startup business plan meaning

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How to Write a Business Plan, Step by Step

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What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

ZenBusiness

A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

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

Noah Parsons

24 min. read

Updated April 17, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

Free business plan templates and examples

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan
• Templates and examples

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What is a Business Plan? Definition, Tips, and Templates

Published: June 07, 2023

In an era where more than 20% of small enterprises fail in their first year, having a clear, defined, and well-thought-out business plan is a crucial first step for setting up a business for long-term success.

Business plans are a required tool for all entrepreneurs, business owners, business acquirers, and even business school students. But … what exactly is a business plan?

In this post, we'll explain what a business plan is, the reasons why you'd need one, identify different types of business plans, and what you should include in yours.

What is a business plan?

A business plan is a documented strategy for a business that highlights its goals and its plans for achieving them. It outlines a company's go-to-market plan, financial projections, market research, business purpose, and mission statement. Key staff who are responsible for achieving the goals may also be included in the business plan along with a timeline.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

What is a business plan used for?

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

Business Plan Template [ Download Now ]

Working on your business plan? Try using our Business Plan Template . Pre-filled with the sections a great business plan needs, the template will give aspiring entrepreneurs a feel for what a business plan is, what should be in it, and how it can be used to establish and grow a business from the ground up.

Purposes of a Business Plan

Chances are, someone drafting a business plan will be doing so for one or more of the following reasons:

1. Securing financing from investors.

Since its contents revolve around how businesses succeed, break even, and turn a profit, a business plan is used as a tool for sourcing capital. This document is an entrepreneur's way of showing potential investors or lenders how their capital will be put to work and how it will help the business thrive.

All banks, investors, and venture capital firms will want to see a business plan before handing over their money, and investors typically expect a 10% ROI or more from the capital they invest in a business.

Therefore, these investors need to know if — and when — they'll be making their money back (and then some). Additionally, they'll want to read about the process and strategy for how the business will reach those financial goals, which is where the context provided by sales, marketing, and operations plans come into play.

2. Documenting a company's strategy and goals.

A business plan should leave no stone unturned.

Business plans can span dozens or even hundreds of pages, affording their drafters the opportunity to explain what a business' goals are and how the business will achieve them.

To show potential investors that they've addressed every question and thought through every possible scenario, entrepreneurs should thoroughly explain their marketing, sales, and operations strategies — from acquiring a physical location for the business to explaining a tactical approach for marketing penetration.

These explanations should ultimately lead to a business' break-even point supported by a sales forecast and financial projections, with the business plan writer being able to speak to the why behind anything outlined in the plan.

Free Business Plan Template

The essential document for starting a business -- custom built for your needs.

• Outline your idea.
• Pitch to investors.
• Secure funding.
• Get to work!

You're all set!

Click this link to access this resource at any time.

Free Business Plan [Template]

Fill out the form to access your free business plan., 3. legitimizing a business idea..

Everyone's got a great idea for a company — until they put pen to paper and realize that it's not exactly feasible.

A business plan is an aspiring entrepreneur's way to prove that a business idea is actually worth pursuing.

As entrepreneurs document their go-to-market process, capital needs, and expected return on investment, entrepreneurs likely come across a few hiccups that will make them second guess their strategies and metrics — and that's exactly what the business plan is for.

It ensures an entrepreneur's ducks are in a row before bringing their business idea to the world and reassures the readers that whoever wrote the plan is serious about the idea, having put hours into thinking of the business idea, fleshing out growth tactics, and calculating financial projections.

4. Getting an A in your business class.

Speaking from personal experience, there's a chance you're here to get business plan ideas for your Business 101 class project.

If that's the case, might we suggest checking out this post on How to Write a Business Plan — providing a section-by-section guide on creating your plan?

What does a business plan need to include?

• Business Plan Subtitle
• Executive Summary
• Company Description
• The Business Opportunity
• Competitive Analysis
• Target Market
• Marketing Plan
• Financial Summary
• Funding Requirements

1. Business Plan Subtitle

Every great business plan starts with a captivating title and subtitle. You’ll want to make it clear that the document is, in fact, a business plan, but the subtitle can help tell the story of your business in just a short sentence.

2. Executive Summary

Although this is the last part of the business plan that you’ll write, it’s the first section (and maybe the only section) that stakeholders will read. The executive summary of a business plan sets the stage for the rest of the document. It includes your company’s mission or vision statement, value proposition, and long-term goals.

3. Company Description

This brief part of your business plan will detail your business name, years in operation, key offerings, and positioning statement. You might even add core values or a short history of the company. The company description’s role in a business plan is to introduce your business to the reader in a compelling and concise way.

4. The Business Opportunity

The business opportunity should convince investors that your organization meets the needs of the market in a way that no other company can. This section explains the specific problem your business solves within the marketplace and how it solves them. It will include your value proposition as well as some high-level information about your target market.

5. Competitive Analysis

Just about every industry has more than one player in the market. Even if your business owns the majority of the market share in your industry or your business concept is the first of its kind, you still have competition. In the competitive analysis section, you’ll take an objective look at the industry landscape to determine where your business fits. A SWOT analysis is an organized way to format this section.

6. Target Market

Who are the core customers of your business and why? The target market portion of your business plan outlines this in detail. The target market should explain the demographics, psychographics, behavioristics, and geographics of the ideal customer.

7. Marketing Plan

Marketing is expansive, and it’ll be tempting to cover every type of marketing possible, but a brief overview of how you’ll market your unique value proposition to your target audience, followed by a tactical plan will suffice.

Think broadly and narrow down from there: Will you focus on a slow-and-steady play where you make an upfront investment in organic customer acquisition? Or will you generate lots of quick customers using a pay-to-play advertising strategy? This kind of information should guide the marketing plan section of your business plan.

8. Financial Summary

Money doesn’t grow on trees and even the most digital, sustainable businesses have expenses. Outlining a financial summary of where your business is currently and where you’d like it to be in the future will substantiate this section. Consider including any monetary information that will give potential investors a glimpse into the financial health of your business. Assets, liabilities, expenses, debt, investments, revenue, and more are all useful adds here.

So, you’ve outlined some great goals, the business opportunity is valid, and the industry is ready for what you have to offer. Who’s responsible for turning all this high-level talk into results? The "team" section of your business plan answers that question by providing an overview of the roles responsible for each goal. Don’t worry if you don’t have every team member on board yet, knowing what roles to hire for is helpful as you seek funding from investors.

10. Funding Requirements

Remember that one of the goals of a business plan is to secure funding from investors, so you’ll need to include funding requirements you’d like them to fulfill. The amount your business needs, for what reasons, and for how long will meet the requirement for this section.

Types of Business Plans

• Startup Business Plan
• Feasibility Business Plan
• Internal Business Plan
• Strategic Business Plan
• Business Acquisition Plan
• Business Repositioning Plan
• Expansion or Growth Business Plan

There’s no one size fits all business plan as there are several types of businesses in the market today. From startups with just one founder to historic household names that need to stay competitive, every type of business needs a business plan that’s tailored to its needs. Below are a few of the most common types of business plans.

For even more examples, check out these sample business plans to help you write your own .

1. Startup Business Plan

As one of the most common types of business plans, a startup business plan is for new business ideas. This plan lays the foundation for the eventual success of a business.

The biggest challenge with the startup business plan is that it’s written completely from scratch. Startup business plans often reference existing industry data. They also explain unique business strategies and go-to-market plans.

Because startup business plans expand on an original idea, the contents will vary by the top priority goals.

For example, say a startup is looking for funding. If capital is a priority, this business plan might focus more on financial projections than marketing or company culture.

2. Feasibility Business Plan

This type of business plan focuses on a single essential aspect of the business — the product or service. It may be part of a startup business plan or a standalone plan for an existing organization. This comprehensive plan may include:

• A detailed product description
• Market analysis
• Technology needs
• Production needs
• Financial sources
• Production operations

According to CBInsights research, 35% of startups fail because of a lack of market need. Another 10% fail because of mistimed products.

Some businesses will complete a feasibility study to explore ideas and narrow product plans to the best choice. They conduct these studies before completing the feasibility business plan. Then the feasibility plan centers on that one product or service.

3. Internal Business Plan

Internal business plans help leaders communicate company goals, strategy, and performance. This helps the business align and work toward objectives more effectively.

Besides the typical elements in a startup business plan, an internal business plan may also include:

• Department-specific budgets
• Target demographic analysis
• Market size and share of voice analysis
• Action plans
• Sustainability plans

Most external-facing business plans focus on raising capital and support for a business. But an internal business plan helps keep the business mission consistent in the face of change.

4. Strategic Business Plan

Strategic business plans focus on long-term objectives for your business. They usually cover the first three to five years of operations. This is different from the typical startup business plan which focuses on the first one to three years. The audience for this plan is also primarily internal stakeholders.

These types of business plans may include:

• Relevant data and analysis
• Assessments of company resources
• Vision and mission statements

It's important to remember that, while many businesses create a strategic plan before launching, some business owners just jump in. So, this business plan can add value by outlining how your business plans to reach specific goals. This type of planning can also help a business anticipate future challenges.

5. Business Acquisition Plan

Investors use business plans to acquire existing businesses, too — not just new businesses.

A business acquisition plan may include costs, schedules, or management requirements. This data will come from an acquisition strategy.

A business plan for an existing company will explain:

• How an acquisition will change its operating model
• What will stay the same under new ownership
• Why things will change or stay the same
• Acquisition planning documentation
• Timelines for acquisition

Additionally, the business plan should speak to the current state of the business and why it's up for sale.

For example, if someone is purchasing a failing business, the business plan should explain why the business is being purchased. It should also include:

• What the new owner will do to turn the business around
• Historic business metrics
• Sales projections after the acquisition
• Justification for those projections

6. Business Repositioning Plan

When a business wants to avoid acquisition, reposition its brand, or try something new, CEOs or owners will develop a business repositioning plan.

This plan will:

• Acknowledge the current state of the company.
• State a vision for the future of the company.
• Explain why the business needs to reposition itself.
• Outline a process for how the company will adjust.

Companies planning for a business reposition often do so — proactively or retroactively — due to a shift in market trends and customer needs.

For example, shoe brand AllBirds plans to refocus its brand on core customers and shift its go-to-market strategy. These decisions are a reaction to lackluster sales following product changes and other missteps.

7. Expansion or Growth Business Plan

When your business is ready to expand, a growth business plan creates a useful structure for reaching specific targets.

For example, a successful business expanding into another location can use a growth business plan. This is because it may also mean the business needs to focus on a new target market or generate more capital.

This type of plan usually covers the next year or two of growth. It often references current sales, revenue, and successes. It may also include:

• SWOT analysis
• Growth opportunity studies
• Financial goals and plans
• Marketing plans
• Capability planning

These types of business plans will vary by business, but they can help businesses quickly rally around new priorities to drive growth.

Getting Started With Your Business Plan

At the end of the day, a business plan is simply an explanation of a business idea and why it will be successful. The more detail and thought you put into it, the more successful your plan — and the business it outlines — will be.

When writing your business plan, you’ll benefit from extensive research, feedback from your team or board of directors, and a solid template to organize your thoughts. If you need one of these, download HubSpot's Free Business Plan Template below to get started.

Editor's note: This post was originally published in August 2020 and has been updated for comprehensiveness.

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Blog Feature Updates

Startup Business Plans 101: Your Path to Success

By Jay Nair , Jul 24, 2023

It’s time — you’ve got a promising idea and you’re now prepared to invest the necessary effort to turn it into reality. Startup business plans are vital hack tools that will guide you through your entrepreneurial journey and a business venture with clarity and purpose.

Though vital, business planning doesn’t have to be a chore. Business plans for lean startups and solopreneurs can simply outline the business concept, sales proposition, target customers and sketch out a plan of action to bring the product or service to market. These plans will serve as strategic documents outlining your company’s vision, mission statements, business objectives, target market, financial forecasts and growth strategies.

To simplify the creation of a robust business plan as an entrepreneur, you can harness the power of a business plan maker . This invaluable tool streamlines the process and ensures a polished and well-organized presentation.  Startup business plan templates provide pre-designed frameworks that can be customized to suit your specific industry needs, saving valuable time and effort while preserving the essential structure of a comprehensive business plan.

Ready to begin? Let’s go!

Just so you know, some of our business plan templates are free to use and some require a small monthly fee. Sign-up is always free, as is access to Venngage’s online drag-and-drop editor.

Click to jump ahead:

• Laying the foundation of your startup business plan
• Business plan executive summary
• Writing your business description
• Marketing & sales strategies
• Startup operational plans
• Financial plans – forecasting and projections
• Team and management
• Appendix and supporting documents

FAQs on startup business plans

• Use Venngage to create your startup business plan

Preparation and research: 6 steps to laying the foundation of your startup business plan

• What problem does your product or service solve? 
• Who are your target customers? 
• What differentiates your offering from existing solutions in the market? 

This self-reflection will help you establish a clear direction for your startup.

• Next, conduct market research to gather valuable insights about your target market , including demographics, preferences, and purchasing behavior . This data will enable you to tailor your product or service to meet the specific needs of your customers. Identify trends, industry growth projections, and any potential barriers or challenges you may encounter.
• Competitive analysis is another critical aspect of preparation and research. Study your competitors to understand their strengths, weaknesses, and strategies. Analyze their pricing, marketing tactics, customer experience, and product/service features. This analysis will allow you to identify gaps in the market and position your startup to offer a unique value proposition .
• Financial research is equally important during this phase. Calculate the costs associated with starting and operating your business , including overhead expenses, production costs, marketing expenses, and employee salaries. Assess potential revenue streams and estimate your expected sales. This financial analysis will help you determine the feasibility of your business idea and outline a realistic financial plan.
• Additionally, gather information about legal and regulatory requirements that apply to your industry and location . Understand the necessary permits, licenses, and certifications you need to operate legally. Complying with these regulations from the outset will prevent potential setbacks or legal issues in the future.
• Finally, organize your findings and insights into a coherent business plan. Create your business plan outline , list your business plan goals, strategies, target market, competitive analysis, marketing plan, financial projections and any other relevant information. This compilation will serve as a roadmap for your startup, guiding your decisions and actions moving forward.

