Step 2 – Write Your Business Plan
Your business plan is what builds the foundation for your business. A good business plan serves as a roadmap for how to structure, run, and grown your new business. In addition, most investors or funding providers will want a business plan submitted as part of the underwriting process.
There are two common formats for business plans; traditional and lean startup.
Traditional business plans are very detailed and take more time to write. Lenders and investors commonly request this time of business plan. Traditional business plans typically include the following information:
Description of 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.
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.
Description of the data you compiled from your market research. Indicate what other businesses are doing and what their strengths are. Talk about what successful competitors do? Why does it work? How you can do it better?
Organization & Management
Information on 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 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
Description of what you sell or what service you offer, and an explanation of how it benefits your customers and what the product life cycle 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 & Sales
Description of how you will attract and retain customers. You will also want to 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.
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.
The goal of this section is to show 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, or patents, legal documents, permits, and other contracts.
A lean startup plan is fast to write, contains key elements only and is high-level focused. Some lenders and investors may ask for additional information when using this type of business plan. A lean startup plan will typically contain the following information:
Description of other businesses or services you’ll work with to run your business. Think about suppliers, manufacturers, subcontractors and similar strategic partners.
Information on 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.
A list of any resources 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.
A clear and compelling statement about the unique value your company brings to the market.
Description of 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.
Description and information on your target market. Your business won’t be for everybody, so it’s important to have a clear sense of who your business will serve.
Description of the how you will communicate to your customers, emphasizing the most important ways for your type of business. Most businesses use a mix of channels and optimize them over time.
Description of your strategy and the most significant costs you will face pursuing the strategies. Will your company focus on reducing cost or maximizing value?
Explanation on 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.
Business Plan Tool
The Small Business Administration provides you with a step-by-step guide to create your business plan. You can save your plan online and update it any time or download it as a PDF file.
Business Plan Template
Writing a business plan is an opportunity to carefully think through every step of starting your company so you can prepare for success. This template provided by SCORE includes instructions for each section of the business plan, followed by corresponding fillable worksheet(s).