ultimate guide for business plan

How to Make a Business Plan: The Ultimate Guide for Small Businesses

August 6, 2024

By: Emily Harper

Table Of Contents

When & why do you need a business plan, the benefits of a business plan, 10 steps to make a useful business plan, what to do after writing your business plan, your business plan from startup to success, faqs about business plans.

You have a brilliant business idea that's keeping you up at night. Maybe it's a cozy bakery with mouthwatering pastries, a lawn care service that'll make neighbors green with envy, or a boutique that revolutionizes local fashion. Whatever your dream is, creating a business plan is one crucial step between your lightbulb moment and the grand opening.

Don’t worry; creating a business plan isn’t as overwhelming as you think! We’ve broken the process down into ten simple steps that will leave you feeling confident and ready to implement your plan!

A business plan is essential for all businesses, not just large companies.

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Even if you're a one-person show, a business plan keeps you focused and organized. It helps you prioritize tasks, manage your time effectively, and make informed decisions about where to invest your limited resources.

Your business plan becomes a crucial communication tool as you grow from a solo operation to a small team. It ensures everyone is on the same page about your company's goals, values, and strategies.

What about non-profits?

Yes, even non-profits need business plans! Your plan helps you articulate your mission, outline your programs, and demonstrate how you'll achieve sustainable impact. It's essential for attracting donors, grants, and partnerships.

No matter the size of your business, having a plan in place is your ticket to success. Here’s how to know when and why you need a business plan:

1. You Started a New Business

This is the most obvious time to create a plan. It helps you transform your idea from a vague concept into a concrete strategy. Your plan will outline everything from your target market to your financial projections, giving you a clear picture of what you're getting into.

2. You’re Expanding Your Business

Growth is exciting, but it can also be risky. Whether you're adding new products, opening another location, or entering new markets, updating your business plan helps you navigate these changes strategically.

3. You Need Funding

Investors and lenders aren't mind readers. They need to see a well-crafted business plan to understand your vision, market potential, and financial projections. It's your ticket to securing the capital you need to grow.

4. You’re partnering with Another Business

Partnerships can be tricky. A comprehensive business plan ensures both parties are on the same page about goals, responsibilities, and expectations. It's like a prenup for your business relationship.

5. You are Making Major Strategic Changes

Pivoting your business model? Restructuring your organization? Your business plan will guide you through these significant shifts, helping you anticipate challenges and plan for success.

Remember, a business plan is a living document that evolves with your company. It's not just about predicting the future – it's about preparing for it. Whether you're just starting out or running an established business, a well-maintained business plan is your secret weapon for success.

Now, you might be wondering, "Do I really need a business plan? Can't I just wing it?"

Well, you could try to build a house without blueprints, but we wouldn't recommend it!

Think of a business plan as your entrepreneurial GPS – it'll help you navigate from where you are to where you want to be. This clear path will set your business up for success. In fact, 70% of businesses that survive for five years follow a strategic business plan .

Here are four ways a business plan is crucial to the success of your business:

• It forces you to think through all aspects of your business
• It helps you identify potential problems before they occur
• It's often required if you're seeking funding from investors or lenders
• It gives you a clear direction and helps you stay focused

Whether you're starting a bakery, a lawn care service, or the next big tech company, a solid business plan is your first step toward success.

Step 1: Write Your Executive Summary

Think of the executive summary as the highlight reel of your business plan. It's the first thing people will read, so it needs to be clear, concise, and compelling. Even though it comes first in your plan, it's often best to write it last after you've worked out all the details.

6 Key elements to include:

• A brief and clear description of your business
• Your mission statement
• Your products or services
• Basic information about your leadership team
• Location details
• Financial information and growth plans

Example: Sweet Dreams Bakery Executive Summary Snippet

Sweet Dreams Bakery aims to become the go-to destination for delectable, handcrafted pastries in downtown Springfield. Our mission is to sweeten lives one pastry at a time, using locally sourced ingredients and time-honored recipes with a modern twist.

Led by award-winning pastry chef June Dough, we'll offer a rotating menu of seasonal treats alongside classic favorites. Located in the heart of Main Street, we project to serve over 500 customers weekly and achieve profitability within the first year of operation.

Step 2: Describe Your Business

This is where you get into details of what your business is all about.

You'll want to include:

• The problem your business solves
• Who your customers are
• What sets you apart from the competition

How to Write a Mission and Vision Statement

Your mission and vision statements are crucial elements of your business description.

Your mission statement describes what you do now and why your business exists. It should be clear, concise, and inspiring.

To write an effective mission statement, you should:

• Define what your company does
• Describe how you do it
• Include why you do it (your purpose)
• Keep it short and memorable (1-2 sentences)

Your vision statement outlines your aspirations for the future. It should be ambitious yet achievable.

To craft a compelling vision statement:

• Project 5-10 years into the future
• Dream big but remain somewhat realistic
• Use present tense, as if it's already happening
• Make it inspiring and aspirational
• Align it with your company's values

Remember, your mission and vision statements should work together to give a complete picture of your business's purpose and direction. They should inspire your team, guide your decision-making, and communicate your values to customers.

Example: Green Thumb Lawn Care Business Description

Green Thumb Lawn Care provides top-notch lawn maintenance services to busy homeowners in the suburbs of Oakville. We understand that our clients value a beautiful lawn but lack the time or expertise to maintain it themselves. Our eco-friendly practices and state-of-the-art equipment set us apart from traditional lawn care services.

Mission: To create and maintain beautiful, sustainable landscapes that enhance our clients' quality of life and property value.

Vision: To become the leading eco-friendly lawn care provider in the Oakville area, known for our exceptional service and commitment to environmental stewardship.

Step 3: Conduct Market Analysis

This step is about understanding your industry, your customers, and the opportunity for your business. The information you get from your research gives you valuable insights into your customer's wants and needs, which helps you with future marketing plans and business decisions.

To conduct market analysis, you need to:

1. Define your target market

2. Analyze industry trends

3. Understand your customers' needs and preferences

4. Estimate market size and potential growth

Market research doesn't have to involve expensive focus groups or complicated surveys. It can be as simple as chatting with potential customers, analyzing online reviews of similar products, or testing a small batch of your product before going all in.

So, before you dive headfirst into your business venture, take some time to do your market research.

Example: Chic Boutique Market Analysis Highlights

Millville's women's clothing retail market is valued at $50 million annually and is projected to grow by 3% over the next five years. Our target demographic—fashion-conscious women aged 25-45 with disposable income—makes up 40% of the local population.

Recent surveys indicate a growing demand for sustainable, locally made clothing options, which aligns perfectly with Chic Boutique's eco-friendly product line.

Step 4: Analyze Your Competition

Understanding who your competition is helps you position your business effectively and identify your unique selling points.

A SWOT analysis, which stands for Strengths, Weaknesses, Opportunities, and Threats, is a great tool for evaluating your business in relation to your competitors.

Example: Snip & Style Salon SWOT Analysis

• Experienced, award-winning stylists
• Prime downtown location
• Use of high-end, eco-friendly hair products

Weaknesses:

• Higher prices compared to budget salons
• Limited parking options
• New brand, low awareness

Opportunities:

• Growing demand for organic hair treatments
• Potential to expand into hair care product line
• Partnership with local fashion events
• The increasing number of home-based stylists
• Economic downturn affecting voluntary spending
• Potential new franchise salon opening nearby

Step 5: Outline Your Products or Services

This is the section of your business plan where you can highlight your products and services.

Make sure to be specific about your products or services and explain what makes them special.

• Detailed descriptions of what you're selling
• How your offerings benefit customers
• Any intellectual property, like patents or trademarks
• Your pricing strategy
• Your product's lifecycle (if applicable)

Example: Sweet Dreams Bakery Product Line Description

Sweet Dreams Bakery offers a delectable array of handcrafted pastries, including:

1. Signature Dream Puffs: Light, airy cream puffs filled with locally sourced fruit creams. Available in seasonal flavors like strawberry, peach, and pumpkin spice.

2. Cloud Nine Cupcakes: These moist, fluffy cupcakes are topped with our famous cloud-like frosting. Flavors include classic vanilla, rich chocolate, red velvet, and rotating seasonal specials.

3. Heavenly Tarts: Buttery tart shells filled with premium ingredients like Belgian chocolate, French lemon curd, and local maple pecans.

4. Custom Dream Cakes: Made-to-order celebration cakes, perfect for birthdays, weddings, and special events.

All our products are made fresh daily using organic, locally sourced ingredients wherever possible. We cater to various dietary needs with gluten-free and vegan options.

Our unique selling proposition lies in our commitment to quality, creativity, and the use of local ingredients, which sets us apart from chain bakeries and mass-produced alternatives.

Step 6: Develop Your Marketing and Sales Strategy

You've got an amazing product or service, but how will people know about it? That's where your marketing and sales strategy comes in.

5 Key elements to include:

1. Your target market (be specific!)

2. Your unique selling proposition

3. Marketing channels you'll use (social media, print ads, etc.)

4. Your sales process

5. Sales forecasts

Example: Green Thumb Lawn Care Marketing Plan

Target Market: Homeowners aged 35-65 in Oakville suburbs with annual household incomes over $100,000.

Marketing Channels:

1. Local SEO: Optimize our website to appear in local searches for 'lawn care services'

2. Social Media: Regular posts on Facebook and Instagram showcasing before-and-after photos

3. Direct Mail: Seasonal flyers to homes in target neighborhoods

4. Referral Program: 10% discount for customers who refer new clients

Sales Process:

1. Generate leads through marketing efforts

2. Provide free lawn assessments

3. Present customized care plans and quotes

4. Follow up within 48 hours

5. Offer seasonal service packages for repeat business

Sales Forecast: We aim to acquire 100 regular clients in year one, with an average annual value of $2,000 per client.

Step 7: Describe Your Organizational Structure

This section of your business plan is about the people working together to run your business. Even if you're a solo entrepreneur now, think about how your team might grow in the future.

Your organizational structure is like the skeleton of your business – it provides the framework that supports everything else. A clear organizational structure shows investors you've thought about how your business will operate and grow while clarifying roles and responsibilities.

When creating your organizational structure, be sure to include:

• An organizational chart
• Descriptions of key team members and their roles
• Your staffing plan and hiring timeline

Example: Chic Boutique Organizational Chart

Chic Boutique will initially operate with a lean team:

1. Owner/Manager (Sarah Style): Responsible for overall business operations, purchasing, and customer relations.

2. Sales Associates (2): Provide excellent customer service, manage inventory, and assist with social media.

3. Visual Merchandiser (Part-time): Create eye-catching displays and manage store layout.

As the business grows, we plan to add a full-time assistant manager and additional sales associates.

Step 8: Outline Your Operational Plan

Your operational plan outline shows that you've considered the practical aspects of bringing your business idea to life. In this section, you’ll include details about how your business will run day-to-day.

This is the part where you think about your physical needs, technology requirements, and any special equipment you need to run your business successfully.

Here's what to include in your operational plan:

• Physical location
• Equipment and technology
• Inventory management
• Production process (if applicable)
• Shipping and fulfillment (for product-based businesses)
• Customer service procedures
• Key partnerships and suppliers
• Legal requirements and licensing
• Hours of operation
• Risk management

The key is showing that you've thought through all aspects of running your business daily. This level of detail demonstrates to potential investors or lenders that you're prepared for the realities of business ownership.

Example: Snip & Style Salon Operations

Snip & Style Salon will operate from a 1,200 sq ft leased space in downtown Millville. Our hours will be 10 am-8 pm Tuesday through Saturday and 12 pm-5 pm Sunday.

Key operational elements include:

• Six styling stations, each equipped with professional-grade chairs and tools
• Two washing stations with comfortable, reclining chairs
• A reception area with a POS system for check-in and retail sales
• High-speed internet for online booking and social media management
• Eco-friendly laundry facilities for towels and capes

Key partnerships:

• Main supplier: Beauty Supply Distributors Inc. for hair products and tools
• Local partnership with Bloom Florist for fresh flowers in the salon weekly

We'll use Salon Iris software for appointment scheduling, client management, and inventory tracking. We'll maintain a four-week supply of hair care products and color treatments. Our POS system will track inventory in real-time, automatically reordering when stock is low.

All stylists must maintain current cosmetology licenses and attend quarterly training sessions on new techniques and trends.

To mitigate the risk of staff shortages, we'll maintain relationships with local beauty schools for a pipeline of qualified stylists. We'll also cross-train staff on multiple services to ensure flexibility.

This operational plan ensures that Snip & Style Salon can efficiently deliver high-quality services while providing a luxurious experience for our clients.

Step 9: Create Financial Projections

This is often the most daunting part for new entrepreneurs, but it's crucial for understanding the financial viability of your business.

• Income Statement (Profit & Loss)
• Balance Sheet
• Cash Flow Statement
• Break-even Analysis

Remember – these are projections, not promises. Be realistic but optimistic about your financials and what they may look like in the future.

Example: Sweet Dreams Bakery Financial Projection Highlights

Based on our market research and industry averages, we project:

• Revenue: $300,000
• Expenses: $280,000
• Net Profit: $20,000
• Revenue: $500,000
• Expenses: $400,000
• Net Profit: $100,000

Break-even Point: We expect to break even after ten months of operation, assuming average monthly sales of $25,000.

Step 10: Add an Appendix

The appendix of a business plan is like the bonus features on a DVD. It's where you put any additional information supporting your plan that could clutter the main sections.

This could include:

• Resumes of key team members
• Detailed market research
• Legal documents
• Product photos or detailed descriptions

Example: Green Thumb Lawn Care Equipment List

1. Eco-friendly riding mower (2)

2. Electric string trimmers (4)

3. Leaf blowers (4)

4. Pruning shears (6 sets)

5. Fertilizer spreaders (2)

6. Company-branded trucks (2)

Congratulations! You've created your business plan. But the journey doesn't end here.

The next steps include:

1. Using your business plan as a roadmap to stay on track.

2. Sharing with potential investors or lenders if you’re seeking funding.

3. Regularly review and update your plan quarterly or bi-annually.

4. Implementing your strategies and track progress.

5. Creating your business identity:

• Design a logo that represents your brand and business
• Build a website that showcases your products or services
• Order business cards to network
• Set up professional email addresses for you and your team

Creating a business plan might seem daunting, but it's an essential step in turning your entrepreneurial dreams into reality.

Remember, your business plan is more than just a document – it's a roadmap that forces you to think critically about every aspect of your business, from your target market to your financial projections.

So, whether you're planning to open that bakery, start a lawn care service, launch a boutique, or pursue any other business dream, your business plan is your first step toward making it happen.

Take it one step at a time, and before you know it, you'll have a solid business plan to guide you on your entrepreneurial journey.

Q: How long should a business plan be?

Typically, a traditional business plan runs 20-30 pages. However, the length can vary depending on the complexity of your business and your goals for the plan.

Q: Do I need a business plan if I'm not seeking funding?

While it's especially crucial for seeking funding, a business plan is valuable for any business. It helps you clarify ideas, spot problems, and set goals.

Q: How often should I update my business plan?

Reviewing and updating your plan at least annually is a good idea. However, if your business is rapidly changing, you should revisit it quarterly.

Q: Can I hire someone to write my business plan?

Yes, there are professionals who can help you write your business plan. However, it's important that you're heavily involved in the process, as no one knows your business idea better than you.

Q: What's the difference between a business plan and a pitch deck?

A business plan is a comprehensive document detailing all aspects of your business. A pitch deck is a brief presentation, usually in slide format, that provides potential investors with a quick overview of your business plan.

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How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated July 29, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan

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Business Plans: The Ultimate Guide To Building A Good Plan

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When starting a business, a business plan is essential. Whether you are launching an online store or opening a brick-and-mortar shop, having a well-written business plan is crucial to your success.

A business plan is essentially a roadmap that outlines your goals, strategies, and potential hurdles. It not only helps you stay organized but also provides a clear vision of your business to potential investors and stakeholders.

Think of the business plan as a blueprint that guides you towards building a profitable and sustainable business. If you're serious about starting a business, take the time to create a well-crafted business plan.

How a business plan benefits you

A business plan is not just a document for investors or loan officers - a business plan can be an invaluable tool for yourself as well. By taking the time to write out your idea and flesh out the details, you gain a deeper understanding of your business and what it takes to make it a reality.

Plus, having a plan in place helps you stay focused and motivated when the going gets tough, and can save you time and money in the long run.

Don't underestimate the power of a solid business plan. Not only does it benefit your bottom line, but it can also be a source of inspiration and guidance as you navigate the exciting world of entrepreneurship.

Best High-Yield Savings Accounts Of 2024

Best 5% interest savings accounts of 2024, how a business plan benefits the lender.

It's no secret that starting a business requires ample financing. But if you're an entrepreneur, how do you convince lenders to invest in your vision?

The answer is simple: a well-crafted business plan.

Not only does a business plan outline your company's goals and strategies, but it also shows lenders that you've done your homework and have a clear understanding of your market and competitors. By presenting a comprehensive plan, you give lenders the confidence to trust that their investment will yield a return.

A business plan benefits not only the entrepreneur but also the lender, providing a roadmap to success and building a foundation of trust and accountability.

A strong business plan is a key factor that lenders consider when deciding whether to loan you money. It shows them that you have a solid plan in place for repaying the loan and growing your business.

By putting in the effort to create a comprehensive business plan, you’ll be setting your company up for success while also gaining the confidence of potential lenders.

Let’s explore the essential elements of a business plan that should be included:

1. executive summary.

When it comes to crafting a business plan, the executive summary is a critical segment. This section sets the stage for the rest of your plan, acting as a teaser for what’s to come.

The executive summary provides a clear and concise snapshot of your business, highlighting why it’s a worthwhile investment opportunity. If you’re seeking funding from potential investors, this section is your golden ticket, as it is their first impression of your business and your chance to captivate their attention from the onset.

It’s essential to craft an executive summary that’s not only informative but also compelling. Think of it as the ultimate elevator pitch - if you can’t sell your business in a few short paragraphs, investors won’t be sold on your vision.

2. Company description

The company description section of your business plan serves as the foundation for everything that follows. In this section, you'll provide a detailed account of your business's history, including how it came to be and what milestones it has achieved thus far.

You'll also shine a light on your company's unique qualities and competitive advantages, setting the tone for the rest of your plan. Beyond that, you'll outline the legal ins and outs of your company to help investors understand the ownership and management structure.

This section serves as your chance to make a memorable first impression and lay the groundwork for a successful venture.

3. Market analysis

The marketing section of a business plan is a crucial component that serves as a guide to identifying the industry, competition, and target market. This section needs to be thorough and well-researched, taking into consideration factors such as the strengths, weaknesses, opportunities, and threats that the business may face.

By taking the time to analyze these factors, businesses are better equipped to develop sound marketing strategies that not only address potential risks, but also capitalize on opportunities for growth.

It’s important to remember that the marketing section of the business plan should be engaging and professional, conveying the business’s goals and objectives in a way that resonates with potential investors and customers alike.

4. Products and services

At the heart of any successful business lies a solid understanding of its products and services. In your business plan, this knowledge is communicated through the products and services section where you can showcase what sets your offerings apart from the competition.

This is where you delve into the specifics of how your products and services meet the needs of your target market and the ways in which you provide value to your customers.

You'll also want to highlight your pricing strategy and any intellectual property rights that add unique value to your business. By bringing these essential components of your business to life, you'll ensure that your business plan demonstrates a clear understanding of what your company is all about.

5. Competitive analysis

As an entrepreneur, it's important to recognize that no matter what product or service you're offering, there will always be competition out there. That's why your business plan should highlight what sets you apart from your competitors in the competitive analysis section .

Take some time to reflect on your unique selling proposition. Maybe you provide a more personalized experience for your customers, or maybe you use higher quality materials in your products. Whatever it may be, make sure to convey it in a clear and concise manner.

By doing so, you'll demonstrate to investors and potential customers alike that you have a clear understanding of what sets your business apart from the pack.

6. Strategy and implementation plans

When it comes to starting a business, having a solid plan of attack is essential. That's why the strategy and implementation plan section of your business plan is so important. This is where you get to showcase your vision for success and demonstrate just how you plan to achieve it.

Whether it's outlining your marketing strategies, detailing your management structure, or simply laying out your timeline for growth, this section offers you the opportunity to put your best foot forward and show investors, partners, and potential clients that you mean business.

Don't hold back. Be bold, be thorough, and above all, be confident in your plan.

If your strategy is solid and your implementation is top-notch, the opportunities are endless.

7. Financial projections

Don’t underestimate the importance of the financial projection section. In this section of your business plan, you will dive into the details of your financial projections, including your revenue, expenses, and cash flow.

But this section isn't just about crunching numbers . It's about showing potential investors that your business is not only financially viable but has the potential to succeed. And with a break-even analysis and a profit and loss statement, you'll give those investors a comprehensive look at what your business can achieve.

8. Closing statement

The closing statement is your final chance to convey the enthusiasm and passion you have for your vision while demonstrating your business acumen. A successful closing statement should be concise, professional, and leave the reader feeling excited and eager to learn more about your business.

Whether you want to leave the reader with a call to action, highlight your competitive advantages, or simply express your gratitude for their time and consideration, your closing statement is an integral part of the business plan.

As you craft your final words, remember that they can make all the difference and leave a lasting impression on potential partners, investors, and other stakeholders.

The bottom line is that building a business plan takes time and effort, but it’s well worth it. A well-crafted plan can help you secure funding, set goals, and measure progress. Remember to tailor your plan to your specific needs and be realistic in your projections. With a strong business plan in place, you’ll be better equipped to make informed decisions and achieve success in your endeavors.

Melissa Houston, CPA is the author of Cash Confident: An Entrepreneur’s Guide to Creating a Profitable Business . She is the founder of She Means Profit, which is a podcast and blog . As a Finance Strategist for small business owners, Melissa helps successful business owners increase their profit margins so that they keep more money in their pocket and increase their net worth.

The opinions expressed in this article are not intended to replace any professional or expert accounting and/or tax advice whatsoever.

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Small Business Trends

How to create a business plan: examples & free template.

Whether you’re a seasoned entrepreneur or launching your very first startup, the guide will give you the insights, tools, and confidence you need to create a solid foundation for your business.

Table of Contents

How to Write a Business Plan

Executive summary.

It’s crucial to include a clear mission statement, a brief description of your primary products or services, an overview of your target market, and key financial projections or achievements.

Our target market includes environmentally conscious consumers and businesses seeking to reduce their carbon footprint. We project a 200% increase in revenue within the first three years of operation.

Overview and Business Objectives

Example: EcoTech’s primary objective is to become a market leader in sustainable technology products within the next five years. Our key objectives include:

Company Description

Example: EcoTech is committed to developing cutting-edge sustainable technology products that benefit both the environment and our customers. Our unique combination of innovative solutions and eco-friendly design sets us apart from the competition. We envision a future where technology and sustainability go hand in hand, leading to a greener planet.

Define Your Target Market

Market analysis.

The Market Analysis section requires thorough research and a keen understanding of the industry. It involves examining the current trends within your industry, understanding the needs and preferences of your customers, and analyzing the strengths and weaknesses of your competitors.

Our research indicates a gap in the market for high-quality, innovative eco-friendly technology products that cater to both individual and business clients.

SWOT Analysis

Including a SWOT analysis demonstrates to stakeholders that you have a balanced and realistic understanding of your business in its operational context.

Competitive Analysis

Organization and management team.

Provide an overview of your company’s organizational structure, including key roles and responsibilities. Introduce your management team, highlighting their expertise and experience to demonstrate that your team is capable of executing the business plan successfully.

Products and Services Offered

This section should emphasize the value you provide to customers, demonstrating that your business has a deep understanding of customer needs and is well-positioned to deliver innovative solutions that address those needs and set your company apart from competitors.

Marketing and Sales Strategy

Discuss how these marketing and sales efforts will work together to attract and retain customers, generate leads, and ultimately contribute to achieving your business’s revenue goals.

Logistics and Operations Plan

Inventory control is another crucial aspect, where you explain strategies for inventory management to ensure efficiency and reduce wastage. The section should also describe your production processes, emphasizing scalability and adaptability to meet changing market demands.

We also prioritize efficient distribution through various channels, including online platforms and retail partners, to deliver products to our customers in a timely manner.

Financial Projections Plan

This forward-looking financial plan is crucial for demonstrating that you have a firm grasp of the financial nuances of your business and are prepared to manage its financial health effectively.

Income Statement

Cash flow statement.

A cash flow statement is a crucial part of a financial business plan that shows the inflows and outflows of cash within your business. It helps you monitor your company’s liquidity, ensuring you have enough cash on hand to cover operating expenses, pay debts, and invest in growth opportunities.

Tips on Writing a Business Plan

4. Focus on your unique selling proposition (USP): Clearly articulate what sets your business apart from the competition. Emphasize your USP throughout your business plan to showcase your company’s value and potential for success.

FREE Business Plan Template

To help you get started on your business plan, we have created a template that includes all the essential components discussed in the “How to Write a Business Plan” section. This easy-to-use template will guide you through each step of the process, ensuring you don’t miss any critical details.

What is a Business Plan?

Why you should write a business plan.

Understanding the importance of a business plan in today’s competitive environment is crucial for entrepreneurs and business owners. Here are five compelling reasons to write a business plan:

What are the Different Types of Business Plans?

Using Business Plan Software

Upmetrics provides a simple and intuitive platform for creating a well-structured business plan. It features customizable templates, financial forecasting tools, and collaboration capabilities, allowing you to work with team members and advisors. Upmetrics also offers a library of resources to guide you through the business planning process.

Business Plan FAQs

What is a good business plan.

A good business plan is a well-researched, clear, and concise document that outlines a company’s goals, strategies, target market, competitive advantages, and financial projections. It should be adaptable to change and provide a roadmap for achieving success.

What are the 3 main purposes of a business plan?

Can i write a business plan by myself, is it possible to create a one-page business plan.

Yes, a one-page business plan is a condensed version that highlights the most essential elements, including the company’s mission, target market, unique selling proposition, and financial goals.

How long should a business plan be?

What is a business plan outline, what are the 5 most common business plan mistakes, what questions should be asked in a business plan.

A business plan should address questions such as: What problem does the business solve? Who is the specific target market ? What is the unique selling proposition? What are the company’s objectives? How will it achieve those objectives?

What’s the difference between a business plan and a strategic plan?

How is business planning for a nonprofit different.

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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.

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! 

Establish Goals

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 business plan templates 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.  

Executive Summary

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.

Company Description

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.

Market Analysis

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.

Funding Request

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.

Financial Projections

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.

SWOT Analysis

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!

Want to Learn More?

• How to Start a Dropshipping Business
• How to Register a Business in the USA
• How to Launch Your Ecommerce Store in Less Than 30 Minutes Flat
• 30+ Amazing Startup Business Ideas That’ll Make You Money

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How to Write a Business Plan: The Ultimate Guide in 2024

• By Luisa Zhou
• Building a Business
• Updated: April 14, 2024

On this page

In this ultimate guide, you learn how to write a business plan you’ll actually use. 

You’ll learn:

• A simple process to create a stand-out business plan.
• The most important elements of a business plan.
• How to research your business plan. 
• How to write your business plan.
• Templates, examples, and much more. 

If you want to make sure that you write a great business plan, this guide will give you a lot of value. Read on!

Chapter 1: Business plan fundamentals

Let’s start by establishing what a business plan is. 

In this chapter, you get a business plan outline. 

You also learn how to write a great business plan, and much more. 

Let’s dive in.

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Business plan outline

Introduction.

• Executive Summary
• Company Description
• Product/Service Description 

Value Proposition

• Market Analysis 

Business Model 

• Sales Strategy 
• Growth Plan
• Management & Staffing
• Financial Summary 

What is a business plan? 

A business plan is a written document that outlines your business goals. It explains your business and how you’re going to reach those goals. 

You might need a business plan for obtaining a loan, receiving funding, or applying for a grant. 

But other than that, a business plan is mainly something you create as a roadmap for yourself. It gives you clarity, but no one else will probably see or use it. 

The thing is: 

You can use your business plan to crystallize your thinking and confirm your idea. Basically, to get started in the best way possible. 

That’s why I recommend that you keep it short. It is important to plan for your business. But it’s much more important to get out there and start building your business. 

This guide helps to make writing a business plan a simple process.

Steps to writing a good business plan

A great business plan consists of a few things:

• The language is clear and concise. If you’re writing your business plan for yourself, a few pages (2-5) is more than enough. If you’re writing it for a more official purpose, 15-20 pages will usually do. 
• Your audience’s needs and wants . Your business is built to address your customers’ problems, so your business plan should be written from your audience’s perspective. 
• Research. Your business plan should build on research and not your own assumptions. 

Chapter 2: How to do market research for your business

In this chapter, we’ll look at the research you need for your business plan.

You see, you need to understand your market to write a great business plan.

And for this, you need to do market research. 

Let’s find out how you do it. 

Why do you need market research? 

A lot of failed businesses have one thing in common.

They didn’t research their market. 

Market research essentially means that you research your audience of potential buyers. You get to understand why they want your product or service. 

Plus, if you’re just starting your business, market research can quickly help you get your first clients. That’s because during your research, people might get interested in working with you.

Most importantly: It helps make your business plan incredibly valuable, so that you’re one step closer to a successful business.

How to do market research

There are a few ways to do market research.

The first one is online research.

Look for information on your service or product and audience. 

First, look for information on pricing and positioning.

What are similar products or services priced at? Who is their target audience? How do they speak about their product?

And look at what potential audiences are saying about those products and services. 

For example, Amazon is a great resource because there are so many books and products with reviews by people who might be in your target audience.

Another site with plenty of reviews is the software review site Capterra . 

Also social media groups like Reddit and Facebook groups include a lot of information on what products and services people want to pay for. 

For example, I started my first online business, an advertising consulting business because I noticed that business owners were talking about this need in Facebook groups.

The next step is to interview people.

For example, you can ask people in social media groups to jump on a quick call with you. In exchange, you offer a free consulting call or similar. 

But what should you ask your interview subjects? 

Check out this video where I talk through what you should be looking for:

Other than that, the questions you need to ask are:

• “What is your biggest challenge related to ___?” 
• “What is your goal for ___?”
• “Would you be willing to pay for ___? How much would you be willing to pay to make this problem go away?”

When you’ve talked to 3-5 people, you’re ready to start writing your business plan.

Chapter 3: How to write a business plan

In this chapter, we’ll look at how to write a business plan.

Again, your business plan shouldn’t be too complicated. (That’s unless you need it for a specific reason, like getting funding. In that case, your business plan should follow the funding source’s requirements.)

Here’s how to write a simple business plan.

Executive summary

An executive summary is a summary of the rest of your plan. That’s why you can leave writing it to the end. Your executive summary should be one page, at most. It includes a high-level overview of:

• Your business concept. What does your business do?
• Product or service. What do you sell? 
• Business goals. What are your long-term goals? 
• Market. What does your market look like? Your competitors? 
• Customers. Who do you sell to? 
• Value proposition. How is your business different from what already exists?
• Scope of business. How big can your business get? 
• Business model. What does your marketing look like? Your revenue model? 

Company description

This section is all about understanding what your business is.

These elements should be included in your company description: 

• Your business structure (Sole proprietorship, limited partnership, incorporates company, or general partnership) 
• Your industry 
• What you’re selling
• Your long-term plan (Do you plan to keep your business or sell it?)
• Your vision, mission, and values (Why does your business operate?) 
• Short-term goals (the next year) and long-term goals (the next 1-5 years) 

Product or service description

Is your product or service ready for the market now? For example, if you sell products in an online store, you first need to develop your product and build an inventory. 

But if your business is service-based, your service is ready now. This includes coaching and consulting businesses. 

Also, explain your pricing strategy. How much will your products or services cost? What pricing model do you use (monthly billing, per-product price, or something else)? 

In this video, I give my best pricing recommendations:

And finally, does your product or service come with any intellectual property considerations? Is there a risk that you might be infringing on someone’s IP rights?

A physical product might come with these types of considerations. 

On the other hand, a service-based business doesn’t come with many potential IP rights violations because you’re selling a more generic service. 

(That’s not to say coaching program names and similar can’t be protected, even if the service, like health coaching, can’t. Note that I’m not a lawyer and these tips aren’t meant as legal advice.)

Market Analysis

Your market is crucial for your business success. By choosing a market with plenty of customers who need your product or service, you’re setting yourself up for success.

Remember how we talked about research in the last chapter? 

This is where you’ll use that research to understand why you customers want to buy from you.

Target market

Your customers are at the core of your business. 

Most customer persona guides tell you to list your customers’ demographics:

• Where they live
• Income 
• Interests 

But by now, you know that customer research is so much more than that. Use your customer research (which we looked at in Chapter 3) to dive deeper and understand the psychographics of your target audience. 

What language do they use to describe their needs and goals? For example, a 60-year old executive will talk very differently about her health goals compared to a 25-year old. 

Ask yourself (and answer these questions with your market research):

• What is the problem my customer wants to solve? 
• Why can’t my customer solve this today? 
• What’s the measurable outcome my customer wants to achieve? 

Industry 

How big is your potential market? Check for trends and trajectories in your industry. 

For example, as the boomer generation continues to retire, industries for retirees will continue to grow. If you serve that market, you should mention this in your business plan so you can take that into account when thinking about your business’s long-term goals.

You can get this information from:

• News outlets.
• Governmental statistics offices.
• Academic research.

SWOT analysis

With a SWOT analysis, you analyze your strengths, weaknesses, opportunities, and threats. 

Most importantly, remember that you never have perfect information. You will need to operate with some assumptions. So ask yourself what assumptions you have that, if proven wrong, would cause this business to fail.

Take these into consideration in your SWOT analysis.

Competition

The next step is to look more closely at your competition.

Research your competition with Harvard professor Michael Porter’s Five Forces Framework in mind. This model builds on five forces to determine the competitive intensity and the attractiveness of an industry in terms of profitability. 

An industry with intense competition won’t have incredibly profitable businesses. But industries with mild competition (most coaching and consulting industries) have room for high returns. 

The five forces are:

• Threat of new entry. How likely is it that new businesses will enter your market? For example, airlines don’t see a huge number of competitors because airlines need money and infrastructure to get started. But people will start online businesses (physical products, coaching, or consulting) much more easily. 
• Buyer power. What buying power do your customers have? If you sell coaching to executives, you will likely have customers with better buying power than if you sell coaching to unemployed people.
• Supplier power. How many suppliers are there on the market? If there aren’t that many, you might face high prices, which eat up your profitability. 
• Threat of substitution. How likely is it that your product or service will get substituted by a low-cost, better alternative? Generic products will easily get substituted, but businesses that build a strong brand won’t. For example, think Apple iPhones. 
• Competitive rivalry. How can you distinguish yourself from your competition, so that you don’t have to directly compete with anyone? You can do this by serving a specific group of customers, distinguishing yourself from the competition with marketing, or establishing technological leadership.

Value proposition

One of the main reasons 20% of small businesses fail within their first year is because they don’t understand their value proposition. Make sure you get this right in your business plan. 

The thing is:

Your value proposition helps you understand how you’re going to stand out. 

You can build your value proposition on Michael Porter’s Generic Competitive Strategies .

These include three different factors:

• Cost Leadership. You become the low-cost business in your industry. This usually requires scale, proprietary technology, access to raw material, or something else. For example, think about how Amazon uses technology, infrastructure, and scale to drive down prices. 
• Differentiation. Your business stands out by being unique. You position yourself to meet customers’ needs. This means that you can ask for a premium price for your services. For example, my client David is a health coach who helps people lose weight with the help of herbs, a very unique way to position a health coaching business.
• Cost Focus or Differentiation Focus. Your business focuses on a specific niche and differentiates itself either by serving a specific target market need or a target market cost behavior. 

For example, I started my current business when I realized that there wasn’t a great product for employees who wanted to quit their jobs and become entrepreneurs. I used differentiation focus to target a specific segment within a competitive market (business coaching). 

This chart should help you answer two questions: 

• Who is your target customer? 
• How are you different from the competition? 

Business Model

Your operations plan outlines the workflows you’ll need to implement to make your business work. In terms of a physical product, this includes suppliers, logistics, inventory, and more. You’ll also need a contingency plan in case anything goes wrong.

In terms of a service-based business, you don’t need to put too much energy on your operations because all you need is yourself and your laptop. 

Your marketing plan shows how you’re going to spread the word about your business now and in the future. Focus on where your clients are hanging out, whether that’s on Instagram, Facebook, or somewhere else. 

Your marketing strategy should answer these questions:

• What is the pricing of your product or service? Why did you choose this price?
• How do you promote your business?
• What are you selling and how is that different from other existing products and services?
• Where will you sell your products and services?

Sales strategy

Next, share your sales strategy. This is the process you undergo when you sell to your customers.