You’ve just encountered a wealth of information and are well on your way to becoming a seasoned business owner! This can sometimes feel overwhelming. But don’t worry, take a moment to breathe deeply and remember how far you’ve come. You’ve got this!

To help you condense and organize your essential points, I have brilliant one-page samples of business plan layouts and templates that will capture everything in a concise format.

Knowing when to use a one-page business plan versus a more comprehensive plan depends on various factors. A one-page business plan is ideal for providing a quick overview, saving time, and internal planning. However, it may not suffice for detailed information, complex business models, or meeting external stakeholders’ expectations.

Ultimately, consider the purpose, audience, and complexity of your business when deciding whether to utilize a one-page business plan or opt for a more detailed approach.

Executive Summary: Your Startup’s Elevator Pitch

First impressions are crucial, and a concise yet comprehensive executive summary is your chance to grab potential investors’ attention.

To create a compelling elevator pitch, consider the following key elements:

Problem Statement : Clearly articulate the problem or pain point that your startup addresses. Emphasize the significance of the problem and the potential market size

Solution : Concisely describe your innovative solution or product that solves the identified problem. Highlight its unique features or benefits that differentiate it from existing alternatives.

Target Market : Define your ideal customer segment and outline the market potential. Demonstrate a deep understanding of your target audience’s needs, preferences, and behavior.

Competitive Advantage : Showcase the competitive edge that sets your startup apart from competitors. This could include intellectual property, strategic partnerships, cost advantages, or disruptive technology.

Business Model : Briefly explain how your startup generates revenue and sustains profitability. Outline your monetization strategy, pricing model, and any recurring revenue streams .

Traction and Milestones : Highlight any significant achievements or milestones reached by your startup. This could include customer acquisitions, partnerships, product development progress, or market validation.

Team : Showcase the expertise and qualifications of your founding team or business partners. Highlight key members and their relevant experiences demonstrating their ability to execute the business plan.

I can sense your eagerness to dive right in! To expedite your progress, I’m excited to present you with a collection of meticulously crafted executive summary templates. These templates have been thoughtfully designed and structured by Venngage designers, ensuring seamless integration into your thorough business plan. All you need to do is infuse them with your brilliant startup ideas, and you’ll be well on your way to success!

Now, remember that there’s still a ton of work to be done. Let’s take a moment to regroup and ensure we’re on the right track. Before diving into the process of writing your business plan , it’s imperative to gather a wealth of essential information. Conducting comprehensive research is key, and it should encompass the following aspects:

How to assess your target audience

To gain comprehensive insights into your potential user base, creating a user persona report is invaluable. This persona guide report will help you develop a detailed understanding of various user profiles, enabling you to tailor your products or services to meet their specific needs and preferences.

Understanding Your Market and Competition

Analyze your market and any trends relevant to your startup. Research your competitors, their strengths and weaknesses, and identify what differentiates your offering from the competition.

Developing a Unique Value Proposition

A business Unique Value Proposition (UVP) is a concise statement that communicates the unique advantage a product or service offers over competitors, addressing a specific problem or need. It highlights the distinctive value and benefits customers can expect, helping businesses attract and retain customers by differentiating themselves in the market.

Your unique value proposition (UVP) is the cornerstone of your startup, defining what sets you apart from your competitors. A strong UVP focuses on the specific benefits and solutions your startup offers to customers.

Company Description: Painting the Picture

Your company description allows you to showcase your startup’s unique features and provide more in-depth details about your business. This section should include:

The Purpose of the Company Description

Clarify the purpose of your business, your goals and how your startup is uniquely positioned to achieve them.

Essential Information to Include

Include details such as your company’s legal structure, location and a brief history of any founders or key personnel.

Showcase Your Company’s Unique Features

Emphasize the unique aspects of your startup, explaining how these features translate into a competitive advantage.

Allow me to provide you with a dash of inspiration to ignite the momentum for your startup business plan:

When it comes to showcasing your company’s unique features, keep in mind that it is essential to emphasize and highlight the distinctive aspects of your startup . Clearly articulate how these features set your company apart from competitors and translate into a tangible competitive advantage . 

Whether it’s through cutting-edge technology, innovative business models, exceptional customer service, or a combination of factors, conveying the value and impact of these unique features is crucial. By effectively communicating the benefits they bring to customers, investors, and partners, you can demonstrate the significance of your offerings and differentiate yourself in the market.

Product/Service Line: What You’re Bringing to the Table

This section highlights the finer details of your product or service offerings:

Detailing Your Product/Service Offerings

Provide a thorough description of your products/services, highlighting key features and their intended use.

Highlighting Features, Benefits, and Solutions

Demonstrate how your startup’s offerings solve specific problems or address customer needs through an analysis of product features and associated benefits.

Defining Your Pricing and Revenue Model

Outline your startup’s pricing strategy and how it aligns with the overall business model. Detail any plans for scaling or expanding your revenue sources in the future.

Presenting Your Market Research Findings

Share insights from your market research, including target customer demographics, market size, and growth potential.

Identifying Market Trends and Opportunities

Discuss current trends, emerging opportunities, and how your startup will capitalize on these developments.

Marketing and Sales Strategies: Spreading the Word

Developing a robust marketing and sales strategy plan aligns with your overall business strategy and ensures steady growth. Marketing planning will be an essential part of your journey once you’ve got your business plan tight-knit! Also, creating a marketing strategy can be the most fun part of your business plan!

Developing a Comprehensive Marketing Strategy & Plan

• Outline Specific Marketing Goals : Clearly define your marketing objectives, whether it’s increasing brand awareness, driving website traffic, generating leads, or boosting sales . Set measurable targets to track progress.
• Identify Target Audience : Conduct thorough market research to identify your ideal customer profiles. Understand their demographics, behaviors, preferences, and pain points. Tailor your marketing messages to resonate with their needs.
• Select Effective Marketing Channels : Consider both digital and traditional channels that align with your target audience and marketing goals. This may include online advertising, social media marketing, content marketing, search engine optimization (SEO), email campaigns, print media, events, or partnerships.
• Craft Compelling Messages : Develop persuasive and consistent messaging that highlights the unique value proposition of your products or services. Clearly communicate how your offerings solve customer problems or improve their lives.

5 Tips for Effective Sales Techniques and Growth Strategies + free templates

• Define Your Sales Strategy : Outline the approach and tactics your sales team will use to reach and convert customers. This may involve direct sales, channel partnerships, online sales, or a combination of strategies. Specify your sales process, including lead generation, qualification, nurturing, and closing.
• Expand Your Customer Base : Identify opportunities to expand your customer reach. Consider targeting new customer segments, entering new geographic markets, or exploring untapped market niches. Develop strategies to attract and engage these potential customers.
• Penetrate New Markets : Assess the feasibility of expanding into new markets or verticals. Market research will help you understand the dynamics, competition, and customer needs in these markets. Adapt your marketing and sales strategies accordingly to effectively penetrate and capture market share.
• Innovate Products/Services : Continuously evaluate and enhance your product or service offerings to meet evolving customer demands. Identify areas for innovation or improvement and develop a roadmap for launching new features, versions, or complementary offerings.
• Perform a SWOT analysis : By conducting a sales SWOT analysis , you will gather valuable insights to enhance your department’s performance. This analysis involves evaluating your company’s strengths, weaknesses, opportunities, and threats, enabling you to identify areas for improvement and capitalize on advantageous factors in the market.

Here’s a hack to get you organized – Get right into it with the help of these growth strategy templates and strategic planning templates :

Operational Plan: How Your Startup Will Run

Define an efficient and scalable operational plan, keeping in mind the following points:

Defining an Efficient and Scalable Plan

Outline the day-to-day operations, including processes, timelines, and necessary resources.

Legal Considerations for Your Startup Business

Identify any legal requirements or considerations, such as licenses, permits, or regulations that may apply to your startup.

Key Elements of Supply Chain Management and Logistics

Discuss supply chain and logistical aspects relevant to your business. Include details on how you plan to manage and scale these processes.

Here’s a kickstart on how you can structure your operating plans:

Financial Projections: Crunching the Numbers

A startup’s financial projections are vital in securing investor buy-in. This section should address:

The Importance of Financial Forecasting and Budgeting

Explain the significance of accurate financial forecasting, budgeting, and the assumptions made in your projections.

Identifying Key Performance Indicators (KPIs)

Highlight the KPIs used to gauge your business’s financial health and growth trajectory.

Outlining Funding Requirements

Detail the amount and type of funding your startup requires , including how the funds will be allocated and how this investment positions the company for growth.

Team and Management Structure: Building Your Dream Team

Your startup’s success depends on the people behind it. This section should cover:

Tips for Building the Right Team

Share your strategy for assembling a skilled team that supports your startup’s vision and growth trajectory.

Founders’ Background and Roles

Provide an overview of the founders’ backgrounds, their roles within the company, and how their skills contribute to the startup’s success.

Organizational Structure and Key Management Personnel

Outline your startup’s organizational structure, including any key management personnel who play a pivotal role in day-to-day operations.

Appendices and Supporting Documents: Backing Up Your Plan

Include any other relevant supporting documents, such as:

• Research data, market analysis, or competitor analyses.
• Financial statements, budgeting or forecasting data, and other financial documentation.
• Legal documents, agreements or contracts, and any patent or trademark information.

Finally, remember to review and update your business plan regularly as the industry, market, and competitive landscape evolve!

1. Why is a business plan essential for a startup?

A startup business plan is crucial for a startup because it provides a framework for strategic decision-making, facilitates financial planning, helps assess risks, aligns teams, communicates your vision, and ensures effective resource allocation. 

2. What should a startup business plan include?

A startup business plan should include:

• Vision and Direction : Set clear goals and objectives, and outline strategies to achieve them. With a well-defined plan, you will stay focused, make informed decisions, and ensure alignment with your vision.
• Market Analysis : A business plan necessitates thorough market research to understand your target market, identify competition, and assess product/service demand. These insights enable you to tailor offerings, meet customer needs, and gain a competitive edge.
• Financial Planning : By constructing a financial roadmap through projected statements such as income, cash flow, and balance sheets, a business plan unveils the expected revenues, expenses, and profitability. This comprehensive planning not only anticipates challenges and sets realistic goals but also serves as a magnet for attracting investors and securing funding.
• Risk Assessment : Devise strategies for risk mitigation and contingency planning. By proactively doing this, you can significantly enhance the likelihood of success by anticipating and effectively addressing potential obstacles.
• Communication and Team Alignment : From fostering effective communication with both internal and external stakeholders to aligning team members and showcasing your startup’s unique value proposition, a business plan plays a crucial role. It enables you to articulate target market insights, competitive advantages, and growth strategies to potential investors, partners, and employees.
• Resource Allocation : A business plan helps you identify the resources required to launch and operate your startup successfully. It includes an assessment of your human resources, technology needs, infrastructure requirements, and other key resources. By understanding your resource needs, you can allocate them effectively, ensuring that you have the necessary assets to execute your business strategy.
• Adaptability and Flexibility : Your business plan should be flexible enough to accommodate changes and adapt to new circumstances. Startups operate in dynamic environments, and a well-designed plan allows you to monitor progress, evaluate outcomes, and make adjustments as needed. This agility enables you to seize new opportunities and navigate challenges effectively.

3. What is the ideal length for a startup business plan?

The optimal length for a startup business plan typically depends on the specific requirements and intended audience, but a concise and focused plan of around 20 to 30 pages is often recommended.

4. How to write a good startup business plan?

To write a good and effective startup plan, include an executive summary, company description, market analysis, detailed products/services description and a clear marketing and sales strategy. Also incorporate a comprehensive financial plan, outline your organizational structure, and demonstrates your team’s expertise and capabilities. Your plan should be well-researched, concise, and compelling, with a focus on your company’s unique value proposition and market opportunity, making it attractive to investors and stakeholders.

Utilizing Venngage templates & other tools for success

A visually appealing and professional business plan needn’t be a daunting task. Leverage tools like Venngage Business Plan Maker for effective templates that cater to various industries and streamline the process. 

• Leveraging Venngage for Visually Appealing and Professional Business Plans

Venngage offers a range of templates designed specifically for business plans, allowing you to craft a polished and visually engaging plan without any design experience. Simply choose a template, customize it to suit your startup’s branding, and populate it with your content.

• Exploring Additional Resources and Tools for Entrepreneurs. In addition to Venngage, several other resources and tools can assist entrepreneurs in crafting the perfect business plan. Examples include:
• Small Business Administration (SBA) – Offers guidance on writing business plans and provides templates and resources for each section.
• SCORE – A nonprofit organization providing mentorship, workshops, and other resources for entrepreneurs.
• Industry-specific resources – Research relevant professional organizations, industry publications, and blogs to stay up to date on industry trends and insights.

Embarking on the entrepreneurial path may present formidable challenges, yet it offers abundant rewards in various aspects. Embrace the art of continuous learning, delving not only into the essence of your business idea but also immersing yourself in the vast world that surrounds it. Cultivate a genuine passion for understanding every facet of your enterprise, for it is through this journey of exploration that you will uncover invaluable insights and experience the true fulfillment of entrepreneurship.

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Written by Jesse Sumrak | May 14, 2023

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Business plans might seem like an old-school stiff-collared practice, but they deserve a place in the startup realm, too. It’s probably not going to be the frame-worthy document you hang in the office—yet, it may one day be deserving of the privilege.

Whether you’re looking to win the heart of an angel investor or convince a bank to lend you money, you’ll need a business plan. And not just any ol’ notes and scribble on the back of a pizza box or napkin—you’ll need a professional, standardized report.

Bah. Sounds like homework, right?

Yes. Yes, it does.

However, just like bookkeeping, loan applications, and 404 redirects, business plans are an essential step in cementing your business foundation.

Don’t worry. We’ll show you how to write a business plan without boring you to tears. We’ve jam-packed this article with all the business plan examples, templates, and tips you need to take your non-existent proposal from concept to completion.

Table of Contents

What Is a Business Plan?

Tips to Make Your Small Business Plan Ironclad

How to Write a Business Plan in 6 Steps

Startup Business Plan Template

Business Plan Examples

Work on Making Your Business Plan

How to Write a Business Plan FAQs

What is a business plan why do you desperately need one.

