. This can include items such as e-books, online courses, audio files or software. If you have expertise in a particular area or niche, this is a great option for you. Dropshipping is also a great option because you don’t have to keep inventory. Or, you could buy wholesale products or create your own. Once you create your product, you can sell it through your own website or third-party platforms such as Amazon or Etsy.
What is the most profitable type of business?
There is no one answer to this question because the most profitable type of business will vary depending on a number of factors, such as your industry, location, target market and business model. However, some businesses tend to be more profitable than others, such as luxury goods, high-end services, business-to-business companies and subscription-based businesses. If you’re not sure what type of business to start, consider your strengths and interests, as well as the needs of your target market, to help you choose a profitable business idea.
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Kathy Haan, MBA is a former financial advisor-turned-writer and business coach. For over a decade, she’s helped small business owners make money online. When she’s not trying out the latest tech or travel blogging with her family, you can find her curling up with a good novel.
Step-by-Step Guide to Writing a Simple Business Plan
Smartsheet Contributor Joe Weller
October 11, 2021
A business plan is the cornerstone of any successful company, regardless of size or industry. This step-by-step guide provides information on writing a business plan for organizations at any stage, complete with free templates and expert advice.
Included on this page, you’ll find a step-by-step guide to writing a business plan and a chart to identify which type of business plan you should write . Plus, find information on how a business plan can help grow a business and expert tips on writing one .
What Is a Business Plan?
A business plan is a document that communicates a company’s goals and ambitions, along with the timeline, finances, and methods needed to achieve them. Additionally, it may include a mission statement and details about the specific products or services offered.
A business plan can highlight varying time periods, depending on the stage of your company and its goals. That said, a typical business plan will include the following benchmarks:
- Product goals and deadlines for each month
- Monthly financials for the first two years
- Profit and loss statements for the first three to five years
- Balance sheet projections for the first three to five years
Startups, entrepreneurs, and small businesses all create business plans to use as a guide as their new company progresses. Larger organizations may also create (and update) a business plan to keep high-level goals, financials, and timelines in check.
While you certainly need to have a formalized outline of your business’s goals and finances, creating a business plan can also help you determine a company’s viability, its profitability (including when it will first turn a profit), and how much money you will need from investors. In turn, a business plan has functional value as well: Not only does outlining goals help keep you accountable on a timeline, it can also attract investors in and of itself and, therefore, act as an effective strategy for growth.
For more information, visit our comprehensive guide to writing a strategic plan or download free strategic plan templates . This page focuses on for-profit business plans, but you can read our article with nonprofit business plan templates .
Business Plan Steps
The specific information in your business plan will vary, depending on the needs and goals of your venture, but a typical plan includes the following ordered elements:
- Executive summary
- Description of business
- Market analysis
- Competitive analysis
- Description of organizational management
- Description of product or services
- Marketing plan
- Sales strategy
- Funding details (or request for funding)
- Financial projections
If your plan is particularly long or complicated, consider adding a table of contents or an appendix for reference. For an in-depth description of each step listed above, read “ How to Write a Business Plan Step by Step ” below.
Broadly speaking, your audience includes anyone with a vested interest in your organization. They can include potential and existing investors, as well as customers, internal team members, suppliers, and vendors.
Do I Need a Simple or Detailed Plan?
Your business’s stage and intended audience dictates the level of detail your plan needs. Corporations require a thorough business plan — up to 100 pages. Small businesses or startups should have a concise plan focusing on financials and strategy.
How to Choose the Right Plan for Your Business
In order to identify which type of business plan you need to create, ask: “What do we want the plan to do?” Identify function first, and form will follow.
Use the chart below as a guide for what type of business plan to create:
Is the Order of Your Business Plan Important?
There is no set order for a business plan, with the exception of the executive summary, which should always come first. Beyond that, simply ensure that you organize the plan in a way that makes sense and flows naturally.
The Difference Between Traditional and Lean Business Plans
A traditional business plan follows the standard structure — because these plans encourage detail, they tend to require more work upfront and can run dozens of pages. A Lean business plan is less common and focuses on summarizing critical points for each section. These plans take much less work and typically run one page in length.
In general, you should use a traditional model for a legacy company, a large company, or any business that does not adhere to Lean (or another Agile method ). Use Lean if you expect the company to pivot quickly or if you already employ a Lean strategy with other business operations. Additionally, a Lean business plan can suffice if the document is for internal use only. Stick to a traditional version for investors, as they may be more sensitive to sudden changes or a high degree of built-in flexibility in the plan.
How to Write a Business Plan Step by Step
Writing a strong business plan requires research and attention to detail for each section. Below, you’ll find a 10-step guide to researching and defining each element in the plan.
Step 1: Executive Summary
The executive summary will always be the first section of your business plan. The goal is to answer the following questions:
- What is the vision and mission of the company?
- What are the company’s short- and long-term goals?
See our roundup of executive summary examples and templates for samples. Read our executive summary guide to learn more about writing one.
Step 2: Description of Business
The goal of this section is to define the realm, scope, and intent of your venture. To do so, answer the following questions as clearly and concisely as possible:
- What business are we in?
- What does our business do?
Step 3: Market Analysis
In this section, provide evidence that you have surveyed and understand the current marketplace, and that your product or service satisfies a niche in the market. To do so, answer these questions:
- Who is our customer?
- What does that customer value?
Step 4: Competitive Analysis
In many cases, a business plan proposes not a brand-new (or even market-disrupting) venture, but a more competitive version — whether via features, pricing, integrations, etc. — than what is currently available. In this section, answer the following questions to show that your product or service stands to outpace competitors:
- Who is the competition?
- What do they do best?
- What is our unique value proposition?
Step 5: Description of Organizational Management
In this section, write an overview of the team members and other key personnel who are integral to success. List roles and responsibilities, and if possible, note the hierarchy or team structure.
Step 6: Description of Products or Services
In this section, clearly define your product or service, as well as all the effort and resources that go into producing it. The strength of your product largely defines the success of your business, so it’s imperative that you take time to test and refine the product before launching into marketing, sales, or funding details.
Questions to answer in this section are as follows:
- What is the product or service?
- How do we produce it, and what resources are necessary for production?
Step 7: Marketing Plan
In this section, define the marketing strategy for your product or service. This doesn’t need to be as fleshed out as a full marketing plan , but it should answer basic questions, such as the following:
- Who is the target market (if different from existing customer base)?
- What channels will you use to reach your target market?
- What resources does your marketing strategy require, and do you have access to them?
- If possible, do you have a rough estimate of timeline and budget?
- How will you measure success?
Step 8: Sales Plan
Write an overview of the sales strategy, including the priorities of each cycle, steps to achieve these goals, and metrics for success. For the purposes of a business plan, this section does not need to be a comprehensive, in-depth sales plan , but can simply outline the high-level objectives and strategies of your sales efforts.
Start by answering the following questions:
- What is the sales strategy?
- What are the tools and tactics you will use to achieve your goals?
- What are the potential obstacles, and how will you overcome them?
- What is the timeline for sales and turning a profit?
- What are the metrics of success?
Step 9: Funding Details (or Request for Funding)
This section is one of the most critical parts of your business plan, particularly if you are sharing it with investors. You do not need to provide a full financial plan, but you should be able to answer the following questions:
- How much capital do you currently have? How much capital do you need?
- How will you grow the team (onboarding, team structure, training and development)?
- What are your physical needs and constraints (space, equipment, etc.)?
Step 10: Financial Projections
Apart from the fundraising analysis, investors like to see thought-out financial projections for the future. As discussed earlier, depending on the scope and stage of your business, this could be anywhere from one to five years.
While these projections won’t be exact — and will need to be somewhat flexible — you should be able to gauge the following:
- How and when will the company first generate a profit?
- How will the company maintain profit thereafter?
Business Plan Template
Download Business Plan Template
Microsoft Excel | Smartsheet
This basic business plan template has space for all the traditional elements: an executive summary, product or service details, target audience, marketing and sales strategies, etc. In the finances sections, input your baseline numbers, and the template will automatically calculate projections for sales forecasting, financial statements, and more.
For templates tailored to more specific needs, visit this business plan template roundup or download a fill-in-the-blank business plan template to make things easy.
If you are looking for a particular template by file type, visit our pages dedicated exclusively to Microsoft Excel , Microsoft Word , and Adobe PDF business plan templates.
How to Write a Simple Business Plan
A simple business plan is a streamlined, lightweight version of the large, traditional model. As opposed to a one-page business plan , which communicates high-level information for quick overviews (such as a stakeholder presentation), a simple business plan can exceed one page.
Below are the steps for creating a generic simple business plan, which are reflected in the template below .
- Write the Executive Summary This section is the same as in the traditional business plan — simply offer an overview of what’s in the business plan, the prospect or core offering, and the short- and long-term goals of the company.
- Add a Company Overview Document the larger company mission and vision.
- Provide the Problem and Solution In straightforward terms, define the problem you are attempting to solve with your product or service and how your company will attempt to do it. Think of this section as the gap in the market you are attempting to close.
- Identify the Target Market Who is your company (and its products or services) attempting to reach? If possible, briefly define your buyer personas .
- Write About the Competition In this section, demonstrate your knowledge of the market by listing the current competitors and outlining your competitive advantage.
- Describe Your Product or Service Offerings Get down to brass tacks and define your product or service. What exactly are you selling?
- Outline Your Marketing Tactics Without getting into too much detail, describe your planned marketing initiatives.
- Add a Timeline and the Metrics You Will Use to Measure Success Offer a rough timeline, including milestones and key performance indicators (KPIs) that you will use to measure your progress.
- Include Your Financial Forecasts Write an overview of your financial plan that demonstrates you have done your research and adequate modeling. You can also list key assumptions that go into this forecasting.
- Identify Your Financing Needs This section is where you will make your funding request. Based on everything in the business plan, list your proposed sources of funding, as well as how you will use it.
Simple Business Plan Template
Download Simple Business Plan Template
Microsoft Excel | Microsoft Word | Adobe PDF | Smartsheet
Use this simple business plan template to outline each aspect of your organization, including information about financing and opportunities to seek out further funding. This template is completely customizable to fit the needs of any business, whether it’s a startup or large company.
Read our article offering free simple business plan templates or free 30-60-90-day business plan templates to find more tailored options. You can also explore our collection of one page business templates .
How to Write a Business Plan for a Lean Startup
A Lean startup business plan is a more Agile approach to a traditional version. The plan focuses more on activities, processes, and relationships (and maintains flexibility in all aspects), rather than on concrete deliverables and timelines.
While there is some overlap between a traditional and a Lean business plan, you can write a Lean plan by following the steps below:
- Add Your Value Proposition Take a streamlined approach to describing your product or service. What is the unique value your startup aims to deliver to customers? Make sure the team is aligned on the core offering and that you can state it in clear, simple language.
- List Your Key Partners List any other businesses you will work with to realize your vision, including external vendors, suppliers, and partners. This section demonstrates that you have thoughtfully considered the resources you can provide internally, identified areas for external assistance, and conducted research to find alternatives.
- Note the Key Activities Describe the key activities of your business, including sourcing, production, marketing, distribution channels, and customer relationships.
- Include Your Key Resources List the critical resources — including personnel, equipment, space, and intellectual property — that will enable you to deliver your unique value.
- Identify Your Customer Relationships and Channels In this section, document how you will reach and build relationships with customers. Provide a high-level map of the customer experience from start to finish, including the spaces in which you will interact with the customer (online, retail, etc.).
- Detail Your Marketing Channels Describe the marketing methods and communication platforms you will use to identify and nurture your relationships with customers. These could be email, advertising, social media, etc.
- Explain the Cost Structure This section is especially necessary in the early stages of a business. Will you prioritize maximizing value or keeping costs low? List the foundational startup costs and how you will move toward profit over time.
- Share Your Revenue Streams Over time, how will the company make money? Include both the direct product or service purchase, as well as secondary sources of revenue, such as subscriptions, selling advertising space, fundraising, etc.
Lean Business Plan Template for Startups
Download Lean Business Plan Template for Startups
Microsoft Word | Adobe PDF
Startup leaders can use this Lean business plan template to relay the most critical information from a traditional plan. You’ll find all the sections listed above, including spaces for industry and product overviews, cost structure and sources of revenue, and key metrics, and a timeline. The template is completely customizable, so you can edit it to suit the objectives of your Lean startups.
See our wide variety of startup business plan templates for more options.
How to Write a Business Plan for a Loan
A business plan for a loan, often called a loan proposal , includes many of the same aspects of a traditional business plan, as well as additional financial documents, such as a credit history, a loan request, and a loan repayment plan.
In addition, you may be asked to include personal and business financial statements, a form of collateral, and equity investment information.
Download free financial templates to support your business plan.
Tips for Writing a Business Plan
Outside of including all the key details in your business plan, you have several options to elevate the document for the highest chance of winning funding and other resources. Follow these tips from experts:.
- Keep It Simple: Avner Brodsky , the Co-Founder and CEO of Lezgo Limited, an online marketing company, uses the acronym KISS (keep it short and simple) as a variation on this idea. “The business plan is not a college thesis,” he says. “Just focus on providing the essential information.”
- Do Adequate Research: Michael Dean, the Co-Founder of Pool Research , encourages business leaders to “invest time in research, both internal and external (market, finance, legal etc.). Avoid being overly ambitious or presumptive. Instead, keep everything objective, balanced, and accurate.” Your plan needs to stand on its own, and you must have the data to back up any claims or forecasting you make. As Brodsky explains, “Your business needs to be grounded on the realities of the market in your chosen location. Get the most recent data from authoritative sources so that the figures are vetted by experts and are reliable.”
- Set Clear Goals: Make sure your plan includes clear, time-based goals. “Short-term goals are key to momentum growth and are especially important to identify for new businesses,” advises Dean.
- Know (and Address) Your Weaknesses: “This awareness sets you up to overcome your weak points much quicker than waiting for them to arise,” shares Dean. Brodsky recommends performing a full SWOT analysis to identify your weaknesses, too. “Your business will fare better with self-knowledge, which will help you better define the mission of your business, as well as the strategies you will choose to achieve your objectives,” he adds.