It covers all activities that lead up to a sale. Your sales cycle could look something like this:

Facebook ad → Lead subscribes to your email list → Lead reads your emails → Lead buys from you

Growth plan

What will your business growth look like? How will you make it happen? Your growth plan should be specific and realistic. Define the exact steps you’ll take to grow your business.

Management & staffing

What does the management of your business look like? If you’re starting a business on your own, you’re the CEO and you don’t need to include anyone else here.

Will your business employ a team? Or at what point will you start hiring people, if at all? 

If you’re unsure, I share advice on hiring in this video: 

Financial summary

Your financial plan builds on your income statement, balance sheet, and cash-flow statement. 

Income statement: Where do you get your revenue and what are your expenses? With this information, you can make a profit-and-loss calculation. 

If you haven’t made any sales yet, you can work with estimates. Remember that people are less likely to buy in the beginning when you don’t have testimonials and you’re new to sales. That’s why I recommend estimating that one out of every ten sales calls will convert. 

Cash-flow statement: Your cash-flow statement is just like your income statement, but it also takes into account when revenues are collected and expenses paid. If you get more money in than is going out, you have a positive cash-flow statement. 

Balance sheet: List your business assets or what you own (if you have any) and what you owe. By deducting liabilities from assets you get your business’s shareholder equity. 

Also ask yourself: What’s the biggest risk to your financial viability? 

For example, let’s say you’re a health coach who teams up with a local gym to provide their members with health coaching. Your biggest financial risk (assuming this was your only client acquisition strategy) would be that the gym went bankrupt. 

Knowing your risks upfront means that you can prepare for them. And by including these in your business plan, you are clear on your risks and your planning for those risks. 

Need a way to set up your financial plan for your business plan? Copy this simple financial tracker that I created for you and calculate your own business income.

Chapter 4: Business plan template

This chapter is all about using what you’ve learned so far. 

First, you get a fillable business plan template.

And second, we’ll look at a business plan example.

Let’s dive right in.

Business plan template 

The simplest business plan format? A Business Model Canvas.

The Business Model Canvas was first developed by Alexander Osterwalder in 2005. This is a visual chart of your business plan that includes nine ‘building blocks’. You can either use it as your business plan or use it to structure a longer business plan. Either way, use what you’ve learned so far in this guide to fill in the sheet. 

Start by filling in this PDF to answer all the business plan elements we’ve looked at so far. 

Then, use your answers to fill in your own Business Model Canvas. 

Here is a fillable PDF Business Model Canvas you can use, including instructions on how to use it. 

Business plan example

Not sure exactly what your Business Model Canvas should look like?

Here’s a simple business plan example to help you get started. 

Chapter 5: Helpful resources

Starting a business is so much more than creating a business plan.

A business plan will help you put your idea on paper.

But that’s when the real work kicks in.

These resources will help you write your business plan and start your business. 

Let’s take a look.

Start a business resources 

“ How to Start an Online Business ” 

“ Start Your Own Business ” – USAGov

Shopify’s Business Name Generator 

“ Talking to Humans: Success Starts With Understanding Your Customers ” – Giff Constable

“ Your Strategy Should Be a Hypothesis You Constantly Adjust ” – Harvard Business Review

“ The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It ”, Michael E. Gerber

Legal resources to start a business 

“ Register Your Business ” – US Small Business Administration

“ Starting a Business: License and Permit Checklist ” – LegalZoom

“ Business Structures ” – IRS

Funding resources  

“ Fund Your Business ” – US Small Business Administration 

“ Government Small Business Loans ” – SBA.com 

Financial resources

“ Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine ”, Mike Michalowicz

“ Business Planning & Financial Statements Template Gallery ” – SCORE

Marketing and sales resources

“ Business Marketing Strategies ”

“ 5 Tips to Using Social Media for Your Business Without Being Salesy ”

“ How I Learned to Sell (Strategies for Business) ” (YouTube)

What’s next?

There you have it. Now you know how to write a business plan. 

However, there are far more things that go into building a successful online business.

And not just any business, but a business that lets you quit your day job, earn a great income, and build a flexible life.

I teach the exact steps you need to take to build such a business in this PDF on starting a six-figure online business.

Get it here:

About Luisa Zhou

Luisa Zhou has helped thousands of students build and scale their own profitable online Freedom Business. Fun Fact: She used to work as an engineer for the Space Station and holds a B.S.E. from Princeton. Click here to learn more about Luisa.

Hope you enjoy this blog post.

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You don’t have to write an entire plan if you don’t plan to present it to a board of trustees. You can always start with a business model canvas.

Thank you, thank you so much. So simple and easy to understand and work with. I appreciate you so much. Thank you!

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How To Write A Business Plan: A Comprehensive Guide

A step-by-step guide on writing a business plan to catch an investor's attention & serve as a guiding star for your business..

July 13th, 2022    |    By: The Startups Team     |    Tags: Planning , Model , Pitch Deck

A comprehensive, step-by-step guide - complete with real examples - on writing business plans with just the right amount of panache to catch an investor's attention and serve as a guiding star for your business.

Introduction to Business Plans

So you've got a killer startup idea. Now you need to write a business plan that is equally killer.

You fire up your computer, open a Google doc, and stare at the blank page for several minutes before it suddenly dawns on you that,  Hm…maybe I have no idea how to write a business plan from scratch after all.

Don't let it get you down. After all, why would you know anything about business planning? For that very reason we have  4 amazing business plan samples  to share with you as inspiration.

For most founders,  writing a business plan  feels like the startup equivalent of homework. It's the thing you know you have to do, but nobody actually wants to do.

Here's the good news: writing a business plan doesn't have to be this daunting, cumbersome chore.

Once you understand the fundamental questions that your business plan should answer for your readers and how to position everything in a way that compels your them to take action, writing a business plan becomes way more approachable.

Before you set fingers to the keyboard to turn your business idea into written documentation of your organizational structure and business goals, we're going to walk you through the most important things to keep in mind (like company description, financials, and market analysis, etc.) and to help you tackle the writing process confidently — with plenty of real life business plan examples along the way to get you writing a business plan to be proud of!

Keep It Short and Simple.

There's this old-school idea that business plans need to be ultra-dense, complex documents the size of a doorstop because that's how you convey how serious you are about your company.

Not so much.

Complexity and length for complexity and length's sake is almost never a good idea, especially when it comes to writing a business plan. There are a couple of reasons for this.

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.

Investors wade through hundreds of business plans a year. There's no version of you presenting an 80-page business plan to an investor and they enthusiastically dive in and take hours out of their day to pour over the thing front to back.

Instead, they're looking for you to get your point across as quickly and clearly as possible so they can skim your business plan and get to the most salient parts to determine whether or not they think your opportunity is worth pursuing (or at the very least initiating further discussions).

You should be able to refine all of the key value points that investors look for to 15-20 pages (not including appendices where you will detail your financials). If you find yourself writing beyond that, then it's probably a case of either over explaining, repeating information, or including irrelevant details in your business plan (you don't need to devote 10 pages to how you're going to set up your website, for example).

Bottom line: always be on the lookout for opportunities to “trim the fat" while writing a business plan (and pay special attention to the executive summary section below), and you'll be more likely to secure funding.

2. Know Your Audience

If you fill your business plan with buzzwords, industry-specific jargon or acronyms, and long complicated sentences, it might make sense to a handful of people familiar with your niche and those with superhuman attention spans (not many), but it alienates the vast majority of readers who aren't experts in your particular industry. And if no one can understand so much as your company overview, they won't make it through the rest of your business plan.

Your best bet here is to use simple, straightforward language that's easily understood by anyone — from the most savvy of investor to your Great Aunt Bertha who still uses a landline.

How To Format Your Business Plan

You might be a prodigy in quantum mechanics, but if you show up to your interview rocking cargo shorts and lime green Crocs, you can probably guess what the hiring manager is going to notice first.

In the same way,  how  you present your business plan to your readers equally as important as what you present to them. So don't go over the top with an extensive executive summary, or get lazy with endless bullet points on your marketing strategy.

If your business plan is laden with inconsistent margins, multiple font types and sizes, missing headings and page numbers, and lacks a table of contents, it's going to create a far less digestible reading experience (and totally take away from your amazing idea and hours of work writing a business plan!)

While there's no one  right  way to format your business plan, the idea here is to ensure that it presents professionally. Here's some easy formatting tips to help you do just that.

If your margins are too narrow, it makes the page look super cluttered and more difficult to read.

A good rule of thumb is sticking to standard one-inch margins all around.

Your business plan is made up of several key sections, like chapters in a book.

Whenever you begin a section (“Traction” for example) you'll want to signify it using a header so that your reader immediately knows what to expect from the content that follows.

This also helps break up your content and keep everything nice and organized in your business plan.

Subheadings

Subheadings are mini versions of headings meant to break up content within each individual section and capture the attention of your readers to keep them moving down the page.

In fact, we're using sub-headers right now in this section for that very purpose!

Limit your business plan to two typefaces (one for headings and one for body copy and subheadings, for example) that you can find in a standard text editor like Microsoft Word or Google Docs.

Only pick fonts that are easy to read and contain both capital and lowercase letters.

Avoid script-style or jarring fonts that distract from the actual content. Modern, sans-serif fonts like Helvetica, Arial, and Proxima Nova are a good way to go.

Keep your body copy between 11 and 12-point font size to ensure readability (some fonts are more squint-inducing than others).

You can offset your headings from your body copy by simply upping the font size and by bolding your subheadings.

Sometimes it's better to show instead of just tell.

Assume that your readers are going to skim your plan rather than read it word-for-word and treat it as an opportunity to grab their attention with color graphics, tables, and charts (especially with financial forecasts), as well as product images, if applicable.

This will also help your reader better visualize what your business model is all about.

Need some help with this?

Our  business planning wizard  comes pre-loaded with a modular business plan template that you can complete in any order and makes it ridiculously easy to generate everything you need from your value proposition, mission statement, financial projections, competitive advantage, sales strategy, market research, target market, financial statements, marketing strategy, in a way that clearly communicates your business idea.

Refine Your Business Plans. Then Refine Them Some More.

Your business isn't static, so why should your business plan be?

Your business strategy is always evolving, and so are good business plans. This means that the early versions of your business plans probably won't (and shouldn't be) your last. The details of even even the best business plans are only as good as their last update.

As your business progresses and your ideas about it shift, it's important revisit your business plan from time to time to make sure it reflects those changes, keeping everything as accurate and up-to-date as possible. What good is market analysis if the market has shifted and you have an entirely different set of potential customers? And what good would the business model be if you've recently pivoted? A revised business plan is a solid business plan. It doesn't ensure business success, but it certainly helps to support it.

This rule especially holds true when you go about your market research and learn something that goes against your initial assumptions, impacting everything from your sales strategy to your financial projections.

At the same time, before you begin shopping your business plan around to potential investors or bankers, it's imperative to get a second pair of eyes on it after you've put the final period on your first draft.

After you run your spell check, have someone with strong “English teacher skills” run a fine-tooth comb over your plan for any spelling, punctuation, and grammatical errors you may have glossed over. An updated, detailed business plan (without errors!) should be constantly in your business goals.

More than that, your trusty business plan critic can also give you valuable feedback on how it reads from a stylistic perspective. While different investors prefer different styles, the key here is to remain consistent with your audience and business.

Writing Your Business Plan: A Section-By-Section Breakdown

We devoted an entire article carefully breaking down the  key components of a business plan  which takes a comprehensive look of what each section entails and why.

If you haven't already, you should check that out, as it will act as the perfect companion piece to what we're about to dive into in a moment.

For our purposes here, we're going to look at a few real world business plan examples (as well as one of our own self-penned “dummy” plans) to give you an inside look at how to position key information on a section-by-section basis.

1. Executive Summary

Quick overview.

After your Title Page — which includes your company name, slogan (if applicable), and contact information — and your Table of Contents, the Executive Summary will be the first section of actual content about your business.

The primary goal of your Executive Summary is to provide your readers with a high level overview of your business plan as a whole by summarizing the most important aspects in a few short sentences. Think of your Executive Summary as a kind of “teaser” for your business concept and the information to follow — information which you will explain in greater detail throughout your plan. This isn't the place for your a deep dive on your competitive advantages, or cash flow statement. It is an appropriate place to share your mission statement and value proposition.

Executive Summary Example

Here's an example of an Executive Summary taken from a sample business plan written by the Startups.com team for a fictional company called Culina. Here, we'll see how the Executive Summary offers brief overviews of the  Product ,  Market Opportunity ,  Traction , and  Next Steps .

Culina Tech specializes in home automation and IoT technology products designed to create the ultimate smart kitchen for modern homeowners.

Our flagship product, the Culina Smart Plug, enables users to make any kitchen appliance or cooking device intelligent. Compatible with all existing brands that plug into standard two or three-prong wall outlets, Culina creates an entire network of Wi-Fi-connected kitchen devices that can be controlled and monitored remotely right from your smartphone.

The majority of US households now spend roughly 35% of their energy consumption on appliances, electronics, and lighting.  With the ability to set energy usage caps on a daily, weekly or monthly basis, Culina helps homeowners stay within their monthly utility budget through more efficient use of the dishwasher, refrigerator, freezer, stove, and other common kitchen appliances.

Additionally, 50.8% of house fires are caused in the kitchen — more than any other room in the home — translating to over $5 billion in property damage costs per year.  Culina provides the preventative intelligence necessary to dramatically reduce kitchen-related disasters and their associated costs and risk of personal harm.

Our team has already completed the product development and design phase, and we are now ready to begin mass manufacturing. We've also gained a major foothold among consumers and investors alike, with 10,000 pre-ordered units sold and $5 million in investment capital secured to date.

We're currently seeking a $15M Series B capital investment that will give us the financial flexibility to ramp up hardware manufacturing, improve software UX and UI, expand our sales and marketing efforts, and fulfill pre-orders in time for the 2018 holiday season.

2. Company Synopsis

Your Company Synopsis section answers two critically important questions for your readers: What painful  PROBLEM  are you solving for your customers? And what is your elegant  SOLUTION  to that problem? The combination of these two components form your value proposition.

Company Synopsis Example

Let's look at a real-life company description example from  HolliBlu * — a mobile app that connects healthcare facilities with local skilled nurses — to see how they successfully address both of these key aspects.  *Note: Full disclosure; Our team worked directly with this company on their business plan via Fundable.

Notice how we get a crystal clear understanding of why the company exists to begin with when they set up the  problem  — that traditional nurse recruitment methods are costly, inconvenient, and time-consuming, creating significant barriers to providing quality nursing to patients in need.

Once we understand the painful problem that HolliBlu's customers face, we're then directly told how their  solution  links back directly to that problem — by creating an entire community of qualified nurses and directly connecting them with local employers more cost-effectively and more efficiently than traditional methods.

3. Market Overview

Your Market Overview provides color around the industry that you will be competing in as it relates to your product/service.

This will include statistics about industry size, [growth](https://www.startups.com/library/expert-advice/the-case-for-growing-slowly) rate, trends, and overall outlook. If this part of your business plan can be summed up in one word, it's  research .

The idea is to gather as much raw data as you can to make the case for your readers that:

This is a market big enough to get excited about.

You can capture a big enough share of this market to get excited about.

Target Market Overview Example

Here's an example from HolliBlu's business plan:

HolliBlu's Market Overview hits all of the marks — clearly laying out the industry size ($74.8 billion), the Total Addressable Market or TAM (3 million registered nurses), industry growth rate (581,500 new RN jobs through 2018; $355 billion by 2020), and industry trends (movement toward federally-mandated compliance with nurse/patient ratios, companies offering sign-on bonuses to secure qualified nurses, increasing popularity of home-based healthcare).

4. Product (How it Works)

Where your Company Synopsis is meant to shed light on why the company exists by demonstrating the problem you're setting out to solve and then bolstering that with an impactful solution, your Product or How it Works section allows you to get into the nitty gritty of how it actually delivers that value, and any competitive advantage it provides you.

Product (How it Works) Example

In the below example from our team's Culina sample plan, we've divided the section up using subheadings to call attention to product's  key features  and how it actually works from a user perspective.

This approach is particularly effective if your product or service has several unique features that you want to highlight.

5. Revenue Model

Quite simply, your Revenue Model gives your readers a framework for how you plan on making money. It identifies which revenue channels you're leveraging, how you're pricing your product or service, and why.

Revenue Model Example

Let's take a look at another real world business plan example with brewpub startup  Magic Waters Brewpub .*

It can be easy to get hung up on the financial aspect here, especially if you haven't fully developed your product yet. And that's okay. *Note: Full disclosure; Our team worked directly with this company on their business plan via Fundable.

The thing to remember is that investors will want to see that you've at least made some basic assumptions about your monetization strategy.

6. Operating Model

Your Operating Model quite simply refers to how your company actually runs itself. It's the detailed breakdown of the processes, technologies, and physical requirements (assets) that allow you to deliver the value to your customers that your product or service promises.

Operating Model Example

Let's say you were opening up a local coffee shop, for example. Your Operating Model might detail the following:

Information about your facility (location, indoor and outdoor space features, lease amount, utility costs, etc.)

The equipment you need to purchase (coffee and espresso machines, appliances, shelving and storage, etc.) and their respective costs.

The inventory you plan to order regularly (product, supplies, etc.), how you plan to order it (an online supplier) and how often it gets delivered (Mon-Fri).

Your staffing requirements (including how many part or full time employees you'll need, at what wages, their job descriptions, etc.)

In addition, you can also use your Operating Model to lay out the ways you intend to manage the costs and efficiencies associated with your business, including:

The  Critical Costs  that make or break your business. In the case of our coffee shop example, you might say something like,

“We're estimating the marketing cost to acquire a customer is going to be $25.  Our average sale is $45.  So long as we can keep our customer acquisition costs below $25 we will have enough margin to grow with.”

Cost Maturation & Milestones  that show how your Critical Costs might fluctuate over time.

“If we sell 50 coffees a day, our average unit cost will be $8 on a sale of $10.  At that point we're barely breaking even. However as we scale up to 200 coffees a day, our unit costs drop significantly to $4, creating a 100% increase in net income.”

Investment Costs  that highlight strategic uses of capital that will have a big Return on Investment (ROI) later.

“We're investing $100,000 into a revolutionary new coffee brewing system that will allow us to brew twice the amount our current output with the same amount of space and staff.”

Operating Efficiencies  explaining your capability of delivering your product or service in the most cost effective manner possible while maintaining the highest standards of quality.

“By using energy efficient Ecoboilers, we're able to keep our water hot while minimizing the amount of energy required. Our machines also feature an energy saving mode. Both of these allow us to dramatically cut energy costs.”

7. Competitive Analysis

Like the Market Overview section, you want to show your readers that you've done your homework and have a crazy high level of awareness about your current competitors or any potential competitors that may crop up down the line for your given business model.

When writing your Competitive Analysis, your overview should cover  who  your closest competitors are, the chief  strengths  they bring to the table, and their biggest  weaknesses .

You'll want to identify at least 3 competitors — either direct, indirect, or a combination of the two. It's an extremely important aspect of the business planning process.

Competition Analysis Example

Here's an example of how HolliBlu lays out their Competitive Analysis section for just one of their competitors, implementing each of the criteria noted above:

8. Customer Definition

Your Customer Definition section allows you to note which customer segment(s) you're going after, what characteristics and habits each customer segment embodies, how each segment uniquely benefits from your product or service, and how all of this ties together to create the ideal portrait of an actual paying customer, and how you'll cultivate and manage customer relationships.

Customer Definition Example

HolliBlu's Customer Definition section is effective for several reasons. Let's deconstruct their first target market segment, hospitals.

What's particularly successful here is that we are explained why hospitals are optimal buyers.

They accomplish this by harkening back to the central problem at the core of the opportunity (when hospitals can't supply enough staff to meet patient demands, they have to resort on costly staffing agencies).

On top of that, we are also told how  big  of an opportunity going after this customer segment represents (5,534 hospitals in the US).

This template is followed for each of the company's 3 core customer segments. This provides consistency, but more than that, it emphasizes how diligent research reinforces their assumptions about who their customers are and why they'd open their wallets. Keep all of this in mind when you are write your own business plan.

9. Customer Acquisition

Now that you've defined who your customers are for your readers, your Customer Acquisition section will tell them what marketing and sales strategy and tactics you plan to leverage to actually reach the target market (or target markets) and ultimately convert them into paying customers.

marketing Strategy Example

Similar to the exercise you will go through with your Revenue Model, in addition to identifying  which  channels you're pursuing, you'll also want to detail all of relevant costs associated with your customer acquisition channels.

Let's say you spent $100 on your marketing plan to acquire 100 customers during 2018. To get your CAC, you simply divide the number of customers acquired by your spend, giving you a $1.00 CAC.

10. Traction

This one's huge. Traction tells investors one important thing: that you're business has momentum. It's evidence that you're making forward progress and hitting milestones. That things are happening. It's one of the most critical components of a successful business plan.

Why is this so important? Financial projections are great and all, but if you can prove to investors that your company's got legs before they've even put a dime into it, then it will get them thinking about all the great things you'll be able to accomplish when they do bankroll you.

Traction Example

In our Culina Traction section, we've called attention to several forms of traction, touching on some of the biggest ones that you'll want to consider when writing your own plan.

Have I built or launched my product or service yet?

Have I reached any customers yet?

Have I generated any revenue yet?

Have I forged any strategic industry relationships that will be instrumental in driving growth?

The key takeaway here: the more traction you can show, the more credibility you build with investors. After all, you can't leave it all on market analysis alone.

11. Management Team

Here's what your Management Team section isn't: it's not an exhaustive rundown of each and every position your team members have held over the course of their lives.

Instead, you should tell investors which aspects of your team's experience and expertise directly translates to the success of  this  company and  this  industry.

In other words, what applicable, relevant background do they bring to the table?

Management Team Example

Let's be real. The vast majority of startup teams probably aren't stacked with Harvard and Stanford grads. But the thing to home in on is how the prior experience listed speaks directly to how it qualifies that team member's current position.

The word of the day here is relevancy. If it's not relevant, you probably don't need to include it in your typical business plan.

12. Funding

Funding overview.

The ask! This is where you come out and, you guessed it,  ask  your investors point blank how much money you need to move your business forward, what specific milestones their investment will allow you to reach, how you'll allocate the capital you secure, and what the investor will get in exchange for their investment.

You can also include information about your  exit strategy  (IPO, acquisition, merger?).

Funding Example

While we've preached against redundancy in your business plan, an exception to the rule is using the Funding section to offer up a very brief recap that essentially says, “here are the biggest reasons you should invest in my company and why it will ultimately benefit you.”

13. Financials

Spreadsheets and numbers and charts, oh my! Yes, it's everybody's “favorite” business plan section: Financials.

Your Financials section will come last and contain all of the forecasted numbers that say to investors that this is a sound investment. This will include things like your sales forecast, expense budget, and break-even analysis. A lot of this will be assumptions, or estimates.

The key here is keeping those estimates as realistic as humanly possible by breaking your figures into components and looking at each one individually.

Financials Example

The balance sheet above illustrates the business' estimated net worth over a three-year period by summarizing its assets (tangible objects owned by the company), liabilities (debt owed to a creditor of the company), and shareholders' equity (source of financing used to fund the assets).

In plain words, the balance sheet is basically a snapshot of your business' financial status by laying out what you own and owe, helping investors determine the level of risk involved and giving them a good understanding of the financial health of the business.

If you're looking to up your game from those outdated Excel-style spreadsheets,  our business planning software  will help you create clean, sleek, modern financial reports the modern way. Plus, it's as easy to use as it is attractive to look at. You might even find yourself enjoying financial projections, building a cash flow statement, and business planning overall.

You've Got This!

You've committed to writing your business plan and now you've got some tricks of the trade to help you out along the way. Whether you're applying for a business loan or seeking investors, your well-crafted business plan will act as your Holy Grail in helping take your business goals to the next plateau.

This is a ton of work. It's not a few hours and a free business plan template. It's not just a business plan software. We've been there before. Writing your [business plan](https://www.startups.com/library/expert-advice/top-4-business-plan-examples) is just one small step in startup journey. There's a whole long road ahead of you filled with a marketing plan, investor outreach, chasing venture capitalists, actually getting funded, and growing your business into a successful company.

And guess what? We've got helpful information on all of it — and all at your disposal! We hope this guides you confidently on how to write a business plan worth bragging about.

About the Author

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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Write your business plan

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.

Business plans can help you get funding or bring on new business partners. Investors want to feel confident they’ll see a return on their investment. Your business plan is the tool you’ll use to convince people that working with you — or investing in your company — is a smart choice.

Pick a business plan format that works for you

There’s no right or wrong way to write a business plan. What’s important is that your plan meets your needs.

Most business plans fall into one of two common categories: traditional or lean startup.

Traditional business plans are more common, use a standard structure, and encourage you to go into detail in each section. They tend to require more work upfront and can be dozens of pages long.

Lean startup business plans are less common but still use a standard structure. They focus on summarizing only the most important points of the key elements of your plan. They can take as little as one hour to make and are typically only one page.

Traditional business plan

Lean startup plan

Traditional business plan format

You might prefer a traditional business plan format if you’re very detail-oriented, want a comprehensive plan, or plan to request financing from traditional sources.

When you write your business plan, you don’t have to stick to the exact business plan outline. Instead, use the sections that make the most sense for your business and your needs. Traditional business plans use some combination of these nine sections.

Executive summary

Briefly tell your reader what your company is and why it will be successful. Include your mission statement, your product or service, and basic information about your company’s leadership team, employees, and location. You should also include financial information and high-level growth plans if you plan to ask for financing.

Company description

Use your company description to provide detailed information about your company. Go into detail about the problems your business solves. Be specific, and list out the consumers, organization, or businesses your company plans to serve.

Explain the competitive advantages that will make your business a success. Are there experts on your team? Have you found the perfect location for your store? Your company description is the place to boast about your strengths.

Market analysis

You'll need a good understanding of your industry outlook and target market. Competitive research will show you what other businesses are doing and what their strengths are. In your market research, look for trends and themes. What do successful competitors do? Why does it work? Can you do it better? Now's the time to answer these questions.

Organization and management

Tell your reader how your company will be structured and who will run it.

Describe the  legal structure  of your business. State whether you have or intend to incorporate your business as a C or an S corporation, form a general or limited partnership, or if you're a sole proprietor or limited liability company (LLC).

Use an organizational chart to lay out who's in charge of what in your company. Show how each person's unique experience will contribute to the success of your venture. Consider including resumes and CVs of key members of your team.

Service or product line

Describe what you sell or what service you offer. Explain how it benefits your customers and what the product lifecycle looks like. Share your plans for intellectual property, like copyright or patent filings. If you're doing  research and development  for your service or product, explain it in detail.

Marketing and sales

There's no single way to approach a marketing strategy. Your strategy should evolve and change to fit your unique needs.

Your goal in this section is to describe how you'll attract and retain customers. You'll also describe how a sale will actually happen. You'll refer to this section later when you make financial projections, so make sure to thoroughly describe your complete marketing and sales strategies.

Funding request

If you're asking for funding, this is where you'll outline your funding requirements. Your goal is to clearly explain how much funding you’ll need over the next five years and what you'll use it for.

Specify whether you want debt or equity, the terms you'd like applied, and the length of time your request will cover. Give a detailed description of how you'll use your funds. Specify if you need funds to buy equipment or materials, pay salaries, or cover specific bills until revenue increases. Always include a description of your future strategic financial plans, like paying off debt or selling your business.

Financial projections

Supplement your funding request with financial projections. Your goal is to convince the reader that your business is stable and will be a financial success.

If your business is already established, include income statements, balance sheets, and cash flow statements for the last three to five years. If you have other collateral you could put against a loan, make sure to list it now.

Provide a prospective financial outlook for the next five years. Include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, be even more specific and use quarterly — or even monthly — projections. Make sure to clearly explain your projections, and match them to your funding requests.

This is a great place to use graphs and charts to tell the financial story of your business.  

Use your appendix to provide supporting documents or other materials were specially requested. Common items to include are credit histories, resumes, product pictures, letters of reference, licenses, permits, patents, legal documents, and other contracts.

Example traditional business plans

Before you write your business plan, read the following example business plans written by fictional business owners. Rebecca owns a consulting firm, and Andrew owns a toy company.

Lean startup format

You might prefer a lean startup format if you want to explain or start your business quickly, your business is relatively simple, or you plan to regularly change and refine your business plan.

Lean startup formats are charts that use only a handful of elements to describe your company’s value proposition, infrastructure, customers, and finances. They’re useful for visualizing tradeoffs and fundamental facts about your company.

There are different ways to develop a lean startup template. You can search the web to find free templates to build your business plan. We discuss nine components of a model business plan here:

Key partnerships

Note the other businesses or services you’ll work with to run your business. Think about suppliers, manufacturers, subcontractors, and similar strategic partners.

Key activities

List the ways your business will gain a competitive advantage. Highlight things like selling direct to consumers, or using technology to tap into the sharing economy.

Key resources

List any resource you’ll leverage to create value for your customer. Your most important assets could include staff, capital, or intellectual property. Don’t forget to leverage business resources that might be available to  women ,  veterans ,  Native Americans , and  HUBZone businesses .

Value proposition

Make a clear and compelling statement about the unique value your company brings to the market.

Customer relationships

Describe how customers will interact with your business. Is it automated or personal? In person or online? Think through the customer experience from start to finish.

Customer segments

Be specific when you name your target market. Your business won’t be for everybody, so it’s important to have a clear sense of whom your business will serve.

List the most important ways you’ll talk to your customers. Most businesses use a mix of channels and optimize them over time.

Cost structure

Will your company focus on reducing cost or maximizing value? Define your strategy, then list the most significant costs you’ll face pursuing it.

Revenue streams

Explain how your company will actually make money. Some examples are direct sales, memberships fees, and selling advertising space. If your company has multiple revenue streams, list them all.

Example lean business plan

Before you write your business plan, read this example business plan written by a fictional business owner, Andrew, who owns a toy company.

Need help? Get free business counseling

Business Planning: Ultimate Guide to Writing a Business Plan for Investors

If you are planning to start, grow or sell a business, it is almost essential you have a plan of attack.

A traditional business plan is much more than a general list of things that you need to do.

An effective plan focuses on short-term and long-term business goals, with information that outlines how you intend to reach them.

A formal business plan will be one of the most valuable tools that you will use in raising capital from investors and for building and growing your business.

Like the businesses themselves, business plans come in many types and forms.

Oftentimes even established business owners and managers underestimate the effectiveness of a qualified business plan.

Some mistakenly think business plans are only used in the venture capital world of start-up finance.

This simply is not true. Enterprise planning is often required for anything from SBA lending and debt financing to internal planning and partnership qualification.

Many find they regularly refer to a previously-written business plan to ensure they stay on track and under budget.

A business plan can also help you establish a framework for your dream business, including structure and planning goals.

In addition, business planning is often a fluid process and a living document, with changes occurring mid-stream which means those best prepared have already done their homework and are prepared to pivot.

Crafting Your Business Plan(s)

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You will essentially create two plans. The first is known as the  internal or initial start-up business plan . This plan includes your company’s mission statement, product/service description, marketing strategy plan and initial start-up goals. Most importantly, the initial plan will also include a market analysis. Performing research on the market helps both internal managers understand whether the business concept or business idea is viable and worth pursuing and to attract investors.

If it is, the initial plan will morph into something suitable for angel investors, venture capitalists and private equity groups. Typically, your final secondary plan will incorporate the details in your initial start-up plan into a more finalized version ready for publication. InvestmentBank.com assists throughout this entire process.

How you go about your business plan process is dependent on the audience for which it will be created.

For example, if you will be seeking a business loan, you need to create  business plan for bank loans . Conversely, if you are seeking investment capital in equity financing, you’ll most likely need a  venture capital business plan . Regardless of the audience any typical business plan will generally include the following:

• A company description, including a description of your business and the products and/or services offered
• A detailed description of the target market and how they will best be served
• Information regarding the management team and key employees within the company
• Detailed information about cash flow and financial analysis, budget and market penetration
• An  Executive Summary  for a snapshot 30,000 foot view of all aspects of the business and how it will be successful

Discovering a business idea is the first step towards creating a business model hypothesis. Specifically, a business idea worth investigating further is a “proto-business model” – the embryo of a viable business model. The business idea is essentially your best guess that describes your Value Proposition (the thing you want to sell) and your Customer Segment(s) (the target customers you want to sell to). This is your initial pass at creating a viable Value Proposition – Customer Segment “fit”.

At a minimum, a business idea worth investigating further should have one or more Customer Segments and a corresponding Value Proposition to match each Customer Segment. Completing the following steps will validate that your business idea is worth investigating further.

• Identify Value Proposition – Customer Segment pairings.  This step involves pinpointing the type and number of Customer Segment(s) your business is going to serve and what your business’s Value Proposition will be for each of those Customer Segments. This will create one or more Value Proposition – Customer Segment pairings.
• What your Customer Segment is trying to do (i.e. eat dinner, find a date, get in shape…). What are your Customer Segment’s problems (they are hungry and don’t want to cook, they can’t find a suitable boyfriend/girlfriend, they are out of shape…). What does your Customer Segment expect to gain from accomplishing whatever they want to do (eat a tasty meal, find a pleasant date, loose a few pounds and feel better)?
• What your company can offer your Customer Segment (i.e. a good quick meal, a matchmaking service, a place to work out…). How will your offer solve your Customer Segment’s problems? What benefits will your offer create for your Customer Segment? The best business solves real-world problems.

Business Plan Outline

A business plan may contain many types of information depending on the nature, size, and financing needs of the company. One general business plan template can be developed with the help of our JDs, MBAs and expert business planning professionals. While various institutions like the Small Business Administration (SBA) help provide guidelines, it is often best to get your detailed business plan drafted by professionals who know what it takes to get funded and what investors are looking for when they sift through thousands of plans.

This is the title or cover page. This page will contain the information of the names and addresses of business enterprise and entrepreneurs, a paragraph describing the nature of business, and the vision and mission statement of the company.

An executive summary of the comprehensive business plan report should be presented within four pages, summarizing the whole report and emphasizing on business purpose, industry analysis, market opportunity, key elements of the business, revenue, and planning.

This segment of a viable business plan will show the present conditions of the industry, in which the entrepreneur desires to enter. This section should include present and future outlook and demographic developments, analysis of competitors, market segmentation, and industry financial forecasts.

In this segment of the business plan a detailed picture of the venture should be outlined with particular reference to products, services, office equipment, machinery, personnel, size of business, and background of entrepreneurs.

This portion of the business plan is indeed an operational plan. The operational activities of manufacturing, trading and service business are different. So the operational plans of different types of enterprises will be different. For example operational plan of a manufacturing business may cover unique aspects such as manufacturing process,equipment, names of the providers of the raw materials and other inputs of the production process, and so on.

It includes market condition, market strategy, and future market prospect. The pricing, promotion, distribution, product forecasts, and controls should be evaluated carefully for the business plan.

This section includes forms of the ownership, identification of partners or major shareholders, the authority of the managers, management-team background, and the duties and responsibilities of members of the organization.

It is very important for any business plan to assess all the possible risks that may affect the enterprise, prior to starting the business. Assessment of risk must include evaluation of the weaknesses of the enterprise, latest technologies, and contingency plans.

This section shows financial viability of the business plan, in which the entrepreneur must prepare forecasted income statement, cash flow estimates, forecasted balance sheet, break-even analysis, and sources and usages of funds. This section will be scrutinized to determine the profitability and sustainability of the enterprise by the investors, such as the bankers or venture capitalists.

It contains all the backup materials such as legal documents, market research data, lease contracts, and price forecasts from suppliers.

These are the general contents of a business plan that are suggested by the experts, but these contents may vary from business to business. A good business plan should be comprehensive enough to provide a complete picture and understanding of the venture regarding its present status and future growth potential to the prospective investors and other interest groups.

Business Plan Types

Traditional business plans come in many types. They include strategic plans, expansion plans, investment plans, growth plans, operational plans, internal plans, annual plans, feasibility plans, product plans, and many more.

The various types of business plans will always matche the specific business situation. For instance, it is not necessary to add all the background information that is known already, while preparing a plan to use internally and not circulating it to financial institutions or investors. Investors always look for information on the description of the management team, while bankers always look for financial background or history of the company.

The various types of business plans are due to the specific case differences:

Start-up plan is the most standard plan that explains the steps for a developing new business. Start-up plans often include standard topics such as the organization, product or service offering, market place, business forecasts, strategy, management team, implementation milestones, and financial analysis. Sales forecast, profit and loss statement, cash flow statements, balance sheet, and probably a few other tables are included in the financial analysis.

First year monthly projections are shown in the start-up plan, which usually begins with an abstract and ends with appendix.

Click on the following link to learn more about how we approach startup investing .

