1. Describe your business in the executive summary
- What the business does and who it serves
- Type of business structure
- Why you started it
- What makes the business special and competitive
- The future of the business
- The funding amount you are seeking (if any)
2. Explain how sales work in your business
Your business model is the way your company will make a profit. Retailers sell in-store, ecommerce companies sell online, software-as-a-service businesses sell subscriptions, professionals sell hours, freelancers charge by the project and franchisors earn royalty fees. All business models rely on making sales to customers.
Describe your target customers and your sales process so you can understand how customers will buy from you. For example, your selling process may include a series of online interactions designed to guide a prospect toward purchase, or it may involve retail store employees closing sales deals in-person.
Once you gain a customer, describe how your sales process will bring them back to buy again and again.
“While you may be convinced your business will be a success, your business plan reader may need more persuading.”
3. Focus on financials in your business plan
Provide financial forecasts for at least the next two years. A small business plan may only need:
- Projected profit and loss statement
- Projected sales forecast
- Cash flow forecast
Explain the assumptions behind your forecasts and why you think they are accurate financial predictions. It’s easy to get caught up in the excitement of opening a business and hype up revenue expectations. But unrealistic sales forecasts could lead to increased overheads followed by a damaging cash flow crisis and drastic cost cutting. It could also damage your credibility, because lenders and investors will quickly see through optimistic plans that ignore weaknesses or threats.
Use a cash flow forecast template to predict your cash requirements. Be clear on the amount of money you are requesting and how it will be used. Add a 10% to 20% contingency budget to the funding requirement in case you need it.
4. Talk about your team
Management experience is an important component of your business plan and can influence a lender or investor to approve the money you want. Share your professional background and explain why you are qualified to lead this business to success. Share your passion, too. If your business is already established, include a brief bio on each of your managers and key employees.
5. Describe your market, customers and competition
Present your findings on competitors, target customers, comparable products, industry statistics, buying trends, buying triggers, pricing, and any government regulations. Include key research findings in the body of your business plan and refer to any supporting documents in the appendix.
- Market: Identify your market and the customer segments you serve. Answer questions about the size of the market, industry statistics, trends and future potential. For example, a mechanic shop might target customers within their local geography as well as neighboring communities to expand clientele.
- Your customers: Describe your customers – who they are, where they are located, why they’ll buy what you sell, and how much money they have. Customer segments are useful because they help the reader understand who you sell to. Provide a customer profile for each market segment you will target.
- Your competitors: Identify your direct competitors. What are the advantages and disadvantages of their products and services compared with yours? Cover issues such as price, quality and distribution. Explain why customers will buy your product instead of buying from your competitors.
Outside of a quick Google search to find key competition in your field, you can also check online for free resources to help you build your market research. Visit the U.S. Small Business Administration Business Guide page for a list of market research resources.
6. Create a marketing plan
Marketing includes all activities engaged by your business to raise customer awareness and create opportunities to sell. For example, online marketing activities can include optimizing your website pages for search engines, buying targeted ads in social media channels, and capturing email addresses on your website with a free newsletter or trial offer. You can also consider community partnerships to generate referrals, deliver exclusive offers to new customers, and offer discounts to your loyal customers who refer business to you.
7. Outline your pricing strategy
Define your pricing strategy for your products or services. Will you price high to serve fewer customers and enjoy healthy margins? Or will you price in the middle or low end, and rely on sales volume to earn decent profits? Explain the pricing strategy of your direct competitors and where you’ll position your prices against theirs. Use a graph to help illustrate your position.
8. Present a Strengths, Weaknesses, Opportunities and Threats Analysis
A snapshot of your business’s Strengths, Weaknesses, Opportunities and Threats (S W O T) will show you’ve thought through all angles.
- Strengths could be management experience, a great location or valuable intellectual property.
- Weaknesses may be a high price point or a need to advertise heavily.
- Opportunities might include franchising the business down the road or expanding to another market. You may choose to open a second location or add an additional sales representative to help you expand.
- Threats could include possible future government regulation affecting your industry.
Don’t sugar coat your S W O T analysis. Try to present strategies to mitigate any weaknesses or threats you discover and that help you take advantage of your strengths and opportunities.
9. Include an appendix
There may be information or items you want to include in your business plan, but they feel out of place in other sections. An appendix can include things like floor plans for your retail store, an equipment list with prices, or results of an important customer survey. Try to limit the appendix to no more than 3 to 5 items.
10. Check for errors
Spend extra time to make sure your plan is professional. Include a cover page, table of contents and number each page. Start with an executive summary and intent of the plan. Work with free design resources like Canva to add charts and graphs to add some visual elements. Proofread the plan carefully and ask other professionals to proofread it as well.
Aim to keep your business plan short, simple and current – you should update your plan whenever your business pivots to a new direction, adds a new product or changes a core strategy.
Lastly, be sure to review your business plan quarterly or annually to compare your business performance and to hold yourself accountable for the strategic changes you set out to accomplish. Download our business plan template to get started on your plan today.
Helpful resources
Use this professional template to help you structure your business ideas, define clear goals and plan for the future.
Input your business expenses to see how much capital you’ll need to start your company.
Learn about the different business structures so you can pick the best one for your business.