How to write a businessplan

How to write a business plan step-by-step

Learn how to write a business plan step-by-step and what information you need for a perfect business plan. You can also download our free business plan template for inspiration and a quick start.
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"Live dangerously-carefully, Make a plan and take a chance" - Maye Musk

So, you want to change direction, fix a problem, or start a new business? The way to get started is to quit talking and start doing! Embrace the business planning process and let us guide you and inspire you to write the perfect business plan for your business.

What is a business plan?

A business plan is a written document that describes the objectives of your business and how you are to go about achieving these goals. It is a strategic document that summarises the marketing, financial, and operational plans you have for your business. A business plan also allows you to check the feasibility of your idea and whether a market exists for your product or service.
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Why do you write a business plan?

There are several reasons for writing a business plan but they can be classified into four main goals:

1. A foundation to a startup
A business plan powers up your entrepreneurial skills, by helping you determine your goals, your market position, and the viability of your ideas. It clarifies your financial needs, gives you insights into your profitability and helps you reach your goals.

2. An assurance to lenders
A business plan gives lenders the confidence that their risk is not high, and it is an assurance that you have things under control, and you will not default on your debts.

3. A confirmation to investors
A business plan confirms to investors that they will have good returns on their investment. It shows that you are up to the challenge and that your business is profitable.

4. A management tool for an established business or company
A business plan keeps your team motivated and on track. It allows you to rethink your strategy. Ideally it is reviewed and updated periodically to see if goals have been met, changed, or evolved.

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‍Components of a good business plan?

"Be so good they can’t ignore you" - Steve Martin

Writing a business planning is both a creative and an analytical process. The creative process relies mostly on describing your business in the best possible way while adapting to your audience. The analytical part of a business plan involves strategic and financial planning - choosing the right financial metrics and doing the calculations.

Every business idea and plan is unique in its terms. However, the structure of a business plan is quite standard. It must include certain sections to fit the purpose of writing a business plan.

Here is our step-by-step guide for structuring a comprehensive business plan; starting with an outline of the business plan sections followed by detailed descriptions of every section and ending with tips and best practices for writing a winning business plan.

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Business Plan Outline

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1. Business Plan Cover Page

2. Table of Contents

3. Executive Summary

4. Company overview

5. Idea

6. Market Analysis

7. Customer Analysis

8. Competitive Analysis

9. SWOT Analysis

10. Marketing Strategy

11. Company Organization

12. Management team

13. Financial Plan

14. Supporting Documentation

1. Business Plan Cover Page

The business plan cover page serves as a representation of you (the author), your business and your plan. It makes the first impression of your document and most readers do judge by the cover page.

Thus, a business plan cover page is as important as any book’s cover in a way that it affects its marketability and sets the ground for a reader to engage (or not) with the rest of your business plan document.

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2. Table of Contents

The table of content is a navigational map of your business plan document. It provides a quick overview of the sections of your business plan and help readers to navigate to the section that interests them the most. For example, a potential investor would like to check the financial part of the business plan first, they will use the table of contents to go straight to the relevant financial calculations before reading the whole business plan document.

When you are using a business plan software program, normally your table of content is created automatically once you start writing. In a word template, you need to add a table of content which is filled gradually as you finish the different sections of the business plan.

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3. Executive Summary ‍

An executive summary provides an overview of your full business plan document. The executive summary is a brief outline of your company's purpose and goals.

A good executive summary of a business plan includes:

A brief description of your product or service and what problem your business solves
A solid description of the market opportunity, your competition and your competitive advantages
Basic financial projections of your revenue, expenses, and profits
An introduction of your team
Your funding needs

When you are applying for a loan where you need to give the reader more confidence in your business plan, you may also need to add evidence of early success, future milestones, and evidence of financial stability.

Sometimes, executive summaries are the only place decision makers will go to determine if they would continue reading your full business plan or if action is warranted on a particular idea. Think of it as a written elevator pitch. Your summary describes the highlights of your plan, includes only the most critical points, and leaves out less important issues and factors.

It is important to not get overwhelmed by the importance and the level of details to include in the summary. Same as writing any introduction, a business plan summary can be easily completed once you complete your business plan. However, you can also choose to finish the summary first. This will boost your motivation and will pave the way for fluent writing to finish a comprehensive business plan. ‍

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4. Company Overview‍

In the first lines of a business plan, you introduce your company with a brief description. You need to specify where and when it was formed, what type of legal entity it is and what is your business model (Business to Business or Business to Consumer)
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5. Idea

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"If you can dream it, you can do it" - Walt Disney

Your business plan is all about your business idea, what it solves and what it brings to the target customer and the world and how. Here you need to clearly articulate the problem and solution, because every great company starts by solving an important problem. The more accurately you articulate the problem, the more valuable the solution will be.

