Without a solid business plan, a company cannot succeed. In fact, if you’ve never started a business before and don’t know what you’re doing, a business plan could be the deciding factor in whether or not you succeed.
Let’s examine what a business plan is, why it’s essential, and a step-by-step guide for writing one.
What is a Business Plan?
A business plan is a document that lays out a company’s goals and how it plans to reach them. It outlines the firm’s marketing, financial, and operational strategies in writing. Both new and established businesses utilize business plans.
It is a crucial document that is intended for both external and internal audiences. A business plan, for instance, is used to attract investors before a company has established a track record. It can also assist in obtaining financing from financial institutions.
In addition, a business plan can keep a company’s executive team on the same page regarding strategic action items and on track to achieve predetermined objectives.
Every business should have a business plan, although they are particularly useful for startups. Ideally, the plan is reviewed and revised on a regular basis to account for goals that have been met or altered. Occasionally, a new business plan is created for an established company that has decided to change course.
Why write a business plan?
Prior to funding a business, investors evaluate its viability based on its business plan, which is why business plans are commonly associated with obtaining a loan. Even if you do not require funding, there are compelling reasons to consider writing a business plan.
Writing out your plan is a valuable exercise for clarifying your ideas and can help you determine the scope of your business as well as the time, money, and resources you’ll need to get started.
If you have multiple business ideas, creating a rough business plan for each one can help you focus your time and resources on the ones with the highest likelihood of success.
In order to write a business plan, you will need to conduct research on your ideal customer and your competitors; this information will assist you in making more strategic decisions.
Your business plan is one of the easiest ways to explain your goals to potential new hires. It can also help them feel more confident in the business, especially if you are just starting to grow.
If you intend to approach other companies about collaborating, having a clear overview of your vision, audience, and growth strategy will make it much easier for them to determine whether your business is a good fit for theirs—especially if they’re further along in their growth trajectory than you are.
There are many business plan contests with prizes like mentorships, grants, or money to invest. Try Googling “business plan competition + [your location]” and “business plan competition + [your industry]” to find competitions in your region and industry.
A business plan is an excellent starting point if you’re looking for a structured way to lay out your thoughts and ideas and share them with people who can have a significant impact on your success.
Read More: 8 Principles of Launching a Startup
Types of Business Plans
Simple and traditional are the two main types of business plans. Traditional business plans are long and full of details. They talk about both short-term and long-term goals. A simple business plan, on the other hand, only talks about a few key metrics in brief detail so that investors can get information quickly.
1. Simple business plan
Ash Maurya, an expert on business models, came up with a simple type of business plan that he calls a “lean canvas.” The model, which was made in 2010, is still one of the most often copied types of business plans.
A lean canvas is made up of nine parts. Each part of the plan has high-value information and metrics to get investors interested. Most of the time, this lean business plan is just one page long and lists the following:
- Key metrics
- Unique proposition
- Unfair advantage
- Customer targets
- Cost structures
- Revenue streams
2. Traditional business plan
Traditional plans are long, and they can be as many as 30 or 40 pages long. A traditional business plan is like a blueprint for a new business. It shows how the business will grow from the time it opens to a few years later when it will be a well-known business. A traditional business plan talks about the following:
- Executive summary
- Company description
- Products and services
- Market analysis
- Management team
- Financial plan
- Operational plan
Below, we explain in detail each part of a traditional business plan.
1. Executive summary
The most important part of your business plan is the executive summary, which needs to get people interested in your plan and make them want to keep reading. If your executive summary doesn’t grab the reader’s attention, they won’t keep reading and won’t be interested in your business.
Even though it’s the first part of your business plan, you should write the executive summary last. When you’re ready to write this section, we suggest that you summarise the problem (or market need) you’re trying to solve, your solution for customers, an overview of the founders and/or owners, and key financial details. The key to this part is to keep it short and interesting.
2. Company description
This part gives a summary of your whole business. Make sure to include basic information like when your business was started, what kind of business it is (LLC, sole proprietorship, partnership, C corporation, or S corporation), and what state it is registered in. Give a brief overview of your company’s history so that people can understand how it got started. Find out what you need to know about articles of incorporation and starting a business.
3. Products and services
Next, explain what your business sells or what it does. Focus on what your customers want and need by showing them the problem you are trying to solve. In this section, you need to show that your business meets a real market need and will be able to stay in business for a while.
4. Market analysis
In this section, be clear about who your target audience is, where you will find customers, how you will reach them, and, most importantly, how you will get your product or service to them. Give a detailed look at who your ideal customer is and how your business can help them.
In this section, you should also talk about your competitors and show how your business is different from those already in the industry or market. What are their strengths and weaknesses, and how will you stand out from the crowd?
You will also need to write a marketing plan for your business. For example, if you run a small business in your town, you might want to look at your nearby competitors. Franchises need to do a big-picture analysis, which could be done on a national scale. Competitor data can help you figure out what’s going on in your target industry and how big it could grow. These details also show investors that you know a lot about the business.
