Here’s the deal: not many small business owners know how to write a proper business plan, nor do they want to spend hours making one.
Some resort to using business plan templates available online, but not all of them are suitable for all companies or business types.
We’ll talk you through what a business plan is, why they are useful, and how to write your own.
We’ll also discuss the pros and cons of using a business plan template or a business planning tool.
So pull out that comfy chair, and let’s get started – it’s time to really nail your executive summary.
What your business plan must include
All entrepreneurs can benefit from a well-written and structured business plan.
Because a well-written business plan gives any startup business strategic focus and clear structure.
A simple business plan should include at least the following:
- Executive summary and mission statement. Brief descriptions of your entire business plan.
- Business and industry overview. Any information that describes your company, business, business idea, and the field you’re in.
- Product and service description. Details about what your products and services offer, including the development process, product features, and benefits.
- Market research analysis. Studies that demonstrate your competitive advantage, and how you’re different from other players in your field.
- Sales and marketing strategies. How you’re going to work to attract new customers and keep your existing ones coming back.
- Execution plan. The milestones that indicate your progress, like having a turnover of $1000.
- Financial plan. Any data that demonstrates your financial projections and potential financing options (think a bank loan or investment capital), like your budget, cash flow statements, balance sheet, and sales forecast.
- Appendix. Additional information that supports your business plan.
Writing a business plan template is not difficult when you know what to include and how to do it best.
Step 1: Executive summary
This first section provides the reader with a snapshot of your grand plan.
In its simplicity, your executive summary covers the main points of your company as a whole.
This section should be brief, attractive, and comprehensive – think of it as your company’s elevator pitch.
When writing your business plan, you should include at least these in your management summary:
- A short description of your company
- An overview of the products or services you’ll offer
- A brief summary of your market analysis and marketing strategies
- Your financial plan
- Your company’s mission statement, answering what problem your business aims to solve
Though this section comes first in most business plan formats, it’s recommended to work on this section last.
That’s because your executive summary is an overview of your entire business plan: it helps the reader decide whether the rest of your business plan is worth reading.
So you want it to be good, right?
Step 2: Company and industry overview
The description of your company and the field you’re in are next up in your business plan.
Mention the key members of your management team and their qualifications, as well as potential shareholders.
Next, go into details about what your field of business is all about:
- Discuss what your company does
- Mention which industry you’re operating in
- Talk about who’s the target market and where in the world you’re doing business
- And explain how your company is performing in the market in general
Include any achievements related to your if necessary.
You want to describe how you view your company in relation to the field, community, or industry it’s a part of.
Don’t forget to define your current company goals in this section of your business plan.
Make sure they are tangible and realistic – and don’t forget to set a deadline for each of them.
But don’t go overboard: keep things brief. You’ll go into more detail about how to achieve your goals in step six.
Step 3: Product and service description
In this part, it’s time to write about the products and/or services your company offers.
To start, illustrate how the product or service was developed – from its early stages until the final form.
Describe how it’s made, how the quality is maintained, how much it costs to produce, and so on. Use visual aids to assist readers.
Finally, explain how the product or service works and how long it lasts.
Highlight its features and elaborate on how it benefits customers. Mention what aspects you hope to improve in the future.
If you’ve sold some units already, include some key customer feedback and potential figures on the sales.
Step 4: Target market and market analysis
This section of your business plan aims to explain your competitive edge against other companies.
A good business plan does this by showing your understanding of your target audience and competition.
Get started by defining your ideal target audience.
Specify their age, gender, profession, and other demographic indicators. Explain why they might be interested in purchasing your offers.
For your competitors, mention companies involved in the same industry and market. Research their audience and the reasons people choose them.
Go over your competitor’s product or service, reviews, customer service, and other relevant aspects. Present a side-by-side comparison between competitors and your company to highlight the differences.
Make sure to describe things competitors don’t offer the market that you can. Establish the opportunities and strengths you have against them. This will be your competitive advantage.
For this section, it’s better to use plenty of visual data from your research.
After all, you want to write your business plan so that it’s easy to understand – especially when persuading a potential team of investors.
Step 5: Sales and marketing strategies
In this section, explain how you’ll attract and retain customers.
Go over your sales strategy and marketing plan. Talk about your pricing, branding, advertising, and other marketing efforts, like packaging and distribution costs.
Always remember to think of your ideal buyer persona when coming up with your marketing plan.
Try visualizing the customer experience. Show how buyers might find your business and be prompted to purchase.
To end the section, write down your sales and marketing budget.
Step 6: Execution plan
Your execution plan is a list of milestones that you’re aiming to complete while reaching your company’s goals (those that you set in step 2).
Let’s say your goal is to expand your clothing business.
To do that, you plan to add new products. Your milestones could include completing new designs, testing prototypes, creating the final versions of your products, and finally, selling X amount of your new products to buying customers.
For new entrepreneurs and small businesses, milestones can be tasks for setting up the company – such as dealing with legal documents, figuring out how much money you need, renting office space, or recruiting employees.
How many milestones you need will depend on your goals. Don’t forget to map out the resources you’ll need to complete each action – such as the equipment, facilities, and the team members involved.
Don’t forget to describe your business’s strengths, weaknesses, opportunities, and threats while reaching milestones.
Step 7: Financial plan
Regardless of the business plan template you’re using, a section for your finances is almost always included in the typical business plan format.
Your financial plan discusses every aspect of your business’s finances.
It covers the budget, your business expenses, and your sales revenue, which will be useful for showing financial projections.