- Seek Peer or Mentor Review: “Ask for feedback on your drafts and for areas to improve,” advises Brodsky. “When your mind is filled with dreams for your business, sometimes it is an outsider who can tell you what you’re missing and will save your business from being a product of whimsy.”
Outside of these more practical tips, the language you use is also important and may make or break your business plan.
Shaun Heng, VP of Operations at Coin Market Cap , gives the following advice on the writing, “Your business plan is your sales pitch to an investor. And as with any sales pitch, you need to strike the right tone and hit a few emotional chords. This is a little tricky in a business plan, because you also need to be formal and matter-of-fact. But you can still impress by weaving in descriptive language and saying things in a more elegant way.
“A great way to do this is by expanding your vocabulary, avoiding word repetition, and using business language. Instead of saying that something ‘will bring in as many customers as possible,’ try saying ‘will garner the largest possible market segment.’ Elevate your writing with precise descriptive words and you'll impress even the busiest investor.”
Additionally, Dean recommends that you “stay consistent and concise by keeping your tone and style steady throughout, and your language clear and precise. Include only what is 100 percent necessary.”
Resources for Writing a Business Plan
While a template provides a great outline of what to include in a business plan, a live document or more robust program can provide additional functionality, visibility, and real-time updates. The U.S. Small Business Association also curates resources for writing a business plan.
Additionally, you can use business plan software to house data, attach documentation, and share information with stakeholders. Popular options include LivePlan, Enloop, BizPlanner, PlanGuru, and iPlanner.
How a Business Plan Helps to Grow Your Business
A business plan — both the exercise of creating one and the document — can grow your business by helping you to refine your product, target audience, sales plan, identify opportunities, secure funding, and build new partnerships.
Outside of these immediate returns, writing a business plan is a useful exercise in that it forces you to research the market, which prompts you to forge your unique value proposition and identify ways to beat the competition. Doing so will also help you build (and keep you accountable to) attainable financial and product milestones. And down the line, it will serve as a welcome guide as hurdles inevitably arise.
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The Essential Guide to Writing a Business Plan
Here's the no-nonsense guide on how to write a business plan that will help you map success for your startup.
By Carolyn Sun • Nov 7, 2015
Opinions expressed by Entrepreneur contributors are their own.
President Dwight D. Eisenhower once said, "In preparing for battle I have always found that plans are useless, but planning is indispensable." If you're starting a business, you should have a business plan regardless of whether you're bootstrapping it or looking for outside funding.
The best sorts of business plans tell a clear story of what the company plans to do and how it will do it. Given the high failure rate of startups in their first year, a business plan is also an ideal opportunity to safely test out the feasibility of a business and spot flaws, set aside unrealistic projections and identify and analyze the competition.
A business plan doesn't need to be complicated, but for it to serve its purpose and set you up for success, it must be clear to whomever is reading your plan that you have a realistic handle on the why and how your business will be a success.
To get you moving in the right direction, here's a guide on how to write a business plan.
There's a lot of advice in the infosphere about how to write a business plan, but there's no single correct way. Your approach depends on your industry, who is reading your plan and what the plan is intended for. Are you trying to get funding? Sara Sutton Fell, founder of FlexJobs , a job site for flexible telecommuting jobs, says her business plan was an initiator for more in-depth conversation with potential investors. "A plan does help to see if investors and entrepreneurs are on the same page with general expectations for the business," she says.
A business plan serves many purposes, but there is universal consensus on the following when it comes to your business plan:
Have several versions tailored for specific audiences: "One of the mistakes that inexperienced business owners make is not understanding who they're writing the plan for," says David Ciccarelli, a small business owner who got consultation from his local Small Business Association (SBA) when he was starting his company Voices.com , which connects employers with voiceover talent.
Your plan is a living document: Tim Berry, the founder of a business planning software company Palo Alto Software , took his company from zero to $5 million in sales in its first three years. To do so requires frequent review and close tracking, says Berry, who met with his management team every month to review the plan versus what actually happened -- and then to revise. "There is no virtue to sticking to a plan if it's not useful and responsive to what actually happens," he cautions.
Be realistic about financial estimates and projections: "When you present a plan to bankers and financiers, or even to your employees, people will get way more excited about what's real rather than some huge thing that's never going to happen," says Ciccarelli. So present an achievable sales forecasts based on bottom-upwards information (i.e. how many units per month get sold in how many stores) and stop over projecting profits.
Writing your business plan is about the process and having a blueprint: Your business plan "reflects your ideas, intuitions, instincts and insights about your business and its future," according to Write Your Business Plan (Entrepreneur, 2015). The plan serves as a safe way to test these out before you commit to a course of action. And once you get your business going, the plan also serves as a reference point. "I still print the document," says Ciccarelli. "You're capturing it in time. If you're changing it all the time, you kind of don't remember where you were last year."
Back up any claims: Follow up your projections and assertions with statistics, facts or quotes from a knowledgeable source to lend your plan credibility.
Presentation counts: Reading any long, text-heavy document is hard on the eyes, so format with this in mind. Consider formatting your text pages into two-columns and break up long passages with charts or graphs. Arial, Verdana or Times New Roman are standard industry fonts.
Writing your business plan isn't busy work or a luxury; it's a vital part of the process of starting a business and arms you with information you need to know. So, let's get into what information goes into your business plan.
Related: Bu siness Plans: A Step-by-Step Guide
What goes into a business plan?
A typical business plan is 15 to 25 pages. Its length depends on a variety of factors, such as whether your business is introducing a new product or belongs to a new industry (which requires explanation to the reader), or if you're pitching to bankers, who generally expect to see a traditional written business plan and financials.
"Most equity investors prefer either an executive summary or pitch deck for first contact, but will often request a more detailed plan later in the due diligence process. Potential customers don't need all the details of your internal operation. Your management team needs access to everything," says Akira Hirai, managing director of business plan consulting service Cayenne Consulting .
Most business plans include these seven sections:
1. Executive summary : The executive summary follows the title page and explains the fundamentals of your business. It should provide a short and clear synopsis of your business plan that describes your business concept, financial features and requirements (i.e. cash flow and sales projections plus capital needed), your company's current business position (i.e. its legal form of operation, when the company was formed, principals and key personnel) and any major achievements in the company that are relevant to its success, including patents, prototypes or results from test marketing.
2. Business description : This section typically begins with a brief description of your industry and its outlook. Get into the various markets within the industry, including any new products that will benefit or hurt your business. For those seeking funding, reinforce your data with reliable sources and footnote when possible. Also provide a description of your business operation's structure (i.e. wholesale, retail or service-oriented), who you will sell to, how you will distribute your products/services, the products/services itself (what gives you the competitive edge), your business's legal structure, your principals and what they bring to the organization.
Here are some worksheets from Write Your Business Plan that will help determine your unique selling proposition and analyze your industry.
Click to Enlarge+
3. Market strategies: Here is where you define your target market and how you plan to reach them. Market analysis requires research and familiarity with the market so that the target market can be defined and the company can be positioned (i.e. are you a premium product or a price-competitive product?) in order to garner its market share. Analyze your market in terms of size, structure, growth prospects, trends and sales/growth potential. This section also talks about distribution plans and promotion strategy and tactics that will allow you to fulfill your plans.
Here is a worksheet from Write Your Business Plan that will guide you toward identifying your target market.
4. Competitive analysis: The purpose of the competitive analysis is to determine the strengths and weaknesses of the competitors within your market, strategies that will provide you with a distinct advantage, the barriers that can be developed in order to prevent competition from entering your market, and any weaknesses that can be exploited within the product development cycle. Show why your business will be a success over others.
5. Design and development plan: You will only need this section if you have a product in development, such as an app. The purpose of this section is to provide investors with a description of the product's design, chart its development within the context of production and marketing and show a development budget that will enable the company to reach its goals.
6. Operations and management plan: This section describes how the business functions on a daily basis, its location, equipment, people, processes and surrounding environment. If you have a product that needs to be manufactured, explain the how and where; also, describe your work facility, the personnel, the legal environment (such as licensing, permits, special regulations, etc.), key suppliers and inventory. This section will also highlight the logistics of the organization such as the various responsibilities of the management team and the tasks assigned to each division within the company.
7. Financial factors: Financial data is always at the back of a business plan -- yet it's extremely important. The financial data can include your personal financial statement, startup expenses and capital, your projected cash flow statement and 12-month profit-and-loss statement. PaloAlto's Berry stresses that if you're going after investors, you'll need to show a cash flow statement and a break-even analysis -- or the breakdown to see where your business breaks even.
The best way to prepare for running a business is to have all the components of the plan ready. So if you are are showing a prospective lender your business plan on 10 PowerPoint slides and get asked about something that isn't in the presentation, you can speak knowledgeably and follow up with a more fleshed out plan -- and quickly.
Some business owners hire business plan writing services. Cayenne Consulting's Hirai says that his clients generally fall into one of two categories: those intimidated by the process and those who could write the plan themselves but would prefer to spend their time on other priorities.
If you find yourself intimidated or stuck, you can always write the parts of plan yourself that you understand and hire a consultant or researcher to help with parts that you find confusing.
Or if you're a startup watching every dollar, then tap the free services of the federal Small Business Association (SBA). Every state has a district office . Through the SBA, you can get business plan assistance through its various resource partners, which includes Women's Business Centers , Small Business Development Centers and Service Corps of Retired Executives .
Allow this business plan template for Business Plan for a Startup Business to guide you:
Different types of business plans
Generally, business plans can be divided into four categories :
Working plan: This plan is what you will use to operate your business and is not meant to be admired. This version of your plan is an internal document and will be long on detail, short on presentation. Here, you can omit descriptions that you need not explain to yourself or your team.
Mini plan: The reader may request a mini plan, or a condensed version of your business plan (1-10 pages), which includes most of the same components as in a longer traditional plan -- minus the details and explanation. This includes the business concept, financing needs, marketing plan, financial statements (especially cash flow), income project and balance sheet. This shorter plan is not meant to be a substitute for a full-length plan, but serves as an option to present to potential partners or investors.
Presentation plan: Whether you're using a pitch deck or a written business plan, the information in your presentation plan will be, more or less, the same as in your working plan but worded differently and styled for the eyes of an outsider. The reader of your presentation plan will be someone who is unfamiliar with your business, such as investor or venture capitalist, so lose any jargon or shorthand from your working plan, which only makes sense to you. Also, keep in mind that investors will want to see due diligence on your competition threats and risks as well as financial projections. In addition, looks count, so use the color printer, a nice cover and bindings and the fancy paper stock. Or else, if you're presenting your business plan as a PowerPoint presentation, you can use this business plan presentation template .
What-if plan: This is a contingency plan -- in case your worst case scenario happens, such as market share loss, heavy price competition or defection of a key member of your team. You want to think about what to do in the face of an of these, and if you're trying to get outside funds, having a contingency plan shows that you've considered what to do if things don't go according to plan. You don't necessarily need this, but if you are getting outside funding, then it can strengthen your credibility showing that you have thought about these what-if possibilities. Even if you're not going to get outside funding, shouldn't you be thinking of the what ifs?
If four plans seem like a mountain of work, don't panic. Select two to start off -- a working plan and a mini plan, which will be an abbreviated version of your working plan.
Take several months to write your business plan. Consider it a journey, not a sprint.
Related: The Ultimate Guide to Writing a Business Plan
Carolyn Sun is a freelance writer for Entrepreneur.com. Find out more on Twitter and Facebook .
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Business Owner Planning
Protect and enjoy everything you’ve achieved – for yourself, your family and your business., we can help you plan for the future we can help you plan for the future.
As a business owner, you have unique challenges and opportunities when it comes to your wealth. From managing your tax burden to planning your retirement and creating a legacy, it’s important to have the right strategies in place. At RBC, we can help, by providing advice, solutions and expertise to help you protect and enjoy all that you’ve achieved.
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Specialists across RBC will provide the ideal solutions to meet your personal and business banking, wealth, estate planning and other needs.
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The Solutions You Need—from Banking to Wealth and Estate Planning The Solutions You Need—from Banking to Wealth and Estate Planning
Your dedicated RBC account manager can introduce you to experts in the following areas to help address your complete financial picture.
Access the business credit, cash management and other solutions you need to grow, manage or transition your company. We can help you choose from a wide range of:
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Many business owners have complex personal banking and credit needs. Our Private Banking team can manage these details for you, getting to know your unique needs and goals to offer you:
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Achieve your personal, family and business goals through a full range of customized investment solutions. Depending on your needs and preferences, an accredited RBC investment professional can make day-to-day investment decisions on your behalf—or work alongside you to help guide your decisions.
You make decisions every day that affect the success of your business and the people who depend on it. We can help, by consulting with you on some of the biggest decisions you face, including:
- Recommending products and solutions to take you to the next stage, whether you want to grow, sell or plan your next adventure
- Contingency planning—in case you’re ever unable to run your business
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You’ve worked hard to build your business and provide a good life for your family. RBC Wealth Management can help you grow, manage and protect your wealth through:
- Tax minimization strategies
- Custom financial planning
- Multi-generational wealth transfer solutions
- And much more
Align your plans with your wishes and the legacy you envision—personally and professionally. Depending on your needs, RBC Wealth Management can:
- Review your existing Will and estate plan to ensure they meet your wishes and objectives
Create a (opens in a new window) business succession plan that positions you, your family and your business for the best possible outcome
- Recommend options for charitable giving
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Three Will and Estate Planning Facts That Will Surprise You
Total Retirement Planning: How to Prepare for More Than the Money
Tips for Building a Career Path Outside of the Family Business
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Microsoft 365 Life Hacks > Writing > Writing and Formatting a Successful Business Plan
Writing and Formatting a Successful Business Plan
Whether you’re an experienced business person or a first-time entrepreneur, a business plan presents an important opportunity to showcase your unique business ideas and make a plan for how it will it function and operate.
