Are you an entrepreneur looking to turn your idea into a business? Do you have a business plan? There is some debate about whether new businesses need a business plan when just starting out, especially if they're not asking for money. According to Carl Schramm, author of "Burn the Business Plan," many large corporations didn't have business plans when they first started:
"If you look at all our older major corporations—U.S. Steel, General Electric, IBM, American Airlines—and then you look at our newer companies like Amazon, Apple, Facebook, Microsoft, none of these companies ever had a business plan before they got started."
The U.S. Small Business Administration takes a middle-of-the-road approach, recognizing that not all businesses need a comprehensive plan. Instead, it suggests that smaller businesses and startups use a "leaner" and more streamlined version to outline the essentials and highlight strengths. Lean or long, your business plan should cover the basics.
Business Plan Outline
The outline below offers a brief overview of what each section of your business plan should cover. It is not a definitive guide, as you may wish to expand or combine sections, or add extra detail in a way that is customized to your particular venture. Keep in mind the idea is to present your venture in the most attractive and professional way possible.
Though it appears first in the business plan, the executive summary is a section that is usually written last, as it encapsulates the entire plan. It provides an introduction and high-level overview of your business, including your mission statement and details about what product(s) and/or service(s) you offer.
Since the executive summary is your business's first impression, it's critical that it be outstanding, especially if you're seeking funding.
Provide information about the business you're starting, including what sort of problem your products/services solve and your most likely buyers. You can also expand this description by offering an overview of the industry that your business will be a part of, including trends, major players, and estimated sales. This section should give a positive perspective on your place within the industry. Set your business apart from the competition by describing your or your team's expertise, as well as your competitive advantage.
The market analysis is a crucial section of the business plan, as it identifies your best customers or clients. To create a compelling market analysis, thoroughly research the primary target market for your products/services, including geographic location, demographics, your target market's needs, and how these needs are currently being met. Your purpose here is to demonstrate that you have a solid and thorough understanding of the people you are planning to sell your products/services to so that you can make informed predictions about how much they might buy, and convince other interested parties.
In preparing to write the competitive analysis section, you'll learn how successful your direct and indirect competitors are in the marketplace. This section of your business plan includes an assessment of your competition's strengths and weaknesses, any advantages they may have, and the unique qualities that make your business stand out from the competition. It also includes an analysis of how you will overcome any barriers to entry in your chosen market.
The primary goal here is to distinguish your business from the competition, but a strong competitive analysis will be able to persuade potential funding sources that your business can compete in the marketplace successfully.
Sales and Marketing Plan
The sales and marketing section offers a detailed explanation of your sales strategy, pricing plan, proposed advertising and promotion activities, and all the benefits of your products/services. This is where to outline your business's unique selling proposition, describe how you plan to get your products/services to market, and how you'll persuade people to buy them.
When developing your unique selling proposition, your goal is to answer the question: Why should people buy from me over my competition?
Ownership and Management Plan
This section outlines your business's legal structure and management resources, including the internal management team, external management resources, and human resources needs. Include any experience or special skills that each person in your management team brings to the business. If the goal of your business plan is to get funding, it's wise to include an advisory board as a management resource.
The operating plan offers detailed information about how your business will be run. It provides your business's physical location, descriptions of facilities and equipment, types of employees needed, inventory requirements, suppliers, and any other applicable operating details that pertain to your precise type of business, such as a description of the manufacturing process, or specialty items needed in day-to-day operations.
Starting a business is usually about making a profit, so it's important to demonstrate that you have a solid sense of your current finances, funding needs, as well as projected income. In the financial section, provide a description of your funding requirements, your detailed financial statements, and a financial statement analysis. This part of the business plan is where you present the three main financial documents of any business: the balance sheet, the income statement, and the cash flow statement, or in the case of a new business, a cash flow projection.
Appendices and Exhibits
In addition to the sections outlined above, at the end of your business plan, include any additional information that will help establish the credibility of your business idea, or bolster your potential success. You may choose to include marketing studies, photographs of your product, permits, patents and other intellectual property rights, credit histories, résumés, marketing materials, and any contracts or other legal agreements pertinent to your business.
How to Organize Your Business Plan
There is no set order to your business plan, the only exception being that the executive summary should always come first. Beyond that, the order depends on your goals.
If your purpose for writing a business plan is to help you organize, gather information, and create a roadmap, organize it in the way that is most intuitive to your process. You might group similar content together, such as all the material relating to markets (industry overview, marketing analysis, competitive analysis, and marketing plan).
If your goal is to seek funding, organize the plan based on what your audience values, and lead with the best, most convincing material first. If you have a stellar group of people serving on your new business's advisory board, put that section directly after the executive summary. Highlighting your new business's strengths will encourage your reader to continue reading your plan.
Add a Title Page and Table of Contents
After completing all the sections, don't forget to insert a title page at the beginning of the plan followed by a table of contents listing each section with page numbers.
|Table of Contents|
|1. Executive Summary...............................||Page #|
|2. Business Description............................||Page #|
|3. Market Analysis......................................||Page #|
|4. Competitive Analysis............................||Page #|
|5. Sales and Marketing Plan.........................||Page #|
|6. Ownership and Management Plan.....||Page #|
|7. Operating Plan........................................||Page #|
|8. Financial Plan.........................................||Page #|
|9. Appendices and Exhibits......................||Page #|
The Appearance of Your Business Plan Matters
If you're writing a business plan as an organizational exercise—for your eyes only—feel free to get loose with the style and organization; the simple act of putting all your ideas into a practical template may be a valuable brainstorming tool. However, if you're looking for funding or investors, the business plan is a formal document, so it should look like one. Every aspect of your business plan should impress your potential funding source.
Pay attention to margins and formatting; make sure it's spell-checked and grammatically sound. If you're not good at this, pay a professional to do it.
Hiring a professional to design, edit, or review your business plan may be a good idea, regardless of how skilled you are; a fresh pair of eyes can often spot issues that the original writer missed.
If you need printed copies, get them professionally printed and bound. Keep in mind that you may only have a short amount of time to sell your idea, and first impressions pack a powerful punch.
How Long Should a Business Plan Be?
A good business plan can't be pinned to a minimum or maximum page count. This is because the right length depends on your business. Your business plan should be brief enough to convey the essentials without redundancy or fluff content, yet long enough to demonstrate to your audience that your business is well-researched and fully considered. A simple plan for a modest startup might be around 40 pages, while a more complex business plan may need 100 pages to convey an ambitious financing strategy, product diagrams, industry data, or the full scope of the venture. The goal is to allow for a full explanation of the pertinent information about your business, presented in a concise and well-organized fashion.
Knowledge@Wharton. "Why Creating a Business Plan Is a ‘Waste of Time’." Accessed April 28, 2021.
U.S. Small Business Administration. "Write Your Business Plan." Accessed April 28, 2020.
Corporate Finance Institute. "Barriers to Entry." Accessed April 28, 2021.
U.S. Small Business Administration. "SBA Recommended Business Plans and Length." Accessed April 28, 2021.