Overall, the plan should demonstrate your company’s growth opportunities and profitability.
If you’re a fresh entrepreneur, use your budget calculations, product or service pricing, and your market research to create your financial projections.
Existing companies can use past data to create forecasts for the next three to five years.
Generally, you want to include:
- Income statements. Most investors will want to take a look at the data on your revenue, annual profit, and expenses.
- Cash flow reports. That’s a fancy way of referring to the summary of how much cash or cash equivalents come in and out of your business.
- Balance sheets. This means the report on the amount of money and assets your company possesses and owes others.
- Breakeven analysis. This refers to the calculation that shows at what stage your company will start turning a profit, and when it will be running at a loss.
Write down your funding request if you want to show your plan to investors or lenders. Include the total funding amount, the lending purpose, and lending terms.
If you’re asking for equity, specify the percentage investors will own. If you want to get a loan, explain how you’ll repay them.
Be specific and realistic when creating your financial plan. Make sure to not overestimate your projections.
Step 8: Appendix
You’re almost done creating a business plan – well done, champ.
The appendix, or the last section of your business plan, encompasses further information that readers might need to understand your business.
Include any supplementary data from earlier sections in this part of your business plan: think detailed statistics of your market research, or images of your marketing materials, like different versions of your logo.
The appendix is also a place to insert copies of important documents related to the business, such as legal documents. Add some information about the business owners as well, like resumes and credit histories.
This way, your business plan leaves nothing to chance and can help you get funding easier.
What is a business plan and why do you need one?
A business plan is a document that sets up an actionable roadmap for establishing a new business, or further growing an existing company.
It allows you to identify potential strengths, weaknesses, opportunities, and threats that your company will face in your field of business.
This way, your business is prepared to face potential hurdles and knows what to expect from the market.
You might not think so, but both new and existing business owners can benefit from writing a business plan.
It’s usually a requirement for any startup to even dream of setting up a meeting with a potential investor.
And as for existing businesses, a business plan is a useful strategic tool: it will help the management team to keep their eyes on the bigger picture and steering the business towards its initial goals.
Business planning with a business plan template
If you’re not sure how to write a business plan, there’s no shame in using free business plan templates.
Most often, a simple Google search is a great place to get started.
For example, if you’re in the UK, British Business Bank offers free business plan templates in both PDF and .docx formats.
Some companies, like Law Depot, even provide free business plan customization services.
There are also premium programs designed for writing business plans, like BizPlan.
Paid software usually provides more customization options and resources to help you make your business look amazing on paper.
Different types of business plans
Depending on the size, industry, and current status of your company, the way you write a business plan can differ from your fellow entrepreneur.
Standard business plan
This type of business plan gives the reader a complete picture of the company.
Usually intended for external use, a standard business plan covers everything from an in-depth company description to a breakdown of its products and services, strategies, goals, and finances.
Internal or lean business plan
These types of business plans tend to be meant for internal eyes only.
They are shorter and more focused on sales and marketing strategies, milestone deadlines, and the overall direction of the company.
Typically, a lean business plan glosses over the highlights of the business rather than conducting an in-depth analysis of the company.
Startup business plan
If you’re looking to start a business, you probably won’t have lots of existing data to base your financial forecasts on.
A startup’s business plan follows the business plan format of a standard plan.
Usually, it includes more information on the background of the founders, a detailed market and industry analysis, and a comprehensive breakdown of finances – something that most investors are interested in.
One-page business plan
This simple business plan aims to summarize your business.
Also referred to as a business pitch, a one-page plan is normally intended for external use.
Many businesses have a one-page business plan at hand at the preliminary stages of talking with a new business partner or investor. Usually, a summary of who you are and what you do is useful at this stage of negotiations.
Operational business plan
Most businesses create a business plan that maps out the year ahead.
These annual plans are usually for internal use but might be interesting for external stakeholders, too.
Include operational details, like project deadlines, sales targets, and team responsibilities in this type of plan.
Strategic business plan
The idea behind a strategic business plan is to look at where your startup or business is going, and how you’re going to get where you want to go.
Strategic business plans are usually meant for internal eyes only, and look at your company’s vision, mission, and different milestones your business plans to reach.
Most small businesses benefit from including a SWOT analysis into their strategic plans.
Pros and cons of using a business plan template
- Great for new entrepreneurs. A business plan template is especially useful for beginners. If you’ve never written a business plan before, there’s no shame in using all the help you can get.
- Saves you time. Simply follow the directions and you’ll have your plan ready in no time. No need to tweak around with the format, as the template already provides instructions for arranging your ideas.
- Correctly formatted. Most business plan templates already have the necessary sections and elements of a business plan, so you won’t have to worry about forgetting to include important information.
- Designed with the right target market in mind. Professional business plan templates are generally designed with investors and lenders in mind. Meaning that you won’t have to worry about whether your plan is up to their standards or not.
- You need to understand what a business plan is. Having a business plan template doesn’t necessarily make things easier. You still need to understand how you’re meant to fill the template out.
- You still need to put in the work. You will have to do all of your balance sheet calculations yourself, and nobody else will write your mission statement for you. If you have no experience in writing a business plan or conjuring up the numbers, you might want to hire someone to lend you a hand.
- Most business plan templates come as a one-size-fits-all. In reality, every business has different needs, and your business planning process will reflect this. Chances are that you’ll need to adjust your template to suit your business.
- Unnecessary business plan sections. Some templates might not come with sections that suit certain businesses. You’d be better off designing your own template that caters to your business resources.