A business plan is a roadmap that outlines:

• Who your business is, what it does, and who it serves
• Where your business is now
• Where you want it to go
• How you’re going to make it happen
• What might stop you from taking your business from Point A to Point B
• How you’ll overcome the predicted obstacles

While it’s not required when starting a business, having a business plan is helpful for a few reasons:

• Secure a Bank Loan: Before approving you for a business loan, banks will want to see that your business is legitimate and can repay the loan. They want to know how you’re going to use the loan and how you’ll make monthly payments on your debt. Lenders want to see a sound business strategy that doesn’t end in loan default.
• Win Over Investors: Like lenders, investors want to know they’re going to make a return on their investment. They need to see your business plan to have the confidence to hand you money.
• Stay Focused: It’s easy to get lost chasing the next big thing. Your business plan keeps you on track and focused on the big picture. Your business plan can prevent you from wasting time and resources on something that isn’t aligned with your business goals.

Beyond the reasoning, let’s look at what the data says:

• Simply writing a business plan can boost your average annual growth by 30%
• Entrepreneurs who create a formal business plan are 16% more likely to succeed than those who don’t
• A study looking at 65 fast-growth companies found that 71% had small business plans
• The process and output of creating a business plan have shown to improve business performance

Convinced yet? If those numbers and reasons don’t have you scrambling for pen and paper, who knows what will.

Don’t Skip: Business Startup Costs Checklist

Before we get into the nitty-gritty steps of how to write a business plan, let’s look at some high-level tips to get you started in the right direction:

Be Professional and Legit

You might be tempted to get cutesy or revolutionary with your business plan—resist the urge. While you should let your brand and creativity shine with everything you produce, business plans fall more into the realm of professional documents.

Think of your business plan the same way as your terms and conditions, employee contracts, or financial statements. You want your plan to be as uniform as possible so investors, lenders, partners, and prospective employees can find the information they need to make important decisions.

If you want to create a fun summary business plan for internal consumption, then, by all means, go right ahead. However, for the purpose of writing this external-facing document, keep it legit.

Know Your Audience

Your official business plan document is for lenders, investors, partners, and big-time prospective employees. Keep these names and faces in your mind as you draft your plan.

Think about what they might be interested in seeing, what questions they’ll ask, and what might convince (or scare) them. Cut the jargon and tailor your language so these individuals can understand.

Remember, these are busy people. They’re likely looking at hundreds of applicants and startup investments every month. Keep your business plan succinct and to the point. Include the most pertinent information and omit the sections that won’t impact their decision-making.

Invest Time Researching

You might not have answers to all the sections you should include in your business plan. Don’t skip over these!

Your audience will want:

• Detailed information about your customers
• Numbers and solid math to back up your financial claims and estimates
• Deep insights about your competitors and potential threats
• Data to support market opportunities and strategy

Your answers can’t be hypothetical or opinionated. You need research to back up your claims. If you don’t have that data yet, then invest time and money in collecting it. That information isn’t just critical for your business plan—it’s essential for owning, operating, and growing your company.

Stay Realistic

Your business may be ambitious, but reign in the enthusiasm just a teeny-tiny bit. The last thing you want to do is have an angel investor call BS and say “I’m out” before even giving you a chance.

The folks looking at your business and evaluating your plan have been around the block—they know a thing or two about fact and fiction. Your plan should be a blueprint for success. It should be the step-by-step roadmap for how you’re going from Point A to Point B.

How to Write a Business Plan—6 Essential Elements

Not every business plan looks the same, but most share a few common elements. Here’s what they typically include:

• Executive Summary
• Business Overview
• Products and Services
• Market Analysis
• Competitive Analysis
• Financial Strategy

Below, we’ll break down each of these sections in more detail.

1. Executive Summary

While your executive summary is the first page of your business plan, it’s the section you’ll write last. That’s because it summarizes your entire business plan into a succinct one-pager.

Begin with an executive summary that introduces the reader to your business and gives them an overview of what’s inside the business plan.

Your executive summary highlights key points of your plan. Consider this your elevator pitch. You want to put all your juiciest strengths and opportunities strategically in this section.

2. Business Overview

In this section, you can dive deeper into the elements of your business, including answering:

• What’s your business structure? Sole proprietorship, LLC, corporation, etc.
• Where is it located?
• Who owns the business? Does it have employees?
• What problem does it solve, and how?
• What’s your mission statement? Your mission statement briefly describes why you are in business. To write a proper mission statement, brainstorm your business’s core values and who you serve.

Don’t overlook your mission statement. This powerful sentence or paragraph could be the inspiration that drives an investor to take an interest in your business. Here are a few examples of powerful mission statements that just might give you the goosebumps:

• Patagonia: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.
• Tesla: To accelerate the world’s transition to sustainable energy.
• InvisionApp : Question Assumptions. Think Deeply. Iterate as a Lifestyle. Details, Details. Design is Everywhere. Integrity.
• TED : Spread ideas.
• Warby Parker : To offer designer eyewear at a revolutionary price while leading the way for socially conscious businesses.

3. Products and Services

As the owner, you know your business and the industry inside and out. However, whoever’s reading your document might not. You’re going to need to break down your products and services in minute detail.

For example, if you own a SaaS business, you’re going to need to explain how this business model works and what you’re selling.

You’ll need to include:

• What services you sell: Describe the services you provide and how these will help your target audience.
• What products you sell: Describe your products (and types if applicable) and how they will solve a need for your target and provide value.
• How much you charge: If you’re selling services, will you charge hourly, per project, retainer, or a mixture of all of these? If you’re selling products, what are the price ranges?

4. Market Analysis

Your market analysis essentially explains how your products and services address customer concerns and pain points. This section will include research and data on the state and direction of your industry and target market.

This research should reveal lucrative opportunities and how your business is uniquely positioned to seize the advantage. You’ll also want to touch on your marketing strategy and how it will (or does) work for your audience.

Include a detailed analysis of your target customers. This describes the people you serve and sell your product to. Be careful not to go too broad here—you don’t want to fall into the common entrepreneurial trap of trying to sell to everyone and thereby not differentiating yourself enough to survive the competition.

The market analysis section will include your unique value proposition. Your unique value proposition (UVP) is the thing that makes you stand out from your competitors. This is your key to success.

If you don’t have a UVP, you don’t have a way to take on competitors who are already in this space. Here’s an example of an ecommerce internet business plan outlining their competitive edge:

FireStarters’ competitive advantage is offering product lines that make a statement but won’t leave you broke. The major brands are expensive and not distinctive enough to satisfy the changing taste of our target customers. FireStarters offers products that are just ahead of the curve and so affordable that our customers will return to the website often to check out what’s new.

5. Competitive Analysis

Your competitive analysis examines the strengths and weaknesses of competing businesses in your market or industry. This will include direct and indirect competitors. It can also include threats and opportunities, like economic concerns or legal restraints.

The best way to sum up this section is with a classic SWOT analysis. This will explain your company’s position in relation to your competitors.

6. Financial Strategy

Your financial strategy will sum up your revenue, expenses, profit (or loss), and financial plan for the future. It’ll explain how you make money, where your cash flow goes, and how you’ll become profitable or stay profitable.

This is one of the most important sections for lenders and investors. Have you ever watched Shark Tank? They always ask about the company’s financial situation. How has it performed in the past? What’s the ongoing outlook moving forward? How does the business plan to make it happen?

Answer all of these questions in your financial strategy so that your audience doesn’t have to ask. Go ahead and include forecasts and graphs in your plan, too:

• Balance sheet: This includes your assets, liabilities, and equity.
• Profit & Loss (P&L) statement: This details your income and expenses over a given period.
• Cash flow statement: Similar to the P&L, this one will show all cash flowing into and out of the business each month.

It takes cash to change the world—lenders and investors get it. If you’re short on funding, explain how much money you’ll need and how you’ll use the capital. Where are you looking for financing? Are you looking to take out a business loan, or would you rather trade equity for capital instead?

Read More: 16 Financial Concepts Every Entrepreneur Needs to Know

Startup Business Plan Template (Copy/Paste Outline)

Ready to write your own business plan? Copy/paste the startup business plan template below and fill in the blanks.

Executive Summary Remember, do this last. Summarize who you are and your business plan in one page.

Business Overview Describe your business. What’s it do? Who owns it? How’s it structured? What’s the mission statement?

Products and Services Detail the products and services you offer. How do they work? What do you charge?

Market Analysis Write about the state of the market and opportunities. Use date. Describe your customers. Include your UVP.

Competitive Analysis Outline the competitors in your market and industry. Include threats and opportunities. Add a SWOT analysis of your business.

Financial Strategy Sum up your revenue, expenses, profit (or loss), and financial plan for the future. If you’re applying for a loan, include how you’ll use the funding to progress the business.

5 Frame-Worthy Business Plan Examples

Want to explore other templates and examples? We got you covered. Check out these 5 business plan examples you can use as inspiration when writing your plan:

• SBA Wooden Grain Toy Company
• SBA We Can Do It Consulting
• OrcaSmart Business Plan Sample
• Plum Business Plan Template
• PandaDoc Free Business Plan Templates

Get to Work on Making Your Business Plan

If you find you’re getting stuck on perfecting your document, opt for a simple one-page business plan —and then get to work. You can always polish up your official plan later as you learn more about your business and the industry.

Remember, business plans are not a requirement for starting a business—they’re only truly essential if a bank or investor is asking for it.

Ask others to review your business plan. Get feedback from other startups and successful business owners. They’ll likely be able to see holes in your planning or undetected opportunities—just make sure these individuals aren’t your competitors (or potential competitors).

Your business plan isn’t a one-and-done report—it’s a living, breathing document. You’ll make changes to it as you grow and evolve. When the market or your customers change, your plan will need to change to adapt.

That means when you’re finished with this exercise, it’s not time to print your plan out and stuff it in a file cabinet somewhere. No, it should sit on your desk as a day-to-day reference. Use it (and update it) as you make decisions about your product, customers, and financial plan.

Review your business plan frequently, update it routinely, and follow the path you’ve developed to the future you’re building.

Keep Learning: New Product Development Process in 8 Easy Steps

What financial information should be included in a business plan?

Be as detailed as you can without assuming too much. For example, include your expected revenue, expenses, profit, and growth for the future.

What are some common mistakes to avoid when writing a business plan?

The most common mistake is turning your business plan into a textbook. A business plan is an internal guide and an external pitching tool. Cut the fat and only include the most relevant information to start and run your business.

Who should review my business plan before I submit it?

Co-founders, investors, or a board of advisors. Otherwise, reach out to a trusted mentor, your local chamber of commerce, or someone you know that runs a business.

Ready to Write Your Business Plan?

Don’t let creating a business plan hold you back from starting your business. Writing documents might not be your thing—that doesn’t mean your business is a bad idea.

Let us help you get started.

Join our free training to learn how to start an online side hustle in 30 days or less. We’ll provide you with a proven roadmap for how to find, validate, and pursue a profitable business idea (even if you have zero entrepreneurial experience).

Stuck on the ideas part? No problem. When you attend the masterclass, we’ll send you a free ebook with 100 of the hottest side hustle trends right now. It’s chock full of brilliant business ideas to get you up and running in the right direction.

About Jesse Sumrak

Jesse Sumrak is a writing zealot focused on creating killer content. He’s spent almost a decade writing about startup, marketing, and entrepreneurship topics, having built and sold his own post-apocalyptic fitness bootstrapped business. A writer by day and a peak bagger by night (and early early morning), you can usually find Jesse preparing for the apocalypse on a precipitous peak somewhere in the Rocky Mountains of Colorado.

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What Is a Business Plan? Definition and Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance. 

A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner. 

Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed. 

What is a business plan?

A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.  

Why do you need a business plan?

The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis. 

These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential. By regularly returning to your plan you can understand what parts of your strategy are working and those that are not.

That just scratches the surface for why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .  

What can you do with your plan?

So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.

Test an idea

Writing a plan isn’t just for those that are ready to start a business. It’s just as valuable for those that have an idea and want to determine if it’s actually possible or not. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful. 

The market and competitive research alone can tell you a lot about your idea. Is the marketplace too crowded? Is the solution you have in mind not really needed? Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability and you can paint a pretty clear picture of the potential of your business.

Document your strategy and goals

For those starting or managing a business understanding where you’re going and how you’re going to get there are vital. Writing your plan helps you do that. It ensures that you are considering all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen. 

With a plan in place, you’ll have an idea of where you want your business to go as well as how you’ve performed in the past. This alone better prepares you to take on challenges, review what you’ve done before, and make the right adjustments.

Pursue funding

Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors. So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can instead keep your plan up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.

The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but easily report on how it’s been used. 

Better manage your business

A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.

Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.

What should your business plan include?

The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see. 

Executive summary

The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover the problem you’re solving, a description of your product or service, your target market, organizational structure, a financial summary, and any necessary funding requirements.

This will be the first part of your plan but it’s easiest to write it after you’ve created your full plan.

Products & Services

When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table. Lastly, be sure to outline the steps or milestones that you’ll need to hit to successfully launch your business. If you’ve already hit some initial milestones, like taking pre-orders or early funding, be sure to include it here to further prove the validity of your business. 

Market analysis

A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the overall state and potential of the industry, who your ideal customers are, the positioning of your competition, and how you intend to position your own business. This helps you better explore the long-term trends of the market, what challenges to expect, and how you will need to initially introduce and even price your products or services.

Check out our full guide for how to conduct a market analysis in just four easy steps .  

Marketing & sales

Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add it. 

Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.

Check out our full write-up to learn how to create a cohesive marketing strategy for your business. 

Organization & management

This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history. Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.

Financial projections

Possibly the most important piece of your plan, your financials section is vital for showcasing the viability of your business. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex on the surface, but it can be far easier than you think. 

Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate. 

Here are the statements you should include in your financial plan:

• Sales and revenue projections
• Profit and loss statement
• Cash flow statement
• Balance sheet

The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first and only add documentation that you think will be beneficial for anyone reading your plan.

Types of business plans explained

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering. 

Traditional business plan

The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you’ll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual. 

This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information. 

Business model canvas

The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea. 

