Creating A Business Plan

Updated: Jan 11, 2020

So you have your core idea for your business, but you’re unsure where to start. Maybe you've been at it for a few years, and need some organization for loans or investors. Or maybe you’ve hatched a great product or service, but your new potential business partner wants to see your plan. Whatever the case may be, if you have a business you should have a Structured Business Plan. Not only will a strong plan set you apart with investors or loan banks, but it will also give you many invaluable insights for your business or proposed idea.

Many ideas seem great at first, but when you take the time to write out the business plan from start to finish, you may start to realize it is unsustainable. With hours of research, studies, & market analysis, you can get a clearer picture of your business’s success rate. Your first business plan should be a rough draft of your business. This allows you to see shortcomings in your profit margins, shipping or manufacturing costs, so you can now plan accordingly before you go belly up for a number of reasons. 

“Failing to plan, is planning to fail.”

It may seem daunting at first but its nothing you haven’t already thought of, so its just time to put it all on paper, or a laptop.

To start off, there are two main types of business plans to choose from:

Traditional - Much more comprehensive, filled with carefully worded descriptions of your business, market, marketing style. Along with in-depth financial history, and/or projections, plus an appendix with things from your team's resumes to your building's lease. 

Startup/Lean - This is a more contemporary view of the business model, a much more efficient way of seeing your business on paper. Instead of taking days or weeks to compile your traditional plan, this plan can be completed during your lunch break but should also be updated every month or so. Of course, if you are just in your startup phase of deciding what your business is all about the lean or startup plan, is the way to go. This will give yourself, and your partners an idea of where you’re headed.

The four basic principals to keep in mind for a Lean Startup Plan are...

Strategy: Summary with bullets only of your purpose as a business. What is the problem for customers, what target demographic needs the problem solved, and what solution are you offering to the problem?

Tactics: Products, Promotion, Target Market, Sales Strategy. Once you have the strategy, what actions do you need to execute in order to get this off the ground? This section is very helpful to delegate tasks for your team, so you have realistic goals set in place.

Milestones: Metrics, Tasks, Schedule. This is the section where you map out your path to success, you have the research of your market, the people and goals lined up, now you can create a schedule to adhere to so you can achieve your milestones!

Forecast: Sales, Spending, Cash Flow. You can never predict the future, however, you need to set realistic expectations for your business. Remember the laws of supply and demand when you are making your estimates. If you have a startup loan to work with, how long will it last you with your current budget, and how long until you get it back?

This Lean Startup Plan is truly for people already inside your company, a way to plan your path and chart your progress. Since it is such a quick plan, it should become outdated rather quickly. Management should keep your lean plan alive, revising it every month or at least every fiscal quarter. Again, this type of plan is to put your business on a structured path, a set of goals, tasks, and realistic expectations of where this path will lead you. So don’t be discouraged if you can’t live up to your first draft. You will learn more and more about what your team can accomplish, and what you need to change in order to be successful in your venture each time you revise your plan.

When in doubt plan it out, execute and check results. Adjust accordingly and plan again

Now if everything goes according to plan within a year to three you may have the need for a more formal plan to attract the approval of an investor or your bank. You can use your lean plan as a great first draft or outline for your Traditional Business Plan. Where your typical lean plan may only consist of a page or two at most, a Traditional Business Plan can be an easy 25 pages to over a hundred for more established businesses. That being said, you shouldn’t shoot to just fill out a book for investors to thumb through, you need to do a lot of in-depth research and be able to show it in a concise way here.

There are many ways to structure your business plan, short or long, however, the core attributes stay the same:

Executive Summary: Why are you needed? This is the first page the investor will read but the last you should write. It's simply a teaser page to get the investor to look through the rest of your plan.