Because of its importance, it can sometimes appear to be an overwhelming task. However, with some guidance on business plan formatting and a breakdown of the plan’s most essential components, you can make the task more manageable and more easily get started on your own plan—bringing the possibility of your grand opening ever closer.
What Is a Business Plan?
A business plan usually serves either or both of two purposes: Sometimes it’s used to court potential investors in a business. Other times, it sets out guidelines and a strategy for initial members of a business’s team to follow as they get things up and running. In either case, this formal document maps out the purpose, goals, finances, and future plans of a new or existing business.
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Formatting Your Business Plan
Before you get started on writing your business plan, it’s useful to understand the formatting of a typical business plan. Not only will this help you make sure you ultimately deliver the information that potential investors or teammates are expecting, but it will also help you see where you might need to do more research or spend more time.
Typically, all business plans contain each of the following parts:
Company description, business goals, market and opportunity analysis, competitive analysis, execution plan, marketing plan, financial analysis and projections.
Below, we sum up what these sections entail to help you craft each of them according to your own business’s needs.
Business plans usually open with what’s called an executive summary. Typically taking up no more than about half of a page, this summary should include the most essential information about your business and highlights from the plan that follows, including:
- Your organization’s mission statement
- A description of the products and services your business offers
- The purpose of your business plan
- Any major achievements your business has made so far
- An overview of your business’s financial health
A company description should include both basic information about your organization—its registered name, physical location, and a short history of the company—as well as more detailed info about how your business intends to succeed. In other words, once you’ve touched on the very basics, this is your chance to hook readers of your business plan. To do so, it can be helpful to set the stage for your readers: consider the answers to questions like, “Why did you start this business?”, “What unique problems does your business solve?”, and “What makes your company different from others like it?”
Sometimes referred to as an “objective statement,” this section of your business plan should clearly outline your company’s goals—over both the short and long term. If you’re making an appeal to investors, this is also your chance to include some persuasive writing and describe to them how their investments are critical to helping you meet these goals.
This section requires keen research skills: Bring in all of your knowledge of the market your business is working in to show investors and potential partners where the opportunity lies. Show that you have an understanding of the market’s past, present, and future—and understand the unique risks that businesses in this space face. Additionally, you will want to show what typical types of customers in this market are like with information on key demographics and customer behaviors that your business will market itself to.
Moving past the broad view of the overall market, your business plan should include an analysis of the business models or examples of your closest competitors in the space. Showing how these other organizations operate, how they’ve fared over their histories, and how they market themselves to customers can help you make the case for how your business will do these things both differently and successfully.
The execution plan section should provide a window into how your business will operate behind the scenes: How will you and your employees be organized? Who will handle what tasks? Why are they the right people to do so? Answer these questions by providing thorough details on who will be doing the work and how they will be structured while getting it done.
Every business needs to have a plan on how they position and promote their offerings, as well as attract and retain customers. With this section of your business plan, explain to potential stakeholders and financiers what your initial marketing strategy is and how it will change and scale over time.
Especially for business owners seeking additional financing and investment, the financial portion of your business plan is critical in showing how your business has generated and managed income, plus deliver insight into how it will continue doing so.
This section should include a breakdown of your organization’s sales, expenses, and profits. If you’re applying for a loan or seeking investment, include an overview of what your company’s financials would look like over the next period of years if you were to receive that financial backing. In addition, you should outline a clear plan for how and when you will pay back these creditors.
Crafting a Business Plan That Succeeds
While the particulars of every business plan will be different, there are some aspects that should be common to all business plans:
- Be Concise: The writing in a business plan needs to be persuasive for its intended audience, but it needs to do so efficiently. Use clear and concise writing that communicates your ideas and plans effectively.
- Use Data for Support: Even if your writing is persuasive, it won’t be as effective as it can be without relevant data and hard numbers that back up your insights.
- Get Rid of Errors: In most cases, your audience is only going to read your business plan once. Make sure you present a tidy image of your business through your business plan writing by catching and fixing all of your typos and grammatical errors. Use a digital writing assistant like Microsoft Editor to help spot these mistakes, along with any slips in the formal tone that a business plan requires.
- Keep It Real: Avoid exaggeration, whether it’s in your sales projections, market opportunity, or elsewhere.
Creating a successful business plan requires pulling together a lot of disparate information, which takes a diverse set of skills to pull off. Whether you’re new to new businesses or this is just your latest and greatest project, this can always be a tall order.
Make it easier on yourself by using all of the tools you have at your disposal to help. In addition to the guidelines above, explore a wide range of business plan templates available from Microsoft 365, including everything from complete business plans to individual components like revenue forecasts .
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How to write a business plan in seven simple steps
When written effectively, a business plan can help raise capital, inform decisions, and draw new talent.
Companies of all sizes have one thing in common: They all began as small businesses. Starting small is the corner for those just getting off the ground. Learn about how to make that first hire, deal with all things administrative, and set yourself up for success.
Writing a business plan is often the first step in transforming your business from an idea into something tangible . As you write, your thoughts begin to solidify into strategy, and a path forward starts to emerge. But a business plan is not only the realm of startups; established companies can also benefit from revisiting and rewriting theirs. In any case, the formal documentation can provide the clarity needed to motivate staff , woo investors, or inform future decisions.
No matter your industry or the size of your team, the task of writing a business plan—a document filled with so much detail and documentation—can feel daunting. Don’t let that stop you, however; there are easy steps to getting started.
What is a business plan and why does it matter?
A business plan is a formal document outlining the goals, direction, finances, team, and future planning of your business. It can be geared toward investors, in a bid to raise capital, or used as an internal document to align teams and provide direction. It typically includes extensive market research, competitor analysis, financial documentation, and an overview of your business and marketing strategy. When written effectively, a business plan can help prescribe action and keep business owners on track to meeting business goals.
Who needs a business plan?
A business plan can be particularly helpful during a company’s initial growth and serve as a guiding force amid the uncertainty, distractions, and at-times rapid developments involved in starting a business . For enterprise companies, a business plan should be a living, breathing document that guides decision-making and facilitates intentional growth.
“You should have a game plan for every major commitment you’ll have, from early-stage founder agreements to onboarding legal professionals,” says Colin Keogh, CEO of the Rapid Foundation—a company that brings technology and training to communities in need—and a WeWork Labs mentor in the UK . “You can’t go out on funding rounds or take part in accelerators without any planning.”
How to make a business plan and seven components every plan needs
While there is no set format for writing a business plan, there are several elements that are typically included. Here’s what’s important to consider when writing your business plan.
1. Executive summary
No longer than half a page, the executive summary should briefly introduce your business and describe the purpose of the business plan. Are you writing the plan to attract capital? If so, specify how much money you hope to raise, and how you’re going to repay the loan. If you’re writing the plan to align your team and provide direction, explain at a high level what you hope to achieve with this alignment, as well as the size and state of your existing team.
The executive summary should explain what your business does, and provide an introductory overview of your financial health and major achievements to date.
2. Company description
To properly introduce your company, it’s important to also describe the wider industry. What is the financial worth of your market? Are there market trends that will affect the success of your company? What is the state of the industry and its future potential? Use data to support your claims and be sure to include the full gamut of information—both positive and negative—to provide investors and your employees a complete and accurate portrayal of your company’s milieu.
Go on to describe your company and what it provides your customers. Are you a sole proprietor , LLC, partnership, or corporation? Are you an established company or a budding startup? What does your leadership team look like and how many employees do you have? This section should provide both historical and future context around your business, including its founding story, mission statement , and vision for the future.
It’s essential to showcase your point of difference in your company description, as well as any advantages you may have in terms of expert talent or leading technology. This is typically one of the first pieces of the plan to be written.
3. Market analysis and opportunity
Research is key in completing a business plan and, ideally, more time should be spent on research and analysis than writing the plan itself. Understanding the size, growth, history, future potential, and current risks inherent to the wider market is essential for the success of your business, and these considerations should be described here.
In addition to this, it’s important to include research into the target demographic of your product or service. This might be in the form of fictional customer personas, or a broader overview of the income, location, age, gender, and buying habits of your existing and potential customers.
Though the research should be objective, the analysis in this section is a good place to reiterate your point of difference and the ways you plan to capture the market and surpass your competition.
4. Competitive analysis
Beyond explaining the elements that differentiate you from your competition, it’s important to provide an in-depth analysis of your competitors themselves.
This research should delve into the operations, financials, history, leadership, and distribution channels of your direct and indirect competitors. It should explore the value propositions of these competitors, and explain the ways you can compete with, or exploit, their strengths and weaknesses.
5. Execution plan: operations, development, management
This segment provides details around how you’re going to do the work necessary to fulfill this plan. It should include information about your organizational structure and the everyday operations of your team, contractors, and physical and digital assets.
Consider including your company’s organizational chart, as well as more in-depth information on the leadership team: Who are they? What are their backgrounds? What do they bring to the table? Potentially include the résumés of key people on your team.
For startups, your execution plan should include how long it will take to begin operations, and then how much longer to reach profitability. For established companies, it’s a good idea to outline how long it will take to execute your plan, and the ways in which you will change existing operations.
If applicable, it’s also beneficial to include your strategy for hiring new team members and scaling into different markets.
6. Marketing plan
It’s essential to have a comprehensive marketing plan in place as you scale operations or kick off a new strategy—and this should be shared with your stakeholders and employees. This segment of your business plan should show how you’re going to promote your business, attract customers, and retain existing clients.
Include brand messaging, marketing assets, and the timeline and budget for engaging consumers across different channels. Potentially include a marketing SWOT analysis into your strengths, weaknesses, opportunities, and threats. Evaluate the way your competitors market themselves, and how your target audience responds—or doesn’t respond—to these messages.
7. Financial history and projections
It’s essential to disclose all finances involved in running your company within your business plan. This is so your shareholders properly understand how you’re projected to perform going forward, and the progress you’ve made so far.
You should include your income statement, which outlines annual net profits or losses; a cash flow statement, which shows how much money you need to launch or scale operations; and a balance sheet that shows financial liabilities and assets.
“An income statement is the measure of your financial results for a certain period and the most accurate report of business activities during that time, [whereas a balance sheet] presents your assets, liabilities, and equity,” Amit Perry, a corporate finance expert, explained at a WeWork Labs educational session in Israel.
It’s crucial to understand the terms correctly so you know how to present your finances when you’re speaking to investors. Amit Perry, CEO and founder of Perryllion Ltd.
In addition, if you’re asking for funding, you will need to outline exactly how much money you need as well as where this money will go and how you plan to pay it back.
12 quick tips for writing a business plan
Now that you know what components are traditionally included in a business plan, it’s time to consider how you’ll actually construct the document.
Here are 12 key factors to keep in mind when writing a business plan. These overarching principles will help you write a business plan that serves its purpose (whatever that may be) and becomes an easy reference in the years ahead.
1. Don’t be long-winded
Use clear, concise language and avoid jargon. When business plans are too long-winded, they’re less likely to be used as intended and more likely to be forgotten or glazed over by stakeholders.
2. Show why you care
Let your passion for your business shine through; show employees and investors why you care (and why they should too).
3. Provide supporting documents
Don’t be afraid to have an extensive list of appendices, including the CVs of team members, built-out customer personas, product demonstrations, and examples of internal or external messaging.
4. Reference data
All information regarding the market, your competitors, and your customers should reference authoritative and relevant data points.
5. Research, research, research
The research that goes into your business plan should take you longer than the writing itself. Consider tracking your research as supporting documentation.
6. Clearly demonstrate your points of difference
At every opportunity, it’s important to drive home the way your product or service differentiates you from your competition and helps solve a problem for your target audience. Don’t shy away from reiterating these differentiating factors throughout the plan.
7. Be objective in your research
As important as it is to showcase your company and the benefits you provide your customers, it’s also important to be objective in the data and research you reference. Showcase the good and the bad when it comes to market research and your financials; you want your shareholders to know you’ve thought through every possible contingency.
8. Know the purpose of your plan
It’s important you understand the purpose of your plan before you begin researching and writing. Be clear about whether you’re writing this plan to attract investment, align teams, or provide direction.
9. Identify your audience
The same way your business plan must have a clearly defined purpose, you must have a clearly defined audience. To whom are you writing? New investors? Current employees? Potential collaborators? Existing shareholders?
10. Avoid jargon
Avoid using industry-specific jargon, unless completely unavoidable, and try making your business plan as easy to understand as possible—for all potential stakeholders.
11. Don’t be afraid to change it
Your business plan should evolve with your company’s growth, which means your business plan document should evolve as well. Revisit and rework your business plan as needed, and remember the most important factor: having a plan in place, even if it changes.
A business plan shouldn’t just be a line on your to-do list; it should be referenced and used as intended going forward. Keep your business plan close, and use it to inform decisions and guide your team in the years ahead.
Creating a business plan is an important step in growing your company
Whether you’re just starting out or running an existing operation, writing an effective business plan can be a key predictor of future success. It can be a foundational document from which you grow and thrive . It can serve as a constant reminder to employees and clients about what you stand for, and the direction in which you’re moving. Or, it can prove to investors that your business, team, and vision are worth their investment.
No matter the size or stage of your business, WeWork can help you fulfill the objectives outlined in your business plan—and WeWork’s coworking spaces can be a hotbed for finding talent and investors, too. The benefits of coworking spaces include intentionally designed lounges, conference rooms, and private offices that foster connection and bolster creativity, while a global network of professionals allows you to expand your reach and meet new collaborators.
Using these steps to write a business plan will put you in good stead to not only create a document that fulfills a purpose but one that also helps to more clearly understand your market, competition, point of difference, and plan for the future.
For more tips on growing teams and building a business, check out all our articles on Ideas by WeWork.
Caitlin Bishop is a writer for WeWork’s Ideas by WeWork , based in New York City. Previously, she was a journalist and editor at Mamamia in Sydney, Australia, and a contributing reporter at Gotham Gazette .
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Write a business plan
Download free business plan templates and find help and advice on how to write your business plan.
