This one document could change the trajectory of your business. Discover how to write a business plan, including examples and what to put in it.
Have you ever sat down to create a business plan? Lots of small business owners skip over this critical step. But it’s so important. If you haven’t established one yet, do it today. I’ll show you how.
What Is A Business Plan?
Before we get into how to write one, we need to understand what it is.
It is basically an outline of goals for your company. Think of it as a map. It lists out where you want to go and how you are going to get there.
Are you a small business with cash flow problems? More than likely, you haven’t created a business plan. This one exercise can help you manage your income and expenses in a smarter way while also helping you to make more money.
Bankers and investors will want to read your business plan before investing in your small business. This contains all the information they need to know to make a financially wise decision such as how much profit your business makes and where you are planning for it to all go in the future.
The Basic Parts
Your business plan should include everything about how you plan on operating your company, the goals you have, and the specifics about how you are going to accomplish them.
The basic parts of a business plan include:
- Executive summary
- Company overview
- Your products/services
- Competitive analysis
- Marketing plan
- Major company milestones
- Management team members and their roles
- Your company’s financial plan
Then there are other things you can include as well but aren’t required. These items will help you define your goals. They include:
- How you will compete in your market
- Your ideal customer
- Projections
This is a detailed document and might take quite a bit of time to create. But trust me, you will appreciate having this. You’ll reference your business plan whenever you try to make changes or decisions.
How to Write a Business Plan
Now that you know what it is, you are ready to create your first business plan. I’ll give you a template and some examples. You’ll have a complete business plan ready to go much faster than you may be imagining!
Business Plan Outline
Let’s start with a basic business plan outline. Once you know what to put in it and in what order, you’ll be well on your way.
This should be extremely detailed. so take your time compiling all the information you need.
- Executive Summary – This is a page or two that summarizes all the information in the business plan. It’s easier if you write this last.
- Problems and Solutions – Describe the problems your business solves and how. For example, if you are a plumber, describe how you focus on new construction homes. Or, if you are a health coach, describe how you focus on helping people find alternative ways to manage autoimmune health issues that they haven’t been able to solve through traditional medicine. Make sure to include your future plans in this section as well.
- Market Analysis Summary – Describe your target market including your ideal customer. Discuss in-depth what your customer’s needs are and how your business meets those needs. You will also want to describe the market trends, growth, and analyses of your competition.
- Execution – Outline all your plans here. This includes your sales plans, your marketing plans, and the metrics you will use to follow up on their success. Also, describe your location, technology, tools, and milestones.
- Company and Management Summary – This is where you explain who you are. Introduce yourself and your management team. Include your organizational structure. You can also share a brief history of the company here as well as a personnel plan. Don’t have a team? That’s perfectly fine! Many companies are built by solopreneurs who do all (or most of) the roles on their own. It’s just important to recognize all the different positions and roles needed to support the company and its vision. The business owner can then put in his/her name as the placeholder, and state that as the company grows, employees would be hired in these positions.
- Financial Plan – This is where you share those beautiful charts. Include balance sheets, sales forecasts, and projected profit loss and cash flow tables. Don’t forget the projected cash flow and business ratios.
- Appendix – This is where you store all tables, charts, and glossary of terms.
This is a very brief and general overview. Business plans tend to be extremely in-depth. Some business plans can grow to be upwards of 15-3o pages long.
If yours is turning into a 30-page one, make sure you organize it so it’s easy to skim and find what you need. Hire a graphic designer if you have to. Your goal should be to make it so easy to skim through that it only takes 15 minutes to read.
Free Templates
Don’t feel overwhelmed. There are lots of free business plan templates you can download online. They will save you a lot of time and stress. Just plug in your information and watch it take shape.
Try any of these free templates.
- Microsoft Office Template
- Santa Clara University My Own Business Template
- RocketLawyer Template by State
- PandaDoc Business Plan Templates
Business Plan Sample
Even after reading through our business plan outline and using a template, this can still seem a bit confusing at first. Seeing example business plans will give you a better idea of what you are creating. When you know what it’s going to look like in the end, it’s easier to put together.
Thankfully there are tons of free samples online you can browse. Here are the best ones I found.
- Thought Co. Sample – This is a brief business plan but it has all the required components. The best thing about this example is how well organized it is.
- Panda Doc template – This template is fantastic. It actually explains each section so you know what to include.
- Startups – There are actually 4 different examples in this article. The best thing about these samples is that you can download the formatted versions so you can see a fully-made business plan.
Establish and Describe Your Ideal Customer
One of the most important parts of your market analysis summary is describing your ideal customer. Do not skip this part. Defining and describing your ideal customer will affect everything from your advertisements to the packaging and even store displays.
Even though you might dream of everyone in the entire world buying your products, your ideal customer cannot be anybody and everybody. When you narrow your marketing focus on one specific type of customer, you will attract them and more.
What Should You Compete on As A Small Business Owner?
Another very important part of your business plan is how you are going to compete in the current market.
I’ve seen as a mistake of many business owners focusing on having the lowest price — I’ve seen business owners who will undercut the competition to attract new customers, but then can’t sustain their business because their profit margin is too low, or even negative. Then, when they want to raise their prices, they lose customers who are price sensitive.
Think of a luxury brand. These companies don’t compete on price or try to be the most affordable in the industry. Instead, they focus on quality and perception that the brand is better. This can go a long way in any market! Think about what makes your business the best, and focus on that.
2 Comments. Leave new
Thanks Sylvia, Great information. What about your exit strategy and your plan for eventually selling your business, either to another company or to the public, in an IPO? If you have investors, they will want to know your thoughts on this. If you’re running a business that you plan to maintain ownership of indefinitely, and you’re not seeking angel investment or VC funding, you can skip the exit strategy section. After all, your investors will want to get a return on their investment, and the only way they will get this is if the company is sold to someone else.
Great point, Valentina! Yes, an exit strategy and plan is a great thing to think about upfront in the business if you can.