Description: What's your plan? This is where you dive deep into what your business is and why you think you can make it thrive. What advantages for the customer are you bringing to the market?  Market Analysis: How will you merge into the industry? This is your in-depth research into your industry. You will describe the industry itself, what your target demographic is, and how you plan to compete with existing companies.  Organization & Management: How will you accomplish this? This is where you can boast about your strengths. Do you have an expert team behind working with you? Or maybe you have an exclusive supplier that gives you an edge on the market. This is also the place to take the time and show how you will run day in and day out. Focus heavily on your logistics here. Marketing & Sales Strategy: How will you get to your customers? Marketing is much more than just advertising. How will you talk and sell to customers, how will those sales help your business grow? From community involvement, distribution, and public relations, how will you keep your business afloat? Products or Services: What makes your products special? This is the time to showcase your products, the advantages it has against its competition, and talk about your suppliers and any advantages you may have because of them. You will list out your price structure, and why you chose your prices. Funding Requests and Financials: How will you return funding? This is one of the most important sections to an investor or bank so be sure to have it revised by an accountant. It goes over your business's financial history and the forecasts for the future. Also, if you are searching for funding you need a section listing what you need and why you need it, prior to your financials section. Appendix: How can you back your claims? This is an optional section, however if you have any graphs, contracts, press coverage or anything else that can highlight your business, you should keep it here for reference. These attributes can be listed, combined, and broken down a number of ways, but you need to find what works best for your personal venture. There are many many free templates out there for you to browse around and start with. Look here to start browsing:

You basically want to get across a few key things to investors: Is there a big problem or a big opportunity for a product? Who and how many have this problem? Why they want it solved, how they deal with it now, and why they should turn to you. Do you have a team that understands the market, problem, and product? Why and how will you win this market? Do you have a sensible business model? How do you plan to keep customers?

This list above is a great framework for your Executive Summary, which leads us to the breakdown of our business plan:

Executive Summary: Again we must reemphasize the importance of completing this topic last when you build your plan. It is the summary of your entire business plan, so of course, you can not summarize something you have not made fully yet. The framework above really is the best framework to start out your summary, but you need to be very concise with your word choice. You need to inspire the investor to flip through to the next pages in your binder, but you need to have enough factual basis to come off as strong and professional. You do not want to write a sales pitch about your business, rather take the strongest points of all your business plan and list them here in a structured order. Another good framework to get started is, to begin with, your company and its products. Move on to your mission statement, then into your management structure and target market. Show your strategy to compete in the market, and forecast the future of your business, or of the industry, it is in. If you have good relationships with investors already be sure to speak on that as well. You want to refrain from going too in-depth into unnecessary points, you will have plenty of space to wow your investor in the next section. Remember, you want to inspire the investor to invest her time first and foremost to look through the rest of your plan, which will then inspire her/him to invest in your company.

*Tips on writing an inspiring mission statement*

Description: This in many ways is a more in-depth summary of your business plan. You want to start off with your mission statement if you did not already put it in the above Executive Summary, and a brief overview of what started your business. If you had a realization of what your competitors lacked or a relationship that you can capitalize on, be sure to go into detail about what inspired you to begin. Especially if you have certain suppliers or partners that make it possible for you to pursue this market. What type of niche are you bringing to the table? What sets you aside from the others already established in your field? You have to go into your legal structure of course (*Best Legal Structure For my Business*). Be sure to describe your target customers, and research studies that you are completing for other demographics you plan to target in the future. What type of products do those demographics like the most and why are your star products best sellers. What aspects of your services or product lines give benefits to your customers. Why do your customers choose you, over their competitors? You also should go into your suppliers, how long they have been in operation, and if you plan to stay with them long or short term. Do their prices fluctuate? Are they niche suppliers, such as organic, fair trade, or vegan, do these attributes provide a benefit to your company and customers? You should also go into detail about how far your company has grown, and how you plan to grow further. When you make a Traditional Business Plan you typically use the same plan for the next 3 - 5 years, so you should detail your growth plan accordingly. Where do you see your company in three to five years, and how will you grow to that level? Do you plan to keep a steady growth and how will you do this? You need to layout your short term and long term goals, be sure to make them realistic, that way you can show accomplishments to your investors a few years down the line. You do not want to lead investors to think they will have returns quicker than you can realistically provide them. Again you simply want a more detailed summary of your whole Business Plan in this section. Save any in-depth market research or financial graphs for later on in the plan. 