Business plan templates
Download a free business plan template on The Prince’s Trust website.
You can also download a free cash flow forecast template or a business plan template on the Start Up Loans website to help you manage your finances.
Business plan examples
Read example business plans on the Bplans website.
How to write a business plan
Get detailed information about how to write a business plan on the Start Up Donut website.
Why you need a business plan
A business plan is a written document that describes your business. It covers objectives, strategies, sales, marketing and financial forecasts.
A business plan helps you to:
- clarify your business idea
- spot potential problems
- set out your goals
- measure your progress
You’ll need a business plan if you want to secure investment or a loan from a bank. Read about the finance options available for businesses on the Business Finance Guide website.
It can also help to convince customers, suppliers and potential employees to support you.
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Why Even Solo Entrepreneur Artists Need a Contingency Plan and How to Create One with Checklists
A contingency plan is not just for the unexpected; it’s a responsible practice for artists to ensure their creative vision is not derailed by unforeseen circumstances. — Barney Davey
As a solo entrepreneur artist, it’s easy to get caught up in the creative process and forget to plan for the “what ifs” in life. However, having a contingency plan is essential for all artists who take their business seriously. In this post, we’ll discuss why having a contingency plan is so important and provide practical advice on creating one.
Besides helping artists with art marketing, I encourage living well with them according to their needs. That includes providing guidance that crosses business and personal, like using a contingency plan to prepare for unexpected events. Having a contingency plan can avoid disasters or make them tolerable as possible. But without one put into action, the effects of an emergency multiply fast and exponentially. And so, I advise you can help to protect your family and business with a contingency plan.
Why a Contingency Plan Is Essential for Solo Entrepreneur Artists
Your art business is your livelihood, and it’s not immune to unexpected events. You might be unable to run your business because of a sudden illness, a family emergency, or a natural disaster. Without a contingency plan, your business would halt, and no one would take care of your customers, fulfill orders, or pay your bills.
A contingency plan ensures that your business can keep operating if you cannot work. It also protects your reputation with buyers and collectors who depend on you to deliver the art. Furthermore, a backup plan gives you a safety net that helps you have peace of mind that you can be okay even when things are uncertain.
Start with This Five-Point List
- Identify potential risks and hazards: Solo business owners must identify the potential risks and dangers that may impact their business. This includes natural disasters such as floods, fires, and earthquakes, as well as manufactured disasters such as cyber-attacks, theft, and vandalism.
- Develop a communication plan: In an emergency, it’s critical to have a communication plan in place to reach out to employees, customers, and other stakeholders. This plan should include contact information for key individuals, alternative modes of communication, and a method for communicating with employees who may not be on-site.
- Prepare an evacuation plan: If your business is in a location that may require evacuation during an emergency, it’s crucial to have a clear and well-thought-out evacuation plan. Ensure your family members and anyone involved in your business understands the plan and know where to go in an emergency.
- Protect important documents and data: In an emergency, it’s essential to have backups of important documents and data, such as financial records and customer information. Store these backups in a secure location, such as a cloud-based storage system.
- Plan for resuming operations: In the aftermath of an emergency, solo business owners must have a plan. This plan should include steps for assessing damage, rebuilding, and communicating with customers and other stakeholders.
Practical Advice for Creating a Contingency Plan
It’s crucial to involve trusted people in your contingency plan. For example, it could be with a friend, family member, or business associate who can take over running your business in your absence. Please ensure they are reliable, trustworthy, and understand your art business. Before you begin recruiting, you must work through your contingency plan, so you know what you will ask of your help.
Visual Artists Emergency Plan
- Document Critical Information
Create a document containing all critical information related to your business. This data includes passwords, account numbers, login details, and other essential information. Make sure your designated person knows where to access this document.
- Make a List of Contacts
Include the names, emails, and phone numbers of all the people you do business with, such as customers, suppliers, and other important people. Give access to this list to your designated person.
- Set Up an Emergency Fund
Set up an emergency fund that can cover your expenses if you cannot work. The fund could be six months’ worth of living expenses or whatever amount you’re comfortable with.
- Make Sure Your Tools and Devices Are Available
Train the person you choose, so they know how to use the tools, software, devices, and equipment your business needs. This list includes your computer, drawing tablet, software licenses, and other devices you use for your work.
- Create a Business Continuity Plan
Create a plan that outlines what will happen in an emergency. This plan includes who will take over, how they will operate the business, and how they will communicate with customers and stakeholders.
How to Make Your Contingency Plans Actionable
Plans without action are useless. Artists can’t handle details in an emergency. You might be the reason for the crisis, or the event might be overwhelming, so you must recruit your help now.
Don’t Put off Recruiting Help
Here are tips for solo entrepreneurs on who to work with on contingency plans. It includes who to share the results with and how to pick someone to step in if the entrepreneur is unavailable to operate the business:
- Identify a trusted advisor, such as a lawyer, accountant, or another qualified person, who can help you develop and implement your contingency plan.
- Consider seeking advice from someone with experience in small business operations.
- Involve family or friends in your contingency planning process. And seek their input on potential risks and develop strategies considering their needs.
- Share the results of your contingency plan with family or friends, so they know the strategy and their roles in executing it.
You Need Willing and Capable Help
The best people to put on this list are those who could be at risk if an emergency happened at your business. For example, your spouse or partner, family member, close friend, employee, investor, or even a vendor could be involved if the relationship allows.
- Identify a dependable backup person who can step in and operate the business in your absence. This person should be someone you trust, who has a good understanding of your business, and who is willing and able to take on the responsibility.
- Prepare the backup person with information about your business operations, contacts, and other vital details. Train them on critical tasks and processes to prepare them to step in if needed.
- Consider developing a succession plan should you become permanently unable to operate the business, including identifying someone to take over ownership or selling the company to a new owner.
Visual Artists Contingency Plan Checklist
Use this guide to prepare your business for an emergency:
- Start by identifying the potential risks that could impact your art business.
- These could include equipment loss, artwork damage, or inability to deliver products on time.
- Once you have identified potential risks, assess the potential impact of each one.
- For example, consider how each risk could affect your ability to produce and sell your art.
- Develop a plan for responding to each potential risk based on your assessment. This plan should outline the steps you will take to minimize the impact of the risk on your business.
- For example, if your artwork is damaged, consider creating backups or storing them in a safer location.
- Ensure that anyone involved in your business knows the contingency plan and understands their roles and responsibilities in implementing it.
- Have your contingency plan documentation available and backed up, so those who need it have immediate access to it–and let them know where you keep it.
- Regularly test your contingency plan to ensure it is practical and up-to-date.
- This testing could include running simulations or practice drills to identify any gaps or weaknesses in the project.
- Finally, after testing, it’s necessary to regularly update your contingency plan based on business or external environment changes.
- Updating ensures you are always prepared to respond to potential risks and minimize their impact on your business.
As a one-person business, the success and survival of your art business depend a lot on having a Plan B. And as such, it is essential to document important information. To ensure your business runs smoothly while you’re gone, you must list people you can trust, set up an emergency fund, and train people to use your business tools.
My best advice is to plan your backup plan before anything unexpected happens. By planning what to do if something goes wrong, you can have confidence your business will run smoothly if something terrible happens. So please don’t wait for unforeseen events; start planning now, and be ready to navigate anything coming your way.
- Ready.gov Emergency Response Plan
- FEMA: Developing and Maintaining Emergency Operations Plans – Comprehensive Preparedness Guide 101
- SCORE is a nonprofit organization that provides mentorship and resources to small businesses. Their website includes information and templates on emergency planning and business continuity.
- The American Red Cross offers resources on emergency preparedness, including tips and checklists for creating an emergency plan.
- State and local emergency management agencies provide resources and information on emergency preparedness and contingency planning specific to their region.
- Insurance agencies can also be a valuable resource for contingency planning. For example, many insurance companies offer business interruption insurance, which can help cover lost income and expenses in the event of an unexpected interruption to your business operations. Some insurance agencies may also offer risk assessment and mitigation services, helping you identify potential risks and develop a plan to address them. In addition, working with an insurance agency that understands your business’s unique risks and needs is essential and can help you create a comprehensive contingency plan.
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What Is a Business Plan: An Introductory Guide
An introductory guide to explain what a business plan is, why you need it (and how it helps), key components, how long it should be, how to write it, who needs to see it, and much more..
May 16th, 2018 | By: The Startups Team | Tags: Planning
It’s been said that a goal without a plan is just a wish.
In the same way, a startup idea without a business plan is little more than just that: an idea — no matter how earth-shatteringly innovative that idea might be.
Whether you’ve committed to starting a business for the first time or you’re still tiptoeing around the idea , chances are you’ve described your startup concept to your friends or family. And chances are you’ve been told by someone that having a well-thought-out business plan in place is absolutely vital for every entrepreneur.
But what you might not have been told was why having a business plan is so important, what critical elements to include, how much of it to include, and how to put it all together in a way that gets potential investors fired up about your idea and eager to get involved.
If that’s the case, then you’re in luck — we’re about to break all of this down for you step by step.
If you'd like to see some samples - we've got 4 awesome business plans for you here.
Business Plan, Defined
First things first. What is a business plan, exactly?
Quite simply, a business plan is a detailed roadmap of your business — a written document that communicates to readers and potential investors what your business goals are and the steps that you plan on taking to achieve them.
You’ll often hear startup origin stories that begin with Founders sitting at a bar or in a restaurant when suddenly they’re struck by that “aha!” moment of inspiration and begin furiously scribbling down their concept on a cocktail napkin.
This has become something of a romanticized idea in the startup world. But if you’ve had an experience similar to this, then you’ve got the makings of a business plan in its most basic, stripped-down form. And while the shorter, one-page business plan can be ideal in certain situations (more on that later), fleshing out a hastily-scrawled cocktail napkin blueprint into a comprehensive, actionable business plan requires a bit more work (and fewer drinks).
We say “actionable” because the very best business plans do more than just inform readers about what your company does — they excite and persuade them about jumping on the opportunity to get involved (and mutually benefit) in helping your company succeed.
How do you do this?
By answering at a very high level the big, fundamental questions your readers will have about your business going in. These questions fall into two key categories: the WHY questions and the HOW questions.
The WHY Questions:
The HOW Questions:
- How will you make money?
- How will you get customers?
- How will you grow your business?
In the process of answering these questions, your business plan should illustrate that your company has:
- The right product/service
- The right market (at the right time)
- The right team
- The right strategy
Why You Need a Business Plan (And How it Can Help You)
Making sure that you have a polished business plan at the ready might seem like one of those things that you’re just kind of expected to do as a Founder. But it really is about more than just going through the motions. You’ve been beaten over the head with the assertion that you need one of these things.
Now here’s a few reasons why.
A. To Optimize Your Strategies
Laying out your objectives and researching your market helps you uncover trends that could help or harm your forward progress and allow you to tailor your growth strategies accordingly.
B. To Give You Direction
A business plan can help you organize your ideas so you can figure out which goals to set, which to prioritize, and how to reach them without spreading yourself too thin.
C. To Convince Investors To Fund Your Business
Investors want to see evidence for why they should risk their time and money in your business and how they’ll recoup their investment. Your business plan helps you make that case.
D. To Secure A Business Loan
If you’re trying to secure a business loan from the bank, if the lender doesn’t already request it (which they probably will), you can bolster your loan application using your business plan.
E. To Forge Strategic Alliances
Your plan can be used to communicate specific parts of your business to lock down potential partnerships.
F. To Sell Your Business
In the event that you find yourself in acquisition discussions, your business plan can be instrumental in helping the buyer better understand the best possible price for the sale of your business .
Who Needs a Business Plan?
A lot of people assume that the only businesses that need business plans are startups seeking funding, and that once they’ve secured said funding their business plan gets stuffed into a filing cabinet where it lives out the rest of its days collecting dust.
Not entirely. So who needs a business plan?
A. Startups Seeking Funding
If you’re a startup with the chief goal of raising capital to fund your growth, then yes, as previously mentioned, a business plan is a must. Simply having one doesn’t necessarily mean you’ll get funding. But not having one reduces the likelihood precipitously.
B. Established Companies Managing Their Business
Unlike startups, existing businesses use business plans more with an eye toward guiding the business and accelerating and tracking growth. Established businesses also use business plans to convince buyers to acquire the company or to bring potential partners or employees into the fold.
How to Choose the Right Kind of Business Plan
Depending on your growth stage and what you intend on using it for, business plans can come in a few different form factors.
If you’re a startup looking to raise investment capital, for example, your business plan is going to look a bit different than that of an established company more concerned with internal strategic planning and actually running the business.
Let’s take a quick look at a handful of the most common examples.
A. Standard Business Plan
If your goal is to convince investors to financially back your business, the standard business plan — or “external business plan”, as it’s sometimes called — is the most commonly-requested iteration you’ll need.
Standard business plans are much more fine-tuned and focused on showing investors how your vision translates into big returns versus an internal business. For our purposes, we’ll be focusing our discussion strictly on the standard business plan for this article.
B. One-Page Business Plan
The one-page business plan is essentially an executive summary — in other words, the TL;DR version of your business plan where you distill down each of the core sections of your business plan to a paragraph or two, giving investors an at-at-glance look at the key takeaways.
The one-pager is a great asset to break out when you establish early discussions with a potential investor. Investors are incredibly busy, so the one-pager is a perfect go-to when you’re trying to spark interest and set the stage for more in depth discussions about your business after you’ve made first contact.
C. Internal Business Plan
As its name implies, internal business plans generally stay within the confines of the office and are meant to act essentially as a management tool to help business owners set and meet goals.
Internal business plans are less concerned with covering things like team overview or outlining the problem you’re solving and more geared toward business strategy, which milestones to reach next, budgeting, and forecasting. This kind of business plan tends to be used more frequently by more established companies than startups.
The Key Components of a Business Plan
Whether you’re starting a brewery, launching a cryptocurrency business, or setting up a subscription box service for your homemade cupcake operation, there are several common elements that are absolute musts to include in virtually every business plan — regardless of your industry.