Business plans that are not usually intended for external investors, financial institutions, or any other third parties are called Internal plans. A detailed description of the organization or the management team may not be included in it. Detailed financial projections like budgets and forecasts may or may not get included in Internal plans. Instead of presenting the whole business plan in the form of paragraph text, Internal plans display the main points in the form of bullet points in slides.

Operations plan can be referred to as Internal plan, which is also known as an annual plan. More detailed information on specific dates, implementation milestones, deadlines, and teams and managers responsibilities are given in Operations plan.

Strategic planning usually does not focus on specific responsibilities and detailed dates, rather it focuses on setting high priorities and high-level options and is also referred to as an internal plan. Unlike most other internal plans, it includes data in the form of bullet points in slides. Organization or management team descriptions are not included in it. Also, some of the financial information is not explained in detail and left while preparing strategic plans.

Some business plans focuses on specific areas of the business or a subcategory of the business, and these plans are referred to as a growth plan or an expansion plan or a new product plan. Depending on whether these business plans are linked to new investments or loan applications, they could be classified as internal plans or not. For instance, like a start-up plan developed for investors, an expansion plan that requires new investment would also have detailed description of the company and its management teams background data. These details will also be required for loan applications. But, these descriptions are skipped in an internal business plan, which is used to design the steps for growth or expansion that is funded internally within the organisation. Although, detailed financial projections might not be given, forecast of the sales as well as the expenses for the new business venture is at least included in more detail.

A very simple start-up plan is the feasibility plan, which include an abstract, mission statement, market analysis, keys to long-term success, and initial cost analysis, pricing, and projected expenses. Feasibility plans helps to analyze whether it is good to continue with a plan or not, to find if the business plan is worth continuing.

Writing a business plan is a highly collaborative affair between the entrepreneur(s) and the business plan writer. The more complex the plan is, the more both the entrepreneur(s) and the business plan writer will need to communicate and collaborate in order to produce a professional, marketable business plan. The business plans we write fall into six general categories. We will discuss each in detail below.

These are business plans for new companies that are 1) trying to raise startup capital to launch the business and 2) the business will serve a clearly defined target market with a service or product that already exists. These business plans are usually the least complex to write because the business models

The hourly fee for work over the project’s estimated number of hours is $20 per hour.

Type 1 and Type 2 business plans are written in five distinct units. Each unit reflects a progressive step in putting the business plan together. Before we can begin writing each unit, we must receive feedback to specific questions that we will send you concerning the topics covered in each specific unit.  After we complete each of the first four units, we will send you a draft of that unit in a Microsoft Word document. You will then have the opportunity to review unit draft and critique or clarify it.

We will make any necessary changes needed for each unit draft. The fifth and final unit will be integrating the information in each of the previous four units into a final, complete business plan. You will then have the opportunity to review and critique that completed business plan draft. We will then correct any and all discrepancies in that final complete draft.

The entire business planning process of writing a Type 1 or Type 2 business plan depends upon our general workload and the speed with which you respond to our requests for information about your business. We estimate that either a Type 1 or Type 2 business plan will take generally 10 to 15 work days to complete (two to three weeks).

These are business plans for existing companies that are 1) trying to raise capital for a new business project or idea and 2) the business project is serving a clearly defined market with a service or product that already exists.

Type 3 and Type 4 business plans are written in six distinct units. Each unit reflects a progressive step in putting the business plan together. Before we can begin writing each unit, we must receive feedback to specific questions that we will send you concerning the topics covered in each specific unit.  After we complete each of the first five units, we will send you a draft of that unit in a Microsoft Word document. You will then have the opportunity to review the draft of each unit and critique or clarify it. We will change or modify any discrepancies you have with the drafts of each unit. The final unit will be integrating the information in each of the five units into a final, complete business plan. You will then have the opportunity to review and critique that completed business plan draft. We will then correct any and all discrepancies in that final complete draft.

The entire process of writing a Type 3 or Type 4 business plan depends upon our general workload and the speed with which you respond to our requests for information about your business. We estimate that either a Type 3 or Type 4 business plan will take generally 15 to 20 work days to complete (three to four weeks).

These are business plans for classic startup companies that are trying to create new products or services to serve new or reimagined markets. These companies are usually looking to raise equity capital from angel investors and venture capital firms. These business plans are far more difficult to write because their business models are largely unproven.

Type 5 business plans are written in five distinct units. Each unit reflects a progressive step in putting the business plan together. Before we can begin writing each unit, we must receive feedback to specific questions that we will send you concerning the topics covered in each specific unit.  After we complete each of the first four units, we will send you a draft of that unit in a Microsoft Word document. You will then have the opportunity to review unit draft and critique or clarify it. We will make any necessary changes needed for each unit draft. The fifth and final unit will be integrating the information in each of the previous four units into a final, complete business plan. You will then have the opportunity to review and critique that completed business plan draft. We will then correct any and all discrepancies in that final complete draft.

The entire process of writing a Type 5 business plan depends upon our general workload and the speed with which you respond to our requests for information about your business. Also, the novelty and newness of the industry you are entering and the market you will be serving are real wild card variables in terms of how much time the business plan will take to complete. We estimate that a Type 5 business plan will take generally 25 to 40 work days to complete (five to eight weeks).

These are business plans for existing companies that are attempting to create new products or services to serve new or reimagined markets. The markets these companies are trying to serve with their new products and services are either undefined or completely new. Usually these companies are seeking financing to raise equity capital (because these business projects are usually risky), but sometimes raising debt capital may be an options for them. These business plans are as difficult to write as Type 5 plans.

Type 6 business plans are written in six distinct units. Each unit reflects a progressive step in putting the business plan together. Before we can begin writing each unit, we must receive feedback to specific questions that we will send you concerning the topics covered in each specific unit.  After we complete each of the first five units, we will send you a draft of that unit in a Microsoft Word document. You will then have the opportunity to review the draft of each unit and critique or clarify it. We will change or modify any discrepancies you have with the drafts of each unit. The final unit will be integrating the information in each of the five units into a final, complete business plan. You will then have the opportunity to review and critique that completed business plan draft. We will then correct any and all discrepancies in that final complete draft.

The entire process of writing a Type 6 business plan depends upon our general workload and the speed with which you respond to our requests for information about your business. Also, the novelty and newness of the industry you are entering and the target market you will be serving are real wild card variables (in terms of how much time the business plan will take to complete). We estimate that a Type 6 business plan will take generally 25 to 40 work days to complete (five to eight weeks).

Running a Business Is Tough, Especially Without a Business Plan

If you are running a business, it’s very important to have a business plan made up and it’s just as important to stick to your business plan once you create it. When you have a business plan you are setting objectives for yourself and you are establishing the priorities you have for your business. It also makes it much easier to reach the goals that you set for yourself as well which is always crucial in a business.

Think of your business plan as a map for your business, without this map you and the way you run your business are traveling blindly which is very dangerous. You want to have a clear idea of where your business is headed and where you want it to go and a business plan outlines what will steer you in the right direction.

Looking for a Loan?

If you are looking to get a loan for your business, you’re going to need a definite business plan. Most banks won’t even consider giving you a loan until they see a business plan. If you don’t have a business plan they’ll think of you as a risk since you don’t truly know where you want your business to go. When you present your business plan to a bank to get the loan you desire be sure that you go over what your business is all about and why you started it. You will also want to list for them what you see in the future of your business as well.

Looking for a Business Investment?

Having a business plan doesn’t mean that you will surely get the investment you desire but not having a business plan will surely mean you will not get the investment you desire. Investors need to know what exactly they are investing in and they will look to your business plan to understand what the idea of the business is, your businesses track records, the technology behind your business and of course yourself. You will absolutely not get a business investment without having a business plan because the investors won’t have anything to help them understand what your business is all about.

Have Business Partners?

A business plan is what defines your agreements that you have made with your business partners which means you’ll have a lot of issues if you don’t have a business plan if you are in this business with more than just yourself. A business plan is the only way to keep everything between you and your partners fair and it ensures that everyone knows what the ground rules are for the business and where each and every one of you stand.

Communicating with a Management Team Won’t Work Without a Business Plan

How can you and your management team effectively run your business without being able to see where you all want it to go? The answer is, you can’t. You can’t steer your business down the right path if nobody knows exactly where it should be going and your management team will feel the exact same way. There will be a lot of different problems that will come up during the day-to-day work and it will be very challenging for you to face them and communicate all of these problems when you or your management team don’t truly know where the problem falls under in the business plan.

Do you need a business valuation?

Whether you need to place a value on your business to sell it or for taxes, a business plan is an essential part in this. It’s always important to know what your business is worth even if you don’t plan on selling it at all, you may need to know what it’s worth when it comes to planning an estate or an unexpected divorce could come up. You always should know what your business is worth an a business plan will help you understand that and keep track of it.

When it comes to developing a business plan, many people believe that it’s too difficult or it’s just too time consuming to do but what those people don’t realize is that putting together a business plan will save you in many ways and you it will help your business in more ways than you can imagine.

Developing a business plan is not that much of a challenge and it will very valuable to you in the future. Nobody should ever try to do something big without planning it first and this includes running a business. You have all these business plans in your head so just lay those plan out on paper so you have tangible evidence of your business and what you want to do with it.

A business plan a very crucial part in creating and owning a business so take the time and effort in creating one and you will benefit from it much more than you think and you’re business will run much more smoothly.

A business plan’s executive summary section provides a round-up of the main points of your business plan. Although the summary will appear at the top of the final printed piece, the majority of business plan developers do not write the executive summary until the last moment. The summary forms the gateway to the remainder of the plan. If you do not write a business plan executive summary it well, your target audience will not read beyond the executive summary.

What should be included in an executive summary?

When a regular business plan is being written, the following should usually be incorporated into the opening paragraph of the executive summary:

• The name of the business • The location of the business • The service or product being offered • The aim of the plan

A further paragraph should underline significant points, for example projected profits and sales, profitability, unit sales, and keys to success. Give the details you need everyone to notice. This is also a sensible point at which to include a highlights chart, a bar chart depicting gross margin, profits before taxes and interest, and sales for the three years to come. These numbers must be explained and cited in the text.

Different summaries are required for different plans

Internal plans, for example annual or strategic plans, or operations plans, do not need such formal executive summaries. With such a plan, make its purpose obvious, and be certain that all the highlights are mentioned, but other details – such as the description of your service or product, and location – may not need to be repeated.

Be concise with your summary

If investment is what you are seeking, mention this in your executive summary, specifying the amount of investment required and the level of equity ownership that will be provided in return. It is also a good idea to include some highlights regarding your competitive advantage and your management team.

If it is a loan that you are looking for, say so in the executive summary, specifying the sum required. Do not include details of the loan.

What is the right length for an executive summary? There are differing views from experts about the ideal length of an executive summary. Some recommend taking only one or two pages, while others suggest a more in-depth approach, with the summary lasting for anything up to ten pages and including sufficient information to be used instead of the full plan. Although it was once common to write business plans of 50 or more pages, today’s lenders and investors expect a more focused, concise plan.

A single page is the perfect length for an executive summary. Keep everything brief, emphasizing the major aspects of your plan. You are not trying to explain every last detail, simply piquing your readers’ interest about the rest of the plan and encouraging them to read further.

Be careful not to confuse a summary memo with an executive summary. The executive summary is the opening section of a business plan, while a summary memo is a distinct publication, usually running to no more than five or ten pages; this is intended as a substitute for the full plan for the benefit of those who are not yet in a position to read the full plan.

In general, a financial plan is a set of steps or goals put together for the business which is intended to help attain and accomplish a final financial goal. It shows the future and current financial state of a business by using known variables to forecast future cash flows, asset values and withdrawal plans. The plan shows financial viability of the business plan, in which the entrepreneur must prepare forecasted income statement, cash flow estimates, forecasted balance sheet, break-even analysis, and sources and usages of funds.

Why is a financial plan important? Investors and bankers must have an incentive to invest in your business. Profitability gives them an incentive to invest.  If your plan is weak and unorganized it will portray your business as unsustainable. Investors and banks will see you only as a risk and be unlikely to give the kind of capital needed for your business. For this reason you need to create a solid financial plan which will convince investors that your business is worth investing in.

Here at InvestmentBank.com we will design for you a financial plan intended to demonstrate to the bank and your investors that your business is sustainable and profitable.  We cannot guarantee you the investments you are hoping for, but we can guarantee that if you don’t have a plan, you will also not receive your hopeful investments. Let us guide you in the planning process.

One core component of market analysis is market forecasting and proforma financial statement drafting. The future trends, characteristics, and numbers in your target market are projected in market analysis. In a standard analysis process, the projected number of potential customers is divided into segments.

Generally, market size is not the only factor that is determined, but the market value is also very important. For instance, small business customers spend around 4 times as much as the home office customer, even though they are 2.5 times smaller than their high-end home segment in terms of customer size. So, in terms of dollar value, the small business market is often considered very important.

Market value is calculated through simple mathematics. The number of potential customers in the market is multiplied by the average purchase per customer. Market value is calculated by taking the average number of customers in each segment over a period of time and then multiplied that figure by the average purchase per customer. In market analysis table, the other items are only subjective qualities that help with marketing. These points are allotted to people who are assigned in preparing marketing information.

Reality Checks Reality checks are always important for market forecast. Finding a way to check reality, while performing a forecast is essential. If you are able to estimate your total market value, then you would relate that figure to the estimate sales of all their competitors to check if the 2 figures relate to each other. The import and export value and production values are checked in an international market to find whether the annual shipments estimates appear to be somewhere in the same range as the estimated figures. To check your results with the forecast, you might also check for some given years with the vendors, who sold products to this market. Macroeconomic data can also be overlooked to confirm the size of this market compared to other markets with same characteristics.

Target Focus Review

Market analysis should help in the development of strategic market focus, which means selecting the key target markets. This is considered the critical foundation of strategy. We speak on this as market positioning and segmentation.

Company will not try to address the needs of all market segments under normal circumstances. While selecting target market segments, understand the inherent market differences, competitive advantage, keys to success, and strengths and weaknesses (SWOT analysis) of your organization. Everyone wants to focus on the best market segment, but the market segment with the maximum growth or the largest market segments, might not be necessarily the best one to address. The best market segment to address would be the one that matches your own company profile.

It is not a good idea to use page count as a gauge to determine the length of a business plan. A business plan with 20 pages of text alone can be considered to be longer than a 35-page plan which is well laid out with bullet points, helpful images of products or locations and charts that highlight vital projections.

In fact, a plan should be measured by its readability as well as the summary provided. If the business plan is prepared keeping these aspects in mind, the reader will be able to get an overall idea in about 15 minutes by quickly browsing through the key points.

Illustrations, headings, format and white space contribute to improving the appeal of the business plan. The summary section is a very important aspect of any business plan. The salient points of the business plan must be clearly visible to the reader as it is done in a presentation.

It is unfortunate that many people still tend to measure the worth of a business plan by the number of pages in it. In this connection, some of the key aspects to be kept in mind are as follows:

• Practical business plans prepared for internal use only can have five to ten pages
• Business plans of large companies may have hundreds of pages

A standard expansion or start-up plan prepared for presentation to outsiders can have 20 to 40 pages. However, it should be easy to read with text well spaced and have bullet point formatting, illustrations in the form of business charts and financial tables in the condensed form. The details of financial aspects can be organized in appendices.

However, the  length of the business plan  is decided by its nature and the purpose for which it is prepared. Some of the questions that can be considered when drafting out a business plan in order to decide on its length are:

• Should descriptions about the company as well as the management team be included as outsiders are likely to read the business plan?
• Should a standalone executive summary be provided for the business plan?Is there a need to incorporate plans, blueprints, drawings and detailed research?Is it an investment proposal?
• Should it be worded in such a way as to clear legal scrutiny?

The form of the business plan is actually decided by the requirement for which it is to be prepared.

Often, venture contests specify a limit of 30 pages or 40 pages at times, but rarely 50 pages, including the appendices that contain detailed financial statements, for a business plan. Some contestants make very bad options because of page restrictions and cram the content using thick texts and bold typefaces, making it worse and not better.

Most often,  good plans have as many as 30 to 40 pages . The plans have 20 to 30 pages of text, excluding graphics to illustrate locations, menus, designs, etc. and appendices consisting of team leaders’ resumes, monthly financial projections, etc. Some pages may have to be included for standard financials. This calls for tables for sales, income and cash flow statement, balance sheet and personnel on a monthly basis. In the body of the plan, annual numbers may also have to be included.

It is not prudent to reduce the length of the plan by cutting down on helpful graphics. Readability is more important than the length. Making use of business charts to illustrate numbers makes it easier to understand. Make use of drawings and photographs to depict locations, sample menus and products. It is important to use as much illustration as possible. Finally, extra graphics such as clip art that are not relevant to the matter at hand may better be avoided.

Business Plan Market Forecast

Proper market forecasting helps provide budgetary allocation for coming market trends, innovative shifts and internal financial allocation. It is a key component of proforma financial statements and  professional market research . Intelligent estimates are best backed by quality, time-intensive research. That’s where we come in. Rather than producing a business plan based on educated guesswork, we use a litany of some of the industry’s best market research tools available to some of the most prestigious universities. Many a business plan software tools can also aid in your research work. Typically business plan software also includes industry-specific templates, which can help with how you approach your niche or even the broader market.

Today’s technology provides access to large data-sets for current and past information. Obtaining the data is not difficult. We help to analyze, interpret and make qualitative assumptions about future trends. By using both qualitative and quantitative approaches we work to derive parallel data forecasts for future trends within your business, your industry and the market as a whole. The future may be uncertain, but with the help of expert modeling, it can be simplified, understood and, in some cases, accurately predicted.

Many business planners lack the luxury of funding a previously-published market forecast from which to glean relevant data. In many cases, free published forecasts can help to paint a meaningful picture. However, when professional forecasts are not forthcoming on market size, supply/demand metrics and potential company penetration, it is usually left up to thoughtful opinion and expert “reverse engineering” to determine any meaningful dribble from the data.

Without free forecasts, a business owners may feel forced to purchase expensive data sets, market research reports and published articles to determine helpful data about the potential of a business idea. Where we can, we utilize past relationships and access to thousands of reports through expensive subscriptions to find the data-set that best fits your business goals for the plan you may be crafting.

Apart from the more obvious sources like the Internet, library references and popular publications, we provide access to industry-specific reports and paid-for research studies not accessible to would-be entrepreneurs. We fully recognize that data forecasting is part art and part science, but we prefer to adhere to more quantitative methods so as to make your business plan as convincing and relevant as possible for its particular audience.

Extrapolation of past data with large populations and data-sets helps to provide reliable predictions about future trends and outcomes. Understanding past growth, market saturation and the competing forces that can impact a company’s success in market entrance are absolutely vital components of the marketing portion of your business plan.  Past data is never a fail safe, but it can act as a healthy gauge of future trends in a marketplace.

When no relevant data on current conditions within your market can be found, we work with the available numbers to create plausible models that form convincing arguments for your particular plan goals.

Perhaps the greatest downfall of many potentially-successful business plans is the disconnect between gathered data, assumptions, external and internal market forces and projections. Without a common sense litmus test, many plans fail to deliver relevant metrics to help make business funding possible. Performing common sense tests often requires qualitative work outside the realms of the given data. Making phone calls to Chambers of Commerce, trade organizations and market reporting agencies to obtain a wider base and deeper foundation of information is extremely helpful when crafting assumptions.

Making wild guesses about targets, markets and industries without thoughtful research can be detrimental to fulfilling the goals of your particular business plan. BusinessPlanning.org helps to remove the guesswork and provide your business with relevant data from which to tell a compelling story.

Correctly identifying the structure and competitive dynamics of the industry you are proposing to enter will create a good general point of reference for judging whether you should enter it or not. If the general industry profile does not appear attractive to you, and you are planning to offer value propositions that have close industry substitutes, then this may be an important signal that your proposed venture may need to be reconsidered. But if the industry profile looks attractive, then this could be a sign that you are on to something.

A fantastic tool to analyze an industry that serves a Defined Existing Market is Porter’s Five Forces Model. Michael Porter is a professor at Harvard Business School and published this strategy model in his seminal work,  Competitive Strategy . Porter’s model is powerful. It demonstrates how an industry’s attractiveness to either its current competitors or a new entrant is an amalgam of disparate, and sometimes contradictory, factors.

To help determine if your business idea will be worth the investment of time, money and energy, you will conduct two sequential analyses using the Five Forces Model. The first Five Forces analysis will be of the overall industry that you are contemplating to enter. The second Five Forces analysis will be of the particular market segment(s) you would be choosing to serve with your Value Proposition(s).

The figure below illustrates how Porter’s model works by focusing on the five forces that shape competition within an industry: 1) the risk of entry by potential competitors, 2) the intensity of the rivalry among established companies within an industry, 3) the bargaining power of suppliers, 4) the bargaining power of buyers, and 5) the similarity of substitutes to an industry’s value propositions.[1]

The main point of Porter’s Five Forces Model is as follows. The stronger that one of the five competitive forces becomes, the greater the overall competitive rivalry becomes within the industry. The more intense the competitive rivalry becomes, the harder it is for ventures within the industry to raise prices or maintain high prices to reap greater profits. The less in average profits that a firm in the industry is able to earn, the more intense the rivalry for customer demand is among the industry’s rival competitors.

The opposite is true also. The weaker that one of the five competitive forces becomes, the less intense the overall competitive rivalry among the industry’s firms is. If rivalry amongst the industry’s firms decreases, the easier it becomes for the industry’s competitors to raise either raise prices or reduce their cost structure (by lowering their value propositions’ quality) and ultimately earn higher profits. The higher the average level of industry profits, the less intense the rivalry for customer demand will be among the industry’s rival competitors.

The importance of each of the five forces is situationally dependent upon the unique facts and circumstances of each industry. For example, the overall threat of new market entrants might be insignificant in determining whether an entrepreneur wants to enter an industry in its growth phase, but it may be a paramount factor in a mature industry.

I developed another diagram (below) to show how the five forces within Porter’s model interact with each other. As you can see, four of the forces (risk of entry by potential competitors, bargaining power of suppliers, bargaining power of buyers, and threat of new entrants) each act upon the fifth force – the intensity of rivalry among the industry’s competitors. This means that if the bargaining power an industry’s buyers increases, the intensity of rivalry among industry competitors will increase. This causal relationship works in only one direction – a change in any of the forces ultimately either increases or decreases the intensity of rivalry among the industry’s competitors. Therefore a change in the intensity of rivalry will not cause change in one of the other four forces.

[1] Charles W. L. Hill and Gareth R. Jones,  Strategic Management Theory , Eighth Edition, Houghton Mifflin Company, pg. 45, 2008.

Macroenvironmental forces are changes in the broader economic, political/legal, social, technological, demographic, and global forces beyond the industry being examined. Any one of these six forces can change or effect any one of an industry’s five internal competitive forces. In conducting an industry’s initial Five Forces analysis – which is a snapshot measurement of an industry’s present competitive environment – these macroenvironmental forces are automatically accounted for. They are already included because an industry’s competitive environment is an aggregate of these turbulent and often conflicting forces. But entrepreneurs and business owners must also make educated guesses about how macroenvironmental trends and forces will shape the industry’s attractiveness into the future, both in the short run and in the long run.

Below is a diagram that visually represents how each of these seven forces can affect an industry’s Five Forces as the future unfolds.

The Six Macroenvironmental Forces

The following is a detailed analysis of the seven macroenvironmental forces touched upon above.

Macroeconomic forces affect the general economic well-being of the nation or the region in which an industry operates. [1]  The following are the major macroeconomic forces that can affect an industry’s ability to deliver an adequate economic return.

• The rate of growth for the economy.  Economic expansions cause a general rise in aggregate consumer demand while recessions cause a general drop in aggregate consumer demand. Because aggregate demand for goods and services rises during economic expansions, an industry’s intensity of competitive rivalry, broadly speaking, will usually decline. The reason is that generally the market demand for an industry’s value propositions will cause an expansion in the industry’s revenue. Therefore its possible for the industry’s firms to generate revenue growth without fighting their competitive rivals for market share. Conversely, a decline in economic growth or a recession causes general aggregate demand to contract. This generally shrinks the amount of revenue an industry can earn and may cause price wars, consolidations and bankruptcies.
• Interest rates. Interest rates affect the cost of borrowing for consumers, thus affecting aggregate demand. Higher interest rates generally makes the cost of borrowing more expensive and can dampen demand for real estate and purchases of major assets (cars, durable goods). Ultimately, higher interest rates can lead to higher industry rivalry if the industry is directly or tangentially affected by borrowing costs. Higher interest rates also affect business’ cost of capital. High interest rates may restrict a business’s ability to invest in new equipment or facilities. On the other hand, low cost of capital makes it substantially easier for established businesses to borrow and invest into expanding their operations.
• Exchange rates.  Exchange rates either make imports more or less expensive for domestic consumers and exports more or less expensive for foreign consumers of domestically produced value propositions. A weak dollar makes imported value propositions more expensive and domestically produced value propositions comparatively less expensive. A strong dollar makes foreign value propositions less expensive and domestic value propositions comparatively more expensive.
• Inflation/Deflation.  Inflation is the decrease in the purchasing power of a nation’s currency over time. Inflation can destabilize an economy, slow economic growth, higher interest rates and increased currency volatility. [2]  Increasing inflation makes business planning very difficult because the future becomes less predictable. Uncertainty makes companies unwilling to invest in growing their operations. On other side of the coin is deflation. Deflation is even more potentially damaging than inflation is. If the purchasing power of currency is increasing over time, firms and consumers will hoard their cash. This will causes a self-reinforcing cycle of low or negative economic growth. Usually the best inflation formula for stable economic growth is a low, steady inflation rate.
• Wage Levels.  The price of labor from industry to industry can have a significant impacts on an industry’s costs of production. High or increasing industry labor costs can make substitute value propositions more attractive for the industry’s customers. Low or decreasing industry labor costs can make substitute value propositions less attractive for the industry’s customers.
• Level of Employment:  High unemployment levels give firms greater leverage over their employees in keeping wage increases down or in actually decreasing labor costs to the firms in an industry. This can reduce the industry’s cost structure and thus raise the industry’s average profitability.

Legal and political forces are the results of changes in laws and regulations within the country your business operates in. [3]  Political and legal developments can be both opportunities and threats. The following are the major legal and political changes that can impact the fortunes of industries.

• Current and Expected Levels of Taxation.  High tax rates can affect the decisions of entrepreneurs to engage in business activities or reduce the ability of companies to reinvest profits in expansion. But often the most important effect of taxes are not the levels of taxation, but the different effective tax rates for different activities. For example, the oil and gas industry, ecommerce businesses and the video game industry get significant tax breaks that reduces their effective tax rate. This can raise or lower the attractiveness of getting into certain industries.
• Import/Export Quotas and Tariffs.  Tariffs and import/export quotas affect the costs of value propositions imported into a country and those exported to other countries. Raising or lowering tariffs or trade quotas can cause demand for the value propositions of the industries affected to increase or decrease. An example of a broad change in trade quotas and tariffs was the implementation of the North American Free Trade Agreement (NAFTA).
• Government Grants.  Government grants are programs that can provide nascent industries with seed capital and resources. Governments (state, local and national) often provide businesses with financial support if the business pursues profit opportunities that align with a government’s policy goals. An example of a significant government grant program is the U.S. government’s Small Business Innovation Research grant (SBIR).
• War/Terrorism.  War and terrorism can increase regulations and transaction costs associated with global travel or insurance. Wars can also saddle nations with large medical costs to society. Wars and anti-terrorism efforts can also increase military related contracting opportunities.
• Quid Pro Quo.  Many industries try (and often succeed) in influencing politicians to enact laws that are favorable to their bottom line and create barriers of entry against potential competitors. A recent example of this was the influence the health care and pharmaceutical industries exerted upon the U.S. Congress during the passage of the Affordable Care Act in 2009.
• The Regulatory State.  In the U.S., most of the regulations that affect business and the general public are promulgated through various government agencies. Often, small changes in regulations can lead to desired or unintended consequences for a number of industries. Here is a small sample of legal and regulatory issues that are managed by various state and federal agencies: environmental protection, corporate governance, intellectual property rights, employment law, criminal law, tort law, food & drug regulation, public health… In the United States (and most other industrialized countries), virtually every area of commerce is affected by government regulations and laws. For any given industry, changes in these regulations and laws can be either threats or opportunities.

Social forces are changes in the social mores and values of a society and how they affect any particular industry. Social changes can create both opportunities and threats for any industry.

• Social and cultural forces specifically refer to changes in the tastes, habits and cultural norms within a significant segment of a country’s population. One example of a social trend is the growth of the organic and local food movements in the U.S. over the last thirty years. The local and organic food movements have created an opportunity for some small farmers near large population centers, but this movement has also created a potential threat to large mono-agriculture farms.
• Cultural attitudes can shift drastically over time, rendering once commonplace habits and activities to no longer be widely accepted or tolerated. An example is the decline of smoking in the U.S. Smoking used to be tolerated in most indoor spaces forty years ago. Now it is either banned or highly frowned upon and the public has become very aware of the health risks smoking causes. This has led to a significant decline in the percentage of adults in the U.S. who smoke. Conversely, marijuana use, which was highly frowned upon by the majority of U.S. society over forty years ago, has become more widely accepted among the public. As a result, many state laws are changing to reflect this increased tolerance of marijuana use.
• Changes in what society considers fashionable are in a constant state of flux. Various fads and crazes rise and fall, sparking opportunities and threats for the industries that capitalize on these trends. Examples of changes in fashion, fads or crazes are: rock n roll in the 1960s, disco music in the 1970s, the Pet Rock, the Hula Hoop, Cabbage Patch Dolls…

Technological change is a primary driver of Schumpeter’s “perennial gale of creative destruction” among business ventures. Technological forces can render established, profitable value propositions obsolete virtually overnight and usher into existence exiting new business ventures. Because of the dual role technological change (both creative and destructive) plays in our society, it can be both an opportunity and a threat.

• Technological forces can cause industries to move through their life cycles more quickly. They can also disrupt an industry in the beginning or middle of its life cycle, rendering it obsolete or changing it so radically that most of the industry’s competitors cannot keep up. Essentially, technological change makes the life cycles of industries more volatile and unpredictable.
• Technological change can lower the barriers of entry for many industries. An example is the internet made it much easier for a potential retailer to sell products to its customers through a virtual storefront versus acquiring, stocking and running a brick and mortar facility. The lowering of barriers of entry tends to increase an industry’s intensity of rivalry, leading to both lower prices and industry profits.
• Technological forces can also reduce transaction costs. Reducing transaction costs is often destructive to the industries that thrive on them (auction houses being replaced by eBay or newspaper classifieds being replaced by Craigslist). Within an industry, a reduction in transaction costs driven by technological change usually leads to an increase in the industry’s intensity of competitive rivalry.
• Technological change can either reduce or increase customer switching costs. An example of how technological forces can reduce customer switching costs are instant price comparison applications on mobile devices. These give the consumers the ability to identify which retailers offer the same value propositions at the lowest prices. Technological forces can also increase customer switching costs. An example is Facebook or eBay. Both of these websites lock in users due to their network effects – alternative market choices do not present as much value because they are not as big.
• Technological forces can unleash changes in industries far removed from the industry in which the technology originated. An example of this is the Internet. The Internet has caused massive sea changes in industries only tangentially related to it such as retail, the news industry, book publishing, and matchmaking services (online dating).

Demographic forces are changes in the characteristics of a population of people. These characteristics can be sex, age, education, race, national origin, social class… Changes in demographics can present businesses with both opportunities and threats.

• Changes in a population’s age distribution can present both opportunities and threats. For example, in the U.S., the population of elderly people is growing more rapidly than the population as a whole. This presents an opportunity for industries who provide long term assisted living, the financial industry (reverse mortgages and retirement planning), and both the health and pharmaceutical industries. It also presents a threat to certain industries like funeral and burial providers (if the general population is living longer, it means people are dying at a slower rate).
• The rapid increase of the Hispanic population in the U.S. has led to an increase in Spanish speaking music, television and news in the U.S. This represents a growing opportunity for food and media companies that market to Latinos.

Global forces are changes that occur within and beyond the borders of the country a business is operating within and affect how a company can operate on the international stage. Global forces can present both opportunities and threats to an industry.

• The economic growth rates of other countries can play important roles in determining the demand for imports and exports. As barriers to trade fall, national economies become more subject to the winds of international commerce and capital flows. This international liberalization of trading agreements can allow domestic firms greater access to foreign markets. An example of the liberalization of international trade is the outsourcing trend over the last two decades from industrial economies in the west to developing economies in Asia.
• Climate change is another example of a global force. The long term changes to the world’s climate will profoundly shape countless industries in the decades to come. Climate change can offer both opportunities and threats to different industries. For example, the wine industry in France may have to experiment with new varietals due to changes in temperature and rainfall expected by scientists in the coming decades. Climate change also presents some industries with opportunities. One example is the shipping industry. The rapidly dwindling polar ice cap in the Arctic Ocean presents the possibility that new, more efficient shipping routes might become available.

[1] Charles W. L. Hill and Gareth R. Jones,  Strategic Management Theory , Eighth Edition, Houghton Mifflin Company, pg. 66, 2008.

[2] Charles W. L. Hill and Gareth R. Jones,  Strategic Management Theory , Eighth Edition, Houghton Mifflin Company, pg. 68, 2008.

[3] Charles W. L. Hill and Gareth R. Jones,  Strategic Management Theory , Eighth Edition, Houghton Mifflin Company, pg. 70, 2008.

A good Five Forces analysis will cause you to sift through a lot of data, much of it conflicting and confusing. Below is a series of scorecards that try to condense the most important points from your Five Forces analysis and present them to you in an easily understandable format.

The scorecards rate the attractiveness of an industry’s five forces  from the perspective of a new venture attempting to enter the industry . Each force gets its own scorecard. Each scorecard has the main factors that help determine the strength the force exerts upon the industry. A factor’s attractiveness is rated on a five category scale that ranges from Highly Unattractive, Mildly Unattractive, Neutral, Mildly Attractive, to Highly Attractive. For each factors’ rating, the top line (yellow) indicates the level of the factor’s level of attractiveness at present. The bottom line (green) is the entrepreneur’s rating of what he or she thinks each factors’ level of attractiveness will be in the future. The level of future attractiveness for a factor is determined by analyzing how macroenvironmental forces will affect the industry in the future.

Directly below is a hypothetical example scorecard of an industry’s intensity of rivalry:

Remember, none of this is exact science. There is no mathematical formula that determines whether you should enter an industry or not. The purpose of this exercise is to ensure that you, the entrepreneur, have thoroughly thought about the nature and future of the competitive environment you are proposing to jump into.

Force One: Intensity of Rivalry among Industry Competitors

Force Two: Risk of Entry by Potential Competitors

Force Three: The Bargaining Power of Buyers

Force Four: The Bargaining Power of Suppliers

Force Five: The Availability and Similarity of Substitutes to an Industry’s Value Propositions

And finally, the table below is a final snapshot evaluation of the industry’s attractiveness. To fill out this table, you should look at your ratings in the tables above as guidelines. The importance of the forces, and the factors that comprise them, will change from industry to industry. It will ultimately depend upon the unique facts and circumstances of each industry being evaluated. Therefore you will have to use your best judgment.

Overall Evaluation of Industry’s Attractiveness

Porter’s Five Forces – Risk of Entry

Profitable industries are like chum in the water for new competitors. The smell of money to be made will attract potential competitors to circle an industry, try to enter it and look for an easy meal. The only thing stopping a myriad of potential competitors from entering an industry are  barriers to entry  – a business version of a steel shark cage.

Profitable industries attract new market entrants – potential competitors. Potential competitors are companies that are not currently competing in an industry, but possess the ability to do so if they choose. Theoretically, if it cost nothing to form a company and enter an industry serving a profitable market, new firms would flood into that industry until the industry’s average profit margin shrank to zero. But we don’t live in a frictionless, theoretical world and different industries have wildly different levels of profitability. Barriers of entry are what discourages new companies from entering a profitable market and making a killing.

Barriers of entry benefit established companies within an industry by protecting them from new competition and preserving their profit margins. Low barriers of entry leave an industry wide open to new market entrants. The results to an industry with low barriers of entry are lower profits for the companies within that industry will inevitably result.

Therefore, established firms within an industry have great incentive to erect barriers of entry to keep the number of potential rivals to a minimum. Some barriers of entry are passive and a natural result of the industry’s operations. An example of this is economies of scale. But companies often take active steps to discourage new companies from entering their industries. Examples of this are when companies create brand loyalty or try to purposely raise their customers’ switching costs. The reason is simple – the more companies that enter the industry, the more difficult it is for established companies to maintain their market share and protect their profits.