There might be multiple problems you will be solving, but always try to focus on the main problem. You can certainly cite other problems in your business plan, but you want to tighten your focus initially so that you can talk about this problem first, build a story around it, and then dig into related problems to solve later.

Problem ‍

In a business plan the problem that your idea will solve is defined in a problem statement.

It is important that you give the problem more weight than the solution in your business plan. Founders get so excited about their solution that they forget to explain why the problem is so important. A well-articulated problem makes the value of your solution and your entire business plan more effective.

After you explain the problem, it is also important to set the stage to introduce the solution you are proposing by explaining the problem and solution in a story and how the world will look like with a solution. ‍

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Solution ‍

Here you need to describe how and why your business solves that problem. In other words, you need to provide a description of your products or services as the solution and why your team is uniquely qualified to execute it. So the solution has to match the problem, but it should demonstrate your distinctive difference -compared to all your competitors- lead to your new solution to the problem.

The solution section of the business plan should be as precise as possible however without too many technical or industry details. ‍

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6. Market Analysis

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It is not the strongest species that survive, nor the most intelligent, but the most responsive to change - Charles Darwin

Before you start your business, it is essential to conduct market research before and while writing a business plan. You can determine whether you'll have enough customers, size your competition, and determine your own unique selling points. With market analysis, you can identify the market entry barrier, market needs, and estimate the market attractiveness from a financial standpoint
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You will be able to forecast sales and revenue later in the business plan based on your market analysis.

This research is not only necessary for writing your business plan but also for your marketing strategy and is key to your business success. It helps you plan where to invest your marketing efforts and avoid making the wrong decisions.‍

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Market Overview ‍

This is a general overview of the industry where you describe the current position of the industry and the current and forthcoming market trends. It is also a way to describe your knowledge and experience in the industry.
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Target Market ‍

It is the segment of the market that will use your products or services. Not everyone from the industry will use your product or services, so it is important to find the right audience for your product. ‍

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Market Size ‍

It is basically how many potential customers are there for your product or service. You can usually find statistics of the size of the industry and its growth rate over the last few years with good online research. In the business plan, the main objective of the market analysis is to demonstrate the potential opportunities and risks associated with your business. ‍

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7. Customer Analysis ‍

Customer analysis is the practice of using qualitative and quantitative data to gain insight into your customers. Without any doubt customer analysis is the foundation of a successful marketing plan and business plan and it is key to the success of your business. Customer analysis allows you to determine exactly who your potential customers may be, what do they need and how your product or service meet this need.An Effective analysis is based on in-depth research, focused on what really matters: customer pains and goals — and insights on what influences their buying decisions. When doing your customer research part in your business plan, the first step is to group your clients by certain characteristics or customer-based segmentation.

Customer-based segmentation is done by dividing clients according to the following groups:

Geographic: countries, region, urban/rural, online
Demographics: age, sex, ethnicity, socio-economic type, education, etc.Psychographic: lifestyle, opinions, etc
Interests: hobbies, activities, etc
Benefit: what they value about a brand or service
Buying decisions: their role in the buying process, perceived barriers, decision criteria, perceived benefits

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You can get some of this information for your business plan from social media, your CRM (customer relationship management) tool, paid campaigns, customer surveys, existing customers feedback, and other data sources.‍

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8. Competitor Analysis

The first one gets the oyster, the second gets the shell – Andrew Carnegie

A competitor analysis is the process of finding your competitors and evaluating them according to certain characteristics. A good competitor analysis will help you see your business and competitors through your customers' eyes to pinpoint where you can improve.

It is important to conduct routine competitor analyses throughout the lifecycle of your business to stay up to date with market trends and product offerings. Your competitor analysis needs to be up to date in your business plan review as it can affect your sales forecast and your overall strategy.

Your competitors can be categorized into Direct and Indirect. Direct competitors are the ones who provide the same solution as you do. Indirect competitors are the ones who do not provide the same solution as you do but solve the same customer problem as you do.

Once you identify who your competitors are, you are able to evaluate their strengths, differentiators and weaknesses, products and services, features, market share, pricing, marketing strategy, location, customer reviews etc.

Competitive advantage

Describing well your competitive advantage in your business plan becomes crucial especially if you are applying for funding. Here you compare your product and service and show how you solve the customer problem better than your competitors.

In other words, in this section of the business plan, you need to explain how your business will effectively compete and win against both direct and indirect competitors.

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9. SWOT Analysis

Every problem is a gift, without problems we would not grow – Anthony Robbins

A SWOT analysis are quick and straightforward assessments of your business. It is a useful tool for brainstorming and strategic planning. In writing a business plan, developing a SWOT analysis allows you to see your business in a new way and from different directions so that you create or fine tune your business strategy.

