A well-written business plan can help you scale-up operations, raise revenue, and meet your biggest business goals.
By Hannah Massen
There are times in life when it’s OK to “wing it” or “fake it ‘till you make it.” Starting a business is not one of them. Writing a business plan is the first step in turning your business idea into something tangible. A business plan is a document that details your company’s goals, finances, services, strategies, and direction for the next 3-5 years. While it should be a blueprint that guides you and your team through the business-building process, a great business plan can convince investors that your mission is worth supporting.
If you’re a new entrepreneur, it should absolutely include information about funding sources, product development, and initial sales strategies. But business plans aren’t limited to the realm of startups; established companies also can benefit from reviewing and revising their marketing tactics, financial documentation, market research, and competitor analysis. As you navigate uncertainties, obstacles, or new opportunities, this comprehensive document can keep you on track to meet your biggest business goals.
No matter your industry or the size of your company, writing such an extensive report can be daunting. But don’t let that stop you. We’ve broken down the essential sections of a business plan so you can roll up your sleeves and get everything down on paper.
The first section of your business plan is a brief description of your company’s purpose and goals. We emphasize brief, as the executive summary should be no more than half a page long. The key is to cram as much essential information into this section as you can – like a snapshot of growth potential, funding requirements, or high-priority goals – so that the reader doesn’t find the facts and stats they’re looking for buried on page eight.
Think back to writing an old-school essay or research article: if the executive summary is like an abstract, then your business description would be your introduction. Begin with a description of your industry, especially if it’s something investors may not be familiar with. What is the state of your industry? Are there market trends you should keep an eye on? How will this affect your business’ success? Remember to back up your claims and include the full gamut of information – positive and negative.
Next, introduce your business. Are you an established company or a startup? What does your leadership structure look like and how many employees do you have? What value do your products and services bring to customers? Who are your customers? This is where you contextualize your company, demonstrate competitive advantage, or break down your mission statement.
While the market analysis is all about your customers, the competitive analysis is all about your competition. Rather than explaining what makes your business special, this is where you provide an in-depth look at competitors themselves. Delve into the operations, financials, history, leadership, and sales strategies of your direct and indirect competitors, then explain ways you can compete with – or exploit – their strengths and weaknesses.
Spoiler alert: writing a business plan involves a lot of research. In fact, you might spend more time researching and analyzing than writing the plan itself. But it’s important to understand the history, current risks, and future potential of your market, which is where this section comes in.
The market analysis is where you define your target market (or primary audience). This can be done through demographic research, customer feedback, or fictional buyer personas. While the research you do should be objective, this section is a good place to reiterate your competitive advantage and how your business captures customers’ attention.
Now that you know where your business is, it’s time to take a look at where it’s going. This section should restate your most pressing business goals, then detail how you’re going to achieve them. For startups, the execution plan should discuss the time, talent, and resources you need to start turning a profit. Established business owners should outline the steps they need to take to meet specific objectives and explain how those objectives will benefit their business.
This is also a good place to go over the roles your employees play in furthering your business’ mission. Consider adding information about your company’s organization and a detailed overview of your leadership team. You also could include your hiring strategy or positions you’ll need to fill in the coming years.
A marketing plan is often referred to as a separate document, but it has a place in your business plan. It’s essential that you have marketing strategies in place as you scale-up operations or break into the industry.
This section of your business plan should show how you’re going to promote your business, attract and retain customers, or launch new products and services. It should also mention brand messaging and style guidelines, marketing channels or assets, event details, or budget information. You can also include a SWOT analysis of your business’ strengths, weaknesses, opportunities, and threats, or evaluate the ways your competitors market themselves.
If there’s one part of your business plan that you just can’t skip, it’s the financial projections. You have to disclose your business’ finances so stakeholders know how your company is expected to perform moving forward. You should include an income statement (which outlines annual net profits and losses), a cash flow statement (which shows how much money you will need to launch or scale operations), and a balance sheet (which lists financial liabilities or assets). If you’re asking for funding, outline exactly how much money you need, where this money will go, and how you plan to pay it back.