The risk of entry by potential competitors is a function of the industry’s profitability and the height of its barriers to entry. The higher an industry’s average profit margin, the more enticing it is for new competitors to jump into the fray and wrestle market share from the incumbent companies. High barriers to entry can deter potential competitors from trying to enter an industry and serve its market segments. The higher the cost of entry into an industry, the weaker the competitive force (the risk of entry by potential competitors) is and generally translates into higher average industry profits. Important barriers to entry include the following:

Capital Requirements  – If it takes a great amount of money or assets to enter the industry, this can be a significant barrier of entry for firms who wish to enter it. Usually industries with high fixed costs have high capital requirements (i.e. factories, warehouses, computing assets…).

Economies of Scale  – Economies of scale is where the companies in an industry enjoy diminishing per unit costs for their value propositions as the volume produced increases.

Brand Loyalty  – Consumers often have preferences for the value propositions offered by established companies due to familiarity and reputation.

Absolute Cost Advantages  – Other entrants cannot hope to match the established firms within the industry’s cost structure. Absolute cost advantages arise from three sources: 1) possessing unique and critical resources (patents, trade secrets, or accumulated experience), 2) control of particular inputs of production (i.e. fertile farm land, a prime piece of commercial real estate…), 3) access to cheaper funds because existing companies represent lower risks than new entrants.

Customer Switching Costs –  High customer switching costs occur when customers resist spending the time, money and energy to switch from the current supplier of a value proposition to one offered by a different company, even though that alternative value proposition may be of greater value.

Government Regulation –  Government regulations, and the lack of them, can be a significant barrier of entry for potential new entrants into an industry. An example of this would be environmental regulations placed on coal mining companies and their operations.

We will now dig deeper into how to identify and analyze these potential barriers of entry, and ultimately understand how they affect the competitive rivalry within an industry.

Capital costs mean the startup costs of your business idea that must be incurred before you can commence operations. Basically, this is the total amount of money you need to spend (on equipment, employees, facilities, legal, accounting….) before you can hang your “Were Open!” sign in your shop window. For some asset intensive businesses, such as a full service health club or a golf course, initial capital costs can be extensive. For other businesses that use relatively few assets, such as an internet marketing business or a hotdog stand, initial capital costs can be relatively small.

For many aspiring entrepreneurs without a lot of financial resources, capital costs can be the most daunting barrier of entry of all. Many industries are able to maintain decent profit margins simply because the capital costs required to enter the industry are significant and insurmountable for many. Also, your time can be thought of as a capital asset too. Your investment of time in pursuing a business endeavor represents an opportunity cost on your part – you are giving up time that you could be working for someone else (and the income that entails) in exchange for pursuing your entrepreneurial ambitions. For example, it may take $100,000 and one year of full time work to create and open a business. If you had to give up a $50,000 per year job in order to pursue the endeavor, the real capital cost for you to start your business would be $150,000, not $100,000.

Another example of this would be opening a law practice. Legal services, in the United States, is a fragmented industry that has an average industry profit of 19.5%. This is a very attractive profit margin. Furthermore, the capital cost required to start a legal practice – purely from creating the actual legal services business – is relatively small. A lawyer needs a laptop, access to research materials, a place to meet clients, and some office equipment. This may cost as little as $10,000 in initial startup capital. But this does not represent the actual capital cost to start a law firm. To actually open a law firm and practice law, a lawyer would have needed to: 1) obtain a law degree (lets estimate $120,000), not work for three years while going to law school (lets estimate $150,000 for three cumulative years), get a state bar card ($3,500 for the test and the study course), and not work for three months while studying for the bar (lets estimate $12,500). Then, an only then, a lawyer could spend $10,000 on opening a legal practice. The real cost of this venture, both in absolute capital costs and opportunity costs, would be $296,000.

So the real capital cost of opening a law firm and practicing law (and being in an industry with an attractive 19.5% profit margin) may be at least nearly $300,000. This capital cost represents a serious barrier of entry to many people who would want to enter this industry, but balk at the $300,000 price tag that it requires.

Key Questions:

• What are the average total capital costs for entering the industry you proposing to enter?
• Is the average profit margin for the industry you are proposing to enter enough to service the capital costs required from a typical new market entrant?

Economies of scale arise when unit costs fall as a firm expands its output. In other words, the more of a value proposition a company produces, the less per unit the company pays to produce those value propositions. Sources of scale economies include 1) cost reductions gained by efficiently creating a massed produced output, 2) discounts on bulk purchases of raw materials, and 3) cost benefits gained from spreading production costs and marketing and advertising over a large production volume. Some industries benefit greatly from economies of scale (i.e. the beer industry, the auto industry…). Other industries do not enjoy economies of scale much at all (i.e. nail salons, massage therapy, dry cleaners…).

The following are examples of economies of scale: 1) when the creator of a product gets bulk discounts on the purchases of raw materials for their products, 2) spreading fixed production costs over a large production volume, 3) cost reductions through mass-producing a standardized output, 4) cost savings associated with spreading marketing and advertising costs over a large volume of output. Most manufacturing industries, such as pulp and paper products or textiles, are examples of industries with economies of scale. If economies of scale are a factor in an industry, then many small producers are at a disadvantage because their per-unit costs will be higher than that of their larger competitors.

An industry whose rivals have significant economies of scale creates powerful barriers to entry for an aspiring new entrant to overcome. First, the established firms will have a substantial cost advantage over a new rival. Second, because high economies of scale imply high fixed costs (equipment, facilities), it is critical that these companies protect their market share at all costs. If their sales volumes decrease, this can render them incapable of sustaining their high fixed costs.

Companies, who try to match the existing industry competitors’ economies of scale, must enter the industry as a large producer to overcome this problem. But to do so, it must raise enough capital (to purchase the necessary assets and facilities) to match its competitors’ economies of scale. This becomes another barrier of entry in itself. Furthermore, if a new company enters an industry with a large capital investment (to match current industry competitors’ economies of scale), the increased supply of products the new company brings to the market risks depressing prices and may trigger a price war with established industry competitors.

• Does the industry you propose to enter have significant economies of scale (where the per-unit costs for producing a good or service decrease significantly as the volume of production increases)?
• Does the industry you propose to enter have high fixed costs (equipment, facilities, or significant R&D requirements)?
• Do the suppliers of the industry you propose to enter give significant volume discounts and payment terms to large-volume buyers?
• Within the industry you are proposing to enter, do its company’s marketing and sales budgets increase, on a per unit basis, proportionally to sales of its value propositions, or do the costs of its company’s sales and marketing budgets decrease, on a per unit basis, with an increase in the sales volume of its value propositions?

Brand loyalty is when consumers develop and hold a preference for a particular company’s brand of value propositions. Significant brand loyalty makes it difficult for new market entrants to wrestle market share away from established industry brands. Examples of value propositions with strong brand loyalty are mass consumer products such as beer (Budweiser, Coors and Miller), soft drinks (Coca Cola and Pepsi), or tobacco products (Marlborough and Winston-Salem’s).

A company can also cultivate brand loyalty by developing innovative value propositions. Probably the most successful major company over the last decade that has leveraged innovative value propositions into brand loyalty has been Apple.

A venture may be able to sidestep an industry’s brand loyalty barriers of entry by entering the premium category of product markets. An example would be Dry Soda or small craft micro-brewers.

Significant brand loyalty makes it difficult for new entrants to take market share away from established industry brands. A company faces the daunting task of not only convincing consumers to buy its value propositions, but also to choose not to buy value propositions they already like and feel comfortable with.

• Are the value propositions in the industry you propose to enter highly branded?
• How strong is the brand loyalty in the industry you are proposing to enter?

Absolute Cost Advantages are when an established venture has an insurmountable cost advantage, meaning that new entrants cannot possibly hope to match the incumbent companies’ lower cost structure. Absolute cost advantages can arise from: 1) superior production operations and processes due to access to unique assets (i.e. patents, copyrights, or fertile farmland), 2) accumulated skill and expertise, 3) exclusive or relatively favorable control of their value propositions’ inputs (labor, materials, equipment, or management skill), and 4) access to cheaper capital due to their lower business risk when compared to a new market entrant. Also, access to superior distribution channels could be considered an absolute cost advantage. If established companies have absolute cost advantages, then the threat of entry as a competitive force will be weaker.

A new market entrant must be especially careful in attempting to directly compete with entrenched industry competitors that have absolute cost advantages. If a new entrant enters an industry where there are established competitors who have lower cost structures, the established firms can lower the price of their value propositions to eliminate the new entrant. This could erase any ability for the new market entrant to ever earn a profit. If this threat is credible, it can be a barrier of entry for new market entrants.

• Do the major competitors in the industry you are proposing to enter possess absolute cost advantages? If so, will you be able to acquire these absolute cost advantages before you begin directly competing with them?
• If the major competitors within the industry you are proposing to enter possess absolute cost advantages over your business idea, are there any steps or actions you can take to mitigate those absolute cost advantages?

Customer switching costs are the time, energy, and money necessary for them to switch from the value propositions offered by an established company to those of a new market entrant. If switching costs are high, customers will be unlikely to change even if the new product is superior to other market substitutes and alternatives. An example would be the switching costs associated with leaving the Microsoft Windows operating system or the QWERTY keyboard. Other value propositions in the market may be better/faster, but consumers often find themselves resistant to change because the time or hassle of switching to a better product or service proves prohibitive.

 K ey Questions:

• In the industry you are proposing to enter, do the value propositions the industry produces have high switching costs? If they do, can you think of a way your business idea can mitigate this obstacle?
• If the industry you are proposing to enter doesn’t typically have high switching costs, can you think of a way for your business to raise the switching costs for your proposed value propositions?

Government regulations create politically and legally defined barriers of entry for many industries. Government regulations can increase barriers of entry for market entrants and potentially reduce competition. An example would be food safety regulations or anti-pollution laws. Also, in industries where economies of scale are a powerful force, the absence of regulations can lead to an intense concentration of market share in the hands of a few firms. This can create barriers of entry that are extremely difficult for a new market entrant to overcome. To sum up, high regulation within an industry usually leads to higher barriers of entry, but not always.

• Does the industry you propose to enter require government licenses or strict adherence to statutory codes (construction, health care, lending money, real estate rental, restaurant & food preparation…)?
• To what degree are the industry’s regulations beneficial to the incumbent industry competitors?

Below is a chart that summarizes how the six types of barriers of entry affects industry attractiveness from both the perspective of a new market entrant and an industry incumbent.

Estimating Market Size

Estimating the size of the market you want to enter is the first critical step in testing the feasibility of your business idea. This is a lot like cliff diving. If you are going to jump off a cliff into a pool of water far below, it’s a really good idea to know beforehand just how deep the water is. If you jump without finding out (or at least making an educated guess based on objective facts), you run the very real risk of getting hurt. Bad.

The first order of business in determining the sizes of the various market types for your business idea’s value proposition(s) is to correctly define the parameters of the market types you are trying to measure.  This may sound rather simple, but it is honestly the hardest and most frustrating part of this process. Estimating a market size is the epitome of the phrase “garbage in – garbage out.” If you incorrectly define the boundaries of the type of market you are trying to size up, your entire estimate (and the basis for all of your future financial projections) won’t really be worth the paper it is printed on.

So, creating a quality market size estimate that’s based upon good, logical assumptions, is the first step in determining if your business idea can support a potentially successful business model. To make a quality market size estimate, you should roughly measure the size of each relevant market type for your business idea’s value propositions. By understanding the rough size of each of these market types, you can roughly gauge how much revenue (based upon your market share assumptions) your business idea could generate in the present and going forward into the future. Determining which market types to estimate the size of depends upon the type of market your business idea is attempting to serve. These general market types are Defined Exiting Markets, Cloned Markets, Re-segmented Markets, or a New Markets.

A market is a group of customers that have the willingness to buy a particular type of value proposition. When determining the size of the markets for your proposed business idea’s value proposition(s), you may use all or some combination of the following market type definitions.

• Examples: the car market (supplied by the car industry), the personal computer market (supplied by the personal computer industry), and the athletic shoe market (supplied by the athletic shoe industry).
• Examples: the total market for electric cars, the total market for tablet computers, the total market for running shoes.
• Examples: the market for electric cars in the United States sold through dealerships, the market for android compatible tablet computers sold through big box stores, the market for athletic shoes sold through e-commerce websites .
• The TM is comprised of one or more customer segments , each of which are offered a unique value proposition by your proposed business idea. For a comprehensive explanation of what comprises a customer segment, please refer to the following section.
• The TM is a measurement dependent upon the definition and size of the SAM (because it is a portion of the SAM), but independent of the SOM. Both the TM and the SOM are portions of the SAM that measure different things.
• Examples: Upper-middle class, educated, ecologically conscious automobile customers, early adopter electronics consumers who use their personal computers and laptops mostly for entertainment and not work, high school and college athletes who buy high performance running shoes to gain an edge on their competition.
• Like the TM, the SOM is dependent upon the definition and size of the SAM, but is independent of the TM. Both the TM and the SOM are portions of the SAM that measure different things.
• Examples: the portion of the market for electric cars sold in the United States through dealerships that your business idea can realistically capture, the portion of the android compatible tablet computer market in the United States sold though big box stores that your business idea can realistically capture, the portion of the market for high performance running shoes for athletes in the United States that are sold through ecommerce websites that your business idea can realistically capture.

For practical purposes, you can think of both the SOM and TM as a portions of the SAM, the SAM as a portion of the TAM, and the TAM as a portion of the TID. Both the SOM and TM are separate business concepts that measure different things. The SOM estimates your proposed value proposition’s penetration of the SAM. The TM estimates the size of the group of people for whom your proposed value proposition is specifically designed for.

I know, it’s a lot of acronyms to keep straight. But estimating the sizes of the TIM, TAM, SAM, TM and SOM are important for determining if the market size for your business idea’s value proposition(s) can support your entrepreneurial ambitions and business goals. The following are three generalizations – rule-of-thumb explanations – of what market sizes are necessary to support a particular business type, development path and outcome.

This type of company is usually entering a cloned, re-segmented, blue ocean or new market, or a defined existing market with a new product. They usually seek traditional angel investor and venture capital funding. Rapid scalability an achieving high market share is the key to this type of company. Often the founders of scalable, high growth companies have either an Initial Public Offering (IPO) or the sale of the company to a Fortune 500 corporation as their exit strategy .

These companies require a SAM large enough to support potential company EBITDA (after the company has successfully scaled its operations) of at least somewhere between $10 million to $20 million per year. Publically traded companies, on average, often trade for 10x their annual EBITDA or greater. This, depending upon the company’s industry and whether or not its founders and investors want it to have an IPO, would probably put the company’s valuation at greater than $100 million. A $100 million valuation is a safe rough estimate for whether a company will be able to both afford to go public and financially benefit from an IPO.

So, armed with these rough guidelines, to create a scalable, high growth company that proposes to enter an industry with a 10 percent average EBITDA and capture 10 percent of that industry’s market share, would need to at least generate $100 million per year in revenue ($10 million per year in EBITDA divided by the industry EBITDA average of 10 percent). To achieve this annual EBITDA target and a 10 percent SAM penetration, the overall SAM size would need to be $1 billion ($100 million per year in revenue divided by a 10 percent penetration of the market by the company).

This type of company can be entering a Defined Existing Market, Cloned Market, Re-segmented Market, or Blue Ocean Market. They do not enter New Markets with New Products due to the incredible amount of time, business risk and resources that would be required. These businesses usually seek capital from the founders, founders’ friends and family, non-bank lenders, bank and institutional lenders, and some angel investors. Rapid scalability is usually not a primary goal for these business ventures. They often prioritize strong, stable profits and cash flow for their owners above all else. Exit strategies for these companies’ founders include selling the company to a third party such as another privately held business or private equity group, passing on the business to heirs, or simply holding on to the business. These types of businesses often make excellent cash cows.

Successful, mid-sized privately held businesses are usually valued between $5 million and $50 million. These businesses, as a rough rule of thumb and depending upon the industry, are usually valued at 3x to 5x their average yearly EBITDA. So, a $30 million dollar privately held business would need an average yearly EBITDA of between $6 and $10 million per year ($6 million per year if the business valuation ratio would be 5x; $10 million if the business valuation ratio would be 3x).

Lifestyle businesses are undertaken by entrepreneurs who want to create their own jobs and/or to support the conscious lifestyle choices of the entrepreneur (hobbies, schedules, living location…). This type of company usually solely enters Defined Existing Markets. Many, if not most, of the entrepreneurs who start lifestyle businesses do not begin their business ventures with any particular exit strategy in mind. Instead, the primary financial goal of these entrepreneurs is usually to generate enough cash flow to support their lifestyle needs. These businesses usually seek capital from the founders, bootstrap financing, and the founders’ friends and family. Rapid scalability is usually not a primary goal for these business ventures.

The market size necessary to support a lifestyle business really depends upon the needs and wants of each individual entrepreneur. The variables used to determine a rough estimate of the minimum market size needed to support a lifestyle business are: 1) the entrepreneurs’ desired minimum yearly EBITDA (include the entrepreneurs’ salaries in with EBITDA), 2) the average EBITDA ratio for a firm competing within the industry you are proposing to enter, and 3) the entrepreneurs’ assumption of how much of their proposed business idea’s SAM they will be able to capture.

For example, if an entrepreneur’s goal is to earn at least $120,000 (in EBITDA and salary) from the lifestyle business per year, the average EBITDA ratio for the proposed business idea’s industry is 15 percent of annual revenue, and the entrepreneur assumes she can capture 10 percent of the SAM she proposes to enter, then the minimum necessary SAM size needed to support the business venture would be $8 million ($120,000 divided by a 15 percent EBITDA ratio divided by a 10 percent SAM penetration equals $8,000,000).

The following chart summarizes the rule-of-thumb market size needs of the business types analyzed above:

Targeting a specific audience is most effective strategy when creating a marketing campaign. The more specific of a customer base a campaign can reach, the more dollars per potential customer a campaign will make. This is why companies will allocate a large amount of resources in order to find the audience that they are looking for. By doing this, you can create a marketing budget as effectively as possible and maximize your results. Knowing or choosing exactly who you are getting your message to has proven to be the most effective method of forming a marketing campaign. Once you have identified your target audience, the hard part is figuring out how to reach it. Below, we will discuss ways to do so.

The goal of any marketing campaign is to give the most amount of information about a product or service to the prospective customer possible. The more the customer knows, the more likely they are to take action. The more that is known about that customer, the more likely it is that you can communicate that information effectively. Using information about your customer base will help you make connections that they can relate to and in turn, they will be more likely to respond to your campaigns call to action.

There are four main ways that are commonly used in identifying targeted markets.

Geographic:  This includes the location, the geographical size and makeup of the area and other environmental factors such as climate.

Demographics:  This includes age, gender, income, average family size, average education, and the types of jobs that are in the geographic area.

Psychographics:  This involves factors such as the personality that you area tends to take on, what and how people behave that live in that area and also factors that will affect the way your potential customers will use your product or service. Will they use it often not so often? Is it a necessity or luxury?

Behaviors:  This has more to do with how your potential customers will react to things such as price changes and price points, how they will react based on what information is given to them, and what types of marketing campaigns they are most likely to respond favorably to. All of these factors can be used to help determine how a population will respond to a specific marketing campaign. Likewise, you can a marketing campaign that will increase conversions based on the information gathered above.

One of the fundamentals of marketing focuses on the benefits to cost trade-off. Understanding how customers will weigh the potential benefits of a product or service versus the costs to obtain that product or service is critical when designing a marketing campaign. Ask yourself, how will your customer gain monetarily or in other ways from purchasing your product or service? Though it is not always achievable, satisfying this is the most effective ways to create sales.

To better understand how they will you this trade-off, ask yourself the following questions.

• How much will it save them? Is this a product that can potentially pay for itself?
• Are there any intangible benefits to this particular product or service that a customer may ignore or find appealing?
• Will this product or service save the customer money, time, effort, or resources?
• Will it increase the customer’s income, investments, future, or personal relationship will it reduce a customer’s expenses, taxes, liabilities, or work?
• Will it improve that customer’s abilities, productivity, appearance, confidence or peace of mind?

Understanding the effect that your product or service will have on the customer will serve as an invaluable tool when designing an effective marketing campaign.

As mentioned in the beginning, understanding, identifying and reaching a target audience is the most effective way creating a marketing campaign that will give you the best results possible relative to the budget and time you are allotted. Ignoring these factors can costs you money and can be the difference between a successful and unsuccessful marketing campaign.

It’s important to define the nature of your involvement, in both depth and scope, in the business you are founding.  An entrepreneur’s involvement in his own business can range from being a full-time manager/employee (active ownership) to that of a hands-off investor (passive ownership).

An active owner materially participates in the day-to-day activities of the business. Most business owners and entrepreneurs actively participate in their businesses in some way, shape or form. Many work full-time in their businesses as employee/managers, drawing both a paycheck and profits (if there are any).

The definition of a passive owner is a little trickier to nail down. A passive business owner does not participate in the day-to-day activities of the business he or she owns. The IRS states that passive income can only come from two possible sources: rental activities or “ trade or business activities in which you do not materially participate .” Within the context of entrepreneurial endeavors some examples of passive income are:

• Earnings from a business from which you, an owner, are not required to be directly involved with (neither labor nor day-to-day management)
• Rent from either tangible personal property or real estate
• Royalties from intellectual property (patent, copyright, trademark…)

Receiving passive income is delightful. The hard part is usually accumulating enough assets in the first place to begin receiving passive income from them (rents or passive business activities). Examples, where an entrepreneur can derive passive income from her investments, are:

• A landlord rents an apartment building to tenants and uses a real estate management company to collect rents and make repairs.
• A passive investor invests capital into a partnership where others manage the business, and in return for his contribution of capital, the passive investor receives a portion of the business’s profits.
• An entrepreneur builds a successful business from scratch. She then hires a manager to manage the day-to-day affairs of the business. She then receives the profits from her business even though she is no longer actively involved in it.

Most entrepreneurs who start businesses have one of two basic plans for their involvement in their enterprises.

1. The entrepreneur(s) plan to be heavily involved in the lean startup plan and operations over a period of a couple of years. Then, at some undetermined point in the future, they plan to hire a manager and then run the company as a passive investment.

2. The entrepreneur(s) are essentially creating a job for themselves. They plan on working in the enterprise as an open-ended, long-term committment.

Starting and/or running a business is a complex and daunting task. Identifying both potential roadblocks and opportunities well in advance is essential for businesses of any size to outmaneuver the competition and gain a foothold as a dominant market leader. But over one-half of all new businesses will fail within five years of their founding. The vast majority of all new businesses never achieve the financial success originally envisioned by the founders. These new businesses and start-ups begin with energetic enthusiasm, but unfortunately, many business plans fall short due to various reasons: lack of capital, a flawed business strategy, unrealistic expectations, or they lack the people with the required skills and expertise to succeed.

Business plans may be required for any number of reasons. Here are a few of the most common business plan needs.

• To Obtain Debt Financing . A company may be required by a bank or other financial institution to provide a detailed, professional business plan in order to secure debt financing. Examples would be bank business loans or a line of credit.
• To Obtain Equity Financing . Start-ups and other new businesses often must sell equity (stock or membership units) to investors to raise capital for new business ventures. Investors can range from friends and family to angel investors to venture capital firms.
• For Internal Company Planning . Companies often need business plans to compare the relative viability between competing potential business projects. This can give those companies a clearer perspective on where to invest limited resources within the organization.
• Joint Ventures and Partnerships . When entering a strategic JV or partnership with another firm, a business plan works to outline the objectives of the two firms working in tangent.
• Mergers, Acquisitions and Corporate Divestiture . Detailed plans are needed when businesses change hands in order to help new owners see details in the industry and the enterprise itself. An expert plan can also serve as part of the marketing material to get the business sold.

The reasons for creating a business plan can be as varied as the businesses themselves. Each plan requires a unique approach to the industry you are in, the market you intend to serve, and your financial needs. That’s where we come in.

Creating a professional business plan can help mitigate these risks, raise capital from potential investors and put the company on the path to success. A good business plan helps to focus an entrepreneur’s mind on accomplishing the tasks necessary to make his or her business succeed. A business plan is not a static document. It is a logical series of informed assumptions that are relevant at the time the plan is written. As soon as market and industry conditions begin to change (which usually happens about five minutes after the plan is written), the plan begins becoming obsolete. For the entrepreneur, the value in the business plan isn’t necessarily the plan itself. Instead, its real value lies in the process – the research, thought and inquiry – in creating it.

We will work with you from start to finish to create a professional business plan that will help you accomplish your objectives. We will ask the necessary questions, help you find the answers, and organize your ideas into a coherent plan. From researching your market and industry to producing realistic, justifiable pro forma financial statements (cash flow, income statements & balance sheet), we will craft a document that can help you accomplish your business objectives.

So your business needs a plan. The question is, what kind of plan does it need? Please check out our business plan menu options and pricing here.

Business Plan Review & Evaluation

If you already have a business plan and would like to have it reviewed by a professional business plan consultant, then this is the right service for you. We will review and critique your business plan with an investor’s eye, scrutinizing it for financial errors, grammatical errors, and weak or unrealistic assumptions. We will also point out what you did right. Our business plan review service is an efficient and affordable way to ensure that your business plan is as good as it can be. Our business plan review services are provided at a substantial discount to our normal hourly rates. Depending on your needs and budget, we offer three levels of business plan review services:

– We will spend 2 and 1/2 hours reviewing your materials. We will then provide a written evaluation and critique your plan and financial model.

– We will spend 30 minutes consulting with you on the telephone, answering any questions you may have and offering additional guidance.

– Optional: if you have made any changes to your business plan, based upon the evaluations and critiques we made in our first examination of your materials, we can offer subsequent reviews of the improvements you have made to your plan. In these subsequent reviews, we will spend up to 2 hours examining your materials again.

–  Flat Rate Price:  $297 for first review; $147 for subsequent reviews

• Once you place your order, we will provide instructions for sending us your business plan. Your plan must be sent to us in Microsoft Word format so we can use the Track Changes feature).
• Your review will generally take place within 3-5 business days of you sending us your business plan.
• When our review of your business plan is complete, we will send you the redlined/track changes version of your business plan with our critiques and suggestions.
• After you receive your reviewed/critiqued version of your business plan, we will work with you to schedule a mutually convenient time for the telephone portion of the review service.
• Optional Subsequent Reviews: After you make changes to the critiqued version of your business plan that we sent you, you may send us your new version for further critiques/comments. Please allow 3-5 business days to complete the evaluation.

– All information you provide will be treated confidentially.

– Fees are payable in advance and are non-refundable. If you decide you no longer want a business plan review after you have made payment, we will provide an equivalent amount of consulting firm services of your choosing (3 hours for the Standard Evaluation and Review).

– Once you submit your plan for review, please allow two business days to schedule an initial discussion so that we can understand your needs and tailor our review for your specific situation. This allows us to make sure you get the most out of this process.

– Depending on our existing workload, please allow up to 5 business days for us to complete the review following this initial discussion.

– All reviews are provided on a best efforts basis. You are ultimately responsible for the accuracy of the information in your business plan (and related materials).

– You agree to defend, indemnify, and hold us harmless from and against all third party claims, losses, or damage which we incur and which arise from or are attributable to our role in this business plan review.

We believe that we have the most transparent and customer friendly pricing strategy on the market.

For someone writing their first business plan, even for simple small businesses, the process can take upwards of 100 hours of time. Often, it takes more than 200 hours . For complex business plans (business plans for unproven business models and undefined markets), the process can often take more than 400 hours. Because we have considerable experience and skill at writing plans, we estimate that, on average, that we can complete an average business plan (depending upon its type, audience and complexity) in the range of 30 to 120 hours.

The range between 30 and 120 hours depends upon three general factors that contribute to a business plan’s complexity. The first factor is whether the plan is for a new business or a business already in existence, The second factor is whether the business’s industry and market are well defined (for example: dry cleaners, dollar stores, organic vegetable farms, family restaurants…) or if the market or industry is new and untested. The third factor is who is the audience for the business plan: equity investors, debt lenders or the internal management of an existing business.

Note:  unless your business idea is exploiting a new market or market niche, or offering customers a product or service that is radically different from what is currently offered to the market, then only on rare occasions will your business plan require longer than 70 hours to complete.

From three factors above, we can generally estimate the average number of hours the plan will take to complete, and therefore we can charge a base flat fee for the project. We Our base flat fee rates are the product of our estimated number of hours times our business plan writing hourly rate. For our business plan writing, we charge $75 per hour.

The business plans we produce fall into the following six general categories:

But often, due to unseen factors (a change in the business plan format scope and direction), a plan may take longer than the anticipated range. Often project extensions occur when it becomes necessary to modify or change the focus of the business plan due to unforeseeable factors (i.e. new market research, assumptions are proven wrong, the founders choose to shift or expand the scope of the business…). So, if your business plan takes longer than the anticipated number of hours to produce, we will charge you at only $20 per hour beyond the original estimated time frame.

This ensures the following:

– By using our pricing formula (flat fee plus $20 per hour beyond the estimated project timeframe) versus using only a fixed billable hour rate, we mitigate any incentive to “run the meter” and unnecessarily inflate the price of your solid business plan. Our goal is to maximize our income per hour for each plan that we produce. Therefore, if we end up going beyond the project’s estimated timeframe, this means we will be working at a significant discount ($20 per hour after the end of the project’s initial timeframe estimate).

– We use our pricing formula also gives us some measure of protection against unforeseen changes to the project’s scope or direction. Creating a lean business plan is a dynamic process. Information discovered or uncovered during the plan writing process can change the focus, scope and goals of the project. Also, by charging a modest hourly rate beyond a predetermined period, helps to focus and frame exactly what you want in your business plan.

– Ultimately, our system encourages both you and us to remain disciplined, efficient and to maximize the value of each other’s time.

For example:  You task us with writing a Type 1 business plan. The project takes 50 hours to complete because the scope changed in the middle of the project. Under these circumstances, the final price for the project would be the Type 1 business plan flat fee ($2,250) plus $20 per hour for every hour spent on the project over 30 hours (20 hours x $20/hour = $400). Therefore, the final complete price for the project would be $2,650 ($2,250 + $400 = $2,650).

• One half (50%) of the project’s flat fee price is required to be paid up front.
• 30% of the project flat fee is due upon completion of the business plan’s Executive Summary (the last plan component to be completed).
• Upon completion of the business plan’s final draft and its approval by the client, the remaining 20% of the project’s flat fee is due  plus  any extra hourly charges if the project goes beyond its initially estimated time.

Preparing an expert business plan can be extremely time-consuming. While the process of mastering and completing your plan may be helpful in understanding the business dynamics, corporate strategy and overall financial and marketing model, it can take you away from operational support that is vital for day-to-day operations. That is where our business planning services come into play. We help business owners in crafting expert MBA-level business plans for internal management buy-in as well as external business funding needs.

Companies often create business plans to obtain financing from venture capitalists, private equity groups and angel investors. Your particular plan will be dependent on the industry you play in, the financing you are seeking to obtain and your overall strategy for execution. Finding the key strengths, knowing potential flaws and being conversant with competitive forces in the industry are only a few of the necessary components of your completed plan. In other words, a full SWOT analysis may be necessary.

Regardless of whether you write a business plan yourself or outsource it to one of the expert members of our qualified MBA team, it is helpful to have a second pair of eyes to edit and provide constructive feedback. You plan and pitch will help to make or break your financing efforts. Don’t skimp on quality. You need to show off your financial health.

Being conversant in finance is certainly not a requirement to operate or be successful in business. Having great financials, including thoughtful projected and proforma financial statements is a must for any entrepreneur seeking to secure funding or internal management buy-in. We help to craft properly-structured financial plans for your business using historical data and realistic assumptions.

Obtain financing for your business with an professionally crafted financial plan as part of your overall strategy.

Business plans are great, but execution is the name of the game. Without a proper marketing plan coupled with flawless execution, your business may eventually disappear.

We work directly with the entrepreneurs themselves to craft detailed, specific and attainable goals and strategies to take your product or service to market. For the seasoned entrepreneur, this may be “old hat,” but having an expert business plan consultant in your corner is helpful to the proper execution of your overall strategy. While there are many business plan software providers on the market, you will still need the human-touch element to really make business plan sing.

If you are seeking funding from any number of sources or simply need help crafting a plan to help you take your business to the next level, we can help. Contact us today to find out more.

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The Ultimate Guide to Business Planning

Whether you’re a seasoned founder or just a starting-out entrepreneur, having a solid business plan is a no-brainer. It’s a document you don’t want to skip over—no matter what.

Most entrepreneurs think business planning is all about writing. But is it?

Absolutely not. Writing a business plan is just one aspect of business planning, like developing marketing strategies, defining vision, analyzing market trends, setting SMART goals, and others.

Don’t worry if it sounds like a lot; this business planning guide is right on the money to help.

To begin with, let’s understand what is a business plan.

What is a business plan?

Simply put, a business plan is a document outlining your business goals and details on how to achieve them. Your business plan is a living document that will prove to you and the world that your idea is not just a dream but a viable reality.

While it’s a written road map for your business from marketing, financial, and operational standpoints, it also helps investors understand your vision and holds the power to convince them to invest in your idea.

That was about the business plan, let’s head straight to our resource guide.

It is a well-compiled document of business planning resources and tools to help you navigate the process of strategic planning.

Before we start, here are some business plan tools, resources, and templates to help you get started.

Sample Business Plans A library of 400+ industry-specific business plan examples. Download Business Plan Template Get started with a free startup business plan template. Write your Plan Faster with Upmetrics A flexible business planning tool with AI capabilities. Download Business Plan E-Book Get a Free e-book on business planning. A complete business planning guide and resources

Write your business plan.

Discover the fundamentals of comprehensive business plan writing. These resources cover everything about business plan writing, from crafting an excellent executive summary to conducting market research, developing the product & services section, and projecting business financials.

• Detailed Outline of a business plan
• A comprehensive guide to writing a business plan
• Crafting an exceptional executive summary for your business plan
• Effective techniques for writing a business overview
• How to conduct a robust market analysis
• Conducting competitive analysis in a business plan
• Developing the products and services section of your business plan
• How to perform customer analysis for a business plan
• Drafting an effective operations plan for your business
• Writing a strong management section in your business plan
• Crafting the financial section of a startup business plan
• The Importance of a business plan appendix

Tips for writing a business plan

Find some extra tips for writing a business plan, including determining the ideal length of your plan, designing attractive cover pages, and the importance of confidentiality statements.

• Determining the ideal length for your business plan
• Designing an attractive cover page for your business plan
• The importance of a confidentiality statement in your business plan
• Exploring why you need a business plan

Types of business plans

Discover the different business plan types and learn how to create a simple and one-page business plan using a template and a step-by-step guide.

• Understanding different types of business plans
• Creating a Simple Business Plan for Your Lean Startup
• Designing an Effective One-Page Business Plan

Business plan course and books

Have a tough time creating a business plan? Check out our comprehensive business plan course or the list of top books on business plan writing to get started.

• Comprehensive business plan course
• Top books to guide in business plan writing

Tips for presenting your business plan to investors

Have a business plan ready? Learn how to write a converting business plan presentation, cover letter, and funding requests with effective strategies for pitching your business to investors.

• How to create an engaging business plan presentation
• Writing a convincing business plan cover letter
• Effective strategies for pitching to investors
• How to write a compelling funding request for your business plan

Business plan examples for various industries

Need an industry-specific business plan example to get started? Discover our library of 400+ industry-specific business plan examples, and easily write the first draft of your business plan.

• Sample business plans for Food and Restaurant industry
• Real estate business plan examples
• Software and Mobile App business plan samples
• Education and Training business plan examples
• Salon, Spa, and Fitness business plan samples
• Medical and Health Care business plan examples
• Retail and Online Store business plan samples
• Entertainment, Recreation, and Media business plan examples
• Transportation business plan examples
• Farm and Food Production business plan samples
• Nonprofit business plan examples
• Manufacturing business plan examples
• Services business plan examples
• Clothing and Fashion business plan samples
• Children and Pets business plan examples
• Fine Art and Crafts business plan samples
• Events business plan examples
• Cleaning and maintenance business plan samples
• Hotel and Lodging business plan examples
• Finance and Investing business plan samples
• Consulting and Marketing business plan examples
• Accounting and Insurance business plan examples
• Other industries' business plan examples

Business plan writers and consultants

Discover the leading professional business plan writing and consulting service providers, understand the costs involved in the business plan creation process, and how you can reduce them.

• List of professional business plan writing services
• Understanding the costs involved in business plan creation

Business plan software & tools

Looking for business plan software? Learn more about business planning tools and AI business plan generators, and explore how you can utilize ChatGPT for business plan writing.

• Comprehensive business plan software and tools
• Understanding AI business plan generators
• Exploring ChatGPT for business plan creation

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How to Write a Business Plan, Step by Step

Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

LLC Formation

A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

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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

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.

