How to Write a Business Plan: Template, Tips and Examples

An entrepreneur with a business plan is 2.6 times more likely to launch and persist in the business emergency process than one without. Researchers have also found that companies with a business plan grow 30% faster than those without. 

A business plan is a road map that guides your organization’s long-term growth and helps it succeed. Writing a business plan can make a big difference in your overall success. To help you get started, we’ll go through a step-by-step guide on how to write a business plan, a general business plan template, and a few important tips.

What Is a Business Plan?

Your business plan is the road map that guides your company’s strategies, goals, and financial objectives. A good business plan won’t just tell you what the goal is; it will also map out how to get there. This may involve a marketing plan, product pricing strategies, a market analysis, and other factors.

To be effective, your business plan should include:

• Who you are
• How you operate
• Who your customers are
• How you plan on making money

Once it is made, the business plan can serve as an internal guide for planning your strategy. External stakeholders, such as banks and investors, often require business plans before providing funding.

Traditional Business Plan vs. Lean Business Plan

When learning how to create a business plan, your first choice will be whether to use a traditional or a lean plan. A traditional business plan is what you’ll need to pitch investors or apply for a bank loan. You may also want to go the traditional route if you’re very detail-oriented or want a more comprehensive plan.

In comparison, a lean business plan is intended for use by founders, such as to test a new idea or to quickly explain a business idea. It will have fewer sections and be more focused on its usefulness as a practical guide for the founders. 

To better understand which option you need, take a look at how these two business plan template styles differ. 

 

Who Needs a Business Plan?

Three main groups should create a business plan. 

• Entrepreneurs Looking for Startup Funding: To get funding for a new business, you’ll need to show that you have a solid business plan and a viable strategy for bringing in revenue.
• Existing Businesses That Need Funding: Before a bank, lender, or investor funds a business, they will review your business plan to assess risk and understand the financial viability of your goals.
• Founders That Need It for Strategic Planning: Business plans serve as guides for founders and internal stakeholders. Once you know your major goals and target clientele, you can create a strategy to achieve them.

Even if you never plan to show your business strategy to an investor, you should still put your plans in writing. Simplifying and writing down your plan clarifies your thoughts, helping you to define your strategy and future goals.

What to Include in a Business Plan: 8 Key Sections

So, what is a business plan? What should you include in it? As a founder, there are a few common sections that you should add to your business plan.

1. Executive Summary

Since the executive summary is a one-page summary of the entire plan, it should be written after you have already created the rest of the document. However, it is placed at the front of the plan so that the reader can access an easy summary.

In the executive summary, include a few key pieces of information.

• Mission statement
• Your target market
• Business name and location
• A funding request, if you are making one
• A brief description of your product or service

Investors will normally read this section first, so it needs to be compelling.

2. Company Description

The company description should cover who you are and what you do. It should list your business structure, such as whether you are a limited liability company (LLC), S corporation (S corp), C corporation (C corp), or sole proprietorship. Additionally, the company description should include your legal business name, registered address, mission, values, goals, and your founding story. 

If you’re uncertain about whether to choose a C corp or S corp, check out our guide to different business entity types.

3. Market Analysis

The market analysis forms a substantial part of most business plans. It should feature your target customer’s profile, pain points, demographics, and buying habits. You’ll also need to weigh the impact of industry trends and your market’s potential growth rate. 

Within the analysis, you should focus on three specific topics. By creating this section well, you demonstrate to investors that you are a serious business with a solid understanding of the opportunities available.

• Serviceable Addressable Market (SAM): The SAM is the share of the market you can target after accounting for your current size, production capacity, and geographic area.
• Serviceable Obtainable Market (SOM): Meanwhile, the SOM is the portion of the SAM that you can realistically capture in the short term based on your current capacity and constraints. 
• Total Addressable Market (TAM): This is the entire revenue opportunity available if you could capture 100% of the market.