- Executive Summary
- Company Description
- Problem, Solution & Market Size
- Product (How it Works)
- Revenue Model
- Operating Model
- Competitive Analysis
- Customer Definition
- Customer Acquisition
- Management Team
A. Executive Summary
Your Executive Summary is essentially a brief overview of your business plan as a whole. The goal is to break down each key section into a sentence or two to convey a birds-eye view of your business and prepare the reader for the content to come.
B. Company Description
The Company Description will serve as a “big idea” statement that introduces your company, what it does, and why it matters. It conveys to your readers the direction your company is going, and the scope of the business you’re building.
Every great product or service starts with a clear and specific problem that it’s setting out to solve. What problems do your target customers face that your product/service solves for them?
If you don’t articulate the problem you’re solving really well, then the solution (and rest of your plan) falls by the wayside.
Once you’ve explained the painful problem you’re setting out to solve, highlight how your product/service connects back directly to that problem and solves it beautifully.
E. Market Size
- How big is your total addressable market?
- Is it growing? By how much?
- Is the market big enough for potential investors to get excited about?
- Have there been any notable exits from similar companies in your space?
F. Product (How it Works)
Give readers an overview of your company’s products and services, their key features, with a special emphasis on what makes them unique from existing solutions in the market.
G. Revenue Model
- How does (or will) your company make money?
- How are you pricing your product/service?
- How does your pricing compare with similar products in the market?
- What are your revenue projections for the next 5 years?
H. Operating Model
While your Revenue Model explains the ways you’re going to make money, your Operating Model is all about the clever ways you’re going to manage costs and efficiencies to earn it.
I. Competitive Analysis
Identify other similar companies working in your same space:
- What are your their strengths and how do you plan to neutralize those strengths?
- What are their weaknesses and how do they translate into an advantage for your company?
J. Customer Definition
Define your customer to help readers get a crystal clear understanding of who is most likely to use and buy your product:
- What are their personas?
- What are their demographics?
- What motivates them to take action (make a purchase)?
K. Customer Acquisition
- What strategies will you implement to actually acquire your customers?
- What acquisition channels will you explore ( direct sales , paid ads , SEO , social media , etc.)?
- What are the cost assumptions for each channel?
List any accomplishments that signal to readers that your company is making moves:
- Where are you in the product development process?
- Have you established a production or manufacturing partner?
- Have you secured any notable partnerships?
- Do you have any patents for the technology or ideas behind your company?
M. Management Team
Introduce your team and how you’ll work together to bring the business to life. Each team member bio should include:
- The team member’s name
- Their title and position at the company
- Their professional background
- Any special skills they’ve developed as a result of their prior experience
- What makes them uniquely qualified to drive success at your company
- How much money do you need to meet your next milestone?
- What are your terms (in other words, what will investors get in exchange for their investment)?
- How will you use the funding that you secure?
Determine what assumptions you need to target in order to make the business viable. Typical assumptions include:
- Sale Price per Product
- Cost of Goods Sold
- Customer Acquisition Costs
- Staff Costs
How Long Should Your Business Plan Be?
To get a better sense of what a 21st century business plan is, it’s best to look at what it’s not. Or, more specifically, what it’s not anymore.
When most people think about a business plan, the first thing that usually comes to mind is an incredibly dense, 50-plus-page manifesto that’s as hard to write as it is to read.
There’s a reason why people think this. It’s because for a long time, that’s pretty much what a business plan was. Thankfully for the writer and the reader, that’s no longer the case.
At a certain point, it became clear that the number of investors who actually took the time (let alone had the time) to read these glassy eye-inducing paperweights front to back was approximately 0.
Which is why the modern business plan as we know it today is far more concise — a mere fraction of the length of its long-winded predecessor.
A good rule of thumb is shooting for around 15 pages.
This should give you more than enough room to provide color to each of the required sections of your business plan while also leaving some room for visual elements to break up the copy and make your business plan much more digestible (and aesthetically engaging) for readers.
If you find yourself exceeding 20 pages, there’s probably opportunities where you can go back through your plan and eliminate redundant or superfluous information.
How to Approach Writing a Business Plan
Remember sitting at your computer back in college, opening up a blank word document, and staring at the blinking cursor as you tried mustering the courage and motivation to dive into your final essay?
For a lot of Founders, that’s kind of what it feels like getting ready to commit their business plan to paper, but even more daunting.
The thing is, if you approach this with a solid understanding of what information you need to cover, how to cover it, and how to make everything flow properly, it doesn’t have to be .
Here are some useful tips to help you get organized and give you the confidence to tackle this head on .
A. Nail The Research First
Going into this knowing everything there possibly is to know about the market you will be competing in, who your audience is, and how you will make money will always be the first step in the business planning process.
Conducting the necessary fact gathering will also help you prove or disprove any assumptions you have about your market fit — either validating what you initially thought, or telling you it’s time to go back to the drawing board.
B. Create a Business Plan Outline
We talked before about the key components that you’ll want to include in your business plan. Instead of jumping in willy-nilly, draft a very basic outline of each of the sections that you will touch on in your business plan.
Not only will this make it significantly easier to stay laser focused on only detailing the relevant information you need for each specific section, but it will help the writing process feel much more manageable by breaking it up into bite-sized pieces.
C. Organize Your Goals and Objectives
Start dividing up all of the information that you need to include in your business plan by section.
The best way to do this is by thinking about each section as if it were comprised of a series of questions that your readers will want answered.
For example, in the Customer Acquisition section, some of the key questions you want to address are:
- How will you reach your target customers?
- What marketing strategies will you use?
- What will it cost to acquire customers?
Once you’ve laid this out for each section, you now have a good jumping-off point to go in and start shedding light on each of these key questions .
Business Planning Tools
Whether you’re doing this for the first time or the tenth time, building a plan from scratch is time and energy-consuming.
Luckily, there are some great business planning software tools available online designed to make this whole business planning process a whole lot easier for you.
In fact, we’ve got one of them!
Our business planning software lets you break down this big undertaking into bite-sized pieces that you can complete in any order you like and in collaboration with your team.
All of the most important sections of a business plan are conveniently built into drag-and-drop templates. Plus, you get everything you need to generate investor-ready financial reports — balance sheets, income statements, break even analysis, you name it.
You can even share your finished product with investors online. You should check it out if you need a leg up with this.
Who Needs to See Your Business Plan (and When)?
You’ve overcome the odds and succeeded in what frequently proves to be an insurmountable task for many startups: you’ve reached out to a prospective investor and they actually got back to you saying that they’re interested in learning more about your project.
If you find yourself in the fortunate position of pitching an investor, this is precisely the right time to have your business plan on hand.
Most of the time, you’ll start by providing a pitch deck — a presentation (PowerPoint, Keynote) version of your business plan highlighting the most basic elements of your plan in a handful of highly visual slides.
Most investors will want to start here because it’s much quicker to read up front than poring over your business plan.
Assuming that you’ve blown your pitch out of the water and have the investor(s) on the edge of their seat, they may ask for the longer-form narrative to start getting into the nitty-gritty of your plan — which you will be able to easily provide courtesy of your finely-tuned business plan.
The Dos and Don’ts of Writing a Business Plan
If you’re learning this stuff for the first time, it might feel a bit overwhelming being asked to remember which specific pitfalls to avoid here and which strategies to follow there.
To make this all a bit more digestible and help you stay on the right track, we’ve compiled a list of some of the top dos and don’ts to keep in mind when you launch into writing your business plan.
- Do your research before you start writing to demonstrate that you have a firm understanding of your market, competitors, and audience.
- Do update your plan as you go to keep information relevant and up to date.
- Do write in clear, plain language that anyone can easily understand, whether it’s an investor or your elderly neighbor.
- Do cite your sources where necessary.
- Do create an engaging narrative around the problem your customers face and why your product or service is the perfect solution to that problem.
- Do explain how you arrived at your financial assumptions.
- Do keep your business plan concise, compelling, and persuasive.
- Do make it more personal and immediate by writing in the 1st person grammatical point of view (write as if it were your team having a conversation about the company to the reader in person “Our team is on the forefront of innovation…”).
- Don’t assume that your reader is already familiar with your industry.
- Don’t overload your plan with industry-specific jargon.
- Don’t exceed 20 pages (or 15 if possible).
- Don’t write lengthy walls of copy.
- Don’t repeat the same information ad nauseum throughout your plan.
- Don’t refer to yourself as “The Company” or use 3rd person grammatical point of view (this is a bit of an outdated approach).
- Don’t claim you have “no competitors” (#1: your investors won’t buy it, and #2: no matter how unique your solution, there’s almost always someone competing with you either directly or indirectly. Really dig in and do your homework on this).
- Don’t forget to proofread (make sure you’ve gone back and corrected any spelling or grammatical errors and that your formatting remains consistent throughout).
We’ve thrown a ton of information at you in this crash course introduction to the business plan. You should now have a fairly good grasp of what a business plan is, what goes into it, and how to use it to maximum effect.
The key thing to take away here is to remain calm and not rush this. Business planning isn’t something that you just casually knock out in a day and walk away with the perfect finished product your first time around.
Founders can spend numerous cycles repositioning their strategies based on discoveries made during research, rethinking how to best boil down their vision and value proposition, and refining their overall story. Such is the nature of the ever-evolving business plan.
As you dive into crafting your own business plan, remember that you’re not alone in this. We’ve got a boatload of other great resources created specifically to help you conquer this every step of the way!
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The startups team.
Startups is the world's largest startup platform, helping over 1 million startup companies find customers , funding , mentors , and world-class education .
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How to Write a Business Plan in 2023: The Ultimate Guide for Every Entrepreneur
Are you starting a new business or trying to get a loan for your existing venture? If so, you’re going to need to know how to write a business plan. Business plans give entrepreneurs the opportunity to formally analyze and define every aspect of their business idea .
In this post, you’ll learn how to put together a business plan and find the best resources to help you along the way.
Start selling online now with Shopify
What is a Business Plan?
A business plan is a formal document that outlines your business’s goals and how you will achieve those goals. Entrepreneurs who start out with business plans are 16 percent more likely to build successful companies , according to the Harvard Business Review. Developing a business plan ensures sustainable success, guiding you as you grow your business, legitimizing your venture, and helping you secure funding (among countless other benefits).
What Are the Main Purposes of a Business Plan?
Most financial institutions and service providers require you to submit a detailed business plan to obtain funding for your business. Online businesses will likely have a low overhead to start, so they may not need funding and therefore may not feel the need to write a business plan. That said, writing a business plan is still a good idea as it can help you secure a drastic increase limit on your credit card as your business grows or open a business account. This varies per bank.
If you’re growing your business, use it to help you raise expansion capital, create a growth strategy, find opportunities, and mitigate risks.Palo Alto software found that companies who make business plans are twice as likely to secure funding . .
If you’re just starting your business, making a business plan can help you identify your strengths and weaknesses, communicate your vision to others, and develop accurate forecasts.
How to Make a Business Plan: The Prerequisites
Here are the prerequisites to creating a solid business plan:
- Establish goals
- Understand your audience
- Determine your business plan format
- Get to writing!
There are two key questions to ask here:
- What are you hoping to accomplish with your business?
- What are you hoping to accomplish with your business plan?
Approaching your business plan through that lens will help you focus on the end goal throughout the writing process. These also provide metrics to measure success against.
Before writing your business plan, gather the content and data needed to inform what goes in it. This includes researching your market and industry – spanning everything from customer research to legalities you’ll need to consider. It’s a lot easier to start with the information already in front of you instead of researching each section individually as you go.
Turn to guides, samples, and small business plan templates to help. Many countries have an official administration or service dedicated to providing information, resources, and tools to help entrepreneurs and store owners plan, launch, manage, and grow their businesses.
The following will take you to online business plan guides and templates for specific countries.
- United States Small Business Administration (SBA) – The “write your business plan page” includes traditional and lean startup business plan formats, three downloadable sample business plans, a template, and a step-by-step build a business plan tool.
- Australian Government – The “business plan template” page includes a downloadable template, guide, and business plan creation app.
- UK Government Business and Self-Employed – The “write a business plan” page includes links to a downloadable business plan template and resources from trusted UK businesses. .
- Canada Business Network – The “writing your business plan” page includes a detailed guide to writing your business plan and links to business plan templates from Canadian business development organizations and banks.
These business resource sites also offer a wealth of valuable information for entrepreneurs including local and regional regulations, structuring, tax obligations, funding programs, market research data, and much more. Visit the sites above or do the following Google searches to find official local business resources in your area:
- your country government business services
- your state/province government business services
- your city government business services
Some Chamber of Commerce websites offer resources for business owners, including business plan guides and templates. Check your local chapter to see if they have any.
Banks that offer business funding also often have a resource section for entrepreneurs. Do a Google search to find banks that offer business funding as well as business plan advice to see the business plans that get funding. If your bank doesn’t offer any advice, search for the largest banks in your area:
- business plan guide bank name
- business plan samples bank name
- business plan template bank name
If you’re looking for more sample business plans, Bplans has over 500 free business plan samples organized by business type as well as a business plan template. Their collection includes 116 business plans for retail and online stores. Shopify also offers a sample business plan intended to help small business owners and aspiring entrepreneurs identify functional areas of a business they may not have considered.
Understand Your Audience
Because business plans serve different purposes, you’re not always presenting it to the same audience. It’s important to understand who’s going to be reading your business plan, what you’re trying to convince them to do, and what hesitations they might have.
That way, you can adapt your business plan accordingly. As such, your audience also determines which type of business plan format you use. Which brings us to our next point…
Which Business Plan Format Should You Use?
The United States Small Business Administration (SBA) presents two business plan formats:
- The traditional business plan format is for entrepreneurs who want to create a detailed plan for themselves or for business funding.
- The lean startup business plan format, on the other hand, is for business owners that want to create a condensed, single-page business plan.
If the business plan is just for you and internal folks, draft a lean startup business plan or a customized version of the traditional business plan with only the sections you need. If you need it for business funding or other official purposes, choose the formal business plan and thoroughly complete the required sections while paying extra attention to financial projections.