Overall tips

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

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How to Write the Perfect Business Plan: A Comprehensive Guide

Thinking of starting a business here's the best step-by-step template for writing the perfect business plan when creating your startup..

Maybe you think you don't need a step-by-step guide to writing a great business plan . Maybe you think you don't need a template for writing a business plan. After all, some entrepreneurs succeed without writing a business plan. With great timing, solid business skills, entrepreneurial drive, and a little luck , some founders build thriving businesses without creating even an  informal business plan . 

But the odds are greater that those entrepreneurs will fail.

Does a business plan make startup success inevitable? Absolutely not. But great planning often means the difference between success and failure. Where your entrepreneurial dreams are concerned, you should do everything possible to set the stage for success.

And that's why a great business plan is one that helps you  succeed .

The following is a comprehensive guide to creating a great business plan. We'll start with an overview of key concepts. Then we'll look at each section of a typical business plan:

Executive Summary

Overview and objectives, products and services, market opportunities, sales and marketing.

• Competitive Analysis

Management Team

Financial analysis.

So first let's gain a little perspective on why you need a business plan.

Key Concepts

Many business plans are fantasies. That's because many aspiring entrepreneurs see a business plan as simply a tool--filled with strategies and projections and hyperbole--that will convince lenders or investors the business makes sense.

That's a huge mistake.

First and foremost, your business plan should convince  you  that your idea makes sense--because your time, your money, and your effort are on the line.

So a solid business plan should be a blueprint for a successful business . It should flesh out strategic plans, develop marketing and sales plans, create the foundation for smooth operations, and maybe--just maybe--persuade a lender or investor to jump on board.

For many entrepreneurs, developing a business plan is the first step in the process of deciding whether to actually start a business. Determining if an idea fails on paper can help a prospective founder avoid wasting time and money on a business with no realistic hope of success.

So, at a minimum, your plan should:

• Be as objective and logical as possible. What may have seemed like a good idea for a business can, after some thought and analysis, prove not viable because of heavy competition, insufficient funding, or a nonexistent market. (Sometimes even the best ideas are simply ahead of their time.)
• Serve as a guide to the business's operations for the first months and sometimes years, creating a blueprint for company leaders to follow.
• Communicate the company's purpose and vision, describe management responsibilities, detail personnel requirements, provide an overview of marketing plans, and evaluate current and future competition in the marketplace.
• Create the foundation of a financing proposal for investors and lenders to use to evaluate the company.

A good business plan delves into each of the above categories, but it should also accomplish other objectives. Most of all, a good business plan is  convincing . It proves a case. It provides concrete, factual evidence showing your idea for a business is in fact sound and reasonable and has every chance of success.

Who  must  your business plan convince?

First and foremost, your business plan should convince  you  that your idea for a business is not just a dream but can be a viable reality. Entrepreneurs are by nature confident, positive, can-do people. After you objectively evaluate your capital needs, products or services, competition, marketing plans, and potential to make a profit, you'll have a much better grasp on your chances for success.

And if you're not convinced, fine: Take a step back and refine your ideas and your plans.

Who  can  your business plan convince?

1. Potential sources of financing.   If you need seed money from a bank or friends and relatives, your business plan can help you make a great case. Financial statements can show where you have been. Financial projections describe where you plan to go.

Your business plan shows how you will get there. Lending naturally involves risk, and a great business plan can help lenders understand and quantity that risk, increasing your chances for approval.

2. Potential partners and investors. Where friends and family are concerned, sharing your business plan may not be necessary (although it certainly could help).

Other investors--including angel investors or venture capitalists--generally require a business plan in order to evaluate your business.

3. Skilled employees . When you need to attract talent, you need  something  to show prospective employees since you're still in the startup phase. Early on, your business is more of an idea than a reality, so your business plan can help prospective employees understand your goals--and, more important, their place in helping you achieve those goals.

4. Potential joint ventures. Joint ventures are like partnerships between two companies. A joint venture is a formal agreement to share the work--and share the revenue and profit. As a new company, you will likely be an unknown quantity in your market. Setting up a joint venture with an established partner could make all the difference in getting your business off the ground.

But above all, your business plan should convince  you  that it makes sense to move forward.

As you map out your plan, you may discover issues or challenges you had not anticipated.

Maybe the market isn't as large as you thought. Maybe, after evaluating the competition, you realize your plan to be the low-cost provider isn't feasible since the profit margins will be too low to cover your costs.

Or you might realize the fundamental idea for your business is sound, but how you implement that idea should change. Maybe establishing a storefront for your operation isn't as cost-effective as taking your products directly to customers--not only will your operating costs be lower, but you can charge a premium since you provide additional customer convenience.

Think of it this way. Successful businesses do not remain static. They learn from mistakes, and adapt and react to changes: changes in the economy, the marketplace, their customers, their products and services, etc. Successful businesses identify opportunities and challenges and react accordingly.

Creating a business plan lets you spot opportunities and challenges without risk. Use your plan to dip your toe in the business water. It's the perfect way to review and revise your ideas and concepts before you ever spend a penny.

Many people see writing a business plan as a "necessary evil" required to attract financing or investors. Instead, see your plan as a no-cost way to explore the viability of your potential business and avoid costly mistakes.

Now let's look at the first section of your business plan: The Executive Summary.

The Executive Summary is a brief outline of the company's purpose and goals. While it can be tough to fit on one or two pages, a good Summary includes:

• A brief description of products and services
• A summary of objectives
• A solid description of the market
• A high-level justification for viability (including a quick look at your competition and your competitive advantage)
• A snapshot of growth potential
• An overview of funding requirements

I know that seems like a lot, and that's why it's so important you get it right. The Executive Summary is often the make-or-break section of your business plan.

A great business solves customer problems. If your Summary cannot clearly describe, in one or two pages, how your business will solve a particular problem and make a profit, then it's very possible the opportunity does not exist--or your plan to take advantage of a genuine opportunity is not well developed.

So think of it as a snapshot of your business plan. Don't try to "hype" your business--focus on helping a busy reader get a great feel for what you plan to do, how you plan to do it, and how you will succeed.

Since a business plan should above all help you start and grow your business, your Executive Summary should first and foremost help you do the following.

1. Refine and tighten your concept.

Think of it as a written elevator pitch  (with more detail, of course). Your Summary describes the highlights of your plan, includes only the most critical points, and leaves out less important issues and factors.

As you develop your Summary, you will naturally focus on the issues that contribute most to potential success. If your concept is too fuzzy, too broad, or too complicated, go back and start again. Most great businesses can be described in several sentences, not several pages.

2. Determine your priorities.

Your business plan walks the reader through your plan. What ranks high in terms of importance? Product development? Research? Acquiring the right location? Creating strategic partnerships?

Your Summary can serve as a guide to writing the rest of your plan.

3. Make the rest of the process easy.

Once your Summary is complete, you can use it as an outline for the rest of your plan. Simply flesh out the highlights with more detail.

Then work to accomplish your secondary objective by focusing on your readers. Even though you may be creating a business plan solely for your own purposes, at some point you may decide to seek financing or to bring on other investors, so make sure your Summary meets their needs as well. Work hard to set the stage for the rest of the plan. Let your excitement for your idea and your business shine through.

In short, make readers want to turn the page and keep reading. Just make sure your sizzle meets your steak by providing clear, factual descriptions.

How? The following is how an Executive Summary for a bicycle rental store might read.

Introduction

Blue Mountain Cycle Rentals will offer road and mountain bike rentals in a strategic location directly adjacent to an entrance to the George Washington National Forest. Our primary strategy is to develop Blue Mountain Cycle Rentals as the most convenient and cost-effective rental alternative for the thousands of visitors who flock to the area each year.

Once underway, we will expand our scope and take advantage of high-margin new equipment sales and leverage our existing labor force to sell and service those products. Within three years we intend to create the area's premier destination for cycling enthusiasts.

Company and Management

Blue Mountain Cycle Rentals will be located at 321 Mountain Drive, a location providing extremely high visibility as well as direct entry and exit from a primary national park access road. The owner of the company, Marty Cycle, has over 20 years experience in the bicycle business, having served as a product manager for Acme Cycles as well as the general manager of Epic Cycling.

Because of his extensive industry contacts, initial equipment inventory will be purchased at significant discounts from OEM suppliers as well by sourcing excess inventory from shops around the country.

Because of the somewhat seasonal nature of the business, part-time employees will be hired to handle spikes in demand. Those employees will be attracted through competitive wages as well as discounts products and services.

460,000 people visited the George Washington National Forest during the last 12 months. While the outdoor tourism industry as a whole is flat, the park expects its number of visitors to grow over the next few years.

• The economic outlook indicates fewer VA, WV, NC, and MD cycling enthusiasts will travel outside the region
• The park has added a camping and lodging facilities that should attract an increased number of visitors
• The park has opened up additional areas for trail exploration and construction, ensuring a greater number of single-track options and therefore a greater number of visitors

The market potential inherent in those visitors is substantial. According to third-party research data, approximately 30 percent of all cyclists would rather rent than transport their own bicycles, especially those who are visiting the area for reasons other than cycling.

Competitive Advantages

The cycling shops located in Harrisonburg, VA, are direct and established competitors. Our two primary competitive advantages will be location and lower costs.

Our location is also a key disadvantage where non-park rentals are concerned. We will overcome that issue by establishing a satellite location in Harrisonburg for enthusiasts who wish to rent bicycles to use in town or on other local trails.

We will also use online tools to better engage customers, allowing them to reserve and pay online as well as create individual profiles regarding sizes, preferences, and special needs.

Financial Projections

Blue Mountain Cycle Rentals expects to earn a modest profit by year two based on projected sales. Our projections are based on the following key assumptions:

• Initial growth will be moderate as we establish awareness in the market
• Initial equipment purchases will stay in service for an average of three to four years; after two years we will begin investing in "new" equipment to replace damaged or obsolete equipment
• Marketing costs will not exceed 14 percent of sales
• Residual profits will be reinvested in expanding the product and service line

We project first-year revenue of $720,000 and a 10 percent growth rate for the next two years. Direct cost of sales is projected to average 60 percent of gross sales, including 50 percent for the purchase of equipment and 10 percent for the purchase of ancillary items. Net income is projected to reach $105,000 in year three as sales increase and operations become more efficient.

And so on ...

Keep in mind this is just a made-up example of how your Summary might read. Also keep in mind this example focused on the rental business, so a description of products was not included. (They'll show up later.) If your business will manufacture or sell products, or provide a variety of services, then be sure to include a Products and Services section in your Summary. (In this case the products and services are obvious, so including a specific section would be redundant.)

Bottom line:  Provide some sizzle in your Executive Summary, but make sure you show a reasonable look at the steak, too.

Providing an overview of your business can be tricky, especially when you're still in the planning stages. If you already own an existing business, summarizing your current operation should be relatively easy; it can be a lot harder to explain what you plan to  become .

So start by taking a step back.

Think about what products and services you will provide, how you will provide those items, what you need to have in order to provide those items, exactly who will provide those items, and most important, whom you will provide those items to.

Consider our bicycle rental business example. It's serves retail customers. It has an online component, but the core of the business is based on face-to-face transactions for bike rentals and support.

So you'll need a physical location, bikes, racks and tools and supporting equipment, and other brick-and-mortar related items. You'll need employees  with a very particular set of skills  to serve those customers, and you'll need an operating plan to guide your everyday activities.

Sound like a lot? It boils down to:

• What you will provide
• What you need to run your business
• Who will service your customers, and
• Who your customers are.

In our example, defining the above is fairly simple. You know what you will provide to meet your customer's needs. You will of course need a certain quantity of bikes to service demand, but you will not need a number of different types of bikes. You need a retail location, furnished to meet the demands of your business. You need semi-skilled employees capable of sizing, customizing, and repairing bikes.

And you know your customers: cycling enthusiasts.

In other businesses and industries, answering the above questions can be more difficult. If you open a restaurant, what you plan to serve will in some ways determine your labor needs, the location you choose, the equipment you need to purchase. And, most important, it will help define your customer. Changing any one element may change other elements; if you cannot afford to purchase expensive kitchen equipment, you may need to adapt your menu accordingly. If you hope to attract an upscale clientele, you may need to invest more in purchasing a prime location and creating an appealing ambience.

So where do you start? Focus on the basics first:

• Identify your industry. Retail, wholesale, service, manufacturing, etc. Clearly define your type of business.
• Identify your customer. You cannot market and sell to customers until you know who they are.
• Explain the problem you solve. Successful businesses create customer value by solving problems. In our rental example, one problem is cycling enthusiasts who don't--or can't--travel with bikes. Another problem is casual cyclists who can't--or choose not to--spend significant sums on their own bikes. The rental shop will solve that problem by offering a lower-cost and convenient alternative.
• Show how you will solve that problem. Our rental shop will offer better prices and enhanced services like remote deliveries, off-hours equipment returns, and online reservations.

If you are still stuck, try answering these questions. Some may pertain to you; others may not.

• Who is my average customer? Who am I targeting? (Unless you plan to open a grocery store, you should be unlikely to answer, "Everyone!")
• What pain point do I solve for my customers?
• How will I overcome that paint point?
• Where will I fail to solve a customer problem, and what can I do to overcome that issue? (In our rental example, one problem is a potential lack of convenience; we will overcome that issue by offering online reservations, on-resort deliveries, and drive-up equipment returns.)
• Where will I locate my business?
• What products, services, and equipment do I need to run my business?
• What skills do my employees need, and how many do I need?
• How will I beat my competition?
• How can I differentiate myself from my competition in the eyes of my customers? (You can have a great plan to beat your competition, but you also must win the perception battle among your customers. If customers don't feel you are different, then you aren't truly different. Perception is critical.)

Once you work through this list you will probably end up with a lot more detail than is necessary for your business plan. That is not a problem: Start summarizing the main points. For example, your Business Overview and Objectives section could start something like this:

History and Vision

Blue Mountain Cycle Rentals is a new retail venture that will be located at 321 Mountain Drive, directly adjacent to an extremely popular cycling destination. Our initial goal is to become the premier provider for bicycle rentals. We will then leverage our customer base and position in the market to offer new equipment sales as well as comprehensive maintenance and service, custom equipment fittings, and expert trail advice.

• Achieve the largest market share bicycle rentals in the area
• Generate a net income of $235,000 at the end of the second year of operation
• Minimize rental inventory replacement costs by maintaining a 7 percent attrition rate on existing equipment (industry average is 12 percent)

Keys to Success

• Provide high-quality equipment, sourcing that equipment as inexpensively as possible through existing relationships with equipment manufacturers and other cycling shops
• Use signage to attract visitors traveling to the national forest, highlighting our cost and service advantage
• Create additional customer convenience factors to overcome a perceived lack of convenience for customers planning to ride roads and trails some distance away from our shop
• Develop customer incentive and loyalty programs to leverage customer relationships and create positive word of mouth

You could certainly include more detail in each section; this is simply a quick guide. And if you plan to develop a product or service, you should thoroughly describe the development process as well as the end result.

The key is to describe what you will do for your customers--if you can't, you won't  have  any customers.

In the Products and Services section of your business plan, you will clearly describe--yep--the products and services your business will provide.

Keep in mind that highly detailed or technical descriptions are not necessary and definitely not recommended. Use simple terms and avoid industry buzzwords.

On the other hand, describing how the company's products and services will differ from the competition is critical. So is describing why your products and services are needed if no market currently exists. (For example, before there was Federal Express, overnight delivery was a niche business served by small companies. FedEx had to define the opportunity for a new, large-scale service and justify why customers needed--and would actually  use --that service.)

Patents, copyrights, and trademarks you own or have applied for should also be listed in this section.

Depending on the nature of your business, your Products and Services section could be very long or relatively short. If your business is product-focused, you will want to spend more time describing those products.

If you plan to sell a commodity item and the key to your success lies in, say, competitive pricing, you probably don't need to provide significant product detail. Or if you plan to sell a commodity readily available in a variety of outlets, the key to your business may not be the commodity itself but your ability to market in a more cost-effective way than your competition.

But if you're creating a new product (or service), make sure you thoroughly explain the nature of the product, its uses, and its value, etc.--otherwise your readers will not have enough information to evaluate your business.

Key questions to answer:

• Are products or services in development or existing (and on the market)?
• What is the timeline for bringing new products and services to market?
• What makes your products or services different? Are there competitive advantages compared with offerings from other competitors? Are there competitive disadvantages you will need to overcome? (And if so, how?)
• Is price an issue? Will your operating costs be low enough to allow a reasonable profit margin?
• How will you acquire your products? Are you the manufacturer? Do you assemble products using components provided by others? Do you purchase products from suppliers or wholesalers? If your business takes off, is a steady supply of products available?

In the cycling rental business example we've been using, products and services could be a relatively simple section to complete or it could be fairly involved. It depends on the nature of the products the company plans to rent to customers.

If Blue Mountain Cycling Rentals plans to market itself as a provider of high-end bikes, describing those bikes--and the sources for those bikes--is important, since "high-end cycling rentals" is intended to be a market differentiation. If the company plans to be the low-cost provider, then describing specific brands of equipment is probably not necessary.

Also, keep in mind that if a supplier runs out of capacity--or goes out of business altogether--you may not have a sufficient supply to meet your demand. Plan to set up multiple vendor or supplier relationships, and describe those relationships fully. 

Remember, the primary goal of your business plan is to convince  you  that the business is viable--and to create a road map for you to follow.

The Products and Services section for our cycling rental business could start something like this:

Product Description

Blue Mountain Cycle Rentals will provide a comprehensive line of bicycles and cycling equipment for all ages and levels of ability. Since the typical customer seeks medium-quality equipment and excellent services at competitive prices, we will focus on providing brands like Trek bikes, Shimano footwear, and Giro helmets. These manufacturers have a widespread reputation as mid- to high-level quality, unlike equipment typically found in the rental market.

The following is a breakdown of anticipated rental price points, per day and per week:

• Bicycle $30/$120
• Helmet $6/$30
• Customers can extend the rental term online without visiting the store.
• A grace period of two hours will be applied to all rentals; customers who return equipment within that two-hour period will not be charged an additional fee.

Competition

Blue Mountain Cycle Rentals will have clear advantages over its primary competitors, the bike shops located in Harrisonburg, VA:

• Newer equipment inventory with higher perceived quality
• Price points 15 percent below the competition
• Online renewals offering greater convenience
• A liberal return grace period that will reinforce our reputation as a customer-friendly rental experience

Future Products

Expansion will allow us to move product offerings into new equipment sales. We will also explore maintenance and fitting services, leveraging our existing maintenance staff to provide value-added services at a premium price.

When you draft your Products and Services section, think of your reader as a person who knows little to nothing about your business. Be clear and to the point.

Think of it this way: The Products and Services section answers the "what" question for your business. Make sure you fully understand the "what" factor; you may run the business, but your products and services are its lifeblood.

Market research is critical to business success. A good business plan analyzes and evaluates customer demographics, purchasing habits, buying cycles, and willingness to adopt new products and services.

The process starts with understanding your market and the opportunities inherent in that market. And that means you'll need to do a little research. Before you start a business you must be sure there is a viable market for what you plan to offer.

That process requires asking, and more importantly answering, a number of questions. The more thoroughly you answer the following questions, the better you will understand your market.

Start by evaluating the market at a relatively high level, answering some high-level questions about your market and your industry:

• What is the size of the market? Is it growing, stable, or in decline?
• Is the overall industry growing, stable, or in decline?
• What segment of the market do I plan to target? What demographics and behaviors make up the market I plan to target?
• Is demand for my specific products and services rising or falling?
• Can I differentiate myself from the competition in a way customers will find meaningful? If so, can I differentiate myself in a cost-effective manner?
• What do customers expect to pay for my products and services? Are they considered to be a commodity or to be custom and individualized?

Fortunately, you've already done some of the legwork. You've already defined and mapped out your products and services. The Market Opportunities section provides a sense-check of that analysis, which is particularly important since choosing the right products and services is such a critical factor in business success.

But your analysis should go further: Great products are great, but there still must be a market for those products. (Ferraris are awesome, but you're unlikely to sell many where I live.)

So let's dig deeper and quantify your market. Your goal is to thoroughly understand the characteristics and purchasing ability of potential customers in your market. A little Googling can yield a tremendous amount of data.

For the market you hope to serve, determine:

• Your potential customers. In general terms, potential customers are the people in the market segment you plan to target. Say you sell jet skis; anyone under the age of 16 and over the age of 60 or so is unlikely to be a customer. Plus, again in general terms, women make up a relatively small percentage of jet ski purchasers. Determining the total population for the market is not particularly helpful if your product or service does not serve a need for the entire population. Most products and services do not.
• Total households. In some cases determining the number of total households is important depending on your business. For example, if you sell heating and air conditioning systems, knowing the number of households is more important than simply knowing the total population in your area. While people purchase HVAC systems, "households" consume those systems.
• Median income. Spending ability is important. Does your market area have sufficient spending power to purchase enough of your products and services to enable you to make a profit? Some areas are more affluent than others. Don't assume every city or locality is the same in terms of spending power. A service that is viable in New York City may not be viable in your town.
• Income by demographics. You can also determine income levels by age group, by ethnic group, and by gender. (Again, potential spending power is an important number to quantify.) Senior citizens could very well have a lower income level than males or females age 45 to 55 in the prime of their careers. Or say you plan to sell services to local businesses; in that case, try to determine the amount they currently spend on similar services.

The key is to understand the market in general terms and then to dig deeper to understand whether there are specific segments within that market--the segments you plan to target--that can become customers and support the growth of your business.

Also keep in mind that if you plan to sell products online the global marketplace is incredibly crowded and competitive. Any business can sell a product online and ship that product around the world. Don't simply assume that just because "the bicycle industry is a $62 billion business" (a number I just made up) that you can capture a meaningful percentage of that market.

On the other hand, if you live in an area with 50,000 people and there's only one bicycle shop, you may be able to enter that market and attract a major portion of bicycle customers in your area.

Always remember it's much easier to serve a market you can define and quantify.

After you complete your research you may feel a little overwhelmed. While data is good, and more data is great, sifting through and making sense of too much data can be daunting.

For the purposes of your business plan, narrow your focus and focus on answering these main questions:

• What is your market? Include geographic descriptions, target demographics, and company profiles (if you're B2B). In short: Who are your customers?
• What segment of your market will you focus on? What niche will you attempt to carve out? What percentage of that market do you hope to penetrate and acquire?
• What is the size of your intended market? What is the population and spending habits and levels?
• Why do customers need and why will they be willing to purchase your products and services?
• How will you price your products and services? Will you be the low cost provider or provide value-added services at higher prices?
• Is your market likely to grow? How much? Why?
• How can you increase your market share over time?

The Market Opportunities section for our cycling rental business could start something like this:

Market Summary

Consumer spending on cycling equipment reached $9,250,000 in the states of VA, WV, MD, and NC last year. While we expect sales to rise, for the purposes of performing a conservative analysis we have projected a zero growth rate for the next three years.

In those states 2,500,000 people visited a national forest last year. Our target market includes customers visiting the Shenandoah National Forest; last year 120,000 people visited the area during spring, summer, and fall months.

Over time, however, we do expect equipment rentals and sales to increase as the popularity of cycling continues to rise. In particular we forecast a spike in demand in 2015 since the national road racing championships will be held in Richmond, VA.

Market Trends

Participation and population trends favor our venture:

• Recreational sports in general and both family-oriented and "extreme" sports continue to gain in exposure and popularity.
• Western VA and eastern WV have experienced population growth rates nearly double that of the country as a whole.
• Industry trends show cycling has risen at a more rapid rate than most other recreational activities.

Market Growth

According to the latest studies, recreation spending in our target market has grown by 14 percent per year for the past three years.

In addition, we anticipate greater than industry-norm growth rates for cycling in the area due to the increase in popularity of cycling events like the Alpine Loop Gran Fondo.

Market Needs

Out target market has one basic need: The availability to source bicycle rentals at a competitive price. Our only other competition are the bike shops in Harrisonburg, VA, and our location will give us a competitive advantage over those and other companies who try to serve our market.

You may want to add other categories to this section based on your particular industry.

For example, you might decide to provide information about Market Segments. In our case, the cycling rental business does not require much segmentation. Rentals are typically not broken down into segments like "inexpensive," "midrange," and "high-end." For the most part rental bikes are more of a commodity. (Although you'll notice in our Products and Services section, we decided to provide "high-end" rentals.)

But say you decide to open a clothing store. You could focus on high fashion, or children's clothes, or outdoor wear, or casual--you could segment the market in a number of ways. If that's the case, provide detail on segmentation that supports your plan.

The key is to define your market--and then show how you will serve your market.

Providing great products and services is wonderful, but customers must actually know those products and services exist. That's why marketing plans and strategies are critical to business success. (Duh, right?)

But keep in mind marketing is not just advertising. Marketing--whether advertising, public relations, promotional literature, etc.--is an investment in the growth of your business.

Like any other investment you would make, money spent on marketing must generate a return. (Otherwise why make the investment?) While that return could simply be greater cash flow, good marketing plans result in higher sales and profits.

So don't simply plan to spend money on a variety of advertising efforts. Do your homework and create a smart marketing program .

Here are some of the basic steps involved in creating your marketing plan:

• Focus on your target market. Who are your customers? Who will you target? Who makes the decisions? Determine how you can best reach potential customers.
• Evaluate your competition. Your marketing plan must set you apart from your competition, and you can't stand out unless you  know  your competition. (It's hard to stand out from a crowd if you don't know where the crowd stands.) Know your competitors by gathering information about their products, service, quality, pricing, and advertising campaigns. In marketing terms, what does your competition do that works well? What are their weaknesses? How can you create a marketing plan that highlights the advantages you offer to customers?
• Consider your brand. How customers perceive your business makes a dramatic impact on sales. Your marketing program should consistently reinforce and extend your brand. Before you start to market your business, think about how you want your marketing to reflect on your business and your products and services. Marketing is the face of your to potential customers--make sure you put your best face forward.
• Focus on benefits. What problems do you solve? What benefits do you deliver? Customers don't think in terms of products--they think in terms of benefits and solutions. Your marketing plan should clearly identify benefits customers will receive. Focus on what customers  get  instead of on what you provide. (Take Dominos; theoretically they're in the pizza business, but really they're a delivery business.)
• Focus on differentiation. Your products and services have to stand out from the competition in some way. How will you compete in terms of price, product, or service?

Then focus on providing detail and backup for your marketing plan.

• What is your budget for sales and marketing efforts? 
• How will you determine if your initial marketing efforts are successful? In what ways will you adapt if your initial efforts do not succeed?
• Will you need sales representatives (inside or external) to promote your products?
• Can you set up public relations activities to help market your business?

The Sales and Marketing section for our cycling rental business could start something like this:

Target Market

The target market for Blue Mountain Cycling Rentals is western VA, eastern WV, southwestern MD, and northern NC. While customers in the counties surrounding the George Washington National Forest make up 35 percent of our potential customer base, much of our market travels from outside that geographic area.

Marketing Strategy

Our marketing strategy will focus on three basic initiatives:

• Road signage. Access to the forest is restricted to a few primary entrances, and visitors reach those entrances after traveling on one of several main roadways. Since customers currently rent bicycles in the local town of Harrisonburg, road signage will communicate our value proposition to all potential customers.
• Web initiatives. Our website will attract potential visitors to the resort. We will partner with local businesses that serve our target market to provide discounts and incentives.
• Promotional events. We will hold regular events with professional cyclists, like demonstrations and autograph signings, to bring more customers to the store as well as to extend the athletes' "brand" to our brand.

Pricing Strategy

We will not be the low-cost provider for our target market. Our goal is to provide mid- to high-end equipment. However, we will create web-based loyalty programs to incent customers to set up online profiles and reserve and renew equipment rentals online, and provide discounts for those who do. Over time we will be able to market specifically to those customers.

Just as in the Market Opportunity section, you may want to include a few more categories. For example, if your business involves a commission-compensated sales force, describe your Sales Programs and incentives. If you distribute products to other companies or suppliers and those distribution efforts will impact your overall marketing plans, lay out your Distribution Strategy.

The key is to show you understand your market and you understand how you will reach your market. Marketing and promotions must result in customers--your goal is to thoroughly describe how you will acquire and keep your customers.

Also keep in mind you may want to include examples of marketing materials you have already prepared, like website descriptions, print ads, web-based advertising programs, etc. While you don't need to include samples, taking the time to create actual marketing materials might help you better understand and communicate your marketing plans and objectives.

Make sure your Sales and Marketing section answers the "How will I reach my customers?" question.

Competitive Advantage

The Competitive Analysis section of your business plan is devoted to analyzing your competition--both your current competition and potential competitors who might enter your market.

Every business has competition. Understanding the strengths and weaknesses of your competition--or potential competition--is critical to making sure your business survives and grows. While you don't need to hire a private detective, you do need to thoroughly assess your competition on a regular basis even if you plan to run only a small business.

In fact, small businesses can be especially vulnerable to competition, especially when new companies enter a marketplace.

Competitive analysis can be incredibly complicated and time-consuming, but it doesn't have to be. Here is a simple process you can follow to identify, analyze, and determine the strengths and weaknesses of your competition.

Profile  Current  Competitors

First, develop a basic profile of each of your current competition. For example, if you plan to open an office supply store, you may have three competing stores in your market.

Online retailers will also provide competition, but thoroughly analyzing those companies will be less valuable unless you also decide you want to sell office supplies online. (Although it's also possible that they--or, say, Amazon--are your  real  competition. Only you can determine that.)

To make the process easier, stick to analyzing companies you will directly compete with. If you plan to set up an accounting firm, you will compete with other accounting firms in your area. If you plan to open a clothing store, you will compete with other clothing retailers in your area.

Again, if you run a clothing store, you also compete with online retailers, but there is relatively little you can do about that type of competition other than to work hard to distinguish yourself in other ways: great service, friendly salespeople, convenient hours, truly understanding your customers, etc.

Once you identify your main competitors, answer these questions about each one. And be objective. It's easy to identify weaknesses in your competition, but less easy (and a lot less fun) to recognize how they may be able to outperform you:

• What are their strengths? Price, service, convenience, and extensive inventory are all areas where you may be vulnerable.
• What are their weaknesses? Weaknesses are opportunities you should plan to take advantage of.
• What are their basic objectives? Do they seek to gain market share? Do they attempt to capture premium clients? See your industry through their eyes. What are they trying to achieve?
• What marketing strategies do they use? Look at their advertising, public relations, etc.
• How can you take market share away from their business?
• How will they respond when you enter the market?

While these questions may seem like a lot of work to answer, in reality the process should be fairly easy. You should already have a feel for the competition's strengths and weaknesses--if you know your market and your industry.

To gather information, you can also:

• Check out their websites and marketing materials. Most of the information you need about products, services, prices, and company objectives should be readily available. If that information is not available, you may have identified a weakness.
• Visit their locations. Take a look around. Check out sales materials and promotional literature. Have friends stop in or call to ask for information.
• Evaluate their marketing and advertising campaigns. How a company advertises creates a great opportunity to uncover the objectives and strategies of that business. Advertising should help you quickly determine how a company positions itself, who it markets to, and what strategies it employs to reach potential customers.
• Browse. Search the Internet for news, public relations, and other mentions of your competition. Search blogs and Twitter feeds as well as review and recommendation sites. While most of the information you find will be anecdotal and based on the opinion of just a few people, you may at least get a sense of how some consumers perceive your competition. Plus you may also get advance warning about expansion plans, new markets they intend to enter, or changes in management.

Keep in mind competitive analysis does more than help you understand your competition. Competitive analysis can also help you identify changes you should make to  your  business strategies. Learn from competitor strengths, take advantage of competitor's weaknesses, and apply the same analysis to your own business plan.

You might be surprised by what you can learn about your business by evaluating other businesses.

Identify  Potential  Competitors

It can be tough to predict when and where new competitors may pop up. For starters, regularly search for news on your industry, your products, your services, and your target market.

But there are other ways to predict when competition may follow you into a market. Other people may see the same opportunity you see. Think about your business and your industry, and if the following conditions exist, you may face competition does the road:

• The industry enjoys relatively high profit margins
• Entering the market is relatively easy and inexpensive
• The market is growing--the more rapidly it is growing the greater the risk of competition
• Supply and demand is off--supply is low and demand is high
• Very little competition exists, so there is plenty of "room" for others to enter the market

In general terms, if serving your market seems easy you can safely assume competitors will enter your market. A good business plan anticipates and accounts for new competitors.

Now distill what you've learned by answering these questions in your business plan:

• Who are my current competitors? What is their market share? How successful are they?
• What market do current competitors target? Do they focus on a specific customer type, on serving the mass market, or on a particular niche?
• Are competing businesses growing or scaling back their operations? Why? What does that mean for your business?
• How will your company be different from the competition? What competitor weaknesses can you exploit? What competitor strengths will you need to overcome to be successful?
• What will you do if competitors drop out of the marketplace? What will you do to take advantage of the opportunity?
• What will you do if new competitors enter the marketplace? How will you react to and overcome new challenges?

The Competitive Analysis section for our cycling rental business could start something like this:

Primary Competitors

Our nearest and only competition is the bike shops in Harrisonburg, VA. Our next closest competitor is located over 100 miles away.

The in-town bike shops will be strong competitors. They are established businesses with excellent reputations. On the other hand, they offer inferior-quality equipment and their location is significantly less convenient.

Secondary Competitors

We do not plan to sell bicycles for at least the first two years of operation. However, sellers of new equipment do indirectly compete with our business since a customer who buys equipment no longer needs to rent equipment.

Later, when we add new equipment sales to our operation, we will face competition from online retailers. We will compete with new equipment retailers through personalized service and targeted marketing to our existing customer base, especially through online initiatives.

Opportunities

• By offering mid- to high-end quality equipment, we provide customers the opportunity to "try out" bikes they may wish to purchase at a later date, providing additional incentive (besides cost savings) to use our service.
• Offering drive-up, express rental return services will be seen as a much more attractive option compared with the hassle of renting bikes in Harrisonburg and transporting them to intended take-off points for rides.
• Online initiatives like online renewals and online reservations enhances customer convenience and positions us as a cutting-edge supplier in a market largely populated, especially in the cycling segment, by customers who tend to be early technology adapters.
• Renting bikes and cycling equipment may be perceived by some of our target market as a commodity transaction. If we do not differentiate ourselves in terms of quality, convenience, and service, we could face additional competition from other entrants to the market.
• One of the bike shops in Harrisonburg is a subsidiary of a larger corporation with significant financial assets. If we, as hoped, carve out a significant market share, the corporation may use those assets to increase service, improve equipment quality, or cut prices.

While your business plan is primarily intended to convince  you  that your business makes sense, keep in mind most investors look closely at your competitive analysis. A common mistake made by entrepreneurs is assuming they will simply "do it better" than any competition.

Experienced businesspeople know you will face stiff competition: showing you understand your competition, understand your strengths and weaknesses relative to that competition, and that you understand you will have to adapt and change based on that competition is critical.

And, even if you do not ever plan to seek financing or bring in investors, you absolutely must know your competition.

The Competitive Analysis section helps you answer the "Against whom?" question.

The next step in creating your business plan is to develop an Operations Plan that will serve your customers, keep your operating costs in line, and ensure profitability . Your ops plan should detail strategies for managing, staffing, manufacturing, fulfillment, inventory--all the stuff involved in operating your business on a day-to-day basis.

Fortunately, most entrepreneurs have a better handle on their operations plan than on any other aspect of their business. After all, while it may not seem natural to analyze your market or your competition, most budding entrepreneurs tend to spend a lot of time thinking about how they will  run  their businesses.

Your goal is to answer the following key questions:

• What facilities, equipment, and supplies do you need?
• What is your organizational structure? Who is responsible for which aspects of the business?
• Is research and development required, either during start up or as an ongoing operation? If so, how will you accomplish this task?
• What are your initial staffing needs? When and how will you add staff?
• How will you establish business relationships with vendors and suppliers? How will those relationships impact your day-to-day operations?
• How will your operations change as the company grows? What steps will you take to cut costs if the company initially does not perform up to expectations?

Operations plans should be highly specific to your industry, your market sector, and your customers. Instead of providing an example like I've done with other sections, use the following to determine the key areas your plan should address:

Location and Facility Management

In terms of location, describe:

• Zoning requirements
• The type of building you need
• The space you need
• Power and utility requirements
• Access: Customers, suppliers, shipping, etc.
• Specialized construction or renovations
• Interior and exterior remodeling and preparation

Daily Operations

• Production methods
• Service methods
• Inventory control
• Sales and customer service
• Receiving and Delivery
• Maintenance, cleaning, and re-stocking
• Licenses and permits
• Environmental or health regulations
• Patents, trademarks, and copyrights

Personnel Requirements

• Typical staffing
• Breakdown of skills required
• Recruiting and retention
• Policies and procedures
• Pay structures
• Anticipated inventory levels
• Turnover rate
• Seasonal fluctuations in demand
• Major suppliers
• Back-up suppliers and contingency plans
• Credit and payment policies

Sound like a lot? It can be, but not all of the above needs to be in your business plan.