Here’s a breakdown of what it means and what kind of information you should include in your SWOT analysis section of a business plan:

Strengths: Strengths are any competitive advantages that you have. These are things that your business can do well, the unique resources your team possesses etc. Strengths are internal factors.
Weaknesses: Weaknesses are areas where your business could improve, where resources are needed, or areas where your competitors are outperforming you. Weaknesses are also internal factors
Opportunities: Opportunities are areas you can take advantage of now. These could be new resources available to you, emerging trends you could lean into, or any strengths you’ve yet to adopt into your strategy.
Threats: Threats are anything that could negatively impact your business from the outside or any obstacles your business currently faces. Like opportunities, threats are external factors that are beyond your control.

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10. Marketing Strategy

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If you really look closely, most overnight successes took a long time – Steve Jobs

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Marketing Mix

In your business plan, the marketing mix streamlines your marketing activities and tactics according to your resources, market conditions and customer needs, so to engage your consumers i.e. your marketing strategy.

Your marketing mix refers to the 7 Ps – product, place, price, promotion, people, processes and physical evidence.

Product: Product refers to anything that’s being sold - a physical product, service, or experience. Your product is the center of your marketing strategy.

Place: Where are you selling your product? ‘Place’ doesn’t just refer to a physical location. It could mean online, in a catalogue or in trade shows. It refers to all your distribution channels. In order to consistently make a profit, you need to distribute in the places that are both appropriate for your brand and accessible for your customers.

Price: How much does your product or service cost? It is your pricing plan where you explain your product pricing and your pricing strategy. Discuss how you got to your pricing and how it compares to the competition. Also mention any premium offerings and how your pricing supports it. This will ensure investors that you based your pricing on in-depth research.

Promotion: How are you promoting your product? This section describes to specific and thoughtful advertising that reaches a company's target market and encourage consumer engagement.

Promotional strategies work on multiple levels. They raise brand awareness, increase sales and generate revenue. These include marketing activities that may offer discounts for early customers, or seasonal promotions, product launch or social events, online advertisements, in the press, podcasts or magazine ads, partnerships, and referrals, etc.

It is good to formulate a short and concise unique selling proposition (USP) for your business plan if you have a highly competitive pricing offer.

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Physical evidence: It is the physical evidence that your customers need to be certain that your business is viable, reliable, and legitimate so that they complete their purchase.

Physical evidence covers the overall existence of your brand. It includes your website, branding, social media, the logo on your building, your store’s decor, the packaging of your products and the post-purchase thank you email.

People: In this section of the business plan, “People” refers to anyone involved in selling your product or service, designing it, marketing, managing teams, representing customers, recruiting and training.

“Your people” are critical to the success of your brand, and the satisfaction of your customers. Make sure that everyone who represents your company is polite, professional, and fully trained.

Part of your business planning, you need to provide a plan for onboarding and training for new hires, and a good working environment and conditions to keep your employees happy.

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Process: So you have a product and you have your target audience. How do you deliver the product to the customer?

In your business plan you need to plan your processes in a way that minimises the costs on your part, whilst also maximising the benefits and value for your customer.

The more personalised your processes are, the better the experience of your customers will be. Checking online customer reviews is a good way to see if there are any complaints, so you maintain a positive brand reputation by addressing and resolving customer complaints.

Your marketing strategy can be 7-8 pages long. However, while writing your business plan, you only need to describe the marketing mix or your action plan. You can separately write a full marketing plan for internal purposes.

The elements of the first marketing mix you create are going to evolve; they are meant to be adjusted and refined as your company's product grows and as your potential buyers change. It is important that you keep it up to date in your business plan.

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11. Company Organization

There’s no shortage of remarkable ideas, what’s missing is the will to execute them – Seth Godin

In this section of your business plan, you need to describe your management team, staff and stakeholders, in other words who is going to execute the plan.

Stakeholders

This section outlines the legal structure of your business. You need to mention if your business is a sole proprietorship, a partnership, or a corporation. You want to be sure you explain who holds what percentage of ownership in the company.

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12. Management team ‍

This section of the business plan should describe the internal management along with any advisors or advisory board. Assuming that you believe people are your greatest asset, follow your instincts to write your management section like the proud small-business owner you are.

There are 3 main goals for describing the Management Team in your business plan:

To prove to you that you have the right team to execute on your business plan, and if not, to identify who you must hire to round out your current team
To convince lenders and investors to fund your company
To document that you have a Board or advisors who can support your team to succeed.

Human Resources

The last point you should address in the management section of your business plan is your staffing needs.