If your business operates outside the U.S., clarify the preferred format with your bank.
How to Create a Business Plan: Questions to Ask Yourself
As you write a business plan, take time to not only analyze your business idea, but yourself as well. Ask the following questions to help you analyze your business idea along the way:
- Why do I want to start or expand my business?
- Do my goals (personal and professional) and values align with my business idea?
- What income do I need to generate for myself?
- What education, experience, and skills do I bring to my business?
How to Write a Business Plan Step by Step
According to the business plan template created by SCORE, Deluxe, and the SBA , a traditional business plan encompasses the following sections.
- Executive summary
- Company description
- Products & services
- Market analysis
- Marketing & sales
- Management & organization
- Funding request
- Financial projections
- SWOT analysis
Since not everyone is aware of the key details to include in each section, we’ve listed information you can copy to fill in your business plan outline. Here’s how to build a business plan step by step.
The Executive Summary is the first part of your business plan, so this is where you need to hook readers in. Every business plan starts this way — even a simple business plan template should kick off with the Executive Summary. Summarize your entire business plan in a single page, highlighting details about your business that will excite potential investors and lenders.
Explain what your business has to offer, your target market , what separates you from the competition, a little bit about yourself and the core people behind your business, and realistic projections about your business’ success.
While this is the first section of your business plan, write it after you’ve completed the rest of your business plan. It’s a lot easier because you can pull from the sections you’ve already written, and it’s easier to identify the best parts of your business plan to include on the first page.
In the Company Description, share 411 about your business. Include basic details like:
- Legal structure (sole proprietor, partnership, corporation, etc.)
- Business and tax ID numbers
- When the business started
- Ownership information
- Number of employees
Your mission statement , philosophy and values, vision, short- and long-term goals, and milestones along with a brief overview of your industry, market, outlook, and competitors should also be in the Company Description.
Pro tip: These are the details you’ll use each time you create a business profile, whether that's on social media, business directories, or other networks. Keep your information consistent to reduce confusion and instill more confidence in potential customers.
Products & Services
The Products & Services section details what you plan to sell to customers. For a dropshipping business , this section should explain which trending products you’re going to sell, the pain points your products solve for customers, how you’ll price your products compared to your competitors, expected profit margin, and production and delivery details.
Remember to include any unique selling points for specific products or product groupings, such as low overhead, exclusive agreements with vendors, the ability to obtain products that are in short supply / high demand based on your connections, personalized customer service, or other advantages.
For dropshipping businesses selling hundreds or even thousands of products, detail the main categories of products and the number of products you plan to offer within each category. By doing this, it’s easier to visualize your business offerings as a whole to determine if you need more products in one category to fully flesh out your online store.
The Market Analysis section of your business plan allows you to share the research you have done to learn about your target audience — the potential buyers of your products. People requesting a business plan will want to know that you have a solid understanding of your industry, the competitive landscape, who’s most likely to become your customers. It’s important to demonstrate that there’s a large enough market for your product to make it profitable and/or to make a strong return on investment .
To complete the Market Analysis component of your business plan, check out the following resources for industry, market, and local economic research:
- U.S. Embassy websites in most countries have a business section with information for people who want to sell abroad. Business sections include a basic “getting started” guide, links to economic and data reports, trade events, and additional useful business links for a particular region.
- IBISWorld is a provider of free and paid industry research and procurement research reports for the United States , United Kingdom , Australia , and New Zealand .
- Statista offers free and paid statistics and studies from over 18,000 sources including industry reports, country reports, market studies, outlook reports, and consumer market reports.
Use these websites and others to learn about the projected growth of your industry and your potential profitability. You can also use social media tools like Facebook Audience Insights to estimate the size of your target market on the largest social network
Another way to research your market and products is through Google Trends . This free tool will allow you to see how often people search for the products your business offers over time. Be sure to explain how your business plans to capitalize on increasing and decreasing search trends accordingly.
Marketing & Sales
Knowing your target market is half the battle. In the Marketing & Sales section, share how you plan to reach and sell products to your target market. Outline the marketing and advertising strategies you intend to use to market your product to potential customers – search marketing , social media marketing , email marketing , and influencer marketing methods .
If you’re unsure how to market your business’ products, analyze your competitors for some inspiration. Discovering your competition’s marketing tactics will help you customize your own strategy for building a customer base and ultimately taking your business to the next level.
Do a Google search for your competitor’s business name to find the websites, social accounts, and content they’ve created to market their products. Look at the ways your competitor uses each online entity to drive new customers to their website and product pages.
Then come up with a plan to convert a similar audience with your marketing and advertising messages. For dropshipping businesses, conversions will typically take place on your website as people purchase your products and/or by phone if you take orders over the phone.
Management & Organization
In the Management & Organization piece of your business plan, describe the structure of your business. In terms of legal structure and incorporation, most businesses are classified as sole proprietorships (one owner), partnerships (two or more owners), corporations, or S corporations.
Draft a condensed resume for each of the key members of your business. If you’re a solopreneur , include how your past education and work experience will help you run each aspect of your business. If you have one or more partner(s) and employee(s), include their relevant education and experience as well.
Think of this as a great way to evaluate the strengths of each individual running your business. When self-evaluating, you’ll be able to identify the aspects of your business that’ll be easier to manage and which ones to delegate to freelancers, contractors, employees, and third-party services. This also makes it easier to find the best way to utilize their strengths for business growth.
Chances are, you don’t have a funding request for a startup dropshipping business since the appeal to dropshipping is the low upfront investment . If you’re looking for a loan, however, this would be the section where you outline the dollar amount you need, what you plan to invest in, and how you see the return on your investment.
Another way to use this section is to analyze the investment you have or plan to make when starting or growing your business. This should include everything from the computer you use to run your website to the monthly fee for business services.
In Financial Projections, share your projected revenue and expenses for the first or next five years of your business. The idea here is to demonstrate that the revenue you’re anticipating will easily lead to a return on any investment, whether from your personal finances or a capital lending service.
If you’re looking for funding, you’ll need to go into detail with projected income statements, balance sheets, cash flow statements, and capital expenditure budgets. If you aren’t looking for funding, it won’t hurt to create these types of financial projections so you can realistically plan for the future of your business.
The Appendix of your business plan includes any supplemental documents needed throughout the sections of your business plan. These may include, but are not limited to:
- Credit histories
- Product brochures
- Legal forms
- Supplier contracts
If you’re submitting your business plan for funding, contact the lender to see what documentation they want included with your funding request.
In addition to the above sections, some business plans also include a SWOT Analysis. This is a one-page summary of your business’s strengths, weaknesses, opportunities, and threats. The strengths and weaknesses you include will be internal, whereas opportunities and threats you include will be external.
Depending on the revelations of this section, you may or may not want to make a SWOT analysis when submitting your business plan formally unless it is requested.
Summary: How to Create a Business Plan
As you can see, creating a business plan for your dropshipping business is a great way to validate your business idea , discover your business’s strengths and weaknesses, and make a blueprint for your business's future.
In summary, here are the sections you will need to write for your business plan, step by step:
- SWOT analysis (Optional)
If you haven’t already, take the time to create a business plan to launch or grow your business in 2023!
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- The Dos and Don’ts of Writing a Solid Business Plan
Business Plans 201: The dos and don’ts of writing a solid business plan
We get it. That new business or venture that you’ve been dreaming about can be nerve-racking, but it’s possible.
Starting a new business starts with an idea which comes to life with a strong business plan. Your business plan is more than a piece of paper or a writing exercise. It’s a roadmap that will keep you focused and give you a baseline for measuring success and achieving your goals.
It isn’t a fixed or final artifact. Instead, think of it as a living document that you’ll revisit, learn from and adjust as your business grows.
Writing your plan at first may take a lot of effort and it’s normal to go through several drafts. Consult your advisory team as they can support your plan’s development. And your plan will develop as you get new ideas, make new decisions and learn about changing business developments.
Your plan is also key to unlocking funding. Whether you finance your business or solicit investors, either party will want to learn more about your plan before they invest. Effective language is key to communicating your business plan successfully to potential investors.
Follow these guidelines to start writing a solid business plan that communicates your vision and speaks to your audience.
The “dos” for writing a solid business plan
Be professional yet simple.
Writing with a professional tone allows investors to appreciate your vision and understand your short- and long-term goals. At the same time, it’s best to write in a simple manner. Aim for your plan to be understood by a non-expert. Replace jargon with active verbs. You can always get your final draft edited by a professional.
Refer to your business in third person
Writing in third person allows objectivity which can be more convincing and accepted by audiences like banks and investors. Avoid using “we” or “I” throughout your business plan. Writing in first person may come across as too personal. Remember to keep it business, not personal.
Be direct throughout your plan. Avoid ambiguous or vague language. Being direct allows you to be convincing about the steps you’ll take to bring your idea to life.
Do your research and present data to support your case. Showing statistics about your business, competitors, customers and industry allows investors to get a bigger picture of the survival and growth of your business.
Avoid adding assumptions in your business plan. Instead of over-promising, show solid data backed up by research on how your business can be successful.
Practice makes perfect
Read your business plan out loud. Ask yourself these questions: Does it sound effective? Does it have the tone of confidence? Is it easily understood by your audience? What are the strengths and opportunities to tackle in your plan? Have a friend read your plan and summarize it back to you .
The language of your business plan should be assertive, yet optimistic. Allow your passion to shine through in your business plan and show your advisor that you’re serious about bringing your vision to life.
The “don’ts ” of writing your business plan
Avoid acronyms and abbreviations.
Use industry specific abbreviations and acronyms only if necessary and if they’re part of your business operations.
Don’t assume the reader knows your industry
Investors and advisors are here to support you. Allow them to understand what industry your business lives in. Provide in-depth knowledge of your industry so they can understand your business functions.
Don’t turn it into an essay
When writing your business plan and conducting industry research, sometimes it’s easy to get sidetracked and turn your plan into an essay. Make sure your business plan has a solid focus and includes all the required information.
Avoid extensive research
Use only credible sources and findings for your research and analysis. It’s a great practice to use government-issued statistics and data. Use this data in your own language for business projections and goals. Simplicity is key.
Don’t be repetitive
Avoid repeating yourself throughout the plan. You can do this by reading your plan out loud and removing duplicate ideas. Include the key points and messages you need to relay.
Don’t forget about it
Be proactive and don’t forget to follow up with your advisor within the right time frame. Communicate with your advisory team and take advantage of your relationships with your investors, business partners and CIBC business advisor.
Updating your business plan on a quarterly basis is a great practice for staying on track of your business growth. Our team is here to support you as you develop your plan and assemble your team.
To create a tailored plan for your business needs and help you achieve your goals, meet with us opens in a new window. . We’re here to help. Talk to a CIBC Business Advisor today by calling 1-866-992-7223 . Opens your phone app.
Written By Lauren Rabindranath
Lauren Rabindranath is a copywriter and communications consultant based in Toronto, Ontario, who works with clients across industries. Working with CIBC Business Banking, Lauren supports content development for online platforms, relating her personal experience as an entrepreneur to CIBC’s tailored services.
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How to Write a Business Plan
When how to write a business plan is at the top of the SBA list of the ten steps in how to start a business, it tells you something about how important the experts consider it to be. Planning a business and writing a business plan is more than just having a location picked and a product or service to sell. Financing, marketing strategy, and future growth all require a well-researched and thought out business plan.
- Chapter 1 – Getting Started
- Chapter 2 – The Key Elements of a Business Plan
- Chapter 3 – Executive Summary
- Chapter 4 – Business Description
- Chapter 5 – Business Environment Analysis
- Chapter 6 – Industry Analysis
- Chapter 7 – Competitive Analysis
- Chapter 8 – Market Analysis
- Chapter 9 – Marketing Plan
- Chapter 10 – Operations Plan
- Chapter 11 – Team and Management Plan
- Chapter 12 – Financial Projections
- Chapter 13 – Appendix
There are many articles and resources available on the Internet explaining how to write a business plan, but writing a business plan is more than merely following a business plan template or copying someone’s business plan examples. A business plan can be as simple as a few notes scrawled on a paper napkin. It can be a 40-page document with multiple sections and subsections describing every minute detail of its operations, products, and finances.
Writing an effective business plan is easier if you take time before starting the writing process to conduct your research and gather the information you need to incorporate into it. Business owners of new startups or established companies can benefit from thinking through and researching such success-determining issues as:
- Marketing strategies
- Regulatory environment
- Capitalization requirements
- Financing opportunities
From this list, you quickly realize that a business plan is more than a document a business uses to get financing or to attract investors. It is a roadmap of how your business will operate to succeed. Before you can begin writing your business planning roadmap, you need reliable information about your industry, your competitors, your product, and your customers for inclusion in it. An industry analysis, competitor analysis, product feature comparison, and market research will give you the information you need.
How to Conduct an Industry Analysis
Understanding the market and industry in which your company will do business is accomplished through industry analysis. An industry analysis conducted before you begin to write a business plan will help you to:
- Recognize and analyze ways of reducing business risks
- Identify industry trends including potential problem areas within the industry
- Project capitalization requirements for your business
- Identify product and service trends and opportunities
Industry analysis is specific to the particular industry in which a business is currently operating or plans to venture. It provides information from which a business owner can create a long-term strategy to minimize risks and take advantage of growth opportunities.
Porter’s Industry Analysis Method
A method developed by Michael E. Porter of Harvard University has become the most frequently used method for analyzing any industry to create a strategy to compete within it. According to Porter, five forces influence all markets and industries.
The five forces are:
- Ease of entry: When new companies can enter an industry with relative ease, those companies already in operation will love their competitive advantage. Profits will suffer unless existing companies have a way to block or slow new entries. Government regulation, customer loyalty, and patents and copyrights can be barriers to new businesses entering a market or industry.
- Power held by suppliers: Suppliers of products, services, or materials that a business needs can affect a company’s ability to compete. If there are few alternative products or only a few vendors offering the materials, the suppliers can dictate prices, quantities, and delivery times to businesses that must purchase from them.