For this section, the target market listed shows what your ideal customer looks like. Target consumers’ ages, genders, levels of income, where they live, whether or not they are married, and where they are in the world could be included as data.
Entrepreneurs often use a SWOT analysis to put all the information they’ve gathered about a market together. “SWOT” is an acronym for “strengths, weaknesses, opportunities, and threats.” Strengths and weaknesses look at the pros and cons of your company, while opportunities and threats look at the risks and benefits of the current market.
5. Management team
Before someone invests in your business, they want to know everything there is to know about it. In this section, you should explain how your business is set up. It should list the founders/owners, key members of the management team, board members, advisors, etc.
As you list each person, give a brief description of their experience and what they do for your company. Consider this section a series of short resumes, and if you want, you can add full-length resumes to the end of your business plan.
6. Financial Plan
Your finances should be shown in detail in the financial plan. At the very least, you should include statements of cash flow and projections of profits and losses for the next three to five years. You can also include your sales forecast and balance sheet, as well as financial information from the past few years. Think about these things as well:
Investors want to know a lot about your business idea to make sure it will work. Expect to include in your business plan an income statement that gives a full picture of your business. On the income statement, income, expenses, and profits will all be listed. For new businesses, income statements are made every month, and for older businesses, they are made every three months.
Plan for cash flow:
Your plan for cash flow is another part of your financial plan. In this part, you estimate how much money will come into your business and how much will leave it. Putting in a cash flow projection can help in two ways. First, this forecast shows if your business is a high-risk or low-risk venture. The second benefit of doing a cash flow projection is that it shows you whether short-term or long-term financing would be better for you.
Analysis of the point of break-even:
A break-even analysis should be part of your financial plan. At the break-even point, your company’s sales are enough to cover all of its costs. Investors want to know how much money your business needs to make so they can decide if it can reach the financial goals you set out in your business plan.
Make sure that this part is clear and correct. Most of the time, it’s best to have a professional accountant help you with this section. If you want to get money from outside sources for your business, explain why you want the money, how you’ll use it, and when investors can expect a return on their money.
- Operational Plan
In the operational plan section, you explain what your business needs in terms of space. This part talks about where the business will be and what equipment or facilities are needed to make your products. Depending on the type of business, some companies may also need to list their inventory needs and information about their suppliers. In the operational plan section, details about how a company makes things are written down.
For a new business, you should split the operational plan into two separate parts: the development plan and the production plan.
The development plan spells out all of the steps that need to be taken to get your product or service on the market. You want to list the risks you’re taking and the steps you’re taking to deal with them to show investors that you’ve thought about all possible problems and that your business is set up to succeed. For example, if workers (or your products) are exposed to toxic materials during the production process, you should include in your development plan the safety measures you will take to keep workers and customers from getting sick or hurt, as well as how you plan to keep your business from being blamed.
Daily operations are outlined in the production plan, together with details like business hours, work location(s), company assets, equipment, raw materials, and any unique requirements.
Read More: 5 High-Profit Margin 2023 Startups
3 Best Software and Tools for Making a Business Plan in 2023
Business plan software is made to walk you through every step of your plan and fill in any holes. So, you will be better able to set your business’s direction, get funding, build your team, and eventually reach your business goals.
What to look for in software for making a business plan?
If you decide to buy business plan software, it’s important to think about a few key features that will make it easy to make your plan. Read on to learn more about the features you should look for in a business plan software program.
A step-by-step guide. With step-by-step wizards, you don’t have to guess as much about which parts to work on and in what order.
This feature can walk you through each section and help you make sure your plan has everything it needs.
- Templates: It can be hard to make a business plan from scratch. Because of this, it’s great to have a place to start. There are dozens or even hundreds of templates to choose from in many tools. Many templates are made for certain kinds of businesses, so you can choose one that fits the business you want to start.
- Financial projections: Most software gives you financial tools so you can make a plan for a business that will be successful. With some options, you can plug in numbers for expenses, cash flow, income, etc., and get financial projections. The better your time making a business plan, the easier this process is.
- Graphs and charts: The tool you choose should be able to automatically turn the financial data into charts and graphs that are easy to understand. Investors will be more interested in your business plan if you do this.
- Integrations: Some software works with well-known accounting programs like QuickBooks or Xero. This will help you make sure there are no math mistakes in your business plan when you transfer financial information from your accounting software.
- Contributors: Many businesses are not started by just one person. When more than one person is involved, you want everyone to have a say in how your business plan is made. So, you need to make sure you know how many people can make changes to the plan. Some software puts a limit on this number, while others let anyone help out.
There are more services. Some software companies give new business owners access to extra services that may be helpful, such as help with digital marketing and website design, as well as direct contact with consultants who can give them good advice.
Bizplan was made for tech startups and will help you make a business pitch and plan that investors will be interested in.
Bizplan, which is part of the Startups.com suite, gets high marks for its modern, easy-to-use, and user-friendly interface. You will use a step-by-step business plan builder to make sure that your plan does exactly what you want it to do. It might remind you of a modern website builder because you can build templates by dragging and dropping.
Also, if you pay, you’ll have access to everything in the Education section, like online courses and more than 600 in-depth videos that will help you learn more.
If you have a problem, you can talk to a customer service rep during business hours (Monday through Friday, 9 a.m. to 9 p.m.), or you can send an email with all your questions.
- Business plan templates that you can drag and drop to put together.
- The financial command center makes it possible to keep track of all business finances in one place.
- Access to Fundable.com, an online platform for raising money that connects small businesses and startups with potential investors.
- Unlimited people can work on one account.
- Online courses, such as tracks, master classes, guides, and answers from experts, are available.
- Control over who can look at and comment on your business information.
- Drag-and-drop business plan builder that is easy to use and understand.
- Excellent educational materials.
- You can subscribe to get access to all Startups.com tools.
- It is easy to connect to accounting software.
- Available lifetime pricing.
- No free test run
- No mobile compatibility
- There aren’t any financial projection templates for a specific industry.
- Plan for each month: $29
- Plan for a year: $20.75 per month.
- Plan for access for life: $349
BizPlanBuilder is an easy-to-use tool for making a business plan. It has a simple wizard that walks users through the business planning process step by step. With the software’s industry-specific templates, you can make a plan that fits your business goals.
You can send your plan to investors online with just one link. So, instead of sending big attachments, you can show your plan directly in a browser using modern navigation.
Don’t worry if math is not your strong suit. You can do this with the help of the financial tools in BizPlanBuilder, such as calculators, cost analysis, financial projections, budget sheets, charts, and graphs. It also lets people bring in financial information from other accounting software.
Along with business planning and financial tools, the software offers real-time collaboration, which means that multiple team members can view and change the business plan at the same time.
- Business planning templates made for specific industries.
- There are many financial tools, like calculators, chart and graph makers, and budget-feasibility tools, that can help you manage your money.
- The collaboration feature lets team members sign in at the same time to see and change the business plan.
- You can get technical help, like email and phone support, answers to frequently asked questions (FAQs), and video tutorials.
- Pictures that look good
- Drag-and-drop templates that are easy to use.
- Several templates for specific industries.
- Deeper explanations
- No free test run
- No mobile-friendliness
- Exporting PDFs is hard to do
- BizPlanBuilder is $97 a year for new businesses, those looking for funding, and MBA students. You can add as many team members as you want for $10 a year each.
- BizPlan Builder is $27 a month for growing a business, strategic planning, and financing growth. You can add as many team members, advisors, and investors as you want for $1 a month each.
3. Business Plan Pro
Business Plan Pro is one of the best tools for making a business plan. It has excellent technical and customer support to help small businesses do well. It also gives clear instructions and up-to-date funding tools to help you make a strong business plan and impress potential investors.
The software has up to 500 templates and examples of business plans in the format that investors, banks, and SBA-approved lenders prefer. There are also different types of templates for you to choose from, such as Manufacturing, Travel & Transportation, Travel, etc.
- More than 500 sample business plans
- Formulas and financial statements that are built-in
- Drag-and-drop graphic forecaster tool lets you make forecasts that look good.
- Ability to import data from Quickbooks and export to Excel, Word, and PowerPoint.
- A strong team of tech experts and customer service reps.
- There are many different business plan templates.
- Instructions for businesses in great detail.
- More time to get your money back (60 days).
- No collaboration opportunities
- Interface design from the past
- Standard Package Plan: One-time payment of $99.95
- Premier Package Plan: One-time payment of $159.95
You can also import data directly from Quickbooks into Business Plan Pro. You can also export your business plan to Microsoft Word, Excel, and PowerPoint, or turn it into a PDF.
Strategies for tackling the toughest parts of crafting a business plan
As a business owner, you can’t possibly anticipate every possible problem that could arise, but you can take measures to minimize the likelihood of any major ones. Learn the ins and outs of the business plan process by reading about it and seeing how other people have done it.
These plans are useful as a starting point, but Rick Cottrell, CEO and founder of BizResults.com, advises going further. Consult local business owners and others in the field who have done well.
Cottrell advised that business owners consult with financial advisors, bankers, and others who regularly encounter such plans in order to gain insight into best practices. They can get involved with startup and investment groups, network with people in similar positions, and pick up useful tips from those they meet. They can join local clubs dedicated to capital innovation in order to network and gain access to additional resources.
After reading up on business plan writing, if you still don’t feel confident in your ability to create a business plan, you can always hire a consultant to assist you.
A business plan is a document that outlines a company’s objectives and how it intends to achieve them. In writing, it outlines the firm’s marketing, financial, and operational strategies. They are used by both new and established businesses.
A business plan is a critical tool for entrepreneurs, startups, and established businesses to outline their goals, strategies, and operational plans. The importance of a business plan cannot be overstated, as it serves as a roadmap for the organization’s future growth and success.