A great business plan is something that helps entrepreneurs stay focused on the big picture, while also keeping them accountable for meeting the goals and objectives they’ve set out to accomplish. A good business plan can also help you get funding for your goals, which is why it’s important to understand what makes a business plan unique from other types of plans. Learn how to write a business plan by following our guide.
In this guide, we review What Do You Need A Business Plan For, how to write a business plan, and who needs a business plan.
What Do You Need A Business Plan For
A business plan is a document that outlines your business goals and objectives, as well as how you’ll achieve them. A good business plan helps you stay focused on your short-term and long-term plans for growth—and it may even help you get funding for these goals. Let’s dive deeper into why writing a business plan is important, what makes a good one unique from other types of plans, and how to create one yourself!
It helps you identify what makes your business unique.
Business plans help you identify what makes your business unique. This is a very important thing to do because it allows you to focus on the things that make your business different from other businesses. It also helps you understand how using these differences can be beneficial and advantageous for your business.
Businesses compete with each other for attention in the marketplace all the time, so if yours isn’t unique or doesn’t stand out from the crowd, there’s no way it will get noticed by customers or prospective investors. A well-crafted business plan will help you create and present a story about how your company stands out from its competitors, as well as give details about what makes it different from them in order to make an impact on potential customers’ minds when they read through it (or hear someone else talk about your idea).
It helps you set a vision for the future of your business.
You’ll be able to set a vision for your business, whether it’s growing your sales or making sure you have enough money in the bank. This is important because it will help you create a plan for how to achieve that vision, and make sure that no one else tries to take away from those plans.
It also allows you to measure progress towards achieving that vision by setting goals for yourself and others involved with your company. For example, if one of your goals is increasing sales by 10%, then measuring this can tell you whether or not you’re on track to achieve that goal – or if something needs changing before it’s too late (like fixing an inefficient pricing structure).
It is a blueprint for your success.
A business plan is a blueprint for your success. It can help you create a road map to achieve your goals, make better decisions, and stay focused on the important things. It will also help you measure your business against industry standards, and determine if it’s on track or not.
It helps you stay focused.
A business plan can help you stay focused. It allows you to see where you are going, what is working and what needs improvement.
The first step to creating a good business plan is to define your goals and objectives clearly. Then break it down into steps that will help get there. This means that if any part of the process isn’t working or isn’t as good as it could be, then make adjustments so that it does work better in the future!
Writing a business plan will help you identify where your money is going, monitor progress and develop strategies for growth.
Writing a business plan will help you identify where your money is going, monitor progress and develop strategies for growth. That’s not to say that every small business should have one, but it’s definitely something that should be on the radar of any serious entrepreneur. Why? Because knowing exactly what you’re doing before getting into it can go a long way toward ensuring success.
how to write a business plan
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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
Business Plan Template
Download Business Plan Template
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.
who needs a business plan
Business plans provide direction and pertinent information to owners, employees, potential investors and lenders. An effective business plan details the mission and goals of a business and the ways in which your company will achieve them. It provides a road map for business owners just starting out as well as for larger companies looking to expand and excel in their area of expertise. A business plan efficiently answers common and pertinent questions regarding the daily operations of a business and its future.
Business plans provide direction and pertinent information to owners, employees, potential investors and lenders. An effective business plan details the mission and goals of a business and the ways in which your company will achieve them. It provides a road map for business owners just starting out as well as for larger companies looking to expand and excel in their area of expertise. A business plan efficiently answers common and pertinent questions regarding the daily operations of a business and its future.
Owners
Small business owners and entrepreneurs sometimes think they do not need a business plan. They sell a product or provide a service that seems to be a straightforward, no-questions-asked type of operation. However, small business owners gain powerful insight into their business when they take the time to develop and review a business plan. New marketing strategies, untapped areas of development and expansion and effective pricing strategies emerge when examining business practices.
Finances
Most businesses require financing by lenders or investors at some point in their development. A business plan details the financial health of a company, its chances of success and its ability to pay financial obligations. The very detailed information contained in the financial section of a business plan includes information on the cost of materials, equipment and business operations along with data describing a company’s pricing strategy and profit potential. Potential lenders and investors insist on this detailed information before providing money to a company.
Employees
Employees need clear direction in both their job duties on a daily basis and their long-term purpose within a company. A business plan describes this information clearly and concisely for employees as they seek to increase individual productivity and that of the business as a whole. Employees in supervisory and management positions remain focused on the big picture by having clear goals and objectives in place.
Government Agencies
Government agencies sometimes request business plans and other pertinent information depending on the circumstances and form of business under which you are operating, according to New Jersey attorney Donald A. Griesmann. This becomes especially important when setting up a nonprofit organization that will be closely examined by both the Internal Revenue Service and the state in which the business plans to operate.
Monitor Progress
Use a business plan to evaluate your business and its progress. Schedule annual business reviews to assess overall business operations, financial health and goal attainment as outlined in the business plan. The business plan should guide changes made within the business in order to complete as-yet unreached goals. Keep in mind that business plans can change and evolve according to the needs of your company.
Tips
Writing a business plan can be overwhelming to new entrepreneurs. Your local chamber of commerce may offer assistance in creating a workable and realistic business plan. There are many business plan templates and samples available online for additional help and guidance. The U.S. Small Business Association, a federal agency, provides detailed information on all aspects of business operations, including writing business plans.