Summarized the management section of the business plan should include the following:

An organizational chart of your business, including departments, department managers and employees, and responsibilities.
Stakeholders chart to show stakeholders with their ownership percentages
Biographical information about the owners. You can mention here education credentials, employment highlights, skills and notable accomplishments.
The credentials of any advisers who will be at your side providing expert advice, such as an accountant and a lawyer.

13. Financial Plan

The only way around is through – Robert Frost

The financial section is an integral part of the business plan. A good business plan is in fact a solid financial plan. The main benefit of developing a business plan is to determine if an idea is viable, if a business is profitable or if a decision makes financial sense.

Business planning and financial forecasting keeps you on track to financial health for the success of your business. It helps you determine if decisions will impact revenue and if you will need financial support from reserves or external sources.

Your financial plan shows that your business is committed to spending wisely and you are to meet financial obligations. This especially becomes obvious if you want to secure outside funding from investors or creditors.

Financial planning is the analytical part of your business plan. You may have different financial metrics to calculate according to the type of your business, but it can be performed with the following steps:

Start with a sales forecast. Project your sales over the course of one, three or even five years. Set up your income model with segments of your revenue streams. This can be products, hours, services, or subscription based. Make prognoses for the length of your forecast and take seasonal influences or discount periods into account to make it accurate.
Make an expenses budget. You're going to need to understand how much it's going to cost you to actually make the sales you have prognosed. Here you need to differentiate between fixed costs (i.e., rent and payroll) and variable costs (i.e., most advertising and promotional expenses), because it's a good thing for a business to know. You need to have a good understanding which costs you make to be able to supply your product or service. Staff/Personnel can be a big chunk of your costs, so put that in your budget as well. You're going to have to estimate things like interest and taxes.
Create a cash-flow statement. Perhaps one of the most critical aspects of your financial plan is your cash flow statement. Your business runs on cash. Understanding how much cash is coming in and when to expect it shows the difference between your profit and cash position.

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When starting a new business without historical financial statements, you start by projecting a cash-flow statement broken down into 12 months. It is important to choose a realistic ratio for how many of your invoices will be paid in cash, 30 days, 60 days, 90 days and so on. A business planning software program will have these formulas built in to help you make these projections.

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Develop an Income statement

This shows how your business experienced profit or loss over a specific period—usually over three months. Also known as a profit-and-loss statement (P&L) or pro forma income statement, it lists the following:

Cost of sale or cost of goods (how much does it costs to produce your goods or services?)
Operating expenses like rent and utilities
Revenue streams, usually in the form of sales
mount of total net profit or loss, also known as a gross margin

This is your pro forma profit and loss statement, detailing forecasts for your business for the coming one, three or five years. Use the numbers that you put in your sales forecast, expense projections, and cash flow statement. " Sales less cost of sales (direct costs) is gross margin. Gross margin, less expenses (indirect costs), interest, and taxes, is net profit.

Balance sheet: Your balance sheet provides an overview of your debit balance and your credit balance. It provides insight into your business and shows you how much cash you have, what your obligations are and what kind of profit you’re making all at a glance.
Assets: cash, goods and resources available
Liabilities: debts to suppliers, personnel, landlords, creditors, etc.
Shareholder equity (the amount of money generated by your business): Use this formula to calculate it: Shareholder Equity = Assets – Liability

Once you have these three items, you’re ready to create your balance sheet. And just as the name implies, when complete, you’ll want this to break even or balance out to zero.

Breakeven analysis. The breakeven point is when your business's expenses match your sales or service volume. On one side, list your assets, such as cash on hand. And on the other side list your liabilities and equity (or how much money is generated by the business). "If your business is viable, at a certain period of time your overall revenue will exceed your overall expenses, including interest." This is an important analysis for potential investors, who want to know that they are investing in a potentially growing business with an exit strategy.

Bizzmill business plan software program helps you identify the important business metrics to calculate in your business plan according to your business, and it automatically calculate your projections once you enter information about your expenses and sales.

Funding

This section becomes a critical part of your business plan if you are looking for funds to run your business operations. Before you directly request for funds, it is good to explain your current financial situation, how much you have already invested, and how much funds you already have secured.

Once you explain your current financial position, you can explain how much funds you are looking for, what type of funding you need (loan or investor) and how you will use those funds. Specify what is needed for hiring new talents, expand your operations, paying your existing debts, or buying new equipment…

Investors or financial institutes usually approve funds if they have a clear idea about how you are going to use their money. In fact, your whole business plan document should support the story of your requirements and use of these funds

Make sure to update this section in your business plan once you secure funding.

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Tips for writing a good business plan

Keep it short
Stay creative and analytical
Use visuals and graphs
Update your plan as your business grows

The best investment is in the tools of one’s own trade – Benjamin Franklin

How to write a businessplan