The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations. This is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan. This format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.

By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan. This plan type is useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Now, the option that we here at LivePlan recommend is the Lean Plan . This is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . However, it’s even easier to convert into a full plan thanks to how heavily it’s tied to your financials. The overall goal of Lean Planning isn’t to just produce documents that you use once and shelve. Instead, the Lean Planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.

It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

Try the LivePlan Method for Lean Business Planning

Now that you know the basics of business planning, it’s time to get started. Again we recommend leveraging a Lean Plan for a faster, easier, and far more useful planning process. 

To get familiar with the Lean Plan format, you can download our free Lean Plan template . However, if you want to elevate your ability to create and use your lean plan even further, you may want to explore LivePlan. 

It features step-by-step guidance that ensures you cover everything necessary while reducing the time spent on formatting and presenting. You’ll also gain access to financial forecasting tools that propel you through the process. Finally, it will transform your plan into a management tool that will help you easily compare your forecasts to your actual results. 

Check out how LivePlan streamlines Lean Planning by downloading our Kickstart Your Business ebook .

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The Importance of Market Research

Creating a business plan, legal requirements, exploring funding options, crafting a marketing strategy, managing and growing your business, how do i start a small business for beginners, how do i create a business plan, what are six ways to grow and scale a business, the bottom line.

• Small Business
• How to Start a Business

Starting a Small Business: Your Complete How-to Guide

From market research to managing growth

The U.S. is home to 33.2 million small businesses, which drive over 43% of GDP.   If you are looking to start a business, there are key factors to consider—from market research and creating a business plan to scaling your business. These factors are critical to your journey and can make a big difference no matter what stage of the process you are in.

Entrepreneurs who take concrete action can differentiate themselves from competitors, innovate, and grow. For successful entrepreneurs, the execution of the business is often what means the most. 

Key Takeaways

• Starting a small business involves extensive market research of your target audience, competitors, and gaining a deep understanding of the industry.
• It is important to build a comprehensive business plan that includes the product or service description, your target customers, financial projections, and all other key details.
• Understanding the legal requirements of starting your business involves knowledge of business registration, permits, licensing, and other regulatory requirements.
• There are various types of funding channels for starting a business, including financing it yourself, securing external funding from your network, and applying for government and corporate grants and loans. 

Being clear about your business goals involves doing your research. Successful entrepreneurs often do extensive research on their field. This includes understanding their prospective customers, the technical aspects of the industry, and the challenges other businesses are facing. 

Understanding how other players operate in an industry is important. Attending conferences, joining associations, and building a network of people involved in the field can help you learn how decisions are made. Often, comprehensive market research takes six months to a year. 

Understanding Your Target Audience

Knowing your target market is critical for many reasons. These are the customers who are most likely to purchase your product, recommend it to friends, and become repeat buyers. Apart from driving your bottom line, having a strong understanding of your target audience will allow you to tailor your offering more effectively, reach your customers more efficiently, and manage customer expectations.

Compiling demographic data on age, family, wealth, and other factors can give you a clearer understanding of market demand for your product and your potential market size.

It’s important to ask, “Why would someone buy this and part with their discretionary income?” or “Will someone love this enough to tell someone about it?” At the heart of these questions is understanding whether your business solves a key problem, as well as whether it delivers the “more” that connects to your audiences’ human emotions.

Assessing Market Trends and Opportunities

To find an advantage in a given market, look at key market trends in customer behavior and the business landscape. Explore the state of business conditions and consumer spending, along with the economic environment and how interest rates may affect financing and business growth.

Several resources are available to dive into market trends across industries, such as Statistics of U.S. Businesses and the U.S. Census Business Builder . To analyze the competitive landscape, and in turn, identify key opportunities, Porter's 5 Forces is a classic model to help businesses build their competitive strategy.

A business plan is a road map for achieving your business goals. It outlines the capital that you need, the personnel to make it happen, and the description of your product and prospective customers.

There are a number of models for creating a business plan. The Small Business Administration (SBA) , for instance, provides a format that includes the following nine sections:

• Executive summary: This should be a description of your company and its potential for success. The executive summary can cover your mission statement, employees, location, and growth plan.
• Company description: This is where you detail what your business offers, its competitive advantages, and your strengths as a business.
• Market analysis: Lay out how your company is positioned to perform well in your industry. Describe market trends and themes and your knowledge of successful competitors.
• Organization and management: Who is running your company, and how is your business structured? Include an organizational chart of your management team. Discuss if your business will be incorporated as a business C or S corporation, a limited partnership, a limited liability company, or a sole proprietorship. 
• Service or product line: Here is where you describe how your business will solve a problem and why this will benefit customers. Describe how your product lifecycle would unfold.
• Marketing and sales: Detail your marketing strategy and how this will reach your customers and drive return on investment. 
• Funding request: If you're looking for financing, lay out the capital you’re requesting under a five-year horizon and where, in detail, it will be allocated, such as salaries, materials, or equipment. 
• Financial projections: This section shows the five-year financial outlook for your company and ties these to your request for capital.

Having a coherent business plan is important for businesses looking to raise cash and crystallize their business goals.

Setting Goals and Strategies

Another key aspect of a business plan is setting realistic goals and having a strategy to make these a reality. Having a clear direction will help you stay on track within specified deadlines. In many ways, it allows companies to create a strategic plan that defines measurable actions and is coupled with an honest assessment of the business, taking into account its resources and competitive environment. Strategy is a top-down look at your business to achieve these targets.

Financial Projections and Budgeting

Often, entrepreneurs underestimate the amount of funding needed to start a business. Outlining financial projections shows how money will be generated, where it will come from, and whether it can sustain growth. 

This provides the basis for budgeting the costs to run a business and get it off the ground. Budgeting covers the expenses and income generated from the business, which include salaries and marketing expenses and projected revenue from sales.

Another important aspect of starting a business are the legal requirements that enable you to operate under the law. The legal structure of a business will impact your taxes, your liability, and how you operate.

Businesses may consider the following structures in which to operate:

• Corporation
• Limited Liability Company (LLC)
• Partnership
• Sole Proprietorship

Each has different legal consequences, from regulatory burdens to tax advantages to liability being shifted to the business instead of the business owner.

Registering Your Business

Now that you have your business structure outlined, the next step is registering your business . Your location is the second key factor in how you’ll register your business. In many cases, small businesses can register their business name with local and state government authorities. 

If your business is being conducted under your legal name, registration is not required. However, such a business structure may not benefit from liability protection, along with certain legal and tax advantages. Often, registering your businesses costs $300 or less.

Before filing, a business structured as a corporation, LLC, or partnership requires a registered agent in its state. These agents handle the legal documents and official papers on your behalf.

Businesses that are looking to trademark their product, brand, or business, can file with the United States Patent and Trademark Office.

Understanding Permits and Licenses

If your business conducts certain activities that are regulated by a federal agency, you’re required to get a permit or license. A list of regulated activities can be found on the SBA website, and includes activities such as agriculture, alcoholic beverages, and transportation.

There are many different ways to fund a business. One of the key mistakes entrepreneurs make is not having enough capital to get their business running . The good news is that there are several channels to help make this happen, given the vital role entrepreneurs play in creating jobs and boosting productivity in the wider economy.

Self-Funding vs. External Funding

Bootstrapping, the term commonly used to describe self-funding your business, is where companies tap into their own cash or network of family and friends for investment. While the advantage of self-funding is having greater control, the downside is that it often involves more personal risk.

External funding involves funding from bank loans, crowdfunding, or venture capital , among other sources. These may provide additional buffers and enable you to capture growth opportunities. The drawback is less freedom and more stringent requirements for paying back these funds.

Grant and Loan Opportunities

Today, there are thousands of grants designed especially for small businesses from the government, corporations, and other organizations. The U.S. Chamber of Commerce provides a weekly update of grants and loans available to small businesses. 

For instance, Business Warrior offers loans between $5,000 and $50,000 to small business owners. As another example, Go. Be. Elevate Fund offers $4,000 to grant recipients who are women and/or people of color business owners to help them grow their businesses.

When it comes to marketing, there is a classic quote from Milan Kundera: “Business has only two functions—marketing and innovation." In order to reach customers, a business needs a marketing strategy that attracts and retains customers and expands its customer base.

To gain an edge, small businesses can utilize social media, email marketing, and other digital channels to connect and engage with customers.

Branding Your Business

Building a successful brand goes hand in hand with building a great experience for the customer. This involves meeting the expectations of your customer. What is your brand offering? Is it convenience, luxury, or rapid access to a product? Consider how your brand meets a customer's immediate need or the type of emotional response it elicits. Customer interaction, and in turn loyalty to your brand, is influenced, for example, by how your brand may align with their values, how it shifts their perception, or if it resolves customer frustration.

Digital Marketing and Social Media

We live in a digital-first world, and utilizing social media channels can help your business reach a wider audience and connect and engage in real time. Given that a strong brand is at the heart of successful companies, it often goes without saying that cultivating a digital presence is a necessity in order to reach your customers. 

According to HubSpot’s 2023 report, The State of Consumer Trends, 41% of the 600-plus consumers surveyed discovered new products on social media and 17% bought a product there in the past three months.

Managing a business has its challenges. Finding the right personnel to run operations, manage the day-to-day, and reach your business objectives takes time. Sometimes, businesses may look to hire experts in their field who can bring in specialized knowledge to help their business grow, such as data analysts, marketing specialists, or others with niche knowledge relevant to their field.

Hiring and Training Staff

Finding the right employees involves preparing job descriptions, posting on relevant job boards such as LinkedIn, and effectively screening applicants. Careful screening may involve a supplemental test, reviewing a candidate's portfolio, and asking situational and behavioral questions in the interview. These tools will help you evaluate applicants and improve the odds that you'll find the people you are looking for.

Once you have hired a new employee, training is the next essential step. On average, it takes about 62 hours to train new employees. Effectively training employees often leads to higher retention. While on-the-job training is useful, consider having an onboarding plan in place to make the transition clear while outlining expectations for the job.

Scaling Your Business

Growing your business also requires strategy. According to Gino Chirio, executive vice president at the consultancy group Maddock Douglas, there are six ways that companies can grow their business to drive real growth and expansion:

• New processes: Boost margins by cutting costs.
• New experiences: Connect with customers in powerful ways to help increase retention.
• New features: Provide advancements to your existing product or service.
• New customers: Expand into new markets, or find markets where your product addresses a different need.
• New offerings: Offer a new product.
• New models: Utilize new business models, such as subscription-based services, fee-for-service, or advertising-based models.

With these six ways to grow a business, it is important to consider the risk, investment, and time involved. Improving your margins through new processes is often the most straightforward way to grow. Offering new features is also effective since it is tailored to your existing market with products you have already delivered.

By contrast, offering new products may involve higher risk since these have not been tested in the market. However, they may offer higher reward, especially if you have a first-mover advantage and release your product in the market before the competition.

A good place to start building a business is to understand the following core steps that are involved in an entrepreneur's journey : market research, creating a business plan, knowing the legal requirements, researching funding options, developing a marketing strategy, and business management.

A business plan is made up of a number of primary components that help outline your business goals and company operations in a clear, coherent way. It includes an executive summary, company description, market analysis, organization and management description, service or product line description, marketing and sales plan, funding requests (optional), and financial projections.

Business growth can fall into the following six categories, with each having varying degrees of risk and investment: new processes, new experiences, new features, new customers, new offerings, and new models.

Knowing how to start a small business involves the key steps of market research, setting up a business plan, understanding the legal requirements, exploring funding options, crafting a marketing strategy, and managing your business. 

For aspiring small business owners, these steps can help you successfully deliver your product or service to the market, and ultimately grow. While it can take a considerable amount of work, the payoffs are manifold: independence of work, personal fulfillment, financial reward, and following your passion.

U.S. Chamber of Commerce. " The State of Small Business Now ."

U.S. Small Business Administration. " Market Research and Competitive Analysis ."

U.S. Small Business Administration." Write Your Business Plan ."

U.S. Small Business Administration. " Choose a Business Structure ."

U.S. Small Business Administration. " Register Your Business ."

U.S. Small Business Administration. " Apply for Licenses and Permits ."

U.S. Small Business Administration. " Fund Your Business ."

U.S. Chamber of Commerce. " 52 Grants, Loans and Programs to Benefit Your Small Business ."

Ogilvy. " Behind Every Brand Is a Great Experience, and Vice Versa—Why Today's Customer Expects Synergy ."

HubSpot. " The State of Consumer Trends in 2023 ."

Training Magazine. " 2022 Training Industry Report ."

Harvard Business Review. " The Six Ways to Grow a Company ."

• How to Start a Business: A Comprehensive Guide and Essential Steps 1 of 25
• How to Do Market Research, Types, and Example 2 of 25
• Marketing Strategy: What It Is, How It Works, and How to Create One 3 of 25
• Marketing in Business: Strategies and Types Explained 4 of 25
• What Is a Marketing Plan? Types and How to Write One 5 of 25
• Business Development: Definition, Strategies, Steps & Skills 6 of 25
• Business Plan: What It Is, What's Included, and How to Write One 7 of 25
• Small Business Development Center (SBDC): Meaning, Types, Impact 8 of 25
• How to Write a Business Plan for a Loan 9 of 25
• Business Startup Costs: It’s in the Details 10 of 25
• Startup Capital Definition, Types, and Risks 11 of 25
• Bootstrapping Definition, Strategies, and Pros/Cons 12 of 25
• Crowdfunding: What It Is, How It Works, and Popular Websites 13 of 25
• Starting a Business with No Money: How to Begin 14 of 25
• A Comprehensive Guide to Establishing Business Credit 15 of 25
• Equity Financing: What It Is, How It Works, Pros and Cons 16 of 25
• Best Startup Business Loans for April 2024 17 of 25
• Sole Proprietorship: What It Is, Pros and Cons, and Differences From an LLC 18 of 25
• Partnership: Definition, How It Works, Taxation, and Types 19 of 25
• What Is an LLC? Limited Liability Company Structure and Benefits Defined 20 of 25
• Corporation: What It Is and How To Form One 21 of 25
• Starting a Small Business: Your Complete How-to Guide 22 of 25
• Starting an Online Business: A Step-by-Step Guide 23 of 25
• How to Start Your Own Bookkeeping Business: Essential Tips 24 of 25
• How to Start a Successful Dropshipping Business: A Comprehensive Guide 25 of 25

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How to Write a Startup Business Plan

May 28, 2022 - 10 min read

A startup business plan is an outline of your ideas and strategies for what you’ll need to do to start, manage, and even complete your startup’s mission. Creating one might sound simple enough, but because it’s a startup’s roadmap for success, it can be a complex document to create. 

Writing a business plan can make a world of difference for entrepreneurs who desire external funding. It involves determining your target customers, understanding what makes them tick, and figuring out how to reach them through marketing campaigns. 

In this blog post, we’ve explained why you should have a startup business plan, different types of startup business plans, and we’ve included 12 of the most effective tips for writing a startup business plan. If you’re ready to start with now, we have a product launch template to get you started quickly. 

What is a startup business plan?

A startup business plan is a written document that outlines your ideas and strategies for launching, managing, and eventually exiting your new venture. 

A well-constructed business plan can be crucial to the success of any entrepreneurial endeavor . As you prepare your proposal, keep in mind that it will evolve as you learn more about your market.

To start, create an outline of the most important items you'd like feedback on before writing anything down officially.

Then ask yourself these questions:

• What do I want?
• Why does my company exist?
• How will I make money?
• What are my long-term goals?

A detailed business plan helps you set milestones for measuring success. You can share the plan with investors who may want some reassurance on the viability of their investment in your company.

The best way to create a successful startup business plan is by including everything in an organized and easy-to-read document — marketing strategies, financial projections, team bios, timelines, and more.

What is a lean startup business plan?

A lean startup business plan is a method for developing products that relies on iterative experimentation to reduce uncertainty. 

It has been used by companies such as Google , Amazon, and Facebook in the early stages of their development, and involves testing your idea with real customers early in development.

Lean startups are less likely to fail because they have tested their product or service with live feedback from consumers. Doing this allows them to make changes quickly without wasting resources on something no one wants.

The goal is not to build an extensive business plan but rather a "lean" one that can be changed based on customer feedback and then re-evaluated in regular intervals until it reaches market potential — or fails.

A lean startup business plan is a strategy that focuses on getting a product in front of customers as quickly and cheaply as possible. Use the lean startup business plan to validate your ideas before wasting time and resources.

Why do you need a small startup business plan?

A small startup business plan is one of the most important steps in building a company. Apart from helping you to focus on company goals, it aids in obtaining feedback from potential partners and keeps the team on the same page.

The best thing about starting small? You can change course at any time! If you need help developing or tweaking your small startup business plan, use this guide for entrepreneurs to get started.

You've built a product and you're ready to take the next step, but what's your plan? First, you need a strategy in place. Do you know how much money it will cost, or where exactly that funding should come from? What about marketing strategies for getting customers in the door? 

You’ll also need to find ways to retain them afterwards so they keep coming back again and again (and spending more).

Obtain external funding

If you want to get funding from lenders or investors, you need a startup business plan. Lenders want to make sure they're investing in a company that will last and grow.

A well-organized idea shows passion for its purpose and outlines clear goals for helping customers. At the same time, having an exit strategy is also important.

Making a plan for when things don’t pan out as desired lets investors understand how much value there can be while giving customers (and yourself) peace of mind.

Understand your target market

One key piece of your business plan is knowing how to conduct a market analysis. To do this, consider the industry, target market, and competitors. 

Are there any market trends or competitor factors that can affect your business? Review them closely and get ready to make required changes to your business plan.

Prioritize high ROI strategies

In business, ROI is important. Any business that doesn’t generate as much cash as it burns is likely to fail.

With a startup business plan in place, the strategies with the highest ROI become crystal clear. You'll know exactly what to tackle first and how to prioritize the rest of your tasks.

Accelerate financial health

Business plans are not crystal balls, but they can help forecast your financial health. Planning for expenses is vital to keep operations steady and identify problems as soon as possible. 

Cash flow projections can help you see if goals are achievable or highlight upcoming issues that need correction before it's too late.

How to write a small startup business plan

Use this guide for entrepreneurs to develop or tweak a startup business plan. By following this easy six-step process, you'll soon have a clear path to startup success.

1. Clarify the startup vision, mission, and values

The first step to writing a startup business plan is understanding the startup itself.

Once you know what your startup does, ask yourself why. What is the startup's mission? What problem will it help customers solve? The startup's mission statement helps define its reason for existing.

It’s usually expressed in a simple sentence, but can also be written as a short paragraph.

Try to answer these questions: What does your startup do? How will it make money? How quickly do you hope it will grow? Are there any significant milestones or deadlines that need to be met?

2. Outline the executive summary

Now that you have an idea for your startup, its mission, and a vision in mind, it's time to write your startup business plan executive summary.

Keep it simple and precise. Begin by writing a one-sentence startup business plan introduction that showcases the core customer need/pain point and how you propose to solve it.

3. Develop startup goals and milestones

Next, write down the milestones and goals for your startup business plan. This is a crucial step that many entrepreneurs forget when they're starting out.

Do you want to focus on getting new customers? Or attaining a specific revenue number?  Without clear short-term goals, it can be hard to know how to prioritize startup tasks.

4. Write a company description

Answer the two fundamental questions — who are you and what will you do? Then, give an introduction to why you're in business.

Provide a summary of introspective goals, clarifying intangible aspects such as values or cultural philosophies. Make sure to mention:

• Proposed business structure (limited partnership, sole proprietorship, incorporated company, or a general partnership)
• Business model
• Business vision and mission statement
• Background information of your team members

5. Conduct market analysis

Choosing the right market is crucial to your organization’s success. There are different kinds of products and services that a business can offer and each has particular requirements for a successful market fit.

If you choose one that doesn't have a large enough customer base or is not profitable enough, your company may end up struggling for every sale.

Ensure that there is a clear market niche — an ideal audience of customers with a need or a pain point that your business can help solve.

6. Develop startup partnerships and resources

When you're launching a small startup, one of the most important things that your business needs is capital. There are several ways to get going on this front.

When thinking about sources of funding for startups , consider startup grants, startup loans, startup investors, and startup accelerators.

7. Write a startup marketing plan and startup budget

Your startup business plan is almost complete! All that's left is to create a startup marketing plan and budget. Your startup marketing plan will help you define your company’s target audience and brand image.

The startup budget is an integral part of any startup that helps you take the guesswork out of writing expenses.

Examples of startup business plans

Business plans differ based on the nature of the business, target market, competitive advantage, delivery of product/service, scope, and size.

Though the core business plan template remains the same, the content and flow change. Here is an example of an accounting firm's business plan:

Vision statement

At our company, ABC Accounting Services LLC, we work hard to provide the best service and build a strong team. Our vision is for this brand to be recognized as #1 throughout NYC by both smaller businesses and larger corporations.

Our values are reflected in all that we do: integrity (ethical behavior), service (giving top priority to clients' needs), excellence ("doing it right"), teamwork (working together).

Executive summary

ABC Accounting Services LLC is the premier accounting firm in New York City and will handle various financial services. We specialize in audits, bookkeeping, tax preparation/compliance work, and budgeting assistance with high-quality consulting.

Business structure

ABC Accounting Services LLC will be structured as an LLC — a Limited Liability Company in the state of New York. It will provide accounting, bookkeeping, taxation, auditing, and compliance-related services to small, medium, and large enterprises situated in New York City.

Marketing strategy and competitive advantages

Despite the fact that there are many established accounting services firms in our industry, we have a great chance of becoming successful because of the high demand for financial consulting. 

Often, small businesses don't need full-time employees but would rather hire an accounting service provider like us to handle their bookkeeping and tax returns on time every year.

It is best to find a unique niche or carve out your own market in the financial consulting services industry. If you're able to create an identifiable brand identity for your accounting business, then you will likely see less competition from other firms.

Startup milestones

ABC Accounting Services LLC will focus on delivering an exceptional client experience to grow the business and expand market share.

Startup business plan template

Here's a template you can follow when creating your startup business plan:

Top tips for writing a startup business plan

The following tips will help you create a compelling startup business plan without getting overwhelmed.

Know your audience

To write an effective business plan, tailor your language and level of detail to match the audience reading it. 

Have a simple and clear goal

If you have a goal of securing funding for your business, it will be an uphill task with lots of work and research.

Simplifying and breaking down bigger goals into smaller, actionable tasks will assist you in getting through them faster.

Spend time researching

Avoid assuming anything about your target audience, product/service, or the market need.

Spending adequate time and effort on research from primary and secondary sources will help you develop an accurate business plan.

Build a startup toolkit

The process of creation becomes easier if you have the right startup tools and software by your side. Pick the right ones that will help you in your journey.

Keep it precise

Short and easy-to-read business plans are best kept within 20 pages. If you have additional documents, consider adding them as appendices or provide a link if available online.

Ensure tonal consistency

Keep the tone consistent by having just one author write your startup business plan. Otherwise, be sure to edit it thoroughly before you finalize it.

Add reference points

All information regarding the market, your competitors, and your customers should reference authoritative data points.

Be ready to pivot

A business plan should be fluid and flexible. Think of it as an evolving document that will continue to change over time.

How to create a business plan with Wrike

A good business plan is a powerful tool and can be a key predictor of future progress, but simply filling in a startup business plan won’t help you achieve success. You need to create action steps with accountability that will help you reach your goals. 

Wrike’s project management software can help your organization deliver successful projects and maximize individual and team productivity, and our product launch template can help you turn your startup business plan goals into actionable steps. 

Start a free trial of Wrike today to see how it can help to simplify work, showcase progress to stakeholders, and achieve startup success.

Yuvika Iyer

Yuvika is a freelance writer who specializes in recruitment and resume writing.

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How to Write a Business Case (With Example & Template)

