There’s a difference between deciding it’s a good idea to start a business and actually bringing it to fruition. You will need to take several steps to make it official, such as registering your business and creating a business website. Another quite large leap to truly test your commitment is to write a business plan.
This document will allow you to formulate your ideas into a streamlined and organized process, as well as set goals for your future. With this business plan template guide, you’ll be able to get started on your very own right away.
What is a business plan?
A business plan is a written document used by SMBs, entrepreneurs and other new ventures when starting a business. It serves several purposes, such as attracting potential partners, as well as investors and banks when it comes to raising capital. Most importantly though, you’ll be able to use your business plan as a roadmap for how to structure, operate and manage your new venture.
Components of a business plan
01. Executive summary
Before you write your executive summary, you may want to start with a concept statement, a short explanation of what you want to achieve. Your executive summary will then be the strongest component of your business plan. That's not only because it's the first part of the document, but it also serves its own standalone purposes, just like in a business proposal.
We mentioned raising capital above. Your executive summary does the grunt work for that. In order words, it’s a necessary piece of information for getting the attention of investors (and crafting your elevator pitch).
In this section, you should give a high level overview of everything included within. Write a few sentences about each of the components of your business plan - company description, products and services, market analysis and more - while leaving your reader intrigued and wanting to know more. It should be short and engaging, at a maximum two pages long.
Although we have listed this part first, you should write it last. Your executive summary will be placed at the beginning of your business plan, but you won’t know what information to include until you’ve completed the sections below.
02. Company description
The first thing you’ll find yourself writing out is your company description. This piece is pretty straight forward too.
Begin with your business name and the names of your founders. Then, give a background story on your business, as well as the people who started it. Include things like the year and location, your company’s purpose, and your mission statement. Briefly describe your core products or services, but without going into too much information since you’ll want to save that for the next section.
Discuss the development stage of your business at this moment as well as past achievements you’re proud of. You’ll want to draw attention to the competitive advantages that can help your business succeed, such as teaming up with other experts in the industry or offering specialized products or services.
Follow up with your future plans by mentioning your goals, partnered with your plan of action for achieving them. Describe the milestones of these goals in a timeline fashion, thinking in terms of quarters and years. Your current or potential investors and other stakeholders will want to know how you plan to grow your business.
03. Products and services
Here’s where you’ll explain your current and future products and services in depth. You’ll need to provide descriptions and potential names of each offering. Predict any questions that could arise from someone who knows nothing about them or even the related industry. Answer them extensively, making sure to not leave out a single detail.
If you’re still working on your idea, include a proof of concept (POC) and describe what stage of development you’re in. Next, add diagrams, product images, and other visual components where necessary to explain the product life cycle.
Finish this section by listing your pricing plan, including the cost of the materials and labor, the cost of the final products/services, and the profit you intend to make on each unit.
04. Market analysis
This is one of the most extensive sections of the business plan template, as it has many lengthy parts. You’ll need to conduct market research, draw conclusions, and write out the related findings for the following points:
Industry background: Give a background of the industry your business operates in, whether that’s health and wellness, education, or something else. Answer questions like: “What’s the current status of the industry?” and “How is it expected to change?” Discuss the key business players and their offerings.
Competitor review: List and analyze your top competitors and how you plan to compete with them. Perform a SWOT analysis. This is where you’ll write out the strengths, weaknesses, opportunities, and threats of each of these businesses.
Barrier to entry: Explain what makes it difficult for a newcomer to enter the industry. Is it high start up costs? Specific equipment? Patent requirements?
Target market: Here, you will give details about your target market. Describe exactly what your potential customer base looks like within this industry, using your market’s demographics, such as age and occupation. You can also include buyer personas to gain valuable insights into the needs and wants of your ideal customer.
Assess your business: Noting the areas listed above, assess how your business fits into them. What advantages do you have? What does the demand look like for your specific product or service? How will you reach your target audience?
05. Marketing and operations plan
In this section, you’ve got to detail how your business idea will translate into selling and delivering your offerings to potential customers.
Start by building your brand. Establish a brand identity of your own, from the colors and fonts to creating the right online personality for you.
With your brand in place, the next thing to do is explain your advertising and promotion plan, along with your marketing budget. This includes creating a professional website to display and sell your products, and picking the right social media channel for your audience.
The reason you’re thinking this all through ahead of time is because you’ll need to plan how you will fulfill those orders or manage your bookings. You’ll want to explain the labor, supplies, equipment and facility requirements necessary to create and ship orders. If you’re choosing alternative options such as dropshipping, mention those here too.
06. Management and organization
Share with your reader how your business will be structured and who will be the people that make it what it is. This includes everyone from your founders and executive team to all of the other stakeholders.
Stakeholders include Board of Directors and advisors, shareholders, heads of departments and other team members. Even if you haven’t hired all of these people yet, it’s important to show what your venture will eventually look like with all of them on board.
To display all of this, create a visual layout of your stakeholders. A diagram or pyramid of some sort will do the job. Following that, describe the roles of the key players mentioned in your illustration.
07. Financial projections
It’s always important to know how you will be able to sustain your business financially, both for your own sake and for that of potential investors.
In this section, write out the answers to the following kinds of questions:
How much will you need to invest at first?
How much funding are you requesting from investors?
How long until you’ll start earning a profit?
How much profit do you expect to earn in the next year? 3 years? 5 years?
Additionally, you’ll need to be able to manage your finances through budgeting and keeping track of your income and expenses. This is both to understand how much money is coming in and out, and to be able to pay your obligatory taxes.
For this final section, list any additional information that will help readers understand the full picture of your business. If you referenced any visuals, research data, or links in your business plan, you can include the supporting details here.
Also make sure to place in this section your licenses, trademarks and patents, contracts, articles of incorporation, insurance, and appraisals.
Business plan template
Writing a business plan may sound daunting at first, but with the right template, you will feel confident about choosing the right direction for your business idea. To facilitate this process, we recommend using our free business plan template for inspiration: