You are driving late at night, tired. You can’t see anything and you don’t know where you are.
You pull up your GPS before you run out of gas and aha! is the way Now you know where the path is again.
Similarly, if you don’t have a guiding “roadmap” (aka business plan) you can lose business ownership.
That’s why you need to know how to write a business plan.
Creating and updating a business plan helps you understand your market, obtain small business financing, and strategize for your company’s future.
However, writing a small business plan takes time and resources.
You may be wondering, how do I write a small business plan? What does a business plan look like? Let’s get started shall we?
How to Write a Business Plan
A traditional business plan outline typically has nine sections. But, business plan templates may differ between companies.
See how to create a business plan with the following sections:
Executive Summary
Company Description
Market Analysis
Organization and Management
Products and Services
Marketing and Sales
Funding Request
Financial Forecast
Appendix
Learn more about how to write a step-by-step business plan by checking out the sections below.
executive Summary
Your executive summary should briefly explain the main points of your business. Keep your summary short and sweet.
It should outline the rest of your business plan, not repeat it.
Use this first section of your small business plan to answer (briefly):
What is your mission statement?
what do you do
Who runs your business?
How many employees do you have, need or plan to have?
What is your business location(s)?
What does your financial situation look like?
How much money do you need to run or grow your business?
Consider waiting until you’ve finished writing the business plan to create your executive summary. For some, summarizing is easier than elaborating.
Company description
Like an executive summary, a company description is a brief summary of the scope of your business.
When creating a business plan, use this section to go into detail about who runs your business, how it is structured, and where it is located.
Include your mission statement and talk about how your company fills a need in the marketplace.
Your company description should answer:
What does your business do?
Who are your target customers?
How is your business poised for success (aka what sets you apart)?
What is your business structure (eg, sole proprietorship, S Corp, etc.)?
where are you
What is your mission statement?
Use the company description as an opportunity to make your business look good and quickly catch the attention of any lenders and investors.
Market analysis
The market analysis part of your plan details your market, target customers, and competition.
To find this information, you need to do some research.
Find out your competitors’ strengths and weaknesses. Know which demographics you want to target.
Analyze the size of the market you want to enter.
Questions you should answer in your market analysis include:
Who is your target audience?
In which market segment does your business exist?
Who are your competitors?
How many competitors are there in this segment of the market?
What are your competitors doing right? wrong?
As the title of this section suggests, you need to do some analysis to fully understand the scope of your market, its current players, and how your business fits (or is different).
Organization and Management
Now is the time to get into the finer details of your business structure and leadership. So, which design makes the most sense for your business?
You can structure your company as follows:
Compare the pros and cons of each business structure before choosing a
Sole Proprietorship
Limited Liability Company (LLC)
Corporation
S Corporation .
Explain why you chose this structure in your business plan.
Next, list the names of the people who run your business. Describe the strengths, skills, and experience of business leaders.
Assign roles and responsibilities to each leader. For example, if you form a partnership, explain each partner’s role.
Use your organization and management section to answer:
What is the legal structure of your business?
Why did you choose this business structure?
Will you change your business organization in the future?
Who runs your business?
What skills do your key employees bring to the table?
What kind of positions do you need to run your business?
Products and Services
Now for the interesting part of your business plan—what you’re going to sell. If you’re like most business owners, you’re more excited about running your company than you are about designing it.
This section of your business plan defines your offering and explains how it benefits your customers.
Also, discuss your offering’s unique value proposition. Explain what differentiates your products or services from the rest of the market (hint: refer to your findings from the market analysis!).
You should answer the following questions in the Products and Services section:
What will sell?
What is your product life cycle?
How does your offering compare to what’s already out there?
What problem does your product or service solve?
Do you plan to obtain patents or copyrights?
Marketing and Sales
You can have a great product or service, but it doesn’t matter if no one knows about it. Cue Marketing and Sales.
This section of your business plan should explain how you will market to potential customers.
Will you use online marketing strategies like social media and email campaigns?
Or, do you plan to use offline strategies, such as radio ads and direct mail?
State exactly what combination of marketing and sales strategies you intend to pursue.
Use this section to answer the following questions:
What marketing strategies will you use?
What channels will you use to market to your target customers?
How will you sell to customers (eg online or in-store)?
What are your ideal profit margins?
Request for funds
If you plan to use your business plan to get outside financing, this is the opportunity for you.
Define your funding needs in this section of your plan.
To learn how to create a business plan to secure funding, you need to narrow down your financing needs, plan for funding, and desired repayment terms.
Your funding request should answer questions like:
How much funding do you need?
How will you fund your business?
What will the requested money go towards?
How do you plan to repay the loan?
Are you looking for loan financing vs. Equity funding?
Use this section of your business plan to show investors or lenders exactly what you’re asking for and how to protect their money.
economic outlook
Use this section to plan the future finances of your business to help with your budget. If applicable, use historical data to estimate financial projections.
When coming up with your financial projections, work in time. You want to be as specific as possible.
And, avoid overstating your small business revenue. Also, be prepared to answer what you will do if you don’t reach your financial forecast.
Some financial questions to answer in this section include:
What are your expenses?
What is your cost of goods sold (COGS)?
What is your projected income?
What is your break-even point?
What is your business exit strategy?
Appendix
The final part of learning how to write a business plan is tying up any loose ends. Add any additional attachments to the Appendix section of your plan.
Some documents you need to provide:
Credit history
Previous financial statements (if applicable)
Business licenses and permits
Pictures
3 Tips for Writing a Small Business Plan
Now that you know how to create a business plan with basic sections, follow these tips to bring it home.
Do your research
Research may not be your favorite thing in the world. But before you start a business or write your plan, you need to research your new best friend.
From doing a thorough market analysis to deciding on the best design for your venture, research is essential.
Without researching your idea you can set your business up for failure.
Know what you’re doing so you don’t wander blindly into an oversaturated market or a dying industry.
Resources to use:
US Bureau of Labor
Small Business Administration: Business Data and Trends
IRS: Business Structure
Prioritize presentation
After doing the necessary research and writing, differentiate your plan by prioritizing the presentation.
Here are some dos and don’ts for putting together the elements of a business plan:
Do:
Check grammar
Use graphs and charts
Go the extra mile to facilitate navigation (eg binder dividers)
Who:
Write it on a blank sheet of paper Stick
your business plan in an old folder
Forget to format your business plan
How long should your presentation be? There is no set business plan length.
According to the Small Business Administration, experts recommend keeping business plans to between 30 and 50 pages.
Avoid writing just for the sake of writing. Answer what you want and keep your plan concise.
Resources to use:
Grammar and spell-checking tools (e.g. Grammarly)
Tools for transforming data into graphs and charts (e.g. Google Data Studio)
Update your business plan
Finished writing your small business plan? Great! But, that doesn’t mean you can just set it on your bookshelf to collect dust. You will need to revise your small business plan from time to time.
Businesses are constantly growing. As your company evolves and changes, you must update your business plan with new:
Consider reviewing your small business plan every year or whenever your business changes as the financial data
products or services
business structure changes .