Market Analysis: This is the first area where you can make factual claims as to why you have a strong chance in the market you’ve chosen. You must complete many levels of research to complete this section correctly, but if you put in this effort now you will establish a viable way of selling to your customers. You also need to show the investors an established market's worth, and the percentage you can take ahold of. There are two types of market research, industry & customer. It's good to start this section by describing your industry and its statistics, and then move on to how your product is performing with independent research studies. Finally you want to list your competition, their strengths and weaknesses, and how your company will stack up in comparison. When you develop research for your target industry you need to know how big the industry is, how much total revenue, and how many companies have a stake in it. You should look into your industry's trends, does it rise and fall often, is it seasonal?  You need to find if there are any specific licenses, certifications, and what regulations your company will have to adhere to in the market. How much will it cost to enter your market, and what barriers do you have to overcome in order to enter the market? Do you need specific equipment to be on par with other companies in the industry? Where does your company fit into the industry you’ve chosen? What qualities of your company give you an edge against your competition? What qualities will put your company at a disadvantage short or long term? You need to find the current size of the market you can target, and what identifying characteristics your demographic shares? How can you advertise to them? If you are having a tough time finding your target demographic you can test out your product or service with your friends or family for very cheap to free market analysis. Be diverse with your age groups, and listen to each groups feedback to your product. Once you’ve narrowed the age and gender of your demographic you can have more specific studies done with larger groups of your specific demographic. This will allow you to get direct feedback of your product from potential future customers. These insights are invaluable to your startup company. Before you sink a fifth of your quarterly budget into a product that may flop you can use the group studies to gauge how the product will perform before you make any big decisions. This also allows you to tweak your product one last time before it hits the markets. You can also get valuable information on what the customer is lacking by going to the competitor's product. This will allow you to capitalize on the niche aspect that your competitors have not found yet. Be sure to stay conscious about what the target demographic, or ‘Market Segment’ wants to buy or already has been buying for years. It is much easier to sell a custom something they want than trying to convince them to buy something they don’t want or need. In the end you want to show clearly why this industry is profitable and why your venture will succeed even with the established competition. *More on Market research studies* Organization & Management: In this section the investors basically need to see the logistic side of running your business. If you are asking for a long to build a factory, warehouse, or workspace, delve into the typical day to day workflow. How and where do orders come in, how are they processed into the product, and how are they shipped. You need to go into detail of your management structure and how many employees you will need to get the job done day in and day out. If you have an expert team already, be sure to describe them all in brief detail. If you claim to have an expert team, be sure to put in their resumes or credentials that show they will help your business succeed. If you don’t already have a team, make sure to put down how many team members you will need, and how do you plan to find them. This is the section where you can feel free to boast your strengths, if you have a star team of experts be sure to accentuate that. It is good if you have an established team whatsoever to put in a chart of the hierarchy and list out the key employees, starting with the owners. If you are public or just have a board of directors, and or advisors then be sure to talk about them. What qualities about your team will give you an advantage to your company? Some investors may request profiles of your team, with resumes included. Now if you are bringing a modernized manufacturing method that gives you edge on the market, this is the time to describe it. You should focus on talking points that shows your company is not only strong, but efficient. What kind of turn around time do you have from order to delivery, and how does your customer service & reviews stack up to your competitors? Be sure to describe your store fronts or online web merchants, and the advantages or disadvantages of either. Explain how you plain to scale up or improve in your manufacturing, and retail locations. Again think three to five years out from now, what types of purchases are you planning to make your operation more efficient? If you are looking for funding, explain what the funding would go towards and the impact this funding would make on your day to day logistics. Focus on the statistics for your production rate before the funding and what it would climb to after the funding. Its rather simple to start this section, just describe every aspect of how your business operates from day to day. Be sure to note any expenses for your financial section.