A business plan is a straightforward document. In it, you’ll include market research, your overall goals for the business, and your strategies for achieving those goals.  But what is a business case and why do you need one if a business plan outlines everything else? A business case takes a closer look at a specific problem and how you can solve it. Think of a business case as the reason you create a project you’re going to manage in the first place.  The article provides a step-by-step guide on how to write a successful business case, including a checklist for identifying problems, researching solutions, and presenting to stakeholders. As a bonus, we’ll show you how to use Wrike to manage your product business cases with a requirements management template or implement them with a project scheduling template. What is a business case? A business case is a project you’ll assemble for identifying, addressing, and solving a specific business problem.  The key to a business case is the change it creates in your business. Developing a business case starts with identifying a problem that needs a permanent solution. Without that lasting change, a business case is only an observation about what’s going wrong. A complete business case addresses how a company can alter its strategy to fix that problem. Front-to-back, a business case is a complete story. It has a beginning, a middle, and an end. It typically looks like this: Beginning: Someone identifies a problem within the business and presents the business case to the key decision-makers. Middle: With the project go-ahead, the company launches an internal team to address the business case and deliver results. End: The team delivers a presentation on the changes made and their long-term effects. In short, a business case is the story of a problem that needs solving.   Examples of business cases The problem for many companies is that they can turn a blind eye to challenges that are right in front of their faces. This is even the case when the company has a compelling product to sell. Consider the example of Febreze. In the mid-1990s, a researcher at Procter & Gamble was working with hydroxypropyl beta-cyclodextrin. His wife noticed that his clothes no longer smelled like cigarettes, which was a frequent complaint. P&G had something of a miracle product on its hands. However, their approach was wrong. They initially marketed Febreze as a way to eliminate embarrassing smells. Predictably, the product flopped.  But P&G stuck at it. They had a potential business case on their hands: a highly marketable product proved difficult to market. What was going wrong? Working on the business case from beginning to end provided the answer. After some focus group testing, P&G found out that few consumers recognized the nasty odors they were used to. Instead, they learned to use a different business case for Febreze: it was a cleaning product now, a way to make the house smell nice when the floors are vacuumed and the counters are wiped clean. They gave it its own pleasant smell and fashioned it into a cleaning product. And because it worked so well, so did the campaign.  That’s an example of a business case overall. But let’s get specific: developing a business case is easier when you have a template to look at. Let’s build an example using a made-up company, ABC Widgets, and a hypothetical business case. Let’s call our business case example “Operation Super Widgets”: Business Case: ABC Widgets Section 1: Summary Briefly describe the problem and the opportunities.  ABC Widgets’ latest widget, the Super Widget, is suffering from supply issues, requiring higher shipping costs to procure the necessary resources, and eating into profits. We need to switch to a new supplier to restore the viability of the Super Widget. Section 2: Project Scope This section should include the following: Financial appraisal of the situation. Super Widgets are now 20% more expensive to produce than in the year prior, resulting in -1% profits with each Super Widget sold. Business objectives. To get revenues back up, we need to restore profit margins on Cost Per Unit Sold for every Super Widget back to 2020 levels. Benefits/limitations. Restoring Cost Per Unit Sold will restore 5% of sagging revenues. However, we are limited to three choices for new Super Widget suppliers. Scope and impact. We will need to involve supply chain managers and Super Widget project management teams, which may temporarily reduce the number of widgets we’re able to produce, potentially resulting in $25,000 in lost revenue. Plan. Project Management Teams A and B will take the next two weeks to get quotes from suppliers and select one while integrating an immediate plan to bring in new Super Widget parts for manufacturing within four weeks. Organization. Team Member Sarah will take the lead on Operation Super Widget Profit. Both teams will report to Sarah. This is a bare-bones example of what a business case might look like, but it does hit on the key points: what’s the problem, how can you fix it, what’s the plan to fix it, and what will happen if you succeed? How do you write and develop a business case? When writing your own business case, the above example is a good guide to follow as you get started with the basics.  But, once you’re more familiar with the nuts and bolts, it’s also worth being prepared for some potential roadblocks you could face along the way.  Challenges of writing a good business case Why don’t more companies create a business case? It might come down to a lack of good communication. Many people don’t even know how to write a business case, let alone present one. “The idea may be great, but if it’s not communicated well, it won’t get any traction,” said Nancy Duarte, communication and author who wrote The HBR Guide to Persuasive Presentations. The key challenge, notes Duarte, is taking abstract business concepts (like lagging numbers) and turning them into an immediately recognizable problem. After all, if a company already had perfect awareness that it was making a mistake, it likely would find a way to stop the error in its tracks.  A business case is challenging because it usually means you’ll have to persuade someone that change is needed. And change can be difficult. In a thriving business, it’s especially problematic because it’s easy to point to the bottom line and say that whatever the company is doing is already working. How do you present a business case? The tips and examples above give you some nice remedies for creating a business case without the typical problems. But you’ll still want to present a business case with the straightforward proposals and numbers you’d associate with any new project.  Essentially, it all comes down to how well your business case can persuade the decision-makers. That’s why you shouldn’t just build a case off of raw numbers. The bottom line might be a compelling argument, but it’s not always what “clicks.”  If you’re presenting a business case, you’re a salesperson. And not every sale is a matter of precise logic. It’s also about emotion—the story of why something’s gone wrong and what needs doing if you’re going to overcome it.  The art of a good business case is the art of persuasion. Keep these specific points in mind as you craft one of your own: Point to an example of a bad business case and liken it to the present case. No one likes the idea of watching themselves walk into a mistake. Presenting an example of a business that made the same mistake your company is making and then translating it into the present moment is a compelling way to craft a business case that makes ears perk up. Build a narrative. Nancy Duarte pointed out that in one business case, a client convinced a CEO to follow through with a project by using simple illustrations. It’s not that the idea of adding illustrations to the business case was so great. It’s that the illustrations were able to tell a compelling story about why the case needed to go through. Distill the idea into an elevator pitch. Try this exercise: get your business case down to one sentence. If you can’t explain it any more simply than that, your business case might not be as memorable as it needs to be to sway decision-makers. Use analogies to drive the point home. Let’s say you discovered a problem in a growing business. Overall, revenues are good — but you’ve noticed an associated cost that has the potential to explode in the future and tank the business. But it’s not compelling to use dollars and cents when the business is doing so well. Instead, consider introducing the business case with a simple analogy: “Without repair, every leaky boat eventually sinks.” You now have their attention. Use the numbers to drive the point home, but not to make the point. If you’re presenting a business case to decision-makers, remember that it’s not only the logic of your argument that will convince people — it’s how persuasive you can be. Business case checklist Before you can check “learn how to write a business case” off your list, you have to know the essentials. Make sure you include the following elements in your business case checklist (and, of course, your business case itself): Reasons. This should be the most compelling part of your business case. You can tell a story here. And the most compelling stories start with a loss or a complication of some sort. What is the threat to the business that needs remedy? What are the reasons for moving forward? Potential courses of action. It’s not a complete story until we know the next chapter. A business case isn’t just about the problem — it’s about rectifying a problem through the solution. Recommend a few specific courses of action to help spur discussion about what to do next. Risks and benefits. Not every solution is going to be perfectly clean. There are going to be solutions with downsides. There are going to be costs along with the benefits. Make sure to include each of these to give a clear and complete picture. This is the time to manage expectations — but also the time to inspire action. Cost. What’s it going to cost to complete the project? The people making the decisions need to know the bottom line figure to assess which business cases to prioritize. Timeline. A good project isn’t only measured in dollars but in days, weeks, and months. What is the expected timeline for the business case? How quickly can the problem meet its solution?  With every business case, specificity is key. A vague timeline won’t help — a timeline with specific weekly milestones looks more achievable. To make your business case more compelling, always look for the specific details that tie your story together. Business case template A business case template is a document that outlines the key elements of a business case in a structured format. By using a standardized template, companies can ensure that all relevant information is captured and shared in a clear and consistent manner. Depending on the size of your business and the scope of your project, your business case template can be as detailed or as simple as you like. For a smaller project, you can use a one-pager to get started, detailing the main points of your project, which include: Executive summary: An overview of your project, its goals, and the benefits of completing it for your business Team and stakeholders: A list of the relevant people involved in your project, and their contact information SWOT analysis: An analysis of how your strengths, weaknesses, opportunities, and threats weigh up against your competitors Risk analysis: An overview of the kind of risks that are involved with your project and how you may avoid them Budget and financial plan: Details of your budget and where you may secure financing for your project Project plan: A schedule of how you plan to implement your project and what tasks are involved Let's see what that might look like. Executive summary   Team and stakeholders   SWOT analysis   Risk analysis   Budget   Project plan   How to write a business case with Wrike Wrike’s project management software can step in and turn a business case from the seedling of an idea to a full-fledged initiative.  The requirements management pre-built template can help you document and track project requirements in a structured manner. The template includes sections for capturing stakeholder requirements and business cases, as well as any constraints that may affect the project’s success. By using this template, you can ensure that all necessary requirements are identified and that potential issues are addressed early in the project planning process. If you want to move from the business case description to the actual implementation faster, consider using the project scheduling template. This template can help you create a detailed project timeline with milestones, identify task dependencies, and assign resources. By utilizing this template, you can ensure that the project is realistically achievable and meets all business needs, giving stakeholders confidence in the project’s success.

Operational Planning: How to Make an Operational Plan

Learn how to create an operational plan that will help your business succeed. Check out our guide to everything you need to know about operational planning.

What Is a PMIS and How Does it Work?

Discover how a PMIS can help your team deliver high-quality projects faster in this in-depth guide. Learn what is PMIS and how you can set one up.

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Lean Startup Business Plan Guide: Innovate and Grow Your Way to Success

Starting your own business? It’s an exciting journey, but let’s be honest, it can also be a bit overwhelming. You’ve probably heard about the lean startup approach, a method that emphasizes efficiency and agility. Well, you’re in the right place to dive deeper.

A lean startup business plan isn’t your traditional, lengthy business plan. It’s more like a roadmap, constantly evolving as you learn more about your market and customers. It’s about starting small, testing your assumptions, and adapting quickly. This guide will walk you through creating a lean, mean business plan that keeps you focused and flexible.

So, grab your favorite notebook or open a new digital doc, because we’re about to embark on a journey to streamline your startup process. Let’s make your business dream a reality with a plan that’s as dynamic and innovative as you are.

What is a Lean Startup?

Imagine this: You’re on the starting line, heart pounding, ready to sprint into the world of entrepreneurship. But instead of carrying weights of hefty business plans, you’ve got the lean startup approach —your ticket to running a more flexible, adaptive race. It’s not just a strategy; it’s a mindset shift from traditional, plan-heavy methods to a dynamic, learn-as-you-go process.

At its core, the lean startup methodology is about testing assumptions and iterating quickly . You start with a basic version of your product – folks in the biz call it a Minimum Viable Product (MVP) . This MVP isn’t your final offer to the world but a test balloon. It helps you gather valuable customer feedback without spending all your resources upfront.

• Build : Create a minimum viable product, or MVP, something that’s good enough to start gathering data.
• Measure : Collect data on how customers use your MVP. This step is all about understanding what your customers actually want, not what you think they want.
• Learn : Take what you’ve learned from the data, refine your product, and maybe, your business model too. It’s a cycle of learning and adapting that’s much faster than the traditional way of doing things.

Simply put, the lean startup method is your way of validating business ideas with real-world testing , ensuring you’re building a product people actually want. It encourages constant adaptation, learning from failures , and pivoting when necessary. So, if you’re passionate about the hustle and love iterating on your ideas, leaning into the lean startup philosophy might just be your game-changer.

Benefits of a Lean Startup Business Plan

Diving into the entrepreneurial journey, you’ve probably heard the buzz around lean startup business plans . Drawing from my own adventures in the online business world and the rich tapestry of side hustles I’ve woven, let me walk you through why this approach isn’t just hype—it’s a game changer.

First off, the cost savings are undeniable. Traditional business plans often lead you down a path of heavy initial investment, where you’re shelling out for products or services without concrete evidence of customer interest. A lean startup business plan flips this narrative, urging you to create a minimum viable product (MVP) . This way, you’re not diving into your savings or seeking substantial funding right off the bat.

Let’s talk about speed and flexibility . In the fast-paced digital market, agility is your best friend. Adopting a lean approach means you’re constantly iterating, quickly adapting to customer feedback and market changes. This is paramount, especially when you’re testing out fresh side hustles or trying to carve a niche in the crowded online business arena.

Real-World Learning

When you embrace the lean startup methodology, your playground becomes the real world. Instead of hypothesizing in a vacuum, you’re out there, seeing how your MVP resonates with actual users. This direct feedback loop not only fine-tunes your product but also deepens your understanding of your target audience. You learn what truly matters to your customers, information that’s gold dust in tailoring your offerings and marketing strategies.

Risk Reduction

A significant edge of the lean startup plan is its capacity to mitigate risk . By testing your ideas in incremental steps, you significantly lower the stakes of failure. It’s about smart, calculated risks where each iteration brings valuable insights, minimizing the chances of a high-stakes flop.

Embracing this mindset opens up an exhilarating path of exploration and growth. You’re not just launching a business; you’re embarking on a continuous learning journey. From my personal journey of juggling online ventures and various side hustles, adopting a lean startup approach has been instrumental in navigating the ebbs and flows of the entrepreneurial world.

Setting Clear Goals and Objectives

When you’re navigating the sea of entrepreneurship, setting clear goals and objectives for your lean startup plan is like charting a course for your ship. Without a destination in mind, you’re just drifting. But with goals, you’ve got your north star.

First off, understand the difference between goals and objectives: goals are your broad, long-term targets, while objectives are specific, measurable steps you’ll take to hit those targets. Think of your goals as your endgame and your objectives as the milestones along the way.

Here’s how to do it right:

• Start with Vision : Your goal setting should stem from the very vision you have for your business. What problem are you solving? Who are you solving it for? This shouldn’t just be about making money – it’s about the impact you want to have.
• Be S.M.A.R.T. : Ensure your objectives are Specific, Measurable, Achievable, Relevant, and Time-bound. This framework keeps your startup agile, allowing you to iterate or pivot based on customer feedback and market demand.
• Prioritize : Not all goals are created equal. Identify which ones are critical for your MVP’s success and focus your energy there. This prioritization ensures you’re not spreading yourself too thin and losing sight of what’s truly important.
• Flexibility Is Key : One of the biggest strengths of a lean startup is its ability to adapt quickly. Set regular intervals to review and adjust your goals and objectives based on what you’ve learned from real-world testing. This continuous loop of feedback and improvement is crucial for staying relevant and competitive.

Remember, the journey of a thousand miles begins with a single step. By setting clear, actionable goals and objectives, you’re not just dreaming of success; you’re plotting a course towards it.

Identifying Your Target Market

After nailing down your goals and objectives, it’s time to zoom in on who your lean startup will serve. Knowing your target market is not just beneficial; it’s crucial . You might believe your product or service is for everyone, but in reality, a focused approach will lead to more effective marketing strategies and, ultimately, a stronger business model.

First, start by defining the demographics of your potential customers. Consider age, location, gender, income level, education, and even marital status. But don’t stop there. Understanding the psychographics—personality traits, values, attitudes, interests, and lifestyles—of your market can make your targeting even more effective. This dual approach ensures you’re not just understanding who your customers are but also why they might be interested in what you have to offer.

Here’s a tip: use your personal experiences and networks to get initial insights. Since you’ve ventured into businesses and side-hustles, tap into those communities. What do they crave? What’s lacking in the current offerings? As both an entrepreneur and a customer in various niches, you’ve got a unique perspective that can help identify untapped market opportunities.

Gathering data can be as simple as conducting online surveys, hanging out in online forums where your potential customers spend their time, or even direct interviews. The goal is to collect enough information to create a buyer persona , a semi-fictional character that embodies the characteristics of your ideal customer.

Leverage social media analytics and Google Analytics to start. These platforms offer insights into who is interacting with your content and how. Patterns in these interactions can be golden, guiding you towards understanding who really needs your product or service.

Remember, identifying your target market isn’t a one-and-done task. Markets evolve, trends shift, and new competitors emerge. Keep your finger on the pulse by continually gathering feedback and staying engaged with your audience. This way, you ensure your lean startup remains relevant and ahead of the curve.

Validating Your Business Idea

Validating your business idea is a crucial step that cannot be overlooked. It’s the bridge between a concept and a viable product. Imagine you’re gearing up for a journey. Validation is your map, ensuring you’re headed in the right direction.

Start with the Lean Canvas Model – a one-page business plan that lets you flesh out your idea quickly without diving too deep into the minutiae. This model forces you to focus on the main components: problem, solution, key metrics, and unique value proposition. It’s like sketching the outline of your masterpiece before painting the details.

Next, dive into customer validation . This isn’t just about confirming that people want what you’re offering; it’s about understanding why they want it. Engage with potential customers through surveys, interviews, or even a simple landing page test. Here’s where it gets real. You’re not just asking if they like your idea; you’re seeing if they’re willing to open their wallets for it. Data speaks louder than words, so keep an eye on those metrics. How many clicked through? Who signed up for more information? These are the signals that your idea has legs.

Don’t forget the power of a Minimum Viable Product (MVP) . It’s your idea stripped down to its essentials, ready for the real world’s scrutiny. Launching an MVP provides invaluable insights into how your product fits the market. It’s immediate, raw feedback that can pivot your idea from nice-to-have to must-have.

Remember, validation is about learning, not just confirmation. It’s possible that your idea might not hit the mark on the first try. That’s okay. Every piece of feedback is a goldmine. It helps you tweak, adjust, and sometimes even overhaul your approach to better meet your customers’ needs. Keep iterating until the market response is undeniable. You’re not just building a product; you’re crafting a solution that fits like a key in a lock.

Testing Assumptions and Hypotheses

When you’re knee-deep in the hustle of launching your lean startup, testing assumptions and hypotheses about your business model becomes critical. You’re probably buzzing with excitement and ideas, which is fantastic! But now’s the time to put those ideas to the test and see if they hold water in the real world.

First off, break down your business idea into its core assumptions. These are the foundation stones of your venture, covering everything from who your customers are, what problem you’re solving, and how your solution fits into the market. Once you’ve got your assumptions lined up, it’s testing time!

A great place to start is by employing a validated learning approach. This means launching small, controlled experiments that aim to validate your hypotheses about the business. Think of it like mini science experiments where your product or service is the hypothesis, and the market is your laboratory.