4. Competitor Analysis

A competitor analysis focuses on three to five competitors in your industry. You should review what each competitor excels at and where they fall short. Through this type of analysis, you can discover ways you can differentiate your business. 

For example, an electrician may review local competitors and realize that none of them offer online booking options. Given how many clients are online and the ease of scheduling for customers, this marketing opportunity represents a strategic advantage.

Entity types, registration status, and ownership information can also reveal useful insights. By using EntityCheck’s Secretary of State (SOS) search, you can quickly find out how your competitors are structured. Then, you can use this intelligence to inform your competitive analysis.

5. Products and Services

The products you sell, how they work, and why customers might want them are important parts of your business plan. In this section, you should illustrate your pricing model and what problem your product solves. You’ll also need to review where you are in the development cycle, such as the concept or launch stage.

Other information may also be necessary, such as your supply chain or production processes. If you are in the pre-launch stage, you’ll need to include a realistic development timeline.

6. Marketing and Sales Plan

Your marketing strategy demonstrates how you will attract customers. For example, you may use mailers, a social media campaign, content for search engine optimization (SEO), paid ads, or partnerships. In your plan, you should address your key marketing channels, the target audience, buyer personas, and your conversion strategy. 

Before you start marketing your product, you should think about your value proposition. This is a concise statement explaining why your clients would choose your business over any other. Once you have a strong, accurate value proposition, you can use it to guide the rest of your marketing approach.

As part of this process, you may also need to file a trademark or patent. Trademarks are essential for protecting your brand identity by protecting your logo and brand name. Meanwhile, patents protect your product position by keeping others from making or selling the products you design without your permission.

When investors read through your company’s business plan, they want to see the marketing plan. Even if you are the best manufacturer in the world, you won’t generate revenue if you can’t find a way to attract the right customers.

7. Operations Plan

Your operations plan involves how your business runs on a day-to-day basis. For example, this section should include your vendors, suppliers, location, facilities, qand equipment. It needs to include your current production or service delivery process and how you will staff your business. Technology, like AI tools and automation, should also be included in the operations plan.

8. Financial Plan

If you’re applying for funding or seeking investors, this section will be the most scrutinized part of your plan. Even though you want to appear to be a great investment, you should also be realistic. An unreasonably optimistic financial plan is one of the most common reasons why lenders reject business plans.

Within the financial plan, you should include your expense forecast, break-even analysis, cash flow statement, and revenue projections for 3 to 5 years. Your funding requirements should detail how much you need and how you will use the funds. If you have an existing business, you should also include your historical income statements and balance sheets.

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

Figuring out how to write a business plan doesn’t have to be challenging. With the following recommendations, you can quickly create your business plan. Keep in mind that your executive summary should be written last, even though it will be the first section of the plan.

Step 1: Define Your Business Idea and Goals

First, you need to understand what pain point or need you want to address as a company. You need to thoroughly consider who you plan on serving and your mission. Then, clarify your revenue target, market position, and targeted customer count as part of your one-year and three-year goals.

Step 2: Research Your Market and Competitors

Next, research the existing market. Your market analysis needs to be completed before you create the rest of the business plan, because you first need to know whether your plan is viable. 

As part of your market analysis, you can review government data, industry reports, and competitor research. For example, EntityCheck’s SOS Search, Employer Identification Number (EIN) Lookup, and Professional License Lookup tools let you see how your established competitors are structuring and registering their companies.

Step 3: Choose Your Business Structure

If you are not an established business already, you will also need to decide on your business structure. Setting up your company as a sole proprietorship, LLC, S corp, or C corp will have a direct impact on your funding options, liability, and taxes. Depending on your industry and where your business is located, you may also require a range of business licenses.

Step 4: Write Each Section in Order (Except the Executive Summary)

Next, you should write the rest of the business plan in order. Start with the company description. Then, write the market analysis, competitor analysis, products or services, marketing plan, operations plan, and financial plan. The only exception is that the executive summary should be left for the end so that you can incorporate the strongest parts of every section.

