A great business plan can help you clarify your strategy, identify potential roadblocks, decide what you’ll need in the way of resources, and evaluate the viability of your idea or your growth plans before you start a business.
Not every successful business launches with a formal business plan, but many founders find value in taking time to step back, research their idea and the market they’re looking to enter and understand the scope and the strategy behind their tactics. That’s where writing a business plan comes in.
So, what is a business plan?
A business plan is a roadmap describing a business, its products or services, how it earns (or will earn) money, its leadership, and staffing, its financing, its operations model, and many other details essential to its success.
How to write a business plan in 8 steps:
1. Draft an executive summary
A good executive summary is one of the most crucial sections of your plan—it’s also the last section you should write. The executive summary’s purpose is to distill everything that follows and give reviewers a high-level overview of your business that persuades them to read further.
An executive summary shouldn’t exceed one page and should include:
2. Business / Industry Overview
This section should answer two fundamental questions: who you are, and what you plan to do? Some of the components you should include in your company overview are:
3. Market analysis
Here you need to demonstrate your analysis of the market your business will work in. It’s a key section of your business plan and should detail the following:
4. Ownership & Management Plan
The management and organization section of your business plan should tell readers about who’s running your company. Detail the legal structure of your business.
If you have a management team, use an organizational chart to show your company’s internal structure, including the roles, responsibilities, and relationships between people in your chart. Communicate how each person will contribute to the success of your startup.
5. Products & Services
Your products or services will feature prominently in most areas of your business plan, but it’s important to provide a section that outlines key details about them for interested readers.
It’s also important to note where products are coming from—handmade crafts are sourced differently than trending products for a dropshipping business, for instance.
6. Marketing plan
Your marketing efforts are directly informed by your ideal customer. Your plan should outline your current decisions and your future strategy, with a focus on how your ideas are a fit for that ideal customer.
Your ideal customer, also known as your target market, is the foundation of your marketing
plan, if not your business plan as a whole.
To give a holistic overview of your ideal customer, describe a number of general and specific demographic characteristics.
Most marketing plans include information on four key subjects. How much detail you present on each will depend on both your business and your plan’s audience.
7. Logistics & Operations Plan
Logistics and operations are the workflows you’ll implement to make your ideas a reality. If you’re writing a business plan for your own planning purposes, this is still an important section to consider, even though you might not need to include the same level of detail as if you were seeking investment.
8. Make a financial plan
No matter how great your idea is, and regardless of the effort, time, and money you invest, a business lives or dies based on its financial health. At the end of the day, people want to work with a business they expect to be viable for the foreseeable future.
Look to include:
A business plan can help you identify clear, deliberate next steps for your business, even if you never plan to pitch to investors—and it can help you see gaps in your plan before they become issues.