For instance, if you believe that your eco-friendly packaging will be a hit with environmentally conscious consumers, run a targeted marketing campaign to test the waters. Use metrics like engagement rates, conversion rates, and direct feedback to assess the market’s response. This data is gold and will guide your next steps.

Remember, the goal here isn’t to prove you’re right. It’s to find out what’s true. Sometimes, you’ll discover that an assumption was off-mark. That’s not a failure; it’s a vital learning experience. It’s about embracing the pivot . If an assumption doesn’t pan out, pivot your approach based on what you’ve learned. Iterate on your product, tweak your marketing strategy, or even redefine your target audience if need be.

The beauty of testing assumptions in a lean startup is that it’s cost-effective and time-efficient. You won’t waste months or resources barking up the wrong tree. Each test brings you closer to a product-market fit, fine-tuning your business model until it resonates with your intended audience. So dive in, test rigorously, and let the market guide your journey to success.

Adapting and Iterating

In the ever-evolving landscape of startups, Adapting and Iterating is not just a strategy; it’s your lifeline. Imagine your lean startup as a living, breathing entity. It’s continually growing, learning from its environment, and needs to adapt to thrive. Given my journey, where I’ve juggled numerous side-hustles and steered my online business to success, this phase is where the magic happens.

Start with understanding that no plan is set in stone . You’ve already laid a strong foundation with your MVP, but now it’s time to listen, learn, and pivot if necessary. This doesn’t mean overhauling your entire business at the slightest hiccup. Instead, focus on small, incremental changes based on user feedback and market demand. These iterations empower your startup to remain relevant and competitive.

Here’s how you can make it work:

• Gather Data Relentlessly : Use every tool at your disposal to collect feedback. Online surveys, social media engagement, and direct customer interviews are gold mines of insights.
• Analyze and Act : Don’t just collect data for the sake of it. Dive deep into what your customers are telling you. What features do they love? Where do they struggle? Use these insights to guide your next steps.
• Fail Fast, Learn Fast : Don’t be afraid of ideas that don’t pan out. Each failed experiment is a stepping stone to a better version of your product. Remember, in the world of startups, speed is key. The quicker you can iterate, the faster you’ll find what works.

Embrace the mindset that your business plan is a living document . It grows and evolves with your startup. This approach ensures you’re always ready to seize new opportunities or tackle unforeseen challenges. After all, in the thrilling ride that is entrepreneurship, being adaptable is your greatest asset.

Building a Minimum Viable Product (MVP)

Embarking on the journey to bring your innovative ideas to life, it’s critical to start with building a Minimum Viable Product, or MVP . This essential step in the lean startup approach allows you to test, learn, and iterate your way to success without fully committing all your resources upfront. Think of your MVP as the most basic version of your product that can still solve your customers’ problem or fulfill their need.

Why start with an MVP? It’s simple, really. Your MVP enables you to:

• Launch quickly
• Gather valuable customer feedback
• Make necessary adjustments
• Minimize initial development costs

By focusing on the core features that address the main problem you’re solving, you skip the bells and whistles that can slow down your launch and eat up your budget. The key here is to get your product into the hands of early adopters as soon as possible.

Next, collecting and acting on customer feedback is crucial. Use online surveys, social media, and direct interactions to find out what works, what doesn’t, and what features your users truly desire. This feedback loop will guide your development process in a customer-centric direction , ensuring that each iteration of your product is a step closer to market fit.

Lastly, remember, your MVP is not your final product. It’s a starting point for a cycle of continuous improvement. As you iterate, keep your business goals and customer needs in focus. Every change, addition, or removal from your product should be a strategic decision aimed at better serving your customers and growing your business.

Embracing the MVP approach can significantly increase your chances of success by ensuring that your product truly meets market demands before you’ve exhausted your resources. Dive in, test, learn, and iterate. Your dream business is a work in progress, and every step forward is a step towards success .

Measuring and Learning

In your journey molding a lean startup, measuring progress and learning from the results is your compass. You’ve already embraced the fluidity of your business plan; now, it’s time to quantify your steps and adapt based on what the numbers show. This is where the real magic happens. It’s not just about launching and seeing what sticks. It’s about intentional iteration and growth.

First off, set clear, measurable objectives. These aren’t lofty, vague goals but rather specific milestones you can track. Think in terms of website traffic, conversion rates, or customer retention percentages. Specific targets will give you clear success indicators and help direct your efforts where they’re most needed.

Once your goals are in place, it’s time to dive into the learning process. Utilize tools and platforms that can provide actionable data. Google Analytics for website traffic, social media insights for engagement rates, and customer feedback tools like surveys or direct interviews can offer invaluable information. What’s crucial is not just collecting this data, but analyzing it to understand the why behind the numbers.

Your lean startup is a laboratory, and every piece of customer feedback is a clue towards the next great breakthrough. Keep testing hypotheses, from pricing models to marketing channels, always with an eye on what the data tells you. This doesn’t mean chasing every shiny trend but making informed decisions that align with your strategic directions and customer needs.

Remember, the landscape of online businesses is ever-evolving. Staying static is not an option if you want to stay relevant. Adaptability, grounded in measurable outcomes and continuous learning, is what will set you apart. Keep iterating, keep measuring, and most importantly, keep learning. The path to success is paved with insights gained from each step forward, no matter how small.

Creating a Business Model Canvas

When diving into the lean startup journey, one of your first steps is crafting a Business Model Canvas . This tool simplifies the process of sketching out how your business creates, delivers, and captures value. Think of it as your blueprint; something that evolves as your understanding and the market’s needs shift.

First up, you’ve got to understand the nine essential building blocks that form the canvas. These include key partners, key activities, key resources, value propositions, customer relationships, channels, customer segments, cost structure, and revenue streams. Laying these out visually helps you see the big picture and make connections you might miss in a traditional business plan.

Key Partners : Who’ll help you succeed? These could be suppliers, allies, or even mentors.

Value Propositions : What problems are you solving? This is the heart of why customers will choose you.

Channels : How will you reach your customers? Whether it’s online ads, social media, or physical storefronts, you need a strategy.

Customer Segments : Who are you serving? Knowing your audience is crucial to tailoring your offer.

Key Activities : What actions will you take to deliver your value proposition?

Key Resources : What do you need to execute your activities? Think about physical, intellectual, human, and financial resources.

Customer Relationships : How will you interact with customers? This fosters loyalty and retention.

Cost Structure : Understanding your costs is vital for pricing and profitability.

Revenue Streams : Finally, how will you make money? This could be through direct sales, subscriptions, ads, etc.

As you flesh out these components, you’ll start to see how they interlink and support each other. This exercise isn’t just about filling in boxes; it’s about questioning each assumption and continuously iterating based on feedback and insights. Remember, your business model canvas is a living document. It’ll grow and change as you learn more about your market and refine your approach. So, don’t be afraid to make adjustments or pivot entirely if that’s what the data suggests. After all, flexibility and responsiveness are at the core of a lean startup’s ethos.

Embracing the lean startup approach is a journey of continuous improvement and adaptation. By setting clear goals and leveraging the right tools, you’re well on your way to building a business that not only survives but thrives in today’s dynamic market. Remember, the key is to learn from every outcome—every piece of data and feedback is a stepping stone towards your success. The Business Model Canvas is your map, guiding you through the complexities of creating value. Stay curious, be ready to iterate, and always keep your customers at the heart of everything you do. Here’s to your lean startup journey—may it be filled with insightful learnings and remarkable growth.

Frequently Asked Questions

What is the importance of adapting and iterating in a lean startup.

Adapting and iterating are crucial in a lean startup because they allow businesses to learn from their actions, measure progress, and make necessary adjustments. This cycle of learning and adapting helps startups grow and succeed in the dynamic market environment.

How should a startup measure progress?

A startup should measure progress by setting clear, measurable objectives and utilizing tools and platforms to gather actionable data. This enables startups to track their performance and assess whether they are moving towards their goals.

Why is analyzing collected data important?

Analyzing collected data is important because it helps understand the reasons behind the numbers. It offers insights into what is working and what isn’t, enabling startups to make informed decisions and adjust their strategies accordingly.

What role does customer feedback play in a lean startup?

Customer feedback is vital in a lean startup as it provides direct insights into the customer’s needs and experiences. It helps in testing hypotheses and making decisions that align with customer expectations, ultimately leading to better product or service improvements.

Can you explain the purpose of the Business Model Canvas in a startup?

The Business Model Canvas is a tool designed to help startups sketch out how they create, deliver, and capture value. It utilizes nine essential building blocks to provide a comprehensive overview of the business model, encouraging questioning of assumptions and enabling easy adjustments or pivots based on feedback and insights.

Why is flexibility important in online businesses?

Flexibility is crucial in online businesses due to the fast-paced and ever-evolving nature of the internet landscape. Being flexible and responsive allows businesses to adapt to changes, exploit new opportunities, and stay competitive.

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About the author.

John Prince

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The Startup Business Plan: Why It’s Important and How You Can Create One

What is it about a business plan that makes it such an essential ingredient for success? Let’s take a closer look!

Why a Business Plan Is So Important

We’ve all read the stories of million-dollar businesses that started with a few ideas jotted on a scrap of paper or a bar napkin. But in reality, how many of those businesses grew to million-dollar sales without developing a business plan at some point? A business plan helps you answer important questions such as what is the best business model, what is the future path of the business, and how is the business going to reach its goals? Beyond that, formally-developed business plans serve a number of purposes.

Helps You Articulate Your Vision

A business plan gives you a means for capturing your entrepreneurial vision in writing. It enables you to fine-tune your aspirations and recognize where there are gaps or inconsistencies in what you want to accomplish. It also helps you spell out your business’s purpose and describe the products and services you’ll offer in detail. Rather than keep that info in your head, a business plan frees up your mind to concentrate on what you must do to fulfill your vision.

Helps You Understand Your Industry, Market, and Competition

As you work through the process of writing a business plan, you’ll have an opportunity to gain valuable knowledge about your business strengths, weaknesses, opportunities, and threats. You’ll learn a lot through conducting industry, market, and competitive research. Many entrepreneurs make assumptions about these things, and research is the only way to validate preconceived notions. A business plan helps you better understand your competition, the market you’re entering, and customer trends and preferences. It also helps you recognize possible roadblocks (which could come in many forms, such as the regulatory environment, technology, and other forces within or beyond your control).

Helps Access the Viability of Your Business Idea

According to data provided by the U.S. Bureau of Labor Statistics, only about half of private-sector businesses started in 2014 survived into 2019. Surely, the entrepreneurs who started those now-defunct businesses didn’t set out with the goal of failure. It’s more likely that they neglected to do the work involved to assess the feasibility of their business ideas and create a plan to guide them through the startup process and beyond. A business plan will help you identify red flags in advance. It’s an excellent way to do a “reality check” and recognize warning signs of impending doom. With a realistic view of whether your business idea has a chance of success, you can make an informed decision about whether to move forward, cease and desist, or alter your course.

Provides a Road Map for Launching Your Business

A business plan is also important because it provides direction as you work through the many tasks involved in starting a business. Writing a business plan helps ensure you’ve thought through all of the considerations and requirements. It forces you to think through important decisions in advance and set goals and objectives for which you want to aim. Moreover, a business plan will help keep you on track with all of the tasks required to start your business and operate it legally. For example, registering your business entity type, applying for the licenses and permits you’ll need to obtain, and other mission-critical details.

Helps Address Unseen Flaws

By capturing your vision in a business plan, you’ll be equipped to share it and get feedback. Seek the honest, unbiased thoughts and advice of trusted professionals, friends, family members, and colleagues who will be willing to give you their honest, unbiased thoughts. Doing so can help you identify problem areas that you couldn’t see on your own. From there, you can fine-tune your plan.

Helps Identify the Talent Needed for Moving Your Vision Forward

Starting a business is time-consuming and there may be tasks that will require specialized expertise or skills that you personally do not possess. Understanding legal matters, creating financial reports and forecasts, developing a website, and managing payroll are just a few of the responsibilities that you may not be able to handle on your own. A business plan will help you identify resource needs so that you can begin to look for employees, advisors, contractors, or companies with the knowledge and talent you require.

It Can Equip You to Find the Right Suppliers

A business plan will help you identify what materials you’ll need to offer your products and services. In turn, it will shed light on the criteria you must look for in potential suppliers. For example, if an entrepreneur plans to manufacture all-vegan, organic spa products, the business plan will help dictate the standards the company will look for in its vendors.

Helps You Set Priorities

By seeing all the moving parts involved in starting your business in one place, you can decide what needs your attention first and what can wait. A business plan will help you keep track of what you must do and determine how to allocate your time, energy, and resources wisely.

Helps Set Realistic Goals and Objectives

A business plan will help make you more intentional about setting goals and objectives for your company. Moreover, having goals in writing facilitates a higher level of accountability for your long-term vision. It provides an incentive to look at your business’s potential realistically and to question assumptions. By using your business plan as a guide, you will be reminded to focus attention on both the operational and financial objectives of your startup.

Helps Attract Investors and Obtain Financing

Lenders like banks and credit unions and other institutions will want to see a business plan. Investors will want to see a business plan so they can assess if the business idea will be a sound investment. A business plan is essential for securing funding (such as from bank loans or equity financing) or attracting investors (like venture capitalists or angel investors). Sure, a dazzling presentation akin to what you see on Shark Tank may pique investor interest. However, you’ll want to provide a well-written document that potential investors can review to evaluate the opportunities and risks of financing your business idea.

Helps Cultivate Sound Decisions

Having a business plan allows you to make better decisions because it helps prevent decision-making on the fly. It gives you strategic direction, so fewer outcomes are left to chance. Not only is a business plan important for startups, but it’s also a valuable tool for established businesses. All businesses change and grow. All industries evolve. Therefore, a business plan should be approached as a living, breathing document that needs to adapt to the circumstances at hand and its environment. Entrepreneurs should review and update their business plans regularly. This is especially critical when they see shifts in their market, competition, industry, company growth, financial status, and other critical areas. By keeping your business plan current, you’ll be better equipped to navigate change and make adjustments to stay on the path to success.

Serve as a Communication Tool

You can use your business plan to communicate your vision and business projections with key stakeholders. Potential lenders, investors, project partners, suppliers, key employees, major clients, etc. may rely on the details in your business plan to assess whether working with you will be a sound decision for them.

The Risks of Not Having a Business Plan

Several potential risks that entrepreneurs might face if they neglect to write a business plan for their startup include:

• Running out of money because they haven’t identified all of the startup costs involved in launching the business.
• Unable to sustain running the business down the road because they failed to identify all ongoing costs involved in operating the business.
• Selling products and services that aren’t profitable because they didn’t identify all the time and labor involved in providing them.
• Not attracting customers because there is no market need for the company’s products and services.
• Not attracting customers because competitors’ products and services are superior.
• Facing fines, penalties, and even suspension or administrative dissolution of their company because they didn’t identify their business compliance responsibilities.

All bad stuff, right? I could go on and on about possible downsides. But I believe those examples amply demonstrate why it is important to have a business plan!

Critical Questions to Consider

Like any new endeavor, developing a business plan might seem like an overwhelming task. Challenges include choosing the right verbiage, knowing what to include and what to leave out, where to find statistics and marketing information to back up your ideas and add credibility to your plan, and more.

Don’t let the details prevent you from moving forward. As with any big task, writing a business plan is less daunting if you break it down into smaller sections that are easier to execute.

Before you jump into actually writing your business plan, take a minute to answer the following questions to get your head in the right frame of mind:

• What products or services will you be selling?
• Who is your target market?
• Is your target market broken down into personas or subgroups?
• What pain points, challenges, and struggles do your future customers struggle with?
• How will your product or service help your customer solve problems?
• Who is your competition?
• How does your offering compare to what your competitors offer?
• How much will you charge for your products or service offering?
• What costs will go into the development or execution of your products or services?
• What software will you require to run your operations?
• What type of building or office space will be required for manufacturing, operations, logistics, or sales?
• What resources and staff will you need?
• What type of supplier or manufacturing relationships will be needed to secure your supply chain?
• Are there any possible spinoffs or ancillary products and services?
• How will you market your offering to prospective customers?
• What is your measure of business success (for example, number of customers or annual net income)?
• What are the obstacles to your success?
• What are your solutions to these obstacles?

Core Elements of a Startup Business Plan

These days, successful startups create business plans that come in a variety of shapes and sizes. Some take up no more than a few pages and can be explained in no more than a few minutes, while others are much longer presentations with clearly defined data points. Founders and their most trusted team members start with a predominant vision and develop goals and strategies aimed at seeing that vision come to light.

Whether they develop their own methodology or use one more methodology created and published by experienced consultants and agencies, successful startups take the time to create a plan that keeps them on track but allows them the freedom to pivot when they need to. From a guiding vision to regular checkpoints, and an expectation of accountability, these plans are the new business roadmap.

The sections of a business plan may vary for different businesses. Many business plans include the following segments.

The Executive Summary (Company Description)

Here’s your chance to make a good first impression—especially since many readers won’t read past this initial section. Concisely describe what your company does in the first paragraph of your Executive Summary. Be succinct, descriptive, and engaging, and explain the specifics of your business. Why did you choose your business name? Why did you  choose your business structure ? Why is your business uniquely qualified to succeed? Is it your intellectual property, your management team’s unique and/or extensive background, your startup’s early (standout) accomplishments, your key partnerships, or favorable market trends?

In this section, you should also summarize your vision and your goals. In the beginning stages of a startup, entrepreneurs tend to improvise, and their vision may be a bit hazy. Developing a business plan helps sharpen that vision, and down the road helps the startup succeed. But keep in mind, where businesses of the past started with “what” they were going to produce, market, and sell to “whom”, modern-day businesses start with “why”. Their visions tell a story of a better world for a specific group of people. These visions are backed by core values that define what is important to the founders, the types of employees they want on their team, and the way that their organization will interact internally and with the outside world.

Products or Services

In this section, go into more detail about your service or product. Thoroughly describe your product or service and any associated intellectual property information such as patents or trademarks. Describe what makes your product or service unique and competitive in the marketplace. Most likely your business has more than one product or service, so be sure to provide a brief description of each. Use colorful photos or drawings to illustrate your business and include relevant details such as dimensions, weights, and shelf life. For service businesses, outline your menu of services and any add-ons or extras customers can purchase.

Do you have plans to add new products or services as your business grows? If so, outline the areas of opportunity you see. Explain what you plan to add to your offerings and how that will make your business more competitive.

Market or Situational Analysis

In this section, you need to provide detailed statistics and research on your target market. In a traditional business plan, this was called “SWOT Analysis”, in which companies outlined an exhaustive list of Strengths, Weaknesses, Opportunities, and Threats. In today’s market, this is can be a more fluid conversation.

Colorful visuals are important here to help highlight the key numbers and demographics supporting the validity of your business idea. Use your market research to explain why your business is different and how it will appeal to your prospective customers. Show the reader that you know your market and you understand where your best prospects lie.

Are there new markets you’ll explore in the future, new product lines you plan to add, or new services you expect to develop as the business grows? Include them here. You should also include information about your sales and marketing strategies, such as digital, print, word-of-mouth, etc.

Where to get all those facts and figures?

• The  American Factfinder section of the Census Bureau website has helpful marketing research and consumer data for free. You can search for market information by specific address, by city and state, and find specific city demographics such as social, economic and housing characteristics. You can also look for business patterns statistics and key populations by county.
• eMarketer.com  is a great source for information on online marketing trends.
• If you’re not finding the market research you want or you need help gathering the research, check out  Ask Your Target Market . AYTM gives you the tools to conduct your own market surveys. Or, if you don’t feel you’re qualified to put the survey together, AYTM will create the survey for you.

Company Goals and Objectives

While many plans still include a 3-5 year estimate on sales, market share, and/or valuation, most goals are set in 60-120 day intervals. Personally, I prefer to use quarterly (90 day) cycles and roll that up for the purposes of a startup business plan. That allows you to significantly move the needle four times a year and accounts for typical swings in business based on the quarter. For example, retail businesses are completely different in Q4 during the holidays than they are in Q1.

The shorter time period allows you to focus everyone’s attention on a limited number of goals and resulting projects. I’d recommend no more than four major items in a quarter. If you’re launching a new business, the four goals for your first quarter might be something like:

• File incorporation documents
• Set up bank accounts
• Launch website
• Sign on the first client

Whether it’s just you, you and partner, or a whole team – if it’s not on this list (and not part of regular business operations), it doesn’t get touched. This will allow you to stick to your startup plan and get it moving quickly.

Operational Plan & Team Members

The organization and management section of the business plan tells your readers about the organizational structure of your business and which key employees or owners are responsible for key areas of the business, such as operations, sales, finances, etc. Make sure your business plan explains how each key employee adds to the success potential of your business by explaining their expertise, special skills, and prior experience.

If you’re a  sole proprietor , you most likely outsource some of your work or special projects to independent contractors or freelancers. In that case, including information on their expertise, as well as that of any business consultants you regularly engage with or have on your board of advisors.

Finally, since readers want to see your potential for growth, you should also project how your org chart will develop as the business grows and what positions you plan to add in the future.

Financial Projections

This section outlines what your business will accomplish financially over the next three to five years. The  Panel Study of Entrepreneurial Dynamics II  found that business plans are vital for external fundraising because a plan builds legitimacy and confidence among investors that the entrepreneur is serious. It also serves to reassure staff, suppliers, customers, and other key stakeholders.

Potential investors, creditors, and business partners want to know whether they’re making a good investment in your business. Having solid projections and supportable figures in this section of the plan is key. If you are developing a business plan to seek immediate funding, you also need to include a formal funding request. This should specify how much you need, both now and in the future, and what the money will be used for. Go over this section with your accountant to make sure everything is worded correctly and that your numbers make sense.

Supporting data and documentation that provides additional detail about what is in the other sections of the business plan.

Popular Planning Methodologies You Can Use

Planning strategies are fairly customized now. There’s not a one-size-fits-all document like the old business plan. You really are free to create a strategy that works for your organization. But, if you’d like some framework to guide you through the process, here are some popular methodologies that many startups have used to create and help execute their business plan.

• Gazelles (Scaling Up) – This well-documented program walks you through the creation of a “One Page Strategic Plan”. It covers everything from setting goals to reviewing progress and making decisions on what to do next. It serves as a blueprint for building an effective strategy. While I always modify it to fit a particular business, this is the structure I use when developing strategies for my companies, and for my clients.
• Entrepreneurial Operating System (Traction) – There are several similarities between EOS and the Gazelles’ Scaling Up program. Traction spends more time on meeting rhythms, feedback loops, process documentation, and organizing documents and workflow. Many startups tend to use EOS in conjunction with Scaling Up to flesh out the operational strategy that supports the larger and creative goals.
• The Lean Startup – For those of you that are less interested in a structured program for developing a strategic plan, and simply want to learn more about how companies are creating flexible, scalable businesses, I suggest researching and following The Lean Startup movement. Here, Eric Ries uses stories and examples to describe how executive teams can apply lean manufacturing principles to business management.

Remember to Revisit and Review Your Plan

Last but not least, your planning strategy should include a system for documenting processes and reviewing them on a regular basis. While this may sound like a tedious task that doesn’t belong in a fast-paced business, hear me out.

Documenting processes and reviewing them regularly has huge benefits:

• As you scale you’ll need to delegate tasks, projects, and accountability to more team members. If processes are documented, and not just in your head, or in your managers’ heads, they are easier to transfer to new staff.
• Reviewing processes helps founders and managers stay in the loop on how work is getting done.
• Reviewing and comparing processes allows you and your team to spot redundancies, and identify areas where processes should be combined, or split in different ways to achieve a more productive workflow.
• Reviewing processes allows you and your team to look for opportunities to automate manual processes. This often leads to cost-savings and frees up one of your team members’ time for more creative thinking.

If you skip this part of your planning strategy, you risk creating and fostering systems that are duplicated, redundant, outdated, and unnecessary because everyone continues doing what they’ve always done… because that’s the way they’ve always been done. That’s no way to grow a profitable, long-term business.

CorpNet is Here to Help Throughout Your Entrepreneurial Journey

Our business formation experts can file all the paperwork to help you start a business today. Whether you decide to Form an LLC (Limited Liability Company), Corporation, Non-Profit, or simply File a DBA, our team can file your paperwork quickly and affordably. Plus, all our services are backed by our 100% Satisfaction Guarantee.

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Nellie Akalp

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Creating a business plan for your startup: step-by-step guide

You’ve had a great idea for a startup or new business. Now you need to make sure it all makes sense and create a document that shows how and why your business will succeed.

Every company is unique and this will be reflected in its business plan. The steps below can be tailored to your requirements but should ensure the key elements are all included.

Step 1. Set out your stall

You may be clear about what will make your new business great, but you need to be able to communicate that to investors, customers and other stakeholders. An effective business plan will often start with a clear statement about what the business will do, and what product or service it will sell.

Step 2.  Set clear goals

Do you want to takeover the world or just a small corner of it? Is creativity, social impact or innovation more important than maximum profit? Decide on the business, financial and even personal goals you want to achieve in the short and medium term.

Step 3. Explain your product

Describe what your product or service will be, and what makes it unique or different. What are its limitations or downsides? How will you make, develop or source it?

Step 4. Introduce your customer and market

Who is your target customer and how big is your potential market? The better you understand the customer, the more likely you will create something they will buy. Market research is critical. Consider how you could test the market and assess demand with a Minimal Viable Product.

Step 5. Explain your sales and marketing approach

How will you make potential customers aware of your product or service? Marketing and advertising costs are often underestimated, especially in a crowded market with a lot of competition for customers. Will you have time to do the marketing yourself or will you need to hire staff or outsource tasks?

Step 6. Consider variable costs

These are the costs associated with the product or service itself, including manufacture, storage and delivery. For a digital business this could include development and testing.

Step 7. Estimate fixed costs

There will also be fixed costs that you will need to pay no matter how much you sell. These could include salaries and wages, National Insurance, tax, office costs, accountant’s fees, bad debts, interest payments and rates.

Step 8. Work out your pricing

Take the cost of the product or service away from the sales price and you have your gross profit. Subtract your overhead costs for the relevant time period and you’ll start to have an idea of how much you’ll need to sell to make a profit. There are various pricing models and you may need to experiment to find the right one for your business.

Step 9. Evaluate the competition

Identify other businesses that could compete for customers. Make a list of factors related to their product or service – everything from cost and service level to features and reputation. Assess your idea against the competition to spot risks and opportunities.

Step 10. Crunch the numbers

Financial calculations and forecasts are at the heart of a business plan. They could include capital requirements, profit and loss forecasts, cashflow forecasts, required assets and funding requirements. How much startup capital do you need and what runway will that give you before more investment or revenue is required?

Step 11. Decide on a legal structure and business organisation

Will you be a sole trader, limited company or set up a business partnership, perhaps with a co-founder? Do you need staff and will they be offered any equity?  What access to advice and expertise do you have – and what will you need to pay for?

Step 12. Assess the risks

With so much disruption and uncertainty it has never been more important to assess the risks your business may face. Be honest about gaps in the founders’ knowledge or experience and look to fill them. Work out contingency plans and stress-test your assumptions.

Step 13. Iterate your approach

A business plan should be an evolving document that reflects what you are learning and the data and insight that is being collected. The sections may need to be adapted or added to, depending on the nature of the business, its sales model and type of funding.

Step 14. Talk to Barclays Eagle Labs

The Ecosystem Managers at Barclays Eagle Labs are used to working with founders and entrepreneurs at the start of their business journey. They can advise you on approaches, considerations and next steps. Find your nearest Eagle Lab here.

Step 15. Find a business plan template to suit your needs

There are numerous business plan templates online with some specifically tailored for startups. No two are the same, so it pays to search widely and borrow from multiple sources to create the business plan that best fits your circumstances and concept.

This Barclays Business Plan Generator is a great first step in clarifying your business idea.

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Business Plan Definitions

Business planning is the process of creating a roadmap for your business. It helps you define your goals, strategies, and tactics for achieving those goals. The planning process begins with an assessment of your current situation and ends with an implementation plan and schedule. We have written article guides to some of the important business plan sections here