- Power of buyers: Strong customer bargaining power, as in industries where there are many competing products from which a buyer can choose, can affect a company’s ability to price its products without fear of losing customers.
- Availability of substitute products or services: If two companies with similar products compete within an industry, they will each benefit as advertising and marketing by the companies will generally increase customer demand. For example, two businesses selling different house paint brands will mutually benefit as customer demand for their products increases due to the competing marketing campaigns. A company that sells and promotes vinyl siding as a substitute for painted surfaces will reduce the market share’s size for paint.
- Competitive rivalry: This factor in the analysis takes into consideration the number of competitors in an industry and their relative strength. An industry with many companies offering similar products will offer a company little opportunity to control consumers’ or suppliers’ ability from going elsewhere.
Porter believed that an analysis of the five forces that exist in every industry could help forecast a company’s ability to compete and remain profitable. You will obtain sufficient information on your industry from the five forces analysis to formulate long- and short-term strategies to incorporate into your business plan.
A business plan for startup companies will benefit from an industry analysis that provides ownership with information to make decisions and formulate policy in certain key areas. You should be able to answer the following key questions about the industry and your company’s ability to successfully compete in it when you have completed the industry analysis:
- What are the primary economic characteristics of the industry?
- How strong are the competitive forces that exist within the industry?
- What trends or changes can be expected in the industry, and from where will they come?
- What response will competitors make to the entry of a new company into the industry?
- What are the factors that will determine your company’s ability to succeed?
- What are the industry prospects for profitability and potential for growth?
- Will the company compete on a local, national, regional, or international basis?
- What modifications or changes must be done to the company’s products or services to make them competitive in this industry?
Industry Analysis Resources and Tools
There are several free industry analysis resources and tools available to entrepreneurs preparing to write a business plan. A few of the more popular sources of industry information include:
- BizStats (www.bizstats.com): It offers statistics and financial data on businesses in a variety of industries as well as tools to calculate business valuation and cost of goods sold.
- Securities and Exchange Commission (www.sec.gov/edgar.shtml): The SEC makes annual reports and other financial filings of publicly traded companies available for review at its website.
- FreeLunch.com: This site from Moody’s Analytics offers data on economic trends and financial data from around the country.
- Hoover’s Online (www.hoovers.com): This is a Dun & Bradstreet offers a searchable database of financial information and profiles of public and private companies.
- U.S. Census Bureau (www.census.gov): Government agencies can offer a treasure-trove of information. The Census Bureau has searchable databases with industry overviews, economic data by region, and population statistics.
- Thomas Register (www.thomasnet.com): Originally published in book form, the Thomas Register is a searchable database of product information and market trends for various industries. It publishes an annual survey it calls its “Industry Market Barometer” that shows where reporting companies are, where they have been and where they are heading.
- Library of Congress Legislative Information (https://beta.congress.gov/): The primary source for information about recently enacted federal legislation that could affect a business or an entire industry.
- Websites of individual companies or trade associations: Most companies have websites that provide information about the business, including products and management structure. Trade associations usually have websites that offer glimpses into what is happening within an industry from those working in it.
Industry analysis is not to be confused with a market analysis or a competitor analysis, both of which are included in a business plan for entrepreneurs. Industry analysis will describe the products offered within a particular industry and the marketplace parameters concerning economic, regulatory, and political issues. An industry analysis establishes the marketplace’s scope; a market analysis tells a business owner if a particular industry’s market will be profitable for a company’s product.
How to do a Competitor Analysis
Competitor analysis is when a business obtains information to identify and learn more about key competitors to predict how the competition will react. Competitive analysis plays a vital role in strategic planning, so writing a great business plan becomes easier if you do your research before writing your business plan.
Unlike the competitive rivalry factor of industry analysis, a competitor analysis focuses attention on each competitor’s strengths and weaknesses instead of focusing on the overall competitive climate within an industry. A competitor analysis offers a detailed profile of each competitor along with an analysis of marketing strategies that can be used to counter position your company to improve market share or profitability.
At the completion of your competitor analysis, you should be able to:
- Identify your primary competition within your industry and marketplace
- Know the company profile of your competitors
- Identify the geographic location in which competitors operate
- Identify competitor’s market share and profitability
- Know and understand your competition’s strategies and objectives
- Identify benefits, such as increased customer awareness, derived from your competitors’ marketing
- How to identify and understand competitor strategies that are successful and those that are not
- How to anticipate your competition’s response to implementation of your strategies and plans
- Learn how to turn your competition’s anticipated response to your benefit
The following steps will guide you through your competitor analysis:
- Create a list of your current and future competitors
- Gather data and information about your competitors, their products, and their marketing and pricing strategies
- Review and analyze the data
- Create a list of your competitors’ strengths and weaknesses
- Create strategies to take advantage of competitors’ weaknesses while a minimizing threats posed by their strengths
Sources of Competitor Information
Information for competitor analysis is available from several sources, including news stories and press releases, advertising, company websites, promotional campaigns, patent and copyright applications, price lists, and, in the case of publicly traded companies, annual reports, and SEC filings.
Sometimes, getting information about a competitor might require a bit of sleuthing on your part. If your competitor has a store that is open to the public, no rules are prohibiting you from visiting it and taking a look around. Becoming a member of a competitor’s mailing list to receive promotional material and updates on new products and pricing is a quick and easy source of information.
The information gathered about competitors might not seem like much when looked at separately, but it can be mosaic-like in what it reveals about your competition when viewed as a whole. A random conversation with a supplier might reveal information about a change in a competitor’s product line. The point is to take advantage of every opportunity to acquire data about the marketplace in which your business operates. It might reveal something about your competitors that could be used in developing or refining your marketing strategy.
How to do a Product Feature Comparison
A product feature comparison allows you to compare your company’s product with products produced by competitors. Unlike a competitor analysis that allows you to determine how your business measures up to competing businesses, product feature comparisons limit their focus to the products themselves. When used as part of creating an easy business plan, product features comparison data can provide critical information to making marketing decisions.
1. Conducting the Research
The first thing you should do is purchase or acquire your competitor’s product. This gives you the chance to evaluate your competitor’s sales process while acquiring the product to test. Using the product, you can compare features on the competitor’s product with your own product. If the features of the competing product give it a performance advantage over your own, you can evaluate how important those features are to determine if your product should be redesigned. Another source of information on the product is the internet. What are consumers saying about your product versus the product sold by your competitor? Product reviews by websites that specialize in testing products could also tell you how your product is faring in the marketplace compared to other products.
2. Product Comparison Tables
The information you obtained through your research and product testing is easier to compare if compiled in a simple table format. Each product’s features can be listed under separate columns for each feature, and each product feature can be judged to determine which one was the best. The best feature gets one point while the other product’s feature gets no points. The winning product is the one that ends up with the most points.
Another method of evaluating the features of different products is to assign a score of 1 to 10, with a higher score going to features deemed to be the most important as far as product performance. The winning product is the one that ends up with the highest overall score.
3. Coming to a Conclusion
Comparing a competitor’s product features with those of your own product is only useful if you use the information to make worthwhile improvements to your product. Redesigning your product just to make it look more like your competitor’s product only makes sense if the redesign meets a customer need that your product is not currently meeting.
The conclusions you reach from the data a product feature comparison gives can be incorporated into the market analysis, competitive analysis, and marketing plan sections when writing a business plan. The information will also be useful in guiding decisions made for the future development of new products.
How to Conduct Market Research
Market research provides businesses with information about their customers and the markets in which they do business. By analyzing its data, business owners offer products that consumers want at competitive prices with other sellers. For the new entrepreneur who is learning how to start a business, market research performed before preparing a business plan can help formulate strategies to reduce risks, recognize marketplace and industry trends, and identify opportunities to increase sales.
The marketplace for many businesses is no longer limited to one country. The growth of internet commerce has made it possible for even small businesses to participate in the global economy for many products and services. Market research can help owners of businesses to evaluate the feasibility of expansion into international markets.
The data collected through market research should give a business owner the answers to the following questions:
- Who are the customers for a company’s product or service? What factors influence consumers to purchase this product or service?
- What improvements or changes in current products would encourage customers to purchase more of them?
- What price range will cause customers to switch to other competing products?
- What features of a competitor’s product do customers like or dislike?
- What other uses of the product exist that can be introduced into new markets?
- Marketing research allows you to compile a profile of your current or potential customers to provide answers to the following questions:
- How old are they?
- Where do they live?
- What is their highest level of education?
- How large is the customer base?
- What are their favorite leisure time activities
- What do they do for a living?
- How much do they earn?
- Where are they employed?
- What technology do they use and prefer?
- What are their beliefs, values or opinions?
- Where do they prefer to shop?
- For whom do they shop?
Market Research Tools
The methods of gathering information about consumers do not have to be complicated. Frequently used methods include: Interviews by telephone or face-to-face Surveys are conducted online, by telephone, or through the mail. Questionnaires are completed online, in person, or through the mail. Focus groups to solicit feedback from people representing a cross-section of potential customers
Steps in Market Research
Any of the tools used to gather information can be employed using a five-step approach.
- Step 1: Identify what you want to learn or find out. Be specific about what you want to learn. Working on a single issue or question is easier than trying to create a survey or interview covering a wide variety of topics. For example, if your company is attempting to develop a new and improved widget to replace widgets currently being sold, you might focus your research on customer experiences with the old widget. Are they satisfied with how it performs? Do they believe there is a need for a new and improved model? Would they buy a new and improved model? How much are they willing to pay?
- Step 2: Draft questions to allow for follow-up questions depending upon the answer given.
- Step 3: Identify the target group for your research. Interviewing people who have never used your product will not generate data to determine how your product users react to its design changes.
- Step 4: Select the most effective tool for obtaining the information you need. If your company is in the telecommunications industry, surveying by telephone might be more effective than one conducted through the mail.
- Step 5: Analyze the results of your research. Market research data is only as good as the use to which you can put it. Go back and review the purpose of your research. Determine if the data you gathered allows you to answer the question or solve the problem. If it does, develop a strategy and implement it. If it does not, then decide what additional data you need and return to step 1.
The Key Elements in Writing a Business Plan
The answer to the question “How do you write a business plan?” depends upon the type of business and the purpose for which you are going to use it. Too many business owners think of a business plan as they need to convince a bank to lend their company a loan or convince a venture capitalist to invest in it.
In fact, business plans come in all shapes and sizes, depending upon the audience for which the plan is intended. For example, a startup company would want a business plan containing all of the bells and whistles to serve as a comprehensive guide for the new owners and management. Should the time come when financing is needed for new equipment or expansion, a revised business plan that focuses on the company’s financial growth and ability to repay, the debt would be needed.
Business plans are written with an audience in mind. Internal business plans are written for a company’s management team to use as an operational guide. It can also be written with a specific project in mind to allow owners and managers to evaluate its feasibility and profitability. These types of plans might include projections about profitability and growth ten or more years into the future.
External plans are written for the benefit of an audience located outside of the company. Prospective investors or venture capitalists and lending institutions are examples of the types of audiences for which external business plans are created. These types of plans are created to answer a question or address a particular problem. For instance, prospective investors want a business plan that demonstrates their future growth and profitability to generate a return on their capital investment.
Too many businesses start with inadequate planning. No one goes into business to lose money. If you start a business, you expect that it will be profitable and succeed. Writing a business plan forces you to focus on the strategies that will make your business a successful one. That is why learning how to write a plan is important for new businesses or established businesses that might be venturing into new markets or launching new products.
Business plans come in all shapes and sizes, so what you choose to include in your business plan will depend upon your audience, the question it seeks to answer or the problem it seeks to resolve, and your personal preferences. The most frequently included elements of a business plan are the following:
- Executive summary
- Business description
- Business environment analysis
- Industry analysis
- Competitive analysis
- Market analysis
- Marketing plan
- Operations plan
- Team and management plan
- Financial projections
The Executive Summary
Regardless of the business plan format chosen, the executive summary always appears first in the document. Its purpose is to educate and inform the reader about the company. It should explain where the company is at present, where it is going, and how it plans to succeed. In a plan prepared for an external audience, such as investors or bankers, the executive summary is the first opportunity the business owner has to engage the reader’s interest.
Even though it appears first in a business plan, the executive summary should be written last. The executive summary is a snapshot of your business plan that a reader can quickly look at to become acquainted with your business. Writing it last allows you to highlight your plan’s strengths in the first section your audience reads.
Your executive summary should include the following information
- Mission Statement: This explains to the reader why your company exists. Its mission statement should guide the activities of your company.
- Company Information: This is a brief statement giving a historical perspective of your company. It should include the date of formation, locations, company founders, and current employees.
- Highlights: This is an opportunity to tell the reader about profit or market milestones achieved by the company since its inception.
- Products and Services: Briefly mention and describe the company’s products or services.
- Financial Information: This section is particularly important for companies seeking financing and should include mention of bank references and investors.
- Future Projections: Explain the direction in which ownership and management plan to take the business.
Remember that even though it might be the last thing you write for your business plan, the executive summary is the first thing people will read. You have to grab the reader’s attention and hold it. Think of the executive summary as a highlight reel showcasing your business. One of the reasons for saving the executive summary until last to write is to give you the chance to include the best parts from each of the sections of your business plan in it.
Write the executive summary with a particular audience in mind. If you are trying to attract investors, you should focus on those sections of your business plan that establish how your company’s product fills a consumer need. Reference the market research and marketing strategies that demonstrate how your company will take advantage of this.
After completing the executive summary, read it aloud. It should convey your intended message is clear, unequivocal terms that flow without sounding like a sales pitch.
A business description tells the reader more than simply, “We sell things.” This section of the business plan is an overview of the company, including its legal structure, its owners and management, a brief company history, information about the products or services it offers, markets the company will serve and other information to demonstrate how the company plans to introduce its product into the marketplace.
The purpose of the business description is to help a reader to quickly grasp the goals the company has set and how it intends to meet those goals. By the time people are finished reading, they should have a clear picture of the nature of the company’s business, its business structure, its goals and objectives, and its strengths and advantages.