You should think through and create a detailed plan for each category, but you won't need to share the results with the people who read your business plan

Working through each issue and developing concrete operations plans helps you in two major ways:

• If you don't plan to seek financing or outside capital, you can still take advantage of creating a comprehensive plan that addresses all of your operational needs.
• If you do seek financing or outside capital, you may not include all the detail in your business plan--but you will have answers to any operations questions at your fingertips.

Think of Operations as the "implementation" section of your business plan. What do you need to do? How will you get it done? Then create an overview of that plan to make sure your milestones and timeline make sense.

That way the operations section answers the "How?" question.

Many investors and lenders feel the quality and experience of the management team is one of the most important factors used to evaluate the potential of a new business.

But putting work into the Management Team section will not only benefit people who may read your plan. It will also help  you  evaluate the skills, experiences, and resources your management team will need . Addressing your company's needs during implementation will make a major impact on your chances for success.

• Who are the key leaders? (If actual people have not been identified, describe the type of people needed.) What are their experiences, educational backgrounds, and skills?
• Do your key leaders have industry experience? If not, what experience do they bring to the business that is applicable?
• What duties will each position perform? (Creating an organization chart might be helpful.) What authority is granted to and what responsibilities are expected in each position?
• What salary levels will be required to attract qualified candidates for each position? What is the salary structure for the company, by position?

The Management Team section for our cycling rental business could start something like this:

Jim Rouleur, Owner and Manager

Joe has over 20 years experience in the cycling business. He served for 10 years as a product manager for Acme Bikes. After that he was the operations manager of Single Track Cycles, a full-service bike shop located in Bend, Oregon. He has an undergraduate degree in marketing from Duke University and an MBA from Virginia Commonwealth University. (A complete resume for Mr. Rouleur can be found in the Appendix.)

Mary Gearset, Assistant Manager

Mary was the 2009 U.S. Mountain Biking National Champion. She worked in product development for High Tec frames, creating custom frames and frame modifications for professional cyclists. She also has extensive customer service and sales experience, having worked for four years as the online manager of Pro Parts Unlimited, an online retailer of high-end cycling equipment and accessories.

In some instances you may also wish to describe your staffing plans.

For example, if you manufacture a product or provide a service and will hire a key skilled employee, describe that employee's credentials. Otherwise, include staffing plans in the Operations section.

One key note: Don't be tempted to add a "name" to your management team in hopes of attracting investors. Celebrity management team members may attract the attention of your readers, but experienced lenders and investors will immediately ask what role that person will actually play in the running of the business--and in most cases those individuals won't play any meaningful role.

If you don't have a lot of experience--but are willing to work hard to overcome that lack of experience--don't be tempted to include people in your plan who will not actually work in the business.

If you can't survive without help, that's okay. In fact, that's expected; no one does anything worthwhile on their own. Just make plans to get help from the  right  people.

Finally, when you create your Management section, focus on credentials but pay extra attention to what each person actually will  do . Experience and reputation are great, but action is everything.

That way your Management section will answer the "Who is in charge?" question.

Numbers tell the story. Bottom line results indicate the success or failure of any business.

Financial projections and estimates help entrepreneurs, lenders, and investors or lenders objectively evaluate a company's potential for success. If a business seeks outside funding, providing comprehensive financial reports and analysis is critical.

But most important, financial projections tell you whether your business has a chance of being viable--and if not let you know you have more work to do.

Most business plans include at least five basic reports or projections:

• Balance Sheet: Describes the company cash position including assets, liabilities, shareholders, and earnings retained to fund future operations or to serve as funding for expansion and growth. It indicates the financial health of a business.
• Income Statement: Also called a Profit and Loss statement, this report lists projected revenue and expenses. It shows whether a company will be profitable during a given time period.
• Cash Flow Statement: A projection of cash receipts and expense payments. It shows how and when cash will flow through the business; without cash, payments (including salaries) cannot be made.
• Operating Budget: A detailed breakdown of income and expenses; provides a guide for how the company will operate from a "dollars" point of view.
• Break-Even Analysis: A projection of the revenue required to cover all fixed and variable expenses. Shows when, under specific conditions, a business can expect to become profitable.

It's easy to find examples of all of the above. Even the most basic accounting software packages include templates and samples. You can also find templates in Excel and Google Docs. (A quick search like "google docs profit and loss statement" yields plenty of examples.)

Or you can work with an accountant to create the necessary financial projections and documents. Certainly feel free to do so, but first play around with the reports yourself. While you don't need to be an accountant to run a business, you do need to understand your numbers, and the best way to understand your numbers is usually to actually work with your numbers.

But ultimately the tools you use to develop your numbers are not as important as whether those numbers are as accurate as possible--and whether those numbers help you decide whether to take the next step and put your business plan into action.

Then Financial Analysis can help you answer the most important business question: "Can we make a profit?"

Some business plans include less essential but potentially important information in an Appendix section. You may decide to include, as backup or additional information:

• Resumes of key leaders
• Additional descriptions of products and services
• Legal agreements
• Organizational charts
• Examples of marketing and advertising collateral
• Photographs of potential facilities, products, etc.
• Backup for market research or competitive analysis
• Additional financial documents or projections

Keep in mind creating an Appendix is usually only necessary if you're seeking financing or hoping to bring in partners or investors. Initially the people reading your business plan don't wish to plow through reams and reams of charts, numbers, and backup information. If one does want to dig deeper, fine--he or she can check out the documents in the Appendix.

That way your business plan can share your story clearly and concisely.

Otherwise, since you created your business plan, you should already have the backup.

Tying It All Together

While you may use your business plan to attract investors, partners, suppliers, etc., never forget that the goal of your business plan is to convince  you  that your idea makes sense. 

Because ultimately it's your time, your money, and your effort on the line.

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A step-by-step guide to writing a business plan that will boost your startup's chance at success

• For all of the popularity of pitch decks , business plans still serve an important function for entrepreneurs who are building a business.
• A 2017 study of more than 1,000 entrepreneurs found that those with a business plan were more successful than those without.
• Business Insider asked entrepreneur, business mentor, and former Wall Street bank executive Cate Luzio to distill her decades of experience into a guide.
• Her advice is the basis for these eight essential elements founders should include in a business plan, and why they matter.
• Visit BI Prime for more stories.

A pitch deck is not a plan.

For all of the popularity of pitch decks, business plans still serve an important function for entrepreneurs who are building a business.

A 2017 study of more than 1,000 entrepreneurs found that those with a business plan were more successful than those without. Among pairs of otherwise identical founders, planners were 16% more likely to be profitable for at least 6 months out of the preceding year.

Professor Francis Greene, who co-authored the study with Christian Hopp, told Business Insider the pairs of entrepreneurs were "like twins" in every observable way, and that the results were "fairly definitive."

"It's pretty clear that if you plan, it pays," Greene said.

Of course, a fancy plan won't save a bad business model, but a thoughtful strategy can give a promising idea the winning edge in a competitive market.

And that edge doesn't exclusively apply to startups seeking venture funding. Just ask former Wall Street bank executive Cate Luzio, who left her 17-year corporate career to launch Luminary NYC, a co-working and event hub for professional women.

The importance of time — and timing

Luzio attributes Luminary's success to the business plan she wrote in one week, a feat that Greene says typically takes founders about 2 months to produce. 

Greene also stresses that his research shows that much of the value of a plan is tied to when you write it. In an earlier study, he and Hopp found a sort of Goldilocks zone of time — roughly 7-12 months after the initial idea, and usually 1-2 years before launching the product or service — as the optimal time to start writing.

Still, Greene says there can be significant internal value to the practice of writing a plan beyond simply raising funds, and Luzio would agree. As a self-financed bootstrapper, Luzio told Business Insider that she's often asked why she wrote a plan if she's not out raising money.

"I need a business plan to run the business," she said. "Business plans weren't created 50 years ago for founders to sell their companies. Business plans were created to build their business, understand cash flow and, and manage the business."

For first-time founders and seasoned pros

As Managing Director and the Global Head of Multinational Corporate Banking at HSBC, Luzio had a $2 billion portfolio and a team of more than 2,000 people across 72 countries.

"It's important for startups to make sure their product/service produces value and meets needs," Luzon said. "It's not about any method being the preferred way. I think it's important to have a plan with actionable-steps and a mission 'North Star' for your business."

Greene describes a good business plan as a "pre-mortem," or an analysis of everything that could go wrong with the business, from which even serial founders with numerous exits under their belt could benefit.

"A plan is a corrective device for solving for your biases," he said.

A strategic framework for your business' growth

Over the years, Luzio has reviewed countless plans and she regularly helps entrepreneurs write their own. This February, she will lead a business plan bootcamp at Luminary in New York.

Business Insider asked Luzio to distill her decades of experience into a guide, which she emphasizes is exactly that: a guide, not a rubric.

"I don't want to focus on a one size fits all approach. I want to underscore for new entrepreneurs the importance of fully mapping out their vision," she said. "Whatever the plan or the framework you use, you have to be able to execute."

Related stories

A business plan simply happens to be a very useful framework, and Luzio's advice is the basis for these 8 essential elements founders should include in their plans, and why they matter.

If you have written a plan for your business that you'd like to share with Business Insider, please get in touch via email at dreuter[at]businessinsider.com .

1. Executive Summary

The first section of a business plan is best written last, once you've worked through the questions raised in the other sections.

Here is where you introduce your company's narrative, and define what success will look like. What problem or opportunity will your business address, and who are your target customers?

This is also where you'll introduce your finance strategy. Are you looking for equity investors, taking on debt, or working with existing cash? How much financing will you need from different sources, and when will you be profitable enough to deliver returns?

Boil down the work you've done in the following sections into a few sentences that get straight to the point.

2. Company Overview

If you have an elevator pitch prepared, this is where it belongs. Summarize what your company stands for, and what its guiding principles are. Why does your business do what it does ? Who are the stakeholders that are concerned with your company's success?

Briefly introduce your target market or customer base, how your product or service will meet a demand, and what operational and staffing considerations are necessary for the business to function.

Lastly, Luzio said you should be very upfront about your financial needs and goals, like start-up costs and revenue forecasts. Businesses depend on cash flow, so don't be coy about how you're going to manage that necessity.

3. Business Description

Here is where you start to delve into the details of the market opportunity your company will capitalize on. Consider factors like geographies, demographics, and industries, and demonstrate how your product or service is different.

Identify who the key suppliers or partners are and the extent to which your business will depend on those relationships.

As before, remember to think carefully about the financial picture. Base your revenue and pricing models on thoughtful research and design a structure that can compete in your target market. If you're charging more or less than the competition, provide a solid rationale as to why.

4. Market Research and Analysis

Expand on the market discussion from the previous section, and demonstrate how well you understand your competitive landscape. Who are the dominant players, and what are the growth trends in your industry?

With nearly eight billion people in the world, your odds of success are improved if you can narrow your target to a more specific segment. Depending on your competition, what percentage of that segment do you realistically think your business can address, and how big does your business need to be to handle that percentage?

Round out the section with a good old-fashioned SWOT analysis . Listing the strengths, weaknesses, opportunities, and threats, is a time-honored method of keeping track of the concerns you'll need to manage for your company.

5. Operating Plan

Your company's operations will possibly be the hardest thing to plan in advance. Do your best to spell out how you will generate sales, deliver your product or service to the market, and handle payments from customers.

Think about what you'll need in terms of facilities (like offices, warehouses, storefronts, coworking spaces) and technology (like web services, payment processing, customer resource management), or other capital investments that may be specific to your business.

Review your mission-critical suppliers from earlier, and also identify any key customer relationships that could have a significant impact on your success. Luzio categorizes a key partners as any single customer who delivers more than 10% of your annual revenue.

This is also the beginning of one of the biggest ongoing challenges all business owners face: building your team. Luzio recommends outlining the key roles that need filling in the first two years of operation for your company to succeed. Determine if these must be hires or can be contracted out.

In addition to defining an organizational structure and each position's responsibilities, make a plan for recruiting, retaining, and compensating your team. You may need professional consultation to navigate HR issues, or if you'll be offering equity ownership of the company.

6. Marketing and Sales Plan

Once you've established your target customer segment, you'll need to develop a strategy for crafting the right messaging to reach them.

"How you promote the business is an important element of your success," Luzio said.

With the vast array of available marketing channels, you may need some help from public relations and marketing professionals to choose the right ones for your business and shaping the messaging that's appropriate for each.

This also figures into your hiring plan, since you many need to staff up for sales and support.

7. Financial Plan

Luzio said estimating your startup costs and projected earnings growth "is critical to see when the business becomes profitable or is targeted to be."

Startup costs include one-time and ongoing expenses that are essential to get the business up and running, and should be summarized here and laid out in greater detail in the Appendix.

Your profit-and-loss (P&L) model, also known as a pro forma income statement, is a projection of your expected income and expenses for the first 12 months, and up to a period up to five years. A summary P&L will suffice here, but be based on a more thorough model that is included in the Appendix.

Much as you would love to see the so-called hockey-stick growth curve for your business, few founders will ever see that sort of rapid scale-up. If you've done your diligence in preparing your startup costs and P&L projections, you should have a reasonable idea of when your business will break even and start earning profits.

Equity investors appear to exempt some companies or industries from expectations of foreseeable profitability, but debt investors and lenders are generally less tolerant of cash-burning businesses. They'll want to know when you expect to become EBITDA-positive, since that's when they'll begin seeing repayment on your loans.

8. Appendix

The appendix is the home for any other matters you need to include, but may not merit a fully fleshed-out section.

It's also that place for the tables, charts, and analyses that are summarized in earlier sections, such as:

• Estimated start-up costs: A more detailed breakdown of the expenses and investments required to get your business up and running.
• P&L projections: Also known as pro-forma income statements, here's where you'd go into more detail about your revenues and expenses, forecast up to five years out.
• Additional market research: Provide more specific details about the basis for the analysis and assumptions discussed in section four.
• Competitive analysis: Deeper analysis of individual competitors or potential competitors that could challenge your model.

Now that you've completed all the sections, you're ready to return to the top and work on the Executive Summary.

You can use this guide to inform your own original plan, or if you would like more detailed instructions, check out the Startup Business Plan Template from SCORE, the business mentoring organization .

Watch: It's time for iTunes to die, even though it was key to Apple's early success

• Main content

Writing a Good Business Plan: the Ultimate Guide for Small Businesses 

By: Tatyana Parham 

Whether you're a startup company newly developing tools for your business, or you're a seasoned business owner seeking loans or investments, writing a good business plan is a fundamental part of becoming a well-established company. A strong small business plan provides direction for your company's future, helps you fully develop your business concept, and lays out clear objectives to grow your business from a marketing, financial, and operational standpoint for the next 3-5 years. 

Essentially, a business plan is a living document that grows with your business, and describes your core business activities, objectives, and strategies to achieve your goals. This resource is typically 15-20 pages, and should be reviewed and updated periodically to keep you on track with your goals. Reviewing your business plan is a great opportunity to see how your business has evolved, and can enable you to align your objectives to your company's most pressing interests in real-time. Successful business plans provide an industry overview, outlining how your business differentiates from potential competitors, as well as documenting your financial performance and operational strategy. Most importantly, writing a simple business plan can attract potential investors before your company has established a proven track record, showing that you have a fully vetted business idea. Click here to watch a webinar that provides extra guidance for writing a business plan for investors. 

Across the board, a good business plan is the best internal resource for business executives to identify core objectives and remain competitive in the market landscape. It can be one of the most important tools for small business owners that want to self-manage a startup before obtaining financial resources to hire additional accounting or strategic support. Although the length and content of the business plan may vary depending on the business, there are generally two types of business plans: traditional and lean startup business plans. Traditional business plans, which are most common, are much more detailed and tend to require more work. Lean business plans provide a less detailed snapshot of your company's performance and objectives, and the executives are typically expected to be able to provide more information to investors upon request. 

Here, we detail some common elements to traditionally include while writing a good business plan for your company's overall success. 

Executive Summary 

The executive summary is the first page of your business plan, and it provides a quick overview of the company, including the mission and vision statements, location, a brief description of your products and services, and key information such as ownership structure. Think of this page as your business's elevator pitch - who are you, what do you provide, and what do you want to achieve? In addition, you can include an objective statement, which clearly identifies your company's goals and strategies to achieve them. This is where you can explain a clear need for funding, how financing will help your business grow, and what you intend to do with the expected funds. 

Company Description 

Your company description provides a more granular look into your small business’s technical information. This may include important information such as registered name and EIN, address of physical locations, key players such as owners, leadership, or Board of Directors, and a brief history of the company. 

Products and Services

What products and/or services do your company provide to its target customers, and how do they solve a specific problem or fulfill a specific need? Provide an outline of your company’s general products and service offerings, including your pricing model, consumer benefits, and your sales and distribution strategy. You can also include supplemental information about your products here, such as production and manufacturing, and any information about current or pending trademarks or patents for proprietary technologies associated with your product. 

Market Analysis 

An effective market analysis section provides an understanding of the industry and target market, as well as a look at different personas of your target consumers - who they are, what they need, and how you can help. This is a great section to include your S.W.O.T. Analysis, highlighting your company’s strengths and weaknesses, and your market placement amongst the competition. 

Marketing Strategy 

Once you provide a brief market analysis, you are able to describe your company’s plans to attract and retain a substantial consumer base. Your marketing strategy typically outlines a thorough distribution channel, as well as potential advertising and media campaigns that can be executed separately to reach each of your business’s goals. Your marketing strategy can also include a snapshot of your branding portfolio, including key messaging and differentiators. 

Financial Analysis 

Even if your business isn’t mature enough to have robust financials, it is critical to include a section highlighting your business’s financial performance and projections in order to attract potential lenders and investors. For established businesses, be sure to provide income or profit-and-loss statements, a balance sheet detailing your assets and liabilities, and a cash flow statement to show how much money is coming into and out of your company. Also, this is where you include ratios that showcase the financial health of your company, such as the net profit margin, current ratio, and accounts receivables per year. 

For both established companies and startups, it is ideal to include future financial projections that can outline how your business will generate enough profits to repay potential loans, or how you can earn a considerate return for investors. Including monthly or quarterly sales statements can be sufficient enough to position your company to be capable of financing. You can provide full financial statements in the Appendix for reference. 

Appendix  

The appendix serves as a hub for any supplemental documents that may support the content of your business plan. This includes, but is not limited to, financial statements, bank statements, licenses, equipment and property leases, permits, patents, receipts, contracts, and personal and business credit history. These documents are always useful to have on-hand, just in case a potential lender requests supporting information. 

Further Tips and Resources

By including the most fundamental information in your business plan, future investors and lenders will be more attracted to your company and interested in your objectives. Make sure to keep your plan concise - including only the most necessary information and documents that will support your path to funding. Also double-check your sales estimates and projections, ensuring not to over-reach expected outcomes, which can severely hurt your chances of loan approval. Finally, once you’ve finished creating your business plan, proofread the entire document before hand-off. Prospective investors and lenders may be turned off by spelling, punctuation, and grammatical errors. If necessary, hire a professional writer or copyeditor to finalize a polished and professional document. 

Writing a good business plan may seem overwhelming for any small business owner at any stage of the business life cycle. A no-cost Business Advisor can be a vital resource for writing a simple business plan, as well as providing assistance in several other areas to help your business succeed. 

Click here   to find your local SBDC and get matched with a small business advisor today. 

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Home » Employer Resources » Startup Center » The Ultimate Guide to Creating Investor-Friendly Business Plans [Format Guide]

The Ultimate Guide to Creating Investor-Friendly Business Plans [Format Guide]

Are you an aspiring entrepreneur wondering what a business plan should look like and how to create one? A well-structured business plan is an essential part of any successful venture. But it may seem challenging to give shape to your business idea and not miss out on any important details.

In this blog, we’ll discuss the key elements of a business plan and provide you with a useful business plan format with sample statements to help you on your way.

Table of Contents

Business Plan: An Overview

A business plan is a detailed document that outlines the objectives, strategies, and tactics of a business. It is typically used to secure investments, financing, and other forms of support from stakeholders. The document should include information such as descriptions of the company, its products and services, its customers, its marketing and financial plans, and its operational plans. Having a business plan is crucial for any business. It can ensure that everything is taken into account and that the business is well-prepared to succeed.

Business Plan Format with Sample Templates

Writing a business proposal can be tricky. Whether it is a small or large business, there are a few key elements you should consider when discussing a business strategy to enhance your business plan. This section provides sample templates that can help you streamline your unique business proposal.

1. Give an Executive Summary

An executive summary in a business plan is a brief overview that outlines the major points of the plan. It should be concise and engaging so that it captures the attention of potential investors or lenders. The summary should be in paragraphs with comprehensible headings and points. To write an executive summary, you should briefly answer the following questions (not necessarily all):

• What is the mission of your business or your company/organization?
• How did the idea of business come up?
• Who has the highest leadership?
• Which industry does the business belong to?
• What is going to be the employee base?
• What are the business’s products and services?
• What are the competitive advantages of the business in the already existing market/industry?
• What marketing strategy will be used?
• How many different operational teams are going to form?
• What is going to be the location?
• Who are the stakeholders?
• How will you fund the business?
• How much money is required to set up the business?
• What are its future financial targets?

Here is an example of an executive summary of an organic food product start-up.

“[Company Name] is a start-up business venture that specializes in the production and distribution of organic health food products. It was founded by two entrepreneurs who have 10 years of combined experience in the health food industry. The company is located in a major metropolitan area.

Our goal is to become the top provider of organic health food products in our market. We plan to do this by providing high-quality products and services and excellent customer service. We have identified some key competitive advantages that will help us succeed, including our experienced management team, our strong network of suppliers, and our commitment to innovation.”

2. Talk About the Business’s Key Products and Services

In this section, talk about the key products and services that your business plans to offer, along with their value proposition. Here, the term value proposition means why a person will care to buy your product or service. It also uncovers unexplored and potentially marketable opportunities.

Here’s a business proposal example that includes details of key products and services for an organic healthy food product start-up:

“Our business offers organic foods that are healthier and more sustainable. Our value proposition is that our customers can enjoy healthy, farm-fresh foods while feeling good about contributing to the environment. We strive to offer a wide range of products, from organic produce to organic sauces, fruit bars, and snacks.

As dietary habits have evolved, there are a significant number of people who prefer or require gluten-free products due to their health issues. We strive to produce gluten-tolerance-tested, authentic, and trustworthy gluten-free products with delivery and online ordering to make purchasing easier for our customers.”

3. Insight on Competitive Market Analysis

Business planners need to possess comprehensive knowledge of their target industry and market. Having great business analysis skills can help a business planner get a clear understanding of how to compete effectively and gain a foothold in the market. This section should cover the following information:

• Market Size: Describe the size of the industry, the expected growth rate, and the potential earnings it offers.
• Target Audience: Who are the perfect customers for your business? Include details like their age, where they live, and their preferences.
• Competitors: Write about your key competitors’ strengths and weaknesses and how you plan to counter them.
• USP (Unique Selling Point): Cite what distinguishes your product or service from the competition. What’s your marketing plan to set yourself apart from the competition?
• Price and Profit: Share what pricing scheme your business will follow and the estimated profit margin.
• Rules and Regulations: Specify any special rules or laws you must follow in your industry.

An example to describe the market analysis in the business proposal template for an organic healthy food product’s start-up will be like this:

“The health food industry in India is rapidly expanding, with a compound annual growth rate (CAGR) of 20% and an expected CAGR of 16% by 2026, equivalent to $30 billion. This growth is attributed to the increasing number of health-conscious individuals, who are expected to grow from 100 million to 176 million by 2026. Healthy snacking categories like cookies, fruit snacks, snack bars, and trail mixes are expected to experience significant growth.

Our products and services stand out due to our commitment to quality and reasonable prices. Our experienced management team, strong supplier network, and innovation are key competitive advantages. We aim to market our products to health-conscious consumers seeking organic alternatives to conventional foods, aiming to become the leading organic food supplier.”

4. Target Audience Selection

A business’s success is incomplete without fostering and developing its customer base. “You must know your customers and the customers must know you” – this should be the motto for your business.

After in-depth research on target customers, you can form the right marketing and sales strategies. The best way to identify customers is to understand their problems and needs. Simply put, your business’s products and services must solve their problems and fulfill their wants. Here’s an example to share about the target audience selection for an organic, healthy food product start-up:

“Our target audience is adults aged 18-40 who are health-conscious and interested in organic options. We will focus our marketing and sales efforts on this demographic, as they are likely to be more open to trying new products and more likely to embrace organic alternatives. Our goal is to become the leading organic food supplier for this demographic.”

5. Structure of the Company’s Management and Team

This section of the business plan template will discuss the teams and departments that will make the business run. Briefly outline the roles and responsibilities of a position and create a job posting to hire the right employee.

Here is one way to briefly mention your company’s management team structure:

We will have a CEO, COO, CFO, and other executive positions to manage the company’s operations. Several teams will be involved in running the business, including a customer service team, administration, human resources, sales and marketing team, finance team, operations team, and product development team. Each team would have its own set of roles and responsibilities.”

6. Marketing and Promotional Strategies

This is one of the most crucial parts of your business plan. The right marketing and promotional plans help spread the word about your product or service, increase overall brand awareness, capture market share, and thereby, increase the customer base, sales, and profits. Here is a brief overview of marketing and promotional strategies in your business proposal:

“Our marketing strategy is centered around a multi-faceted approach to engaging with our customers. We will create interesting and relevant content for social media platforms, optimize our website for search engines, collaborate with influencers, run targeted online ads, and send out email campaigns.

Our promotional efforts will include limited-time discounts, loyalty programs, and exclusive events to connect with our customers on a personal level. We plan to expand our outreach through partnerships with complementary businesses and attending industry events. To measure the effectiveness of our strategies, we will leverage analytics tools and gather customer feedback to make necessary adjustments. Our ultimate aim is to build trust and credibility in our brand.”

7. Details of Developing Sales Funnel

The growth strategy of a business depends heavily on its sales funnel strategy. This is because successful sales will lead to revenue growth and business expansion. An example to mention about the sales funnel in the business plan model is:

“Our sales funnel is designed to help our business generate more leads and close more sales. We will start by optimizing our online presence to increase visibility and attract potential customers. From there, we will create content and campaigns to nurture leads and build valuable customer relationships. We will then use analytics and other data-driven tactics to identify qualified prospects and target them with effective messaging and emails. Finally, we plan to use automated tools to manage the sales process from start to finish.”

8. Lay Out Your Financial Plan and Budget

This point of your business proposal will include details of the budget, balance sheet, revenue generation, cost reduction strategies, and other expenses. It should talk about the costs required to cover all business operations, management, and estimated future revenue projections. Here is a template of a business budget.

9. Add Appendix to Provide Additional Details

The appendix to a business proposal template includes extra documents that give more information about the proposal. You can put in any part that needs evidence, facts, or reports. Normally, the appendix can have these documents:

• Market research with charts and data from other sources.
• Licenses, contracts, certificates, or patent papers.
• Maps and plans for expanding the business facility.
• Contact details for team members, board members, and current investors.
• Reports and statements from quality-check experts.
• Financial documents like the balance sheet and the company’s account statements.

Every business needs a one-of-a-kind business plan format. It should contain all the necessary information and documents to give the reader, investors, and stakeholders a comprehensive overview of the proposed business. By taking the time to structure and create a detailed business plan, entrepreneurs, business planners, and analysts can create a clear and concise guide to help them achieve their goals. Executing a successful business plan, therefore, requires skilled professionals. If you are interested in the field of business management and helping businesses make valuable decisions, then look for work from home accounts jobs to contribute.

Have you ever drafted a business plan? Tell us in the comments below!

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Sandipta Banerjee has completed her Master's in English Literature and Language. She has been working in the field of editing and writing for the past five years. She started her writing journey at a very young age with her poems which have now evolved into a poetry blog. She was working as Editorial Head in a US-based publishing house before joining Internshala.

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• Mar 30, 2023

The Ultimate Guide to Writing a Business Plan for a Loan: A Step-by-Step Walk-Through

The Ultimate Guide to Writing a Business Plan for a Loan: A Step-by-Step Walkthrough

As a business plan specialist and expert business planner, I'm here to guide you through the process of writing a comprehensive business plan for securing a loan. Whether you're a start-up or an established business looking to expand, a well-crafted business plan is essential for impressing potential lenders and securing the funding you need.

In this extensive, 5,000-word article, I'll cover everything you need to know about creating a top-notch business plan that will boost your chances of loan approval. We'll go through each section in detail, providing you with practical examples and tips to optimize your plan for success. So, let's get started!

Executive Summary

The executive summary is the first and most critical section of your business plan. It's a brief overview of your entire plan, highlighting the key points and giving readers an insight into your business.

Key elements to include in your executive summary:

Business concept: Briefly explain your business idea, the products or services you plan to offer, and the target market.

Company overview: Provide essential information about your company, including its legal structure, location, and mission statement.

Management team: Showcase the expertise and experience of your management team, emphasizing their ability to lead the business.

Market opportunity: Describe the market demand, trends, and target audience, highlighting the opportunity for your business to succeed.

Financial highlights: Summarize your financial projections, including sales, profits, and cash flow.

Loan purpose: Clearly state the purpose of the loan and the amount you're seeking.

Remember, the executive summary is often the first thing lenders read, so make it engaging and informative to grab their attention.

Company Description

The company description section is where you provide a more in-depth look at your business. It should give readers a clear understanding of your company's purpose, goals, and competitive advantages.

Key elements to include in your company description:

Business history: If your company has an existing history, briefly describe its origins and milestones achieved.

Mission statement: Articulate the purpose of your company and the value you aim to provide to customers.

Objectives: Outline the specific goals you want to achieve with your business, both short-term and long-term.

Products and services: Provide a detailed description of the products or services you plan to offer, emphasizing the benefits they provide to customers.

Target market: Identify your target audience, specifying their demographics, psychographics, and buying habits.

Competitive advantage: Explain what sets your business apart from the competition and how you plan to maintain this edge.

Market Analysis

The market analysis section demonstrates your understanding of the industry, market, and competition. It's crucial to show lenders that you've done your homework and have a comprehensive understanding of the market landscape.

Key elements to include in your market analysis:

Industry overview: Provide a high-level view of your industry, including its size, growth trends, and key players.

Market segmentation: Break down your target market into smaller segments, identifying their unique needs and preferences.

Target market characteristics: Describe the specific characteristics of your target market, such as demographics, psychographics, and geographic location.

Market demand: Present evidence of market demand, using data on customer needs, market trends, and buying behaviors.

Competitor analysis: Evaluate your main competitors, analyzing their strengths, weaknesses, and market share.

SWOT analysis: Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to assess your business's position in the market.

Marketing and Sales Strategy

In this section, outline your marketing and sales strategy to show lenders how you plan to attract and retain customers, as well as generate revenue. A well-defined marketing and sales strategy is crucial to demonstrate that you have a clear plan for growth and profitability.

Key elements to include in your marketing and sales strategy:

Marketing objectives: Define your marketing goals, such as brand awareness, lead generation, or customer retention.

Target audience: Reiterate your target market, emphasizing their needs and preferences.

Unique selling proposition (USP): Highlight your USP, the main reason customers should choose your products or services over the competition.

Marketing channels: Identify the marketing channels you plan to use, such as social media, email, content marketing, or paid advertising. Explain the rationale behind your choice of channels and how they align with your target audience.

Sales process: Describe your sales process, from lead generation to closing deals. Include details on your sales team structure, training, and compensation plans.

Key performance indicators (KPIs): List the KPIs you'll use to measure the success of your marketing and sales efforts, such as conversion rates, average deal size, or customer lifetime value.

Operations Plan

The operations plan section details the day-to-day activities required to run your business. It shows lenders that you have a clear understanding of the operational aspects of your company and the resources needed to support your growth.

Key elements to include in your operations plan:

Facilities: Describe your business's physical location, including its size, layout, and any equipment or machinery required.

Production process: If applicable, detail your production process, including the steps involved, quality control measures, and production capacity.

Supply chain: Outline your supply chain, identifying key suppliers, procurement processes, and inventory management practices.

Staffing: Explain your staffing requirements, including the roles, responsibilities, and qualifications of each team member.

Management structure: Provide an organizational chart, showcasing your company's management structure and reporting lines.

Legal and regulatory requirements: Identify any relevant legal or regulatory requirements, such as licenses, permits, or certifications needed to operate your business.

Financial Plan

The financial plan is arguably the most crucial section of your business plan when applying for a loan. It demonstrates your ability to manage finances, make informed decisions, and, ultimately, repay the loan.

Key elements to include in your financial plan:

Revenue projections: Estimate your future sales, breaking them down by product or service category and showing growth rates over time.

Expense projections: Forecast your expenses, including fixed costs (e.g., rent, utilities) and variable costs (e.g., marketing, salaries).

Cash flow statement: Provide a detailed cash flow statement, showing how cash will flow in and out of your business over a specified period (typically 12 months).

Profit and loss statement: Create a profit and loss statement that projects your business's profitability over time.

Balance sheet: Prepare a balance sheet that showcases your business's assets, liabilities, and equity.

Break-even analysis: Calculate the point at which your business will break even, meaning your revenues equal your expenses.

Loan repayment schedule: Detail your proposed loan repayment schedule, including the loan amount, interest rate, repayment terms, and projected date of full repayment.

The appendices section is where you can include any additional documents or supporting materials that are relevant to your business plan. These documents may provide further evidence of your company's viability and help strengthen your case for securing a loan.

Examples of items to include in the appendices:

Resumes of key team members

Product samples or prototypes

Market research data or surveys

Letters of intent or contracts with suppliers, partners, or customers

Intellectual property documentation, such as patents, trademarks, or copyrights

Relevant licenses, permits, or certifications

Writing a comprehensive business plan for a loan can seem like a daunting task, but with the right approach and guidance, it's an achievable goal. By following the step-by-step instructions outlined in this article, you can create a well-structured, persuasive business plan that will greatly improve your chances of securing the funding you need. Remember to:

Pay close attention to your executive summary, as it sets the tone for the entire plan.

Be thorough and detailed in your market analysis, showing a deep understanding of your industry and target audience.

Develop a solid marketing and sales strategy to demonstrate your ability to attract and retain customers.

Address the operational aspects of your business, including staffing, facilities, and supply chain management.

Present a robust financial plan, complete with projections and a loan repayment schedule.

By doing so, you'll showcase your expertise, commitment, and preparedness to potential lenders, significantly increasing the likelihood of obtaining the loan your business needs to grow and succeed.

In addition to following the steps outlined in this guide, consider seeking professional assistance from a business plan consultant or specialist to review and refine your plan. Their expertise can help you identify any areas that may need improvement and ensure that your business plan is optimized for success.

Finally, remember to continuously update your business plan as your business evolves. Regular updates will ensure that your plan remains relevant and accurate, providing you with a valuable roadmap for your business's future growth and development.

With dedication, persistence, and a well-crafted business plan, you can secure the funding you need to bring your business vision to life. Good luck, and here's to your success!

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Free Business Plan Template for Small Businesses (2024)

Use this free business plan template to write your business plan quickly and efficiently.

A good business plan is essential to successfully starting your business —  and the easiest way to simplify the work of writing a business plan is to start with a business plan template.

You’re already investing time and energy in refining your business model and planning your launch—there’s no need to reinvent the wheel when it comes to writing a business plan. Instead, to help build a complete and effective plan, lean on time-tested structures created by other  entrepreneurs and startups. 

Ahead, learn what it takes to create a solid business plan and download Shopify's free business plan template to get started on your dream today. 

What this free business plan template includes

• Executive summary
• Company overview
• Products or services offered
• Market analysis
• Marketing plan
• Logistics and operations plan
• Financial plan

This business plan outline is designed to ensure you’re thinking through all of the important facets of starting a new business. It’s intended to help new business owners and entrepreneurs consider the full scope of running a business and identify functional areas they may not have considered or where they may need to level up their skills as they grow.

That said, it may not include the specific details or structure preferred by a potential investor or lender. If your goal with a business plan is to secure funding , check with your target organizations—typically banks or investors—to see if they have business plan templates you can follow to maximize your chances of success.

Our free business plan template includes seven key elements typically found in the traditional business plan format:

1. Executive summary

This is a one-page summary of your whole plan, typically written after the rest of the plan is completed. The description section of your executive summary will also cover your management team, business objectives and strategy, and other background information about the brand. 