Marketing & Sales Strategy:As mentioned before, marketing is much more than simply an advertising method. It consists of many other aspects such as Community involvement, Customer Support, Distribution, Market research, Media planning, Product pricing, and Public relations. Everything from how you sell or talk to customers to how you plan to grow from your monthly sales into a successful business. This is the area to go into detail about every aspect. Start off by laying out your marketing strategy, there are many many different ways to build a strategy look here for more info Marketing Strategy. A good marketing strategy addresses the unmet needs of customers and tailors product offerings, promotional efforts, and services towards your identified market segments. Remember it is always easier to sell a customer something they want compared to what they don’t need. So find out what strategies are already working for your target demographic and improve on the model. There is always something the customer is lacking, find out what that is and you have your niche market to gain a follow base. When you think of Market Strategy think about the four P’s Place, Price, Promotion, Product. Where are you selling? Is there a high concentration of your target demographic in that area. If you have an online shop, in what ways will you be seen by your target demographic and how do you plan to create a constant customer following? You need to compare your price structure against other competitors in the field. What prices are customers already paying for your type of product, and how do they compare to your prices? You don’t want to sell yourself short if you specifically are marketing to a higher paying demographic, however you want to be sure you’re in the same boat as your competitors. Too high a price and the customers won’t buy, too low of a price and you risk your profit margins and the demographic can view you as a lower quality product. Of course the old sales strategy will hold true, if you start low to gain a customer following, you can always raise the price when you expand. Promotions will always be a key tool you should schedule into your marketing strategy, they promote new customers and stimulate reoccurring customers. Price and Promotion link very well together, if you set your prices correctly, the promotion will drive customer activity up while keeping a sizable profit constant. If you are able to price your products high, during low buying periods, you can generate the profit you initially planned for by promoting a sale price when peak buying periods come around. You make the same profit you planned for while incentivizing the sale for the customer, everyone loves a good sale right? None of the above will mean anything if you do not already have a good solid product to bring to market. Of course the product design is top priority when you start a business, otherwise what are you selling? Be sure to research before you try to sell prototypes. What product designs sell well, and what were the results in your market studies when asked what the customers lack with those product designs. How can you create a product that will revolutionize the industry you are in? Bringing something new to the table that improves what has already been proven to sell well, will always work better in the long term market. Re-creating a product for a cheaper price can work well if you are in an area where the product is not already readily available. Again innovative ideas will take your company much further if you can prove your ideas can improve the way the industry will run. In this case your improved product will sell itself if it makes a big enough impact in your industry. Now, your sales strategy in many ways is your feasible plan of how you will take revenue from your sales and turn them into growth for your company. Everyone knows when you make enough money you can grow your company, but how do you plan to do it? Now that you have brought in enough sales from different marketing methods, how will you improve your organization and management of your business? If you have a floral service which delivers as its main service, how do you plan to keep up with more and more customers? If your customer base scales up, so does your infrastructure. You may need to buy a second or third van to make deliveries, you may need to hire a team and manager for another shift to operate your business. Create a forecast of different scenarios, if you are approved for a loan or given investment funds, how will you spend them to improve your logistics. If you have enough sales revenue coming in, at what point will be able to expand and offer a broader location of service? Products or Services: This is the time where you make your products or services shine, what sets them apart and why do they keep you in business? You need to explain your pricing structure and show how your products can be competitive. It's easy to list out and describe your products, but it is much more worthwhile to show how they are competitive. Be sure to describe in-depth what your product or services provide the customer with, focusing on the benefit your product or service provides the customer and the industry. You need to have investors understand why customers should go to you compared to the competition. What makes your products unique, and what features are important to your customers? Why are the customers turning away from their typical product to switch to yours? Name every factor that gives your product advantage, and describe what disadvantages you currently are currently facing. Be sure to note why you may have a disadvantage, perhaps it is the large workspace you are lacking or the initial working capital. If the disadvantage you are dealing with can be solved by an investor, be sure to make that clear. Be clear if you plan to change the pricing of your products after so many years so you can scale up. Remember, you are planning ahead 3 - 5 years, so be sