A step-by-step guide to writing your business plan
When you’re starting or restructuring your business, writing a business plan can seem like an intimidating task, especially if you’ve never done it before. It can be even more difficult to convey the value of what you envision to potential investors, this is where knowing how to write a business plan comes into play.
Business plans should be a priority, as they lay out the steps you need to take in order to accomplish your specific goals and ensure nothing is missed. They can also be used to show potential investors that you’re serious and that you have a strong plan and business model, increasing the likelihood of receiving financing.
Here are the key steps to writing a business plan
- 1. Write an executive summary
- 2. Write a company description
- 3. Outline your business goals
- 4. Outline your organizational & management structure
- 5. Describe your services and products
- 6. Detail your marketing and sales plan
- 7. Outline funding requirements
- 8. Write a financial projection
- 9. Write an appendix
1. Write an executive summary
The executive summary is a short overview of your business and your plans. It shouldn’t be more than two pages, and it can be used to capture the interest of potential partners, investors, and vendors. This should highlight why you’ll be successful.
Executive summaries must include the following:
- A mission statement, which is a sentence or two that will explain what purpose your business will serve and what pain points you can fulfill
- Information about your product or service, including anything that makes it different from what’s already out there
- Basic information about your company’s leadership team, including existing team members and their roles
- Information about where your team is located
- Basic financial information (including current funding or what you’re seeking funding for) and high-level growth plans about what you plan to accomplish if you’re asking for financing
2. Write a company description
This section will dive deep into the company itself, including the problems that you plan to solve, and the communities you want to reach. List out the specific audience segments, consumers, organizations, or businesses that you want as customers.
You also want to highlight what differentiators or competitive advantages will set your business up for success. This is, simply put, the place to advertise your strengths.
You should include the following:
- Every unique selling proposition (USP) that your business has, and each should be tied back into your mission statement
- An explanation of every competitive advantage that you have as a business and a business owner
- An individual highlight for each individual expert on your team
- Information about company patents or copyrights if relevant
3. Outline your business goals
This section should include what you’d like to accomplish with your company in the short and long term. For example: To become a $100 million dollar corporation in five years by becoming one of the top online retailers in certain categories. This is usually written first because it gives everyone an idea of where your business is going.
The goal of your business is important. Don’t be too vague when writing an objective for your business. Be specific about what you want to accomplish and how you want it done. An objective statement should also include how your vision has affected you personally and why it’s important for others (customers) as well.
4. Outline your organizational & management structure
The organization and management section will detail how your company will be structured and who specifically will run it.
It should include the following:
- Information about your business’s legal incorporation structure, which may be an S or C corporation, a general or limited partnership, an LLC, or a sole proprietorship. Explain who the different owners would be.
- An organizational chart that showcases your management and leadership structure within the company.
- Highlight any executives and upper-level team members who are currently on board, along with information about each that explains how they’ll contribute to the success of your budding business. Including CVs of key members of your team may be useful.
5. Describe your services and products
Your business will offer products, services, or both. This is where you’ll detail exactly what you’re planning on selling.
This section should include the following information:
- An explanation of how the product or service benefits your customer
- The product lifecycle, which is how long it can be sustainable in the market after it’s first introduced
- Plans for intellectual property like patent filings or copyright
- Research or product testing that you’ve conducted for your product or service
6. Detail your marketing and sales plan
All businesses need a detailed marketing strategy if they want to connect with new customers and generate sales. This portion of your business plan will detail what your plans are.
You’ll need to include:
- Specific plans you have for attracting, acquiring, and retaining customers. This will include different platforms that you plan to use, both online and in-person, and should account for all stages of the digital sales funnel.
- An explanation of the sale process, including whether online checkout will be available, what the lead collection process is like, and what any client onboarding processes look like (if any).
- Data about how much you plan to invest in your marketing campaigns, and on which platforms. This will be important during the financial projections part of the business plan, so don’t neglect it; it can always be adjusted later, but you want to have a solid foundation now.
7. Outline funding requirements
Not all business plans are requesting funding, but if you are, this is where you need to outline what you’re seeking in terms of financing and what it will cover.
Explain what funding you’ll need over the next five-year period, and why you need it.
This section should elaborate on the following:
- Whether you want debt or equity in exchange for financing
- The terms under which you’re seeking financing
- The length of time of the loan, line of credit, or investment
- An explanation of how you’ll use the funds and why they’re needed to start and scale your business
- A future strategy about how you’ll pay off the debt in the future
8. Write a financial projection
Your funding requests should immediately be followed by your financial projections. This will explain how much you expect to make, both over the first one-year period and over a five-year period. You need to convince the reader that your business will be financially stable long-term so that they can recoup on their investment.
Here’s what you should include:
- Established businesses should include financial reports like income statements, cash flow statements, profit and loss statements, and balance sheets for the past five years (or whatever is available)
- Mention any collateral that you can put against a loan
- Explain how you plan to make money, including information like profit margins on your product or service line
- Provide a financial projection of how much you expect to grow over the five year period
9. Write an appendix
If you have anything else that you want the reader to know or see, the appendix is the perfect place to put it. This may include additional information like client testimonials if you’re already up and running, images of products or product prototypes, or resumes of any key players.
Your appendix should always include the following if they aren’t already listed in the business plan:
- Copies of any patents or copyrights
- Personal recommendations or testimonials
- Product research that didn’t have a place earlier in the business plan
- Resumes or CVs of any high-level members
- Additional data about the process of manufacturing or creation
- Any necessary permits or licenses that you’ve obtained
Taking the time to write a strong, comprehensive business plan that can guide your business and persuade external team members to get on board is well worth the effort, whether you pen the plan yourself or hire outside help.
Business plans are a crucial part of connecting with financers, partners, vendors, and investors. Since they can also guide your internal team on how to move forward during the early years of managing the business, they’re exceptionally valuable for multiple different purposes. They can help you convey why your business will be a success and why it’s such a great investment for everyone involved.