2. Company overview

This section of your business plan will answer two fundamental questions: “Who are you?” and “What do you plan to do?” Answering these questions clarifies why your company exists, what sets it apart from others, and why it’s a good investment opportunity. This section will detail the reasons for your business’s existence, its goals, and its guiding principles.

3. Products or services offered

What you sell and the most important features of your products or services. It also includes any plans for intellectual property, like patent filings or copyright. If you do market research for new product lines, it will show up in this section of your business plan.

4. Market analysis

This section includes everything from estimated market size to your target markets and competitive advantage. It’ll include a competitive analysis of your industry to address competitors’ strengths and weaknesses. Market research is an important part of ensuring you have a viable idea.

5. Marketing plan

How you intend to get the word out about your business, and what strategic decisions you’ve made about things like your pricing strategy. It also covers potential customers’ demographics, your sales plan, and your metrics and milestones for success.

6. Logistics and operations plan

Everything that needs to happen to turn your raw materials into products and get them into the hands of your customers.

7. Financial plan

It’s important to include a look at your financial projections, including both revenue and expense projections. This section includes templates for three key financial statements: an income statement, a balance sheet, and a cash-flow statement . You can also include whether or not you need a business loan and how much you’ll need.

Business plan examples

What do financial projections look like on paper? How do you write an executive summary? What should your company description include?  Business plan examples  can help answer some of these questions and transform your business idea into an actionable plan.

Professional business plan example

Inside our template, we’ve filled out a sample business plan featuring a fictional ecommerce business . 

The sample is set up to help you get a sense of each section and understand how they apply to the planning and evaluation stages of a business plan. If you’re looking for funding, this example won’t be a complete or formal look at business plans, but it will give you a great place to start and notes about where to expand.

Lean business plan example

A lean business plan format is a shortened version of your more detailed business plan. It’s helpful when modifying your plan for a specific audience, like investors or new hires. 

Also known as a one-page business plan, it includes only the most important, need-to-know information, such as:

• Company description
• Key members of your team
• Customer segments

💡 Tip: For a step-by-step guide to creating a lean business plan (including a sample business plan), read our guide on how to create a lean business plan .

Benefits of writing a solid business plan

It’s tempting to dive right into execution when you’re excited about a new business or side project, but taking the time to write a thorough business plan and get your thoughts on paper allows you to do a number of beneficial things:

• Test the viability of your business idea. Whether you’ve got one business idea or many, business plans can make an idea more tangible, helping you see if it’s truly viable and ensure you’ve found a target market. 
• Plan for your next phase. Whether your goal is to start a new business or scale an existing business to the next level, a business plan can help you understand what needs to happen and identify gaps to address.
• Clarify marketing strategy, goals, and tactics. Writing a business plan can show you the actionable next steps to take on a big, abstract idea. It can also help you narrow your strategy and identify clear-cut tactics that will support it.
• Scope the necessary work. Without a concrete plan, cost overruns and delays are all but certain. A business plan can help you see the full scope of work to be done and adjust your investment of time and money accordingly.
• Hire and build partnerships. When you need buy-in from potential employees and business partners, especially in the early stages of your business, a clearly written business plan is one of the best tools at your disposal. A business plan provides a refined look at your goals for the business, letting partners judge for themselves whether or not they agree with your vision.
• Secure funds. Seeking financing for your business—whether from venture capital, financial institutions, or Shopify Capital —is one of the most common reasons to create a business plan.

Why you should you use a template for a business plan

A business plan can be as informal or formal as your situation calls for, but even if you’re a fan of the back-of-the-napkin approach to planning, there are some key benefits to starting your plan from an existing outline or simple business plan template.

No blank-page paralysis

A blank page can be intimidating to even the most seasoned writers. Using an established business planning process and template can help you get past the inertia of starting your business plan, and it allows you to skip the work of building an outline from scratch. You can always adjust a template to suit your needs.

Guidance on what to include in each section

If you’ve never sat through a business class, you might never have created a SWOT analysis or financial projections. Templates that offer guidance—in plain language—about how to fill in each section can help you navigate sometimes-daunting business jargon and create a complete and effective plan.

Knowing you’ve considered every section

In some cases, you may not need to complete every section of a startup business plan template, but its initial structure shows you you’re choosing to omit a section as opposed to forgetting to include it in the first place.

Tips for creating a successful business plan

There are some high-level strategic guidelines beyond the advice included in this free business plan template that can help you write an effective, complete plan while minimizing busywork.

Understand the audience for your plan

If you’re writing a business plan for yourself in order to get clarity on your ideas and your industry as a whole, you may not need to include the same level of detail or polish you would with a business plan you want to send to potential investors. Knowing who will read your plan will help you decide how much time to spend on it.

Know your goals

Understanding the goals of your plan can help you set the right scope. If your goal is to use the plan as a roadmap for growth, you may invest more time in it than if your goal is to understand the competitive landscape of a new industry.

Take it step by step

Writing a 10- to 15-page document can feel daunting, so try to tackle one section at a time. Select a couple of sections you feel most confident writing and start there—you can start on the next few sections once those are complete. Jot down bullet-point notes in each section before you start writing to organize your thoughts and streamline the writing process.

Maximize your business planning efforts

Planning is key to the financial success of any type of business , whether you’re a startup, non-profit, or corporation.

To make sure your efforts are focused on the highest-value parts of your own business planning, like clarifying your goals, setting a strategy, and understanding the target market and competitive landscape, lean on a business plan outline to handle the structure and format for you. Even if you eventually omit sections, you’ll save yourself time and energy by starting with a framework already in place.

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Business plan template FAQ

What is the purpose of a business plan.

The purpose of your business plan is to describe a new business opportunity or an existing one. It clarifies the business strategy, marketing plan, financial forecasts, potential providers, and more information about the company.

How do I write a simple business plan?

• Choose a business plan format, such as a traditional or a one-page business plan. 
• Find a business plan template.
• Read through a business plan sample.
• Fill in the sections of your business plan.

What is the best business plan template?

If you need help writing a business plan, Shopify’s template is one of the most beginner-friendly options you’ll find. It’s comprehensive, well-written, and helps you fill out every section.

What are the 5 essential parts of a business plan?

The five essential parts of a traditional business plan include:

• Executive summary: This is a brief overview of the business plan, summarizing the key points and highlighting the main points of the plan.
• Business description: This section outlines the business concept and how it will be executed.
• Market analysis: This section provides an in-depth look at the target market and how the business will compete in the marketplace.
• Financial plan: This section details the financial projections for the business, including sales forecasts, capital requirements, and a break-even analysis.
• Management and organization: This section describes the management team and the organizational structure of the business.

Are there any free business plan templates?

There are several free templates for business plans for small business owners available online, including Shopify’s own version. Download a copy for your business.

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The Ultimate Guide to Writing a Nonprofit Business Plan

A business plan can be an invaluable tool for your nonprofit. Even a short business plan pushes you to do research, crystalize your purpose, and polish your messaging. This blog shares what it is and why you need it, ten steps to help you write one, and the dos and don’ts of creating a nonprofit business plan.

Nonprofit business plans are dead — or are they?

For many nonprofit organizations, business plans represent outdated and cumbersome documents that get created “just for the sake of it” or because donors demand it.

But these plans are vital to organizing your nonprofit and making your dreams a reality! Furthermore, without a nonprofit business plan, you’ll have a harder time obtaining loans and grants , attracting corporate donors, meeting qualified board members, and keeping your nonprofit on track.

Even excellent ideas can be totally useless if you cannot formulate, execute, and implement a strategic plan to make your idea work. In this article, we share exactly what your plan needs and provide a nonprofit business plan template to help you create one of your own.

What is a Nonprofit Business Plan?

A nonprofit business plan describes your nonprofit as it currently is and sets up a roadmap for the next three to five years. It also lays out your goals and plans for meeting your goals. Your nonprofit business plan is a living document that should be updated frequently to reflect your evolving goals and circumstances.

A business plan is the foundation of your organization — the who, what, when, where, and how you’re going to make a positive impact.

The best nonprofit business plans aren’t unnecessarily long. They include only as much information as necessary. They may be as short as seven pages long, one for each of the essential sections you will read about below and see in our template, or up to 30 pages long if your organization grows.

Why do we need a Nonprofit Business Plan?

Regardless of whether your nonprofit is small and barely making it or if your nonprofit has been successfully running for years, you need a nonprofit business plan. Why?

When you create a nonprofit business plan, you are effectively creating a blueprint for how your nonprofit will be run, who will be responsible for what, and how you plan to achieve your goals.

Your nonprofit organization also needs a business plan if you plan to secure support of any kind, be it monetary, in-kind , or even just support from volunteers. You need a business plan to convey your nonprofit’s purpose and goals.

It sometimes also happens that the board, or the administration under which a nonprofit operates, requires a nonprofit business plan.

To sum it all up, write a nonprofit business plan to:

• Layout your goals and establish milestones.
• Better understand your beneficiaries, partners, and other stakeholders.
• Assess the feasibility of your nonprofit and document your fundraising/financing model.
• Attract investment and prove that you’re serious about your nonprofit.
• Attract a board and volunteers.
• Position your nonprofit and get clear about your message.
• Force you to research and uncover new opportunities.
• Iron out all the kinks in your plan and hold yourself accountable.

Before starting your nonprofit business plan, it is important to consider the following:

• Who is your audience?  E.g. If you are interested in fundraising, donors will be your audience. If you are interested in partnerships, potential partners will be your audience.
• What do you want their response to be? Depending on your target audience, you should focus on the key message you want them to receive to get the response that you want.

10-Step Guide on Writing a Business Plan for Nonprofits

Note: Steps 1, 2, and 3 are in preparation for writing your nonprofit business plan.

Step 1: Data Collection

Before even getting started with the writing, collect financial, operating, and other relevant data. If your nonprofit is already in operation, this should at the very least include financial statements detailing operating expense reports and a spreadsheet that indicates funding sources.

If your nonprofit is new, compile materials related to any secured funding sources and operational funding projections, including anticipated costs.

Step 2: Heart of the Matter

You are a nonprofit after all! Your nonprofit business plan should start with an articulation of the core values and your mission statement . Outline your vision, your guiding philosophy, and any other principles that provide the purpose behind the work. This will help you to refine and communicate your nonprofit message clearly.

Your nonprofit mission statement can also help establish your milestones, the problems your organization seeks to solve, who your organization serves, and its future goals.

Check out these great mission statement examples for some inspiration. For help writing your statement, download our free Mission & Vision Statements Worksheet .

Step 3: Outline

Create an outline of your nonprofit business plan. Write out everything you want your plan to include (e.g. sections such as marketing, fundraising, human resources, and budgets).

An outline helps you focus your attention. It gives you a roadmap from the start, through the middle, and to the end. Outlining actually helps us write more quickly and more effectively.

An outline will help you understand what you need to tell your audience, whether it’s in the right order, and whether the right amount of emphasis is placed on each topic.

Pro tip: Use our Nonprofit Business Plan Outline to help with this step! More on that later.

Step 4: Products, Programs, and Services

In this section, provide more information on exactly what your nonprofit organization does.

• What products, programs, or services do you provide?
• How does your nonprofit benefit the community?
• What need does your nonprofit meet and what are your plans for meeting that need?

E.g. The American Red Cross carries out its mission to prevent and relieve suffering with five key services: disaster relief, supporting America’s military families, lifesaving blood, health and safety services, and international service.

Don’t skimp out on program details, including the functions and beneficiaries. This is generally what most readers will care most about.

However, don’t overload the reader with technical jargon. Try to present some clear examples. Include photographs, brochures, and other promotional materials.

Step 5: Marketing Plan

A marketing plan is essential for a nonprofit to reach its goals. If your nonprofit is already in operation, describe in detail all current marketing activities: any outreach activities, campaigns, and other initiatives. Be specific about outcomes, activities, and costs.

If your nonprofit is new, outline projections based on specific data you gathered about your market.

This will frequently be your most detailed section because it spells out precisely how you intend to carry out your business plan.

• Describe your market. This includes your target audience, competitors, beneficiaries, donors, and potential partners.
• Include any market analyses and tests you’ve done.
• Outline your plan for reaching your beneficiaries.
• Outline your marketing activities, highlighting specific outcomes.

Step 6: Operational Plan

An operational plan describes how your nonprofit plans to deliver activities. In the operational plan, it is important to explain how you plan to maintain your operations and how you will evaluate the impact of your programs.

The operational plan should give an overview of the day-to-day operations of your organization such as the people and organizations you work with (e.g. partners and suppliers), any legal requirements that your organization needs to meet (e.g. if you distribute food, you’ll need appropriate licenses and certifications), any insurance you have or will need, etc.

In the operational plan, also include a section on the people or your team. Describe the people who are crucial to your organization and any staff changes you plan as part of your business plan.

Pro tip: If you have an organizational chart, you can include it in the appendix to help illustrate how your organization operates. Learn more about the six types of nonprofit organizational charts and see them in action in this free e-book . 

Step 7: Impact Plan

For a nonprofit, an impact plan is as important as a financial plan. A nonprofit seeks to create social change and a social return on investment, not just a financial return on investment.

Your impact plan should be precise about how your nonprofit will achieve this step. It should include details on what change you’re seeking to make, how you’re going to make it, and how you’re going to measure it.

This section turns your purpose and motivation into concrete accomplishments your nonprofit wants to make and sets specific goals and objectives.

These define the real bottom line of your nonprofit, so they’re the key to unlocking support. Funders want to know for whom, in what way, and exactly how you’ll measure your impact.

Answer these in the impact plan section of your business plan:

• What goals are most meaningful to the people you serve or the cause you’re fighting for?
• How can you best achieve those goals through a series of specific objectives?

E.g. “Finding jobs for an additional 200 unemployed people in the coming year.”

Step 8: Financial Plan

This is one of the most important parts of your nonprofit business plan. Creating a financial plan will allow you to make sure that your nonprofit has its basic financial needs covered.

Every nonprofit needs a certain level of funding to stay operational, so it’s essential to make sure your organization will meet at least that threshold.

To craft your financial plan:

• Outline your nonprofit’s current and projected financial status.
• Include an income statement, balance sheet , cash flow statement, and financial projections.
• List any grants you’ve received, significant contributions, and in-kind support.
• Include your fundraising plan .
• Identify gaps in your funding, and how you will manage them.
• Plan for what will be done with a potential surplus.
• Include startup costs, if necessary.

If your nonprofit is already operational, use established accounting records to complete this section of the business plan.

Knowing the financial details of your organization is incredibly important in a world where the public demands transparency about where their donations are going.

Pro tip : Leverage startup accelerators dedicated to nonprofits that can help you with funding, sponsorship, networking, and much more.

Step 9: Executive Summary

Normally written last but placed first in your business plan, your nonprofit executive summary provides an introduction to your entire business plan. The first page should describe your non-profit’s mission and purpose, summarize your market analysis that proves an identifiable need, and explain how your non-profit will meet that need.

The Executive Summary is where you sell your nonprofit and its ideas. Here you need to describe your organization clearly and concisely.

Make sure to customize your executive summary depending on your audience (i.e. your executive summary page will look different if your main goal is to win a grant or hire a board member).

Step 10: Appendix

Include extra documents in the section that are pertinent to your nonprofit: organizational chart , current fiscal year budget, a list of the board of directors, your IRS status letter, balance sheets, and so forth.

The appendix contains helpful additional information that might not be suitable for the format of your business plan (i.e. it might unnecessarily make it less readable or more lengthy).

Do’s and Dont’s of Nonprofit Business Plans – Tips

• Write clearly, using simple and easy-to-understand language.
• Get to the point, support it with facts, and then move on.
• Include relevant graphs and program descriptions.
• Include an executive summary.
• Provide sufficient financial information.
• Customize your business plan to different audiences.
• Stay authentic and show enthusiasm.
• Make the business plan too long.
• Use too much technical jargon.
• Overload the plan with text.
• Rush the process of writing, but don’t drag it either.
• Gush about the cause without providing a clear understanding of how you will help the cause through your activities.
• Keep your formatting consistent.
• Use standard 1-inch margins.
• Use a reasonable font size for the body.
• For print, use a serif font like Times New Roman or Courier. For digital, use sans serifs like Verdana or Arial.
• Start a new page before each section.
• Don’t allow your plan to print and leave a single line on an otherwise blank page.
• Have several people read over the plan before it is printed to make sure it’s free of errors.

Nonprofit Business Plan Template

To help you get started we’ve created a nonprofit business plan outline. This business plan outline will work as a framework regardless of your nonprofit’s area of focus. With it, you’ll have a better idea of how to lay out your nonprofit business plan and what to include. We have also provided several questions and examples to help you create a detailed nonprofit business plan.

Download Your Free Outline

At Donorbox, we strive to make your nonprofit experience as productive as possible, whether through our donation software  or through our advice and guides on the  Nonprofit Blog . Find more free, downloadable resources in our Library .

Many nonprofits start with passion and enthusiasm but without a proper business plan. It’s a common misconception that just because an organization is labeled a “nonprofit,” it does not need to operate in any way like a business.

However, a nonprofit is a type of business, and many of the same rules that apply to a for-profit company also apply to a nonprofit organization.

As outlined above, your nonprofit business plan is a combination of your marketing plan , strategic plan, operational plan, impact plan, and financial plan. Remember, you don’t have to work from scratch. Be sure to use the nonprofit business plan outline we’ve provided to help create one of your own. 

It’s important to note that your nonprofit should not be set in stone—it can and should change and evolve. It’s a living organism. While your vision, values, and mission will likely remain the same, your nonprofit business plan may need to be revised from time to time. Keep your audience in mind and adjust your plan as needed.

Finally, don’t let your plan gather dust on a shelf! Print it out, put up posters on your office walls, and read from it during your team meetings. Use all the research, data, and ideas you’ve gathered and put them into action!

If you want more help with nonprofit management tips and fundraising resources, visit our Nonprofit Blog . We also have dedicated articles for starting a nonprofit in different states in the U.S., including Texas , Minnesota , Oregon , Arizona , Illinois , and more.

Learn about our all-in-one online fundraising tool, Donorbox, and its simple-to-use features on the website here .

Raviraj heads the sales and marketing team at Donorbox. His growth-hacking abilities have helped Donorbox boost fundraising efforts for thousands of nonprofit organizations.

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Live an Adventure: The Ultimate Guide to Active Family Vacations

Disclosure: Articles may contain affiliate links. As an Amazon Associate, we earn from qualifying purchases (at no additional cost to you). See our full disclosure here .

Last updated on August 6th, 2024 at 07:38 pm

What comes to mind when you think about your ideal getaway? While lounging by the pool definitely has its charm, there’s a whole world of adventure just waiting for families who are ready to trade relaxation for excitement.

For those yearning for a way to break free from the everyday and dive into something truly exhilarating, there’s no shortage of choices when it comes to adventurous, active family vacations. And, according to studies , it’s these shared experiences that boost happiness and create lasting family memories .

You can seek out unusual destinations, explore the great outdoors, stay on a working ranch, or for unforgettable views, hiking, or even white water rafting, visit a national park. Whatever you choose, family vacations that include exploring the world together can be a wonderful alternative to traditional getaways–helping you connect with your kids on a deeper level. 

So, are you ready to plan the ultimate ski trip, trek off into the wilderness, or create your own island-hopping loop by sailing in the Caribbean ? Before you do, check out these tips for creating the perfect active family vacation. 

Choose the Right Destination

The most important step in planning the ultimate adventurous family break is to choose the right destination. You want to find a place that offers outdoor activities for the entire family to enjoy, with a wide variety of things to do suited to all ages and abilities. It is worth thinking about what you and your kids like to do, and what sort of exertion you can all manage.

Here are a few ideas:

National Parks

National parks are a terrific place to start, with iconic destinations like Yellowstone, Yosemite, Joshua Tree, or the Grand Canyon combining thrilling activities with gorgeous landscapes and a range of fun activities like hiking, climbing, and wildlife watching. 

Mountain Resorts

Skiing, snowboarding, mountain biking, and rock climbing are just a few of the activities you can enjoy at a mountain resort, which makes it a great choice for an active family getaway. Immersing yourself in nature and testing your limits makes for a wonderful shared experience with your children.

Depending on how far you want to travel, resorts like Verbier in the Swiss Alps, Aspen in the Colorado Rockies, or Banff in Canada are perfect, with loads to do for adults and children alike. 

Beach Destinations

Heading to the beach doesn’t have to be all about relaxing on the sand. A beach trip can include all kinds of adventures. There are gorgeous destinations like Hawaii, the Caribbean, Australia’s Gold Coast, or my local favorite–North Carolina’s Outer Banks , that are perfect for water sports like surfing, snorkeling, sea kayaking, and more.

Plan Activities for All Ages

It is, of course, important that everyone enjoys themselves, which means your active adventure must cater to all ages, tastes, and abilities. The point of a family vacation is to spend time together after all, so make sure no one’s left out.

If you’re planning hikes, make sure to choose trails that aren’t too difficult, so all ages, from youngest to oldest can enjoy the beauty of nature together without feeling left out.

Or, when planning watersports, ensure that there’s a range of activities like kayaking, paddleboarding, tubing, and snorkeling so that everyone can participate at their own comfort level and ability.  

The last thing to remember is to pack carefully, and make sure you bring all the essentials.

Active vacations require flexibility in what clothes you are going to need, which means lightweight, versatile, moisture-wicking garments that can be layered depending on the weather. Accessories like hats and sunglasses are essential, and you might need sturdy, comfortable walking boots or water shoes. And, don’t forget the sunscreen!

Be prepared for illness or injury by taking along first aid supplies, especially when you’ll be venturing into remote areas. A basic first aid kit with bandages, antiseptic wipes, pain relievers, and any personal medications is a must. Consider adding a small emergency blanket and a whistle for safety.

Electronics like a portable charger, camera, and GPS device can enhance your experience, but remember to pack them smartly to avoid getting weighed down.

Wrapping Up

Planning an active family vacation is a fantastic way to break free from the everyday, bond with your family, and experience adventures that will create lasting memories.

As you plan your getaway, remember to choose a destination that offers a variety of activities suitable for all ages, plan to accommodate everyone and their abilities, and pack smart to ensure a smooth and enjoyable trip.

Whether it’s skiing down snowy slopes, hiking through breathtaking landscapes, or exploring the vibrant marine life in crystal-clear waters, the world is waiting for you! Embrace the thrill, cherish the moments, and make your next family vacation one filled with excitement, connection, and fun.

Also read: US National Parks Checklist, Map, & Free Printable Bucket List 5 Important Benefits of Family Vacations 5 Simple Tips for Healthy Travel + What to Include in your Travel Health Kit

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Creating a Restaurant Marketing Plan: The Ultimate Guide

Learn how to craft an effective marketing plan to entice guests and drive restaurant sales.

In the restaurant business, it's not enough to just make great food — you also need to be a savvy marketer . Once customers love your food, they will keep coming back, but how do you get them to try you in the first place? That's where a comprehensive marketing plan comes in, and this guide, including examples of restaurant marketing plans and a useful checklist, will help you understand why you need one and how to proceed.

What is a restaurant marketing plan?

A restaurant marketing plan is a strategic roadmap detailing how your business can proactively attract new customers and retain existing ones. To plan your most effective marketing strategies , you need to begin by researching and writing about your restaurant's mission, value proposition, and unique selling points (USPs). Eventually, your marketing plan can guide you in concert with this broader restaurant business plan . 

The benefits of a marketing plan for restaurants

There are multiple reasons why a robust and structured marketing plan can benefit your restaurant. 

1. Be efficient

A trial-and-error approach to marketing may sometimes get results, but that unpredictability can involve a lot of misplaced effort — and that means wasted time, money, and resources. A thorough restaurant marketing plan, with a deep dive into your priorities, is a way to bring efficiency to your marketing strategies in the same way a business plan does for the operational aspects of your business.

2. Reach new customers

How can you entice curious new consumers and then convert them into loyal regulars? This is the question that should be top-of-mind for any restaurant owner, and it's precisely the question that a marketing plan can help answer. Taking time to create your plan is one of the best ways to assess which marketing channels can drive results for your business, how much you should invest in them, what success metrics you should aim for, and whether you need to alter or adjust your current promotions.

3. Gain a competitive advantage

The most compelling reason to create a restaurant marketing plan may also be the most straightforward: the hospitality industry is a saturated and competitive space, and there's little doubt that your most successful competitors are devising their own marketing plans to stay ahead. Having a strategic document that reiterates your mission and value proposition sets you up to differentiate your business, address your target audience, and stay current in a fast-paced industry.

Components of an effective restaurant marketing plan

The foundation of a restaurant marketing plan is understanding who you are as a business and what you want to accomplish.

Step 1: Be S.M.A.R.T. when setting goals

What targets does your business need to hit in order to be successful and sustainable? And how can you achieve those objectives? As you set goals, make sure they follow a S.M.A.R.T. framework:

Specific: Don't fall into the trap of making your objectives too broad or general. Narrow your focus.

Measurable: Establish how exactly you'll be able to track and benchmark any ongoing progress.

Achievable: Goals should always be realistic. If you're not pragmatic, you may be disappointed.

Relevant : Consider your overall mission for your restaurant and plan accordingly.

Time-bound: Along with being measurable and achievable, effective goals require defined deadlines.

Step 2: Conduct a detailed competitive analysis

For restaurateurs, conducting a SWOT analysis is an invaluable exercise. SWOT stands for strengths, weaknesses, opportunities, and threats, and it's a great tool for figuring out goals because it reveals where your business excels and where it struggles compared to other restaurants. To conduct a SWOT analysis for your business, consider the following:

Strengths are the internal aspects of your business that differentiate you in a positive way, like signature dishes or distinctive decor.

Weaknesses are internal factors that can negatively impact your business and hold you back, such as poor customer reviews or a lack of online presence.

Opportunities are external circumstances that you don't control but could strategically capitalize on. These can include shifting consumer preferences or social media trends.

Threats are external factors in the broader landscape that potentially pose risks. In order to decide which goals to prioritize in this first iteration of your marketing plan, you need to be ruthlessly honest about your business' problems and prospects.

But your SWOT analysis can also extend to your industry peers. Choose three to five competitors in your market that present the biggest challenge to your business, and conduct a SWOT analysis on them too. This time, how you define strengths, weaknesses, opportunities, and threats will be different. Consider these types of questions:

What are these restaurants doing well, and how could you outperform them?

What do their guests complain about, and how will you avoid these issues?

Are there ways to differentiate yourself when considering competitor weaknesses?

Based on their strengths, is there anything they do that you shouldn't compete with?

Completing your competitive analysis should help you better understand your restaurant's differentiators — and ultimately, these are the parts of your business you want to market.

Step 3: Understand your target customers

A key aspect of your brand is your ideal target customer. Marketing will be much more successful if it's honed to the particular demands, desires, and preferences of the customers who are most likely to order from your restaurant.

Relevant information to consider includes:

Demographic indicators such as age, income, and the neighborhood where they live

Psychographic traits like values and reasoning for dining out or ordering in

Behaviors such as how they engage with your business

Nearby attractions (offices, colleges, retailers, other restaurants, etc.) 

This data can be collected through conducting customer surveys and interviews, reviewing your sales analytics to identify trends, and by researching demographic information via online real estate databases or industry resources like the National Restaurant Association. Look for common denominators to inform your restaurant brand personality and positioning .

Step 4: Prioritize your website 

Think of your restaurant website as your second storefront — you want your customers to take notice when they see it. Just like your restaurant's physical appearance, your digital presence has the power to drive demand and increase business.

Your restaurant website should provide customers with essential information like your address and contact information, hours of operation, and menu. It should also be designed to be responsive or adaptive, meaning the layout seamlessly changes depending on the customer's device.

There are many methods you can incorporate into your marketing plan to build a high-converting, high-performing website that attracts traffic and generates engagement. Search engine optimization (SEO) involves refining keywords that customers often search for, such as the type of cuisine you specialize in and the area where you're located (e.g., "best tacos in San Diego"). Explore website optimization strategies that align with your S.M.A.R.T. goals.

But perhaps the most important purpose of a website is to serve as a hub for online orders , so your restaurant can reach all the prospective customers who want to buy what you're selling but may not want to dine in.

Step 5: Crunch the numbers and budget wisely

There is no one standard approach for planning a marketing budget. Every restaurant has its own circumstances, considerations, and objectives. If you're new to the scene, you may need to spend more on marketing to increase your brand's visibility. And while it's tempting to reduce a marketing budget when margins are small and money is tight — that's when investing in strategies to attract new customers and engage existing ones is more critical than ever.

Step 6: Optimize your online presence

You've built a website that can adeptly convert casual prospects into paying customers — but how do you convince people to visit your site in the first place? 

Start by claiming your Google Business Profile and creating a Google My Business Listing. This appears as soon as people search for your restaurant online, and provides fundamental information — such as business hours, menu, photos, and reviews. Without this necessary online presence establishing your credibility and availability, curious consumers could move on to researching more enticing competitors.

Step 7: Create engaging social media content

Social media marketing is a key priority for restaurants today. Facebook supports a range of formats, from long-form text to captioned photos and videos, and also lets you pay for campaigns where you customize how much to spend, how long the ads should run, and the audience segments to reach. 

Instagram and TikTok are favorites for sharing food content. While Instagram's gallery grids are a great way to show off your restaurant, your menu, your customer experience, and your company culture, short-form video is also highly effective, and this is where both Instagram and TikTok deliver value. Be intentional in how you add captions and hashtags to your content so that they're relevant to your menu, service offerings, location, and target audience.

Influencer marketing is another social media strategy that could help garner increased attention for your business. By partnering with the right influencers, you can reach a broader audience beyond traditional advertising channels.

Step 8: Cultivate customer loyalty

Repeat business is a restaurant's bread and butter, and loyalty programs are an effective way to encourage customers to return. Modern digital loyalty programs can be integrated with many point-of-sale (POS) systems. Customers are able to accrue points, which are typically determined by what they order or how much they spend.

Email marketing for restaurants needs to be handled with care — when done right, customers appreciate receiving exclusive offers, specials, or discounts from their favorite restaurants. When optimizing your website to double as an e-commerce platform for online orders and delivery, choose a provider that will let you design and deploy loyalty programs and promotions through your POS.

Step 9: Manage reviews — and your reputation

Just as you claimed your Google My Business page, you'll also want to claim your page on the main restaurant review sites, where more and more customers are doing their preliminary research.

In many ways, these sites function as additional advertising and help to further boost your business' online presence. Make sure you add appetizing photos and maintain current contact and location information. Then respond to reviews to demonstrate that your restaurant cares about its guests.

Whether a review is positive or negative, it warrants a reply.

Positive reviews: Express your sincere appreciation — you might earn a repeat customer.

Negative reviews: Remain respectful to show you care about the customer's experience. Consider offering them a discount to return, or explain steps you've taken to address the issue in their comment. 

A restaurant marketing plan matters for success

An effective restaurant marketing plan takes work, but it means your business is engaging customers all day, every day — even when your store isn't open. Your performance on search engines, your presence on social media platforms and review sites, and any online advertising campaigns are all working 24/7 to build visibility for your brand. Take everything you learned from your SWOT analysis, market research, and customer research, and determine actionable steps for accomplishing your specific, measurable, achievable, relevant, and time-bound goals. 

Once you've determined your objectives and the results you want to attain, the next step is to implement the strategic initiatives to hit your targets. The 2024 Restaurant Marketing Calendar & Toolkit is an invaluable resource for making this happen, with tools, tips, and templates to streamline the planning process.

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What Is Vector Search? The Ultimate Guide

Jeffrey Erickson | Content Strategist | August 5, 2024

In This Article

What Is Vector Search?

Vector search explained, why is vector search important, how does vector search work, traditional vs. vector search, benefits of vector search, challenges of vector search, vector search use cases, vector search examples, future of vector search, vector search made easy with oracle ai vector search, vector search faqs.

Our daily lives are filled with vector searches going on behind the scenes. Looking for a new show to stream? The options suggested to you are most likely generated by a vector search–based engine. Making bank transactions online? That system may use vector search to detect anomalies that hint of fraud. Using a chatbot in your work? Vector search helps the LLM powering the system get answers right, even about day-to-day operational information.

Let’s learn how vector search’s fast and accurate yet nuanced data storage and search method works and where it might lead us in the future.

Vector search is a technique used in information retrieval and machine learning to quickly locate items in a large data set. It does this by storing and grouping items based on their vector representations. These representations, also called vector embeddings, are strings of numbers that correspond to the many attributes of an item, whether that item is a word, document, image, or audio or video file.

The vector embedding for an image of a dog in the park, for example, will describe the dog’s white color, its squat shape, and possibly its breed. It will also describe the wooded setting, the cloudless sky, and myriad other attributes of the image. All these attributes are assigned numbers in vector embeddings, which can be hundreds or even thousands of numbers long and are generally created by sophisticated machine learning algorithms running on neural networks. Now, a computer running a vector database can use the embeddings to group, compare, and quickly locate items based on nuanced, hierarchical relationships.

Vector search is sometimes called “similarity search” or “nearest neighbor search” because of the way it facilitates grouping and matching of items to speed the search process. So, if someone asks for an image of a “happy dog in a park,” the vector search system will quickly and accurately find images stored near those words in the vector database index.

In business, vector embeddings can be applied to documents, products, customer communications, and other commercial assets and blended with business data, such as up-to-date pricing or availability records. When vector search is combined with a technology called retrieval-augmented generation, or RAG, it allows powerful large language models (LLMs) to deliver answers informed by an organization’s operational data. That brings generative AI to bear on a variety of business use cases, including sales, research, product development, and many others.

Key Takeaways

• Vector search enables efficient and scalable search in high-dimensional data, allowing for fast retrieval of similar items from large data sets.
• In vector search, numerical representations are assigned to the features or attributes of an item. This is most often done using AI models with sophisticated algorithms.
• Vector search employs databases with specially designed indexes that allow them to find items based on their “proximity” in the index. This differs from traditional search methods that often require exact keyword matching.
• Vector search is a key component of popular online services, such as search engines, recommendation systems for retail products or streaming suggestions, and the anomaly detection common in finance and cybersecurity.
• More recently, vector search is combined with a technology called retrieval-augmented generation , or RAG, to help businesses combine the power of generic large language models with their own corporate data stores.

For vector search to work, items in a data set must first be assigned vector embeddings and indexed in a way that facilitates fast retrieval of similar items. Vector embeddings are strings of numbers that correspond to the many attributes of an item—whether that item is a word, document, image, or video or audio file. Embeddings are assigned by sophisticated machine learning algorithms and allow for searches that focus on the attributes of an item rather than finding results based on keywords.

In practice, you might ask an LLM-powered chatbot to show you bikes that are good for riding on dirt and trails. That query would be assigned a vector embedding that corresponds to the attributes of those words. A vector search would then return bikes with vector embeddings that rank as similar to the vector embeddings for those words. The result would be populated with mountain bikes or gravel bikes.

Here’s how that works: When your query is made, the words of the query are transformed into a vector embedding and placed in a vector database in the same high-dimensional space as the items in the bike data set. High-dimensional data refers to the many features of an object, not the object itself. For example, a bike’s features could be represented by vectors for its color, frame material, tire type, handlebar configuration, crankset type, brake type, price, or other factors. The database indexes this collection of features in a high-dimensional space where it can use distance metrics and similarity measures to return bikes with features close to your query words in the index.

In this way, a retailer could use a vector database to match people with bikes that suit their needs. The seller can also pair that search result with business data in its relational database for up-to-date pricing and availability. In an increasingly popular scenario, the business would use RAG technology to let an LLM-powered chatbot search through a large database of bikes in inventory, plus up-to-date business data using a multimodel database that handles relational data and vector data as a native data type. This simplifies the architecture so customers can use natural language prompts to interact with the business.

Vector search is important because it plays a starring role in a wide variety of applications that benefit from quickly finding similar items and analyzing high-dimensional data. This constitutes a growing number of use cases, including the emerging imperative to help businesses take advantage of generative AI . When combined with RAG, vector search can securely guide a generic LLM through a trove of business documents and up-to-date operational data to provide outputs that are relevant to stakeholders. The result is a conversational front end on business data that delivers significant value. Benefits can include improvements in customer service, sales prospecting, human resources, content marketing, and many other use cases.

Vector search techniques are designed to handle large-scale data sets efficiently, facilitating the lightning-fast comparison of an item’s vector representation against the rest of the data set. This leads to two other important use cases: recommendations and anomaly detection.

Vector search is a key component of the personalized recommendation systems now common in online retail and entertainment streaming. It allows these applications to quickly find and recommend items based on user preferences, demographics, or habits, and thus, if all goes as planned, enhance the user experience and increase customer engagement. Vector search has also become a vital technology in domains where unusual or dissimilar items must be immediately spotted and alerted on, such as fraud detection, network security, or quality control.