Step 5: Build Your Financial Projections

For many businesses, creating revenue or expense projections is difficult. Whenever possible, you should use competitor pricing, actual cost quotes, industry benchmarks, and real data to build your base projections.

A lender will want to see your income statement, cash flow statement, and balance sheet. While three years of documentation is often the minimum required by investors, they generally prefer to see at least five years of financial documentation. However, this preference may not be required in every case, such as with startups.

Step 6: Write the Executive Summary Last

When you have finished all of the other sections, you can finally write your one-page summary. By waiting until the end to create this section, you can gain more clarity about what sets your business apart. While the executive summary should be less than a page, it should include your business's activities, revenue model, target market, and funding request. Additionally, add a single compelling reason why your business will succeed.

Step 7: Review, Proofread, and Update Regularly

A business plan isn’t simply a document you create to get a loan and then forget about. It should be revisited every quarter to make adjustments. 

Before you submit it to an investor or lender, always review your plan for unrealistic assumptions, financial errors, and spelling mistakes. These are the most common reasons for a plan’s rejection, and they are completely preventable.

Business Plan Writing Tips: What Investors and Lenders Actually Want

The reality is that many of the business plans that fell flat weren’t bad ideas. They just didn’t address what the investor or lender cared about. By adopting a few key tips and learning how to create a business plan, you can increase the likelihood that your funding request will be approved.

Be Realistic With Financial Projections

First, you need to be realistic with your financial projections. Over-optimistic revenue forecasts are frequently rejected right away. Use competitor pricing, industry growth, actual cost quotes from your suppliers, and real data to illustrate best-case, expected-case, and worst-case scenarios.

Know Your Competition Inside Out

If you’re working on how to write a business plan, start by taking a look at your competition. By understanding your competitors, you can spot opportunities for differentiation. You’ll also need to include detailed information about the competition in your competitor analysis. 

For extra insights, use EntityCheck’s tools to verify your competitor’s entity status and ownership.

Show Traction If You Have It

If you already have letters of intent, long waitlists, a consistent revenue stream, or early customers, don’t be afraid to show it. These early successes demonstrate that your business is getting traction, which increases lender confidence and the likelihood of getting funding. If your business website already has 500 people signed up for product launch notifications, clear consumer demand will strongly support your funding request.

Keep It Readable

Lenders and investors read many business plans in a typical day. If your business plan features a 40-page wall of tiny text, it’s less likely to be read. Short paragraphs, tables, bullet points, and headers make your plan easier to read and more concise. Many investors read on their mobile devices, so you need to make it easier for them to understand what your company offers.

Common Business Plan Mistakes to Avoid

Besides learning how to write a business plan the right way, it’s also important to understand common mistakes that should be avoided.

Confusing Business Registration With Having a Plan

Registering your business is a necessary step, but it is only one small part of your entire strategy. You still need a viable business plan to demonstrate your strategy and prove that your projections will work.

Skipping the Competitor Analysis

Every business faces some form of competition, so a business plan claiming there are no real competitors is a red flag for investors. An alternative product or service can still compete with your offering even if it is an imperfect substitute, such as when people opt for public transportation options instead of a personal car. 

With EntityCheck’s SOS Search and Instant Professional License Lookup, you can quickly see your competitor’s structure and select insights into their operations.

Unrealistic Financial Projections

If the business plan says a completely new business will make $20 million in its first year, lenders and investors won’t want to back it. Unreasonable financial projections immediately undermine the business plan. Instead, back up the plan with your actual unit price, website traffic, and vendor estimates.  

Writing It Once and Never Updating It

A business plan from 2023 is likely useless today. From automation to new competitors, many changes can occur that make your old business plan invalid. Ideally, you should review and update the plan once per quarter. At the very least, the plan should be revised before funding requests are submitted.