Begin the description with a few sentences that give a capsule view of the company, its product, and its position in the industry in which it competes. This is an elevator pitch to get the reader interested in learning more about the company. Let the reader know if this is a new venture or a business for a while.
The business description should continue with a statement about the type of business structure adopted by the company. Explain whether it is a corporation, partnership, sole proprietorship, or limited liability company, and list the principals’ names along with brief profiles for each one showing how their presence benefits the company.
Part of the business’s description should include information about the company’s products and services, the potential customers, supply and distribution channels, competitive advantages offered by product features, and how the company plans to exploit those advantages. End the business description by explaining the specifics of how the company plans to be profitable.
The business description section of a business plan should not be overly long. Depending upon the company’s size and the number of products offered by it, a description that is one to two pages in length should suffice.
Business Environment Analysis
Business planning is an ongoing process that does not begin and end with writing a business plan. Periodically taking stock of how a company is doing is essential to ensuring that it meets its goals and will become or continue to be successful and profitable. A business plan should be flexible by incorporating tools to analyze company performance compared to other industry businesses.
A business environmental analysis accomplishes section accomplishes this by providing useful information to management and company owners. Analyzing this data allows the management team to identify those plans and strategies that are not.
The environment in which a company operates involves internal and external factors that influence how business is conducted. Internal factors include a company’s business culture, its organizational structure, and the methods by which it is managed. External environmental factors might include government activities such as laws and regulatory actions, economic changes such as recessions, social trends and movements that shift consumer preferences, and innovations in technology that can help or damage a business’s profitability and productivity.
A systematic process of analyzing the environment to identify those environmental factors affecting a company determines its impact on the business and developing strategies to take advantage of them or limit their effects. After a business has implemented a strategy, the process will monitor the business environment to ensure that it is working and does not require modification or change.
Business plan tools that give management a constant source of current and accurate information about the marketplace and the industry and competitive forces at work in both are essential to an effective analysis of the business environment. Three of those tools are the industry analysis, the competitor analysis, and the market analysis that should be included when writing a business plan.
The industry analysis you performed before sitting down to write your business plan can be incorporated into it to provide data on the industry and markets in which your company conducts business. Drawing upon the data you collected using the various industry analysis resources mentioned earlier allows you to identify the risks and opportunities confronting the company as it prepares to enter the marketplace with its products or services. This information permits you to develop strategies to take full advantage of business opportunities while minimizing or avoiding the identified risks.
When written as a section of a company’s business plan, an industry analysis can be presented as a five-step process.
- Step 1: Give a brief overview of the industry. Define the industry in terms of historical background, the geographic area it services, and its products.
- Step 2: Review trends and growth patterns that have existed within the industry.
- Step 3: Identify factors that influence the industry. These might include government regulatory policies and competitive practices of other businesses.
- Step 4: Using data gathered through research, the industry forecast anticipated growth. The predictions should be both long- and short-term.
- Step 5: Describe how your company will position itself within the industry. Focus on how your company can take advantage of opportunities identified within the industry.
You want your business plan to tell you how your company compares to others in the industry. It is difficult to predict how your company’s product or service will perform in the marketplace without knowing what your competitors are doing. A competitive analysis section draws upon the research you did before writing your business plan to offer the data and analysis to support your performance assumptions.
Writing an effective competitive analysis can be accomplished in five steps. Keep in mind that the data you will need about your competitors should have been gathered earlier when you conducted the industry analysis before starting work on creating your business plan.
- Step 1: Identify and list your competitors. You can do this in paragraph format or a spreadsheet. You should include each competitor’s name and location along with the products they offer, sales volume, market share, pricing information, marketing strategy, and other details of their business.
- Step 2: List your competitors’ strengths and weaknesses.
- Step 3: Analyze the strengths and weaknesses of your company. Focus on how your company can exploit its strengths while overcoming or minimizing identifiable weaknesses.
- Step 4: Describe your company’s role in the marketplace. Explain how your company can compete for a market share, given the information you acquired about your competitors. This is where you support marketing decisions and strategies with the data you previously gathered through your marketing research, product feature comparison, competitive analysis, and industry analysis.
- Step 5: Give a detailed description of your company. Use this opportunity to describe how ownership, management, location, business structure, and other resources possessed by your company will allow it to succeed in the marketplace.
You should use this section of your business plan to describe the market into which you intend to introduce your company’s products or services. This is where you draw from the data you collected earlier when you did your preliminary market analysis before getting to work on preparing your company’s plan.
Ideally, the market analysis should offer an overview of the marketplace, the positions held by your competitors, and other facts to support your company’s strategies about marketing, production, and distribution.
Some of the key topics that should be addressed in this section include:
- A description of the industry and the market. This should include information about projected growth, potential changes in consumer demand, and anticipated trends or cycles that could affect product performance.
- Describe your customers. Describe the customer need that the product or service satisfies. Provide demographics about your customers and show how the product your company offers falls within those demographics.
- How big is the market? If your market research shows that the market has been shrinking, a decision to enter or continue in the market should be supported by research supporting a prediction for future growth.
- Describe and explain the pricing structures of your company and its competitors. Describe how your marketing and pricing will give your company an advantage in the market, or describe what changes must be made to give your company an edge.
- The data collected in the competitive analysis can be incorporated into the market analysis to show how your company will compete with other companies offering the same or similar products or services.
The purpose of a company’s marketing plan is to attract customers willing to purchase a particular product or product line. Creating a market for the product or service your company offers began with the business environment analysis and continues by developing a marketing strategy. A marketing strategy must be flexible and should be evaluated periodically to determine if it must be reworked due to changes in the marketplace.
Marketing plans frequently include strategies for four stages.
- Penetration strategies represent the company’s plans for its initial entry into the market.
- Growth strategy builds upon a product’s success by introducing it to different users or into new markets.
- Another strategy analyzes new or alternative methods of distributing a company’s product to increase sales, such as hiring salespeople or developing new retail outlets.
- The fourth strategy controls the communications process between the company and its customers. Methods of advertising and audiences to be targeted are just two of the issues that a communications strategy should address.
The strategies created by a company under its marketing plan are affected by or affect other aspects of the business plan. For instance, a business’s decision to expand into new markets by acquiring a company already selling in the new market might be hampered by a lack of capital to complete the transaction. It might force the company to seek additional capital by adding investors or borrowing money.
The operations plan is closely tied to the team and management plan section of a business plan. An operations plan is the engine that runs the machine you call a business. Without an operations plan, nothing else in your business plan will get done. The operations section of a business plan created to obtain bank financing or some other external purpose does not require the details to go into a plan that will guide ownership and management in running the business.
This section should be crammed with details and instructions to direct people within the business’s day-to-day operations. The personnel covered in the team and management plan section of a business plan should refer to the operations plan to carry out the strategies and tasks needed to run the business.
An effective way of including an operations plan when writing a business plan is to combine it into a single section entitled “Operations and Management Plan.” Writing the section begins with creating an organization chart showing each business member’s title, duties and responsibilities, and supervisory role.
Team and Management Plan
The people who make up your ownership and management team focus on the team and management portion of a business plan for entrepreneurs. Whether intended for internal or external use, readers of this section of a business plan should have a clear understanding of who is in charge. The length and complexity of this section will depend upon the size of the company. The business plan written by a sole proprietor will be much shorter than one prepared for a corporation with multiple management teams, a board of directors, and multiple locations.
The team and management section includes a list of owners and key management personnel and a description of the role each plays in running the organization, the compensation and benefits each one receives, and the criteria used for giving promotions and increasing compensation. Brief biographical information for each of the owners, key personnel, and members of the board of directors offers readers insight into the qualifications each person brings to the organization.
Other information about the company that should be included in this section includes:
- Business structure
- Length of time business has existed
- Mission statement and values
- Background and history of the company
This section of the business plan provides readers with a picture of where your company has been and where it is going from its finances. Established companies should include financial data on past performance. Banks, venture capitalists, and other lenders usually want at least three years of financial data, but some might want to see up to five years of information.
Financial data that should be included in the plan include income and cash flow statements and balance sheets. Some lenders might ask to include accounts receivable statements, accounts payable statements, and documentation of other company debt obligations.
Regardless of how long a company has been in existence, this section must include projections of its future financial picture. These projections must be supported by data the company has compiled through its research and analysis of the industry, competitors, markets, and products.
Financial forecasts should include the following documents:
- Statements of projected income
- Balance sheets
- Cash flow statements
- Capital expenditure budgets
Assumptions that a company makes about future market trends or other factors that could influence the financial projections should be explained. People outside of a company want to see that financial projections in a business plan are supported by accurate data or an analysis based on assumptions having a historical basis.
Financial projections can be supported by graphs, charts, credit history, order history, reference letters, or anything that a business believes will lend credibility and support the plan’s predictions. Such items might work best if they are included in the appendix section of the plan.
The information supporting projections, strategies, and assumptions made in a business plan will be found within the body of each section of it. An appendix usually contains financial information to which company owners and managers might want to limit access. For example, a company that prepares a plan specifically to obtain lender financing could use the appendix to submit tax returns, credit histories, and confidential data such as customer information only to those lenders requesting it. It can also be used for supporting reports, photographs, and other information that takes up more than a couple of pages.
An appendix should begin with a table of contents corresponding to the organization of the business plan sections. Even if it only contains information on some but not all sections of the plan, the appendix should always be located after its last section.
Resources on How to Write a Business Plan:
Business plan examples.
http://www.bplans.com/sample_business_plans.php http://www.score.org/resources/business-planning-financial-statements-template-gallery http://www.businessplans.org/businessplans.html http://www.businessballs.com/freebusinessplansandmarketingtemplates.htm http://www.businessplanarchive.org/
Business Plan Writing Resources
http://www.carnegielibrary.org/research/business/bplansindex.html http://www.hbs.edu/entrepreneurship/resources/businessplan.html http://www.entrepreneur.com/businessplan/index.html http://www.sbdcnet.org/small-business-information-center/business-plans http://www.inc.com/business-plans https://www.sequoiacap.com/grove/posts/6bzx/writing-a-business-plan http://www.sba.gov/tools/business-plan/1 https://business.usa.gov/start-a-business http://www.startupconnection.net/premium-resources/business-plan-disconnect/
Article References on How to Write a Business Plan:
- William A Sahlman. How to Write a Great Business Plan. Harvard Business Press Books 2008. ISBN-1422121429
- Bruce R. Barringer. Preparing Effective Business Plans: An Entrepreneurial Approach. Prentice Hall 2008. ISBN-0132318326
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The ultimate guide to designing a business plan, if you plan to start a business, you need a business plan. all good companies have one and, if you are wise, it's the first thing you'll think about writing..
Exploring ideas like ‘How to plan your business plan’, ‘Marketing and branding plans’, and ‘How to add value to the marketplace’, we’ve created the ultimate guide to designing a business plan to be a digestible go-to for anyone setting up a company.
Inside, you'll learn about the importance of your business concept (and how it will plan for growth), how to clearly communicate your vision to investors and banks and what to do about marketing your new company when it's up and running. Starting a new business is a great adventure – plan for success and enjoy the ride by downloading our ebook below!
THE ULTIMATE GUIDE TO DESIGNING A BUSINESS PLAN
Good business plan advice is hard to find - read our FREE guide to starting up in business the clever way.
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The top entrepreneurial networking events for investment, how to choose the best name for your business, 10 ways to be a more effective entrepreneur.
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Business plans help you run your business A good business plan guides you through each stage of starting and managing your business. You'll use your business plan as a roadmap for how to structure, run, and grow your new business. It's a way to think through the key elements of your business.
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Determine Your Business Concept 2. Research Your Competitors and Market 3. Create Your Business Plan 4. Choose Your Business Structure 5. Register Your Business and Get Licenses 6. Get...
That said, a typical business plan will include the following benchmarks: Product goals and deadlines for each month. Monthly financials for the first two years. Profit and loss statements for the first three to five years. Balance sheet projections for the first three to five years. Startups, entrepreneurs, and small businesses all create ...
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Business plan advice | Discover DHL Whether you starting a business or presenting a plan to investors or a bank, this guide will show you how to clarify your vision and plan for success. Whether you starting a business or presenting a plan to investors or a bank, this guide will show you how to clarify your vision and plan for success.
As a business owner, you have unique challenges and opportunities when it comes to your wealth. From managing your tax burden to planning your retirement and creating a legacy, it's important to have the right strategies in place. At RBC, we can help, by providing advice, solutions and expertise to help you protect and enjoy all that you've ...
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A business plan shouldn't just be a line on your to-do list; it should be referenced and used as intended going forward. Keep your business plan close, and use it to inform decisions and guide your team in the years ahead. Creating a business plan is an important step in growing your company
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1. Investors Are Short On Time. If your chief goal is using your business plan to secure funding, then it means you intend on getting it in front of an investor. And if there's one thing investors are, it's busy. So keep this in mind throughout writing a business plan.
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The following will take you to online business plan guides and templates for specific countries. United States Small Business Administration (SBA) - The "write your business plan page" includes traditional and lean startup business plan formats, three downloadable sample business plans, a template, and a step-by-step build a business plan ...
Refer to your business in third person. Writing in third person allows objectivity which can be more convincing and accepted by audiences like banks and investors. Avoid using "we" or "I" throughout your business plan. Writing in first person may come across as too personal. Remember to keep it business, not personal.
1. Executive summary business plan: This type of business plan is a brief overview of the main points of your business plan. It is typically one to two pages long and is used to give potential investors an overview of your business. 2.
When written as a section of a company's business plan, an industry analysis can be presented as a five-step process. Step 1: Give a brief overview of the industry. Define the industry in terms of historical background, the geographic area it services, and its products.
The ultimate guide to designing a business plan. Good business plan advice is hard to find - read our FREE guide to starting up in business the clever way. SHARE. Serious about taking your brand global? Reach 220 territories across the world. Easy Shipping; Preferential Business Rates; Exclusive Tools;