In vector search, items in the database are assigned vector embeddings that describe their attributes and their meaning. Then the search query is also assigned a vector embedding. The database matches those up and returns items that most closely resemble the vector embedding of the search query.

This graphic helps to visualize the process:

How Do Vector Databases Work?

Vectors are arrays of numbers that represent the many attributes of an item, whether that item is a word, a document, an image, a song, or a movie. A vector database puts these vectors in a special index that groups similar items—enabling lightning-fast “similarity searches.” Let’s see how it works to recommend just the right movie.

Viewer vectors

The database stores vectors that describe customers based on their demographics, preferences, and past choices.

Movie vectors

The database stores vectors that describe each movie, such as its location, language, genre, and actors and then indexes similar movies “close” together.

Our viewer’s vector brings it “close” to vectors of many sci-fi movies in the database index.

Video recommendations

The database returns the closest matches, and the recommendation system displays them for the viewer to peruse.

Traditional search and vector search differ in their approaches to finding and retrieving information from databases. Traditional search, commonly used in relational databases, is very efficient when sifting through data structured into rows and columns full of, for example, product or customer data. Vector search, in contrast, efficiently searches and finds similar items in unstructured data, such as text, images, and video and audio files.

Key Differences

Here are a few of the ways traditional search and vector search differ. Knowing the key characteristics is important when choosing the right database technology for your organization.

Dimensionality. Traditional search methods are designed for low-dimensional data, where the number of attributes or features is small. Think of a city’s average high and low temperature on a given date. Vector search, on the other hand, is specifically designed to handle high-dimensional data, where the number of dimensions or attributes for a given item can be very large.

Similarity vs. exact match. Traditional search focuses on finding exact or approximate matches based on keywords or textual similarity—that is, the semantics or overall message of the text. Vector search, on the other hand, aims to find similar items by calculating feature similarity between the query item and the items in the data set. It does this using distance metrics or similarity measures that evaluate how closely data points represented as vectors resemble one another. Vector search allows for more nuanced and flexible retrieval of similar items rather than relying solely on exact matches.

Scalability. Traditional search methods can struggle with scalability when dealing with large, high-dimensional data sets. Vector search techniques, on the other hand, use specialized data structures and algorithms that enable fast retrieval of similar items, even in massive data sets.

Vector search is a powerful technique found in a variety of applications, such as recommendation systems and anomaly detection engines. The overarching benefit is its ability to provide much more accurate and relevant search results compared with traditional keyword-based search methods. This can result in improved user experience, increased engagement, and ultimately higher conversion rates for businesses. Here are some common examples of benefits.

• Scalability. Vector search takes advantage of optimized data structures and algorithms to enable fast retrieval of likely matches—even in massive data sets. This scalability is vital for applications dealing with large amounts of unstructured data.
• Efficient retrieval. By representing items as vectors and using specialized data structures and algorithms, vector search techniques enable efficient retrieval of similar items from large data sets. This is essential for content and retail recommendation systems, as well as searches for unstructured data, such as images or text.
• Flexibility. Unlike traditional search methods that rely on exact or approximate matches, vector search quickly calculates the similarity between the meaning of a search and the items in a data set. This allows for more nuanced and flexible retrieval of relevant items.
• Semantic understanding. A vector representation can capture complex relationships and similarities between items based on their features or attributes. Semantic understanding allows for more accurate and meaningful retrieval of similar items, even when the items may not have explicit similarities.
• Personalization. Vector search helps retailers or streaming services find and present similar items based on user preferences or item attributes. This personalization has been proven to increase engagement and sales and lead to a better customer experience.
• Reduced dimensionality. Over time, vector search techniques can eliminate irrelevant or redundant dimensions in vector embeddings, allowing future searches to focus on the most informative vectors for an application’s needs. This reduction in dimensionality can improve search performance by paring down the number of dimensions being considered in the search.
• Support for complex queries. Instead of relying on the keyword matching or exact matches used in traditional search techniques, vector search enables similarity searches to be combined with traditional search techniques, such as SQL WHERE clauses, table joins, analytics, property graphs, and spatial and JSON queries.

While vector search offers significant benefits, it’s important to be aware of possible shortfalls in the technology and employ appropriate strategies to overcome them. In general, vector search can be challenging due to the complexity of working with high-dimensional data, as we’ll discuss. Ensuring the accuracy and relevance of search results can also be a challenge as noise and outliers can impact the effectiveness of the technology.

Overall, effectively using vector search requires an understanding of the underlying data and algorithms and an ability to tackle problems inherent in the technology, including the following:

• High dimensionality. Vector search works with high-dimensional data. That poses a challenge because as the number of dimensions increases, the cost of calculating the vector distance also rises. That can decrease search performance and has been called the “curse of dimensionality.” There are techniques to help mitigate this challenge, such as dimensionality reduction via vector quantization, which is a lossy data compression technique used in machine learning. It works by mapping vectors from a multidimensional space to a finite set of values in a lower-dimensional subspace, using clustering algorithms to identify similar vectors.
• Semantic gap. Vector search relies on vector representations of items to calculate similarity. There can, however, be a gap between the vector representation and the actual attributes of an item. For example, two bikes might be semantically similar but have different vector representations due to variations in the vectorization process. Bridging this semantic gap can mean going back to the vectorization process and capturing more accurate semantic features of items in their vector representations.
• Garbage collection. Vector search relies on vector indexes to organize and search large data sets of high-dimensional data. To work efficiently, however, obsolete information must be removed from the index when objects or values change. This problem has long been solved in relational databases, but it’s an ongoing challenge for vector indexes.
• Vector quality. Vectors will be only as good as the data they’re derived from. Vectors are created by ML models specifically for that purpose, and different models will produce higher quality vectors for certain types of data. Knowing the type of data being stored, such as text, images, or audio files, will help identify the right embedding model to use.
• Scalability. While vector search techniques are designed to handle large-scale data sets, extremely large or rapidly growing data sets can still be a problem. They can stretch memory requirements and lengthen search times. A mix of approaches are used to address this challenge, including more efficient indexing structures, distributed computing, and parallel processing techniques.
• Cold start problem. When a new item is introduced to a data set, it may not have a well-defined vector representation, or it may have limited data available for similarity calculations. This can make it difficult to accurately identify similar items, a situation referred to as “the cold start problem.” In vector search-powered recommendation engines, workarounds can include content-based recommendations, or when available, combining user-based content and item-based content to mitigate the cold start problem.
• Interpretability. Because vector representations are strings of numbers that are not easily interpreted by humans, it can sometimes be difficult to understand why certain items are considered similar by the vector search process. In areas where the explainability of AI choices is important, such as in the legal or medical fields, this lack of interpretability can be a limitation. Techniques that help people visualize the data analysis behind vector search results can help with interpretability.

The versatility of vector search makes it valuable across various domains. By enabling efficient retrieval, recommendation, analysis, and decision-making based on similarity calculations, vector search is giving rise to entirely new use cases as well.

• Information retrieval. By representing documents or web pages as vectors, vector search enables rapid semantic search of unstructured data. This is great for businesses who want to pair vector search with RAG to let generic LLMs serve up answers informed by the business’s own knowledgebase .
• Recommendation systems. Vector search is widely used in recommendation systems to provide personalized recommendations to users. Applications in areas such as customer experience marketing use vectors to represent user preferences and item attributes, allowing vector search to identify similar items and make recommendations.
• Content-based filtering. Content-based filtering applies vectors to items and their content attributes. This allows vector search to identify items with similar content. This is often used by vector-enabled databases as a technique in recommendation systems.
• Image and video search. Vector search is commonly used in image and video search. By representing images or videos as vectors, a vector search process, such as Google Images , can identify similar visual patterns and retrieve relevant content.
• Natural language processing (NLP). Vector search is used in NLP for tasks such as document clustering, topic modeling, and semantic search. By representing text documents as vectors, a vector search application, such as a chatbot or digital assistant , clusters documents that are similar by considering topic area or other criteria. That allows AI models to quickly retrieve semantically similar documents.
• Anomaly detection. By representing normal patterns as vectors, vector search can identify outliers that indicate anomalies or abnormalities, making it useful for anomaly detection in domains including construction , manufacturing quality control, network security, and fraud detection.
• Genomics and bioinformatics. By representing genetic sequences or biological structures as vectors, vector search offers an efficient way to compare and analyze biological data, making it useful in tasks such as DNA sequence alignment, protein structure comparison, or gene expression analysis.
• Ecommerce and retail. Vector search is used in many common ecommerce and retail applications for product recommendation and personalized shopping experiences. It does this by representing products and search criteria as vectors, then uses similarity search to identify products and recommend relevant options.
• Music and audio analysis. Vector search is used in music and audio analysis for tasks such as music recommendation, audio similarity search, or genre classification. Popular services, such as Spotify , do this by representing music or audio signals as vectors and then employing similarity search to identify similar songs, recommend related music, or classify audio based on similarity calculations.
• Healthcare and medical imaging. Vector search has become an important tool in healthcare and medical imaging. For example, vector search applications represent medical images or patient data as vectors and then identify similar images, assist in diagnosis, or find patients with similar characteristics for personalized treatment.

Once you start noticing, you’ll see vector search throughout your online experiences and beyond. It’s in the search results you peruse, the movies that are recommended to you, the product suggestions you see, and much more.

Here are a few more well-known examples.

• Google Search. As you might imagine, Google makes extensive use of vector search technology for semantic searches and to power recommendation engines. You can find it in services such as Google Image Search, YouTube, and Google Play. In addition, Google has integrated a technology it calls BERT (Bidirectional Encoder Representations from Transformers) into its search algorithm. BERT is, Google notes, a form of vector search where queries and content are transformed into vectors that semantically represent their meanings. This allows them to better match queries with more relevant results.
• Netflix Recommendation System. Netflix owes a degree of its success to an efficient and accurate recommendation system. The system continuously collects and analyzes information based on the behaviors and preferences of one viewer and predicts what they’ll want next based on their similarity with other viewers. This is done by assigning vectors to these criteria and using a vector database to note the similarity between users and return most similar selections.
• Amazon Product Search. Accurate product search and recommendations on Amazon’s sites are the result of continual experimentation and refinement. Originally derived from a content-based filtering system based on user likes or favorite selections, the recommendation engine now relies on vector representations. These give Amazon the ability to capture complex relationships and similarities between products or customers, allowing the company to unearth hidden connections and provide recommendations that closely align with an up-to-date view of the customer’s preferences.
• Spotify Discover Weekly. How does Spotify understand your musical tastes so keenly? It’s the result of several techniques compounded to understand you and people like you, so you can broaden one another’s musical horizons. There are different AI models used throughout the system, including LLMs to analyze text; audio models that analyze and categorize audio files; and collaborative filtering, which groups listeners based on their behavior. Spotify AI experts apply vector representations to describe listeners and audio tracks using strings of numbers that a computer can quickly read and use to compare them. This is done in a vector database, which places the vectors in a special index where it becomes quickly obvious which are “close together” and, quite likely, finding your next favorite song.
• Pinterest Visual Search. Visual search is a core competency of vector search technology, and Pinterest puts it to good use. According to Pinterest, its current visual search technologies use vector embeddings to power the match systems that let users browse 200 billion plus ideas from any image.
• Shazam Music Recognition. Shazam seems like magic. But the system is just really good at applying a technique called audio fingerprinting, which is similar to a vector-based similarity search. That’s how a 20-second audio clip—intro, verse, chorus, doesn’t matter—tells you exactly what song you’re listening to. Still feels like magic.
• Facebook Similarity Search. It’s in the name. Facebook uses vector search, aka similarity search, for tasks throughout its consumer and commercial services. These include image retrieval, recommendation systems, and natural language processing.

The future of vector search is wide open. Its central role as an enabler of generative AI for business means that research and development will only accelerate. As a result, search techniques that contribute to natural language processing tasks, such as semantic search and document clustering, should evolve and improve.

Vector search will also play a bigger role in personalized healthcare and precision medicine, as it helps practitioners delve more deeply into medical images and genomic information and explore vast troves of anonymized patient data. And, of course, when you think of the future—even the near future—you think about autonomous systems, such as self-driving cars, robotics, and intelligent agents .

These are all on the cusp of wider adoption, and vector search will enable the accurate, millisecond similarity calculations required to make them a reality.

There is no better partner for your vector search system than Oracle—and no better vector database than Oracle Database 23ai . With Oracle, you can easily bring the power of similarity search to your business data without having to manage and integrate multiple databases. This simplifies data management and enhances data security by maintaining a single database for storage, retrieval, and analysis.

The system also makes it easy to bring generative AI to your vector and business data using RAG. Now, powerful LLMs can deliver answers to natural language questions informed by your organization’s information and operational data. This can drive more personalized customer service, higher sales efficiency, smoother employee onboarding, and many other benefits.

Try Oracle AI Vector Search using Oracle Database and see how easy it can be to combine your customer data, product data, and AI search for new applications or as an extension of your existing applications. Start learning now with Oracle’s AI Solutions Hub .

Curious how your peers are using vector search and other emerging technologies now? Discover 10 top use cases for AI natural language, pattern recognition, and intelligent decision-making.

Does Google use vector search?

Google uses vector search throughout its offerings, including Image Search and YouTube recommendations. Increasingly, it’s bringing vector-based search into its core search functionality through a technology it calls BERT, or Bidirectional Encoder Representations from Transformers, which enables more accurate search returns based on semantic searches.

What is the difference between vector search and elasticsearch?

Elasticsearch is used to search and analyze text by leveraging a technology called inverted indexes, which make it easy to take words or phrases and know which documents contain them, and where. Vector search, on the other hand, uses vector indexes to enable lightning-fast similarity searches among unstructured data sets containing documents, images, video and audio files, and more.

What is vector search vs. keyword search?

Vector search and keyword search work on different principles. Keyword search is more common in structured data that’s stored in rows and columns. The system scans columns looking for words that exactly or closely match those in the search query. Vector search takes a much more nuanced approach, storing vectors that describe unstructured data and using special indexes to find related items based on a “nearest neighbor” result. Some databases are proficient at both.

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The Ultimate Guide on How To Start a Lawn Mowing Business

Like a well-tended garden, a lawn mowing business starts with planting the right seeds. With careful nurturing and a little hard work, you can watch your dream blossom into a thriving business.

Starting a lawn mowing business can be both rewarding and lucrative. The best part? You don’t need a fortune to get started. With just a mower, some basic tools, and a willingness to get down and dirty, you can start building your green empire.

In this guide, we’ll walk you through what you need to know about how to start a lawn mowing business. Learn everything from market research and buying lawn care equipment to finding customers.

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How Much Is It To Start a Lawn Mowing Business?

One of the best things about starting a lawn mowing business is that you can start with a small budget and grow at your own pace. Your initial startup costs can be surprisingly low, especially if you already own some basic lawn care equipment. As your business expands and you take on bigger jobs, you can invest in more advanced tools and machinery.

To get started, you might only need a reliable push mower, which can cost just a few hundred dollars. Add in some basic tools like a rake, weed eater, and leaf blower, and you could be looking at less than $1,000 for your initial setup.

But as you expand, you might decide to invest in more powerful equipment. A commercial-grade riding mower is one of the biggest expenses. These can run you $10,000 or more, but they open up the opportunity to take on much bigger jobs.

Another major expense to consider is transportation. While you can start by using your personal vehicle, you may eventually need a dedicated truck or trailer. This can add $15,000 or more to your budget.

So, starting a lawn mowing business can cost anywhere from a thousand dollars to upwards of $30,000 when you factor in heavy-duty equipment and a work truck.

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What Do You Need To Start a Lawn Mowing Business?

You can start a lawn mowing business with a small inventory of just a mower. But having the right tools and resources will make a big difference to your success. As your business grows, you’ll likely add more lawn care equipment to your arsenal.

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Let’s take a look at the essentials you’ll need to get your lawn care company off the ground:

• Lawn Mower . Start with a reliable push mower. Upgrade to a commercial mower as the business grows.
• Transportation . When you start taking on bigger jobs with bigger equipment, you’ll need a reliable truck or van.
• Basic Lawn Care Tools . These include tools like rakes, edgers, and pruning shears.
• Protective Gear. Stay safe with work gloves, safety glasses, and ear protection.
• Business Licenses and Permits . Check local requirements for operating a business in your area.
• Insurance . Get general liability insurance at a minimum to protect your business.
• Accounting Software . Use digital tools to streamline your financial records and invoices.
• Marketing Materials . Create business cards and flyers to promote your services.
• Basic First Aid Kit . Have supplies handy to take care of minor injuries that might occur on the job.

Remember, you don’t need to buy everything at once. Start with the basics and add more as your business grows and your needs change.

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Starting a Lawn Care Business: Step-By-Step

So, is it hard to start a lawn care business? Starting any business takes a major investment of time and effort. But with patience and dedication, you’re on your way to becoming a successful lawn care professional.

Here are the key steps involved in starting your lawn care business:

1. Research Your Local Market

Before diving in, check out other lawn care businesses in your area. What services do they offer? How much do they charge? This information helps you spot ways to stand out and set competitive prices.

2. Create a Business Plan

A well-thought-out business plan is like a roadmap for your company. Yours should outline your services, target customers, and growth strategy. Having a detailed plan helps you guide decisions instead of making things up as you go along, avoiding mistakes. It can also help if you want to secure funding down the line.

3. Set Up Your Business Structure and Get Licensed

Decide whether you want to be a sole proprietor, limited liability company (LLC), or something else. Each business structure has different legal and tax implications. Finally, get any necessary business licenses and permits required in your area.

4. Develop Your Brand

Create a catchy business name and design an easily recognizable logo. These help customers remember you and make your business look professional.

5. Establish Your Services and Rates

Decide which lawn care services to offer and how much to charge for them. Will you just mow lawns? Or will you provide additional services like weeding or fertilizing? Don’t forget to research local rates to ensure your prices are competitive.

6. Create a Budget

Plan out your expenses and expected income. This helps you manage your money and ensure you’re charging enough to make a profit. Include costs like equipment, fuel, and marketing.

7. Get the Right Equipment

Start with the basics like a lawn mower, trimmer, and safety gear. As your business grows, you can invest in more specialized equipment.

8. Set Up a Marketing Strategy

Decide how to attract customers. This might include creating flyers, setting up a simple website, or using social media. Word-of-mouth referrals are also powerful in the lawn care business.

9. Find Your First Customers

Start by offering your services to friends, family, and neighbors. Ask satisfied customers for referrals. Consider offering a discount for first-time customers to attract new business.

10. Consider Hiring Help

As your business expands, you might need to hire employees to keep up with demand. Plan ahead for this growth and understand the legal requirements of becoming an employer.

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7 Tips To Succeed in Your Lawn Mowing Business

With hard work and great service, your business can flourish just like the lawns you’ll be caring for. But to truly thrive in this competitive field, go the extra mile. Here are some valuable tips to help your business grow and stand out from the crowd:

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• Offer a Range of Services . Don’t just stick to mowing. Consider adding services like edging, fertilizing, and seasonal clean-ups to attract more customers and increase your earnings.
• Invest in Quality Equipment . Good tools make for good work. Buy the best equipment you can afford to ensure efficient, high-quality service.
• Set Competitive Prices . Research what other lawn care businesses in your area charge. Price your services to be competitive while still making a profit.
• Be Punctual and Reliable . Always show up on time for appointments. If you’re running late, communicate with your clients. Reliability builds trust and leads to repeat customers.
• Focus on Customer Service . Be friendly, professional, and responsive to clients’ needs. Great customer service can set you apart from the competition and get you valuable word-of-mouth referrals.
• Continuously Improve Your Skills . Stay updated on the latest lawn care techniques and trends. Consider getting certifications to enhance your expertise and credibility.
• Use Software to Manage Your Customers . Invest in lawn care business software to help you schedule appointments, track payments, and manage customer information efficiently. This saves you time and helps your business run smoothly as it grows.

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Stay Organized and Manage Customers on the Go

You might know how to manage a lawn, but what about managing your customers? Use Joist to store, access, and export customer information from anywhere, at any time. Keeping track of customers and jobs just got that much easier.

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The Ultimate Guide to Becoming a Medical Specimen Courier in 2024

As the healthcare industry continues to grow and evolve, the need for efficient and reliable medical courier services has never been greater. Medical couriers and couriers for pharma play a crucial role in ensuring that important medical specimens, documents, and supplies are transported safely and securely between healthcare facilities. In 2024, the demand for skilled medical couriers is expected to continue to rise as advancements in technology and changes in healthcare practices create new opportunities and solutions for hospitals, biotech companies, and professionals in this field.

If you are considering a career as a medical courier in the medical delivery space, this ultimate guide is here to help you navigate the steps needed to become successful in this fast-paced and rewarding profession. From understanding the essential skills and qualifications required to finding job opportunities and advancing your career, this guide will provide all the information you need to start your journey as a medical courier in 2024.

What is the medical courier industry?

What does a medical courier professional do, which skills are useful for medical couriers, what are the steps to becoming a certified medical courier, what advantages come with being a medical courier, how do i start a medical courier business, benefits of routemanager, closing thoughts.

The medical courier industry is a crucial component of the healthcare system, responsible for transporting important medical specimens, documents, medical devices, transplant organs, surgical equipment, and supplies between various healthcare facilities. Medical couriers play a vital role in ensuring that these items are delivered safely and securely to their intended destinations, whether a hospital, laboratory, clinic, or other healthcare facility.

In addition to transporting items within a single facility, medical couriers may also be responsible for delivering items between multiple facilities, such as transferring specimens from a clinic to a laboratory for testing. This requires careful handling and attention to detail to ensure that the integrity of the specimens is maintained throughout the transportation process.

A medical courier professional is responsible for the safe and timely transportation of medical specimens, documents, and supplies between healthcare facilities. This includes picking up specimens from hospitals, clinics, laboratories, or other healthcare facilities like nursing homes and delivering them to their designated destinations. Medical couriers must ensure that all items are handled with care to maintain their integrity and prevent contamination.

In addition to transporting items, medical couriers may also be responsible for maintaining accurate records of the items they are transporting, ensuring that they are delivered to the correct locations, and following all necessary protocols and regulations to ensure the safety and security of the items in their care. They may also be required to communicate with healthcare professionals to coordinate pickups and deliveries and provide updates on the status of their shipments.

• Attention to detail: Medical couriers must be detail-oriented to ensure that they accurately record and track the items they are transporting. This includes making sure that specimens are properly labeled, documents are correctly filed, and supplies are delivered to the correct locations.
• Communication skills: Effective communication is essential for medical couriers to coordinate pickups and deliveries with healthcare facilities, provide updates on the status of their shipments, address any issues or concerns that may arise during transportation, and give customers peace of mind.
• Time management: Medical couriers must be able to prioritize their tasks and manage their time effectively to ensure that items are delivered promptly. This includes planning efficient routes, adhering to timely delivery schedules, and responding quickly to any changes or delays, especially if you offer rush courier services.
• Problem-solving skills: Medical couriers must think quickly and make decisions on the spot to address any unexpected challenges that may arise during transportation. This could include navigating traffic delays, dealing with inclement weather, or resolving any delivery issues.
• Physical stamina: The job of a medical courier can be physically demanding, requiring individuals to lift and move heavy items, walk long distances, and work in various weather conditions. Having physical stamina is essential to ensuring that medical couriers can safely and effectively transport items between healthcare facilities.

To become a certified medical courier, individuals typically need to meet certain requirements and undergo specific training. While the exact requirements may vary depending on the employer or state regulations, there are some common steps to becoming a certified medical courier:

• Education and Training: Many employers require medical couriers to have a high school diploma or equivalent. Some companies may also prefer candidates with additional education or training in healthcare, logistics, or transportation. Some employers may also provide on-the-job training to familiarize new hires with the specific protocols and procedures for transporting medical items.
• Obtain a driver’s license and clean driving record: Medical couriers are typically required to have a valid driver’s license and a clean driving record in order to operate vehicles safely and legally. Some employers may also require medical couriers to pass a background check and drug test.
• Obtain any necessary certifications: Some employers may require medical couriers to obtain specific certifications, such as HIPAA certification or hazardous materials training, in order to transport medical items safely and securely. These certifications can usually be obtained through online courses or training programs.
• Gain experience: While some employers may hire entry-level candidates, having previous experience in healthcare, transportation, or logistics can be beneficial when applying for a job as a medical courier. Consider gaining experience through internships, volunteer work, or part-time positions in related fields to enhance your resume.
• Apply for jobs: Once you have met the necessary requirements and gained any required certifications in medical logistics, start applying for medical courier positions at medical facilities, laboratories, courier companies, or other relevant organizations. Be sure to highlight your relevant skills, experience, and certifications in your resume and cover letter to stand out to potential employers.
• Maintain professionalism: As a medical courier, it is important to maintain a high level of professionalism at all times when interacting with healthcare professionals, patients, and other members of the healthcare team. This includes being punctual, following all safety protocols, and handling items with care and confidentiality.

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Becoming a medical courier offers a range of benefits that make it an attractive career choice. One primary advantage is the ability to work independently. As a medical courier, you have the freedom to manage your own schedule and workload. This level of autonomy allows you to maintain a healthy work-life balance and take control of your career.

Another advantage is the ability to choose your clients. Medical couriers often have the opportunity to work with a variety of patient care and healthcare facilities, such as hospitals, clinics, and laboratories. This diversity in clientele allows for exposure to different environments and experiences, which can contribute to professional growth and development.

Additionally, working as a medical courier offers a diverse range of tasks. You will constantly encounter new challenges and scenarios while delivering medical supplies, samples, and medical equipment. This ever-changing nature of the job keeps it exciting and engaging, preventing routine boredom from setting in.

Starting a medical courier business can be a rewarding venture for individuals who have experience in healthcare, transportation, or logistics. Here are some steps to help you get started with your own medical courier business:

1. Research and Planning: Begin by researching the market demand for medical courier services in your area. Identify potential competitors and analyze their services, pricing, and target clientele. Develop a business plan that outlines your goals, target market, services offered, pricing strategy, and marketing plan.

2. Obtain necessary licenses and permits: Before starting your medical courier business, make sure to obtain any required licenses and permits to operate legally in your area. This may include a business license, vehicle registration, and insurance.

3. Purchase or lease vehicles: Invest in a reliable fleet of vehicles that meet the requirements for transporting medical items safely and efficiently, especially if you want to offer timely one-day delivery services or overnight STAT specimen delivery. Consider purchasing or leasing temperature-controlled vehicles that are equipped with temperature control systems for the utmost care of equipment on board, GPS tracking, and secure storage compartments to ensure the safe transport of medical supplies and samples.

4. Hire qualified staff: As your business grows, consider hiring qualified staff to assist with deliveries and logistics. Look for candidates who have experience in healthcare transportation or logistics to ensure that they are knowledgeable about handling medical items safely and securely.

5. Expand your network: Building relationships with health organizations, healthcare facilities, laboratories, and other potential clients is essential for growing your medical courier business. Attend industry events, join networking groups, and reach out to potential clients to establish partnerships and secure contracts.

6. Invest in technology: Utilize technology to streamline operations and enhance the efficiency of your medical courier business. Consider investing in specimen tracking software for route optimization like RouteManager, GPS online tracking systems for real-time vehicle monitoring, and secure communication platforms for exchanging information with clients and staff.

RouteManager is a specimen tracking software that helps pharmaceutical delivery, medical delivery drivers, and medical courier businesses with last-mile logistics. Some of the key advantages of using route planning software include:

1. Advanced Route Planning : Utilizes advanced algorithms to create optimized rush delivery routes that consider traffic patterns, road conditions, and customer preferences. This ensures that drivers are taking the most efficient direct routes possible, saving time, fuel costs, and labor costs.

2. Real-Time Tracking : By providing real-time tracking of deliveries, medical courier businesses can monitor the progress of their drivers and ensure proof of secure lab sample delivery and on-time deliveries. This can help improve customer satisfaction and streamline operations.

3. Reporting & Analytics : Offers comprehensive reporting and analytics tools that allow businesses to analyze seamless specimen delivery performance, track key metrics such as safe delivery times and fuel consumption, and identify areas for improvement. This data-driven approach can help businesses make informed decisions to optimize their healthcare delivery operations.

4. Integration with Existing Systems : Easily integrate with existing systems such as GPS devices, fleet management software, and customer relationship management (CRM) systems. This seamless integration streamlines the rush specimen delivery process and ensures that all data is centralized and accessible in one place when planning routes.

Becoming a medical courier in 2024 can be a rewarding and lucrative career path. By obtaining the necessary licenses and permits, investing in reliable vehicles, hiring qualified staff, expanding your network, and utilizing technology such as RouteManager software, you can streamline operations and enhance the efficiency of your medical courier business. Partnering with RouteManager can provide numerous benefits for your business, including advanced route planning, real-time tracking, reporting, analytics, and seamless integration with existing systems. By leveraging RouteManager’s features, you can optimize your delivery operations, improve customer satisfaction, and drive growth for your medical courier business. Ready to grow your business? Book your free demo today!

Danielle McCarthy joined the WorkWave team in 2018 as Senior Product Marketing Manager for WorkWave PestPac. Today, she serves as our Product Marketing Manager for Alliances and Campaigns across WorkWave PestPac, Payments, Route Manager, and Service as well as supporting our Resellers.

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Ultimate guide: adding staff to your shopify store easily.

Table Of Contents

Adding staff to your Shopify store is essential for efficient operations and business growth. Assigning tasks such as order processing, customer service, and inventory tracking allows you to focus on strategic decision-making and personal development. 

In this ultimate guide, we will walk you through the steps of Adding Staff to your Shopify Store Easily . Use of staff accounts, task management, granting permissions, and process-streamlining technology will all be covered. Whether you're starting off small or expanding, this guide will provide you the knowledge you need to increase personnel and enhance shop operations.

Understanding Staff Accounts in Shopify

To manage your Shopify store effectively and securely, understanding staff accounts is essential. A staff account differs from a standard account by providing customized access levels tailored to specific roles within your business. This feature allows you to assign permissions based on individual responsibilities, such as managing inventory, processing orders, or viewing customer interactions. 

Each Shopify store can have multiple staff accounts, depending on the plan, enabling you to delegate tasks efficiently while protecting sensitive information. This setup not only streamlines operations but also helps in scaling your business by distributing workload effectively.

Step 1: Login your account

You must first log into your Shopify account. This is the URL to get to the Shopify login screen. Press the connection. Enter the details for your account.

Step 2: Go to Account

Look at the screen's left side and scroll down to the "Setting" area, which is located near the bottom. Numerous alternatives will then become available. Ensure that the "Account" option is selected.

Step 3: Select Add staff account

To access the "Accounts and permissions" section, scroll down. You will be able to see all of your staff members' names. It is typical for there to be no staff account. To add an account, select "Add staff account" .

Step 4: Enter the staff information

It will navigate to a new page on its own. Enter the employee details in this stage, making sure to include the email address, last name, and first name.

Under the staff information, there is a tick. The staff has full permissions to view every section of the admin page by default. Uncheck this to limit who may view the content.

Step 5: Click Send invite

Click "Send invite" to establish a new staff account after verifying that the information you submitted is valid.

Advanced Tips

Customizing staff roles and permissions in shopify.

• Assign specific staff members to manage inventory-related tasks, such as tracking stock levels, updating product details, and managing supplier relationships.
• Grant access to product addition, editing, and deletion, as well as the ability to adjust stock quantities and manage inventory transfers. Restrict access to financial data and sensitive customer information.
• This ensures that only authorized personnel can modify inventory data, preventing discrepancies and maintaining accurate stock records.
• Designate roles for employees responsible for processing orders, including verifying payments, fulfilling shipments, and managing returns.
• Provide these staff members with access to order management features, such as viewing, editing, and updating orders, processing refunds, and handling shipping information. Limit access to marketing and analytics tools.
• This division ensures that order processors can efficiently manage customer purchases and returns without overstepping into unrelated areas, maintaining a secure and organized workflow.
• Create roles for customer service representatives tasked with addressing customer inquiries, resolving issues, and providing post-sale support.
• Allow access to customer profiles, order histories, and communication tools, enabling representatives to manage interactions and support tickets. Restrict access to inventory management and financial reporting.
• This setup allows customer service staff to offer personalized assistance while safeguarding sensitive information and ensuring they do not inadvertently disrupt other business operations.
• Assign roles for marketing professionals responsible for creating campaigns, analyzing data, and optimizing store performance.
• Provide access to marketing tools, customer segmentation, email campaign management, and analytics dashboards. Restrict permissions related to order processing and inventory management.
• This configuration enables marketing teams to target campaigns effectively and analyze customer behavior, while protecting the integrity of operational and financial data.
• Designate roles for staff members managing financial records, payroll, and administrative tasks.
• Grant access to financial reports, billing information, and administrative settings. Restrict access to customer service and marketing tools to maintain focus on financial and administrative responsibilities.
• This ensures that financial data is handled by qualified personnel, enhancing data security and maintaining accurate financial tracking.
• For store managers or owners who oversee overall operations, including strategy, performance, and team management.
• Provide full or high-level access to all areas of the store, including inventory, orders, customer data, marketing, and finance. This role typically has the ability to view and modify all settings.
• This comprehensive access enables store managers to monitor and optimize every aspect of the business, ensuring smooth operations and quick response to any issues.

Integrating Staff Roles with Other Business Tools

Enhancing productivity and streamlining procedures may be achieved through the innovative integration of personnel responsibilities with other business technologies. Synchronizing Shopify staff roles with tools like CRM, email marketing platforms, and project management software ensures seamless workflows and efficient data management. 

Start by mapping out the roles and permissions in Shopify, then align these with corresponding roles in your other tools. Many platforms offer direct integrations or can be connected through automation services like Zapier. 

For example, syncing your CRM with Shopify staff roles allows your team to access customer data effortlessly, enhancing personalized marketing campaigns. Similarly, integrating email marketing tools ensures that your marketing team can efficiently segment and target customers based on their interactions with your store, driving more effective campaigns and higher conversion rates.

Can I limit what my staff can see on Shopify?

Yes, Shopify allows you to customize access levels for each staff member. You can assign specific permissions based on their roles, such as managing orders, accessing customer information, or editing products. This ensures that staff members only have access to the areas of the store relevant to their responsibilities, maintaining security and data integrity. By setting these permissions, you can protect sensitive information and prevent unauthorized changes to your store.

How many staff accounts can I add?

Your membership level will determine how many staff accounts you are able to add to your Shopify business. Basic Shopify plans typically allow two staff accounts, while higher-tier plans like Shopify and Advanced Shopify offer more, up to fifteen staff accounts. If you need additional accounts, consider upgrading your plan or exploring Shopify Plus, which offers even more flexibility for larger teams. Always check the latest plan details on Shopify's official website for the most accurate information.

Can I change staff permissions after they are added?

Yes, you can easily change staff permissions from the Shopify admin panel at any time. Navigate to the "Users and Permissions" section, choose the employee whose permissions you want to change, and update their access levels. Each employee will have the right amount of access to carry out their tasks efficiently while protecting the confidentiality of your store's data thanks to this flexibility, which enables you to adjust to shifting roles and responsibilities within your team.

What happens if a staff member leaves the company?

If a staff member leaves the company, you should immediately deactivate their account to prevent unauthorized access. Navigate to the "Users and Permissions" section in your Shopify admin, select the staff member, and choose to deactivate their account. This action will revoke their access to your store. It's also advisable to review and update any permissions or access settings to maintain the security of your store. Ensuring prompt action helps protect your business from potential security risks and data breaches.

• Guide To Staff Permissions In Shopify
• Shopify Login History: Essential Security Measures to Implement
• How to Change Your Shopify Password Safely?
• How to Create 2 Shopify Stores in 1 Account

The value of hiring employees for your Shopify store, setting up and maintaining staff accounts, and the advantages of combining staff responsibilities with other business tools have all been covered in this comprehensive article. We've covered how to customize permissions to ensure security, the flexibility to change roles as needed, and the steps to take when a staff member leaves. These insights are designed to help you efficiently manage your store and foster a productive team environment.

The moment is now for you to begin staffing your Shopify business. By assigning new jobs to your staff and making the most of their strengths, you can concentrate on expanding your business and raising client satisfaction. Take immediate advantage of these strategies to witness a significant boost in your shop's efficiency and productivity. To reach new heights with your Shopify business, start assembling your ideal team now!

Are you Ready to Enhance Staff Account Management for your Shopify Store?

Transform your online business with ECompose r's enhanced staff account management for your Shopify store! With EComposer Shopify Page Builder , managing staff roles, permissions, and activities has never been easier. Ensure smooth operations, boost productivity, and maintain security effortlessly. Say goodbye to administrative hassles – EComposer's intuitive interface and advanced features make staff management a breeze.

Stop waiting and start thriving! Begin your free trial on EComposer now and experience seamless staff account management on Shopify. Transform your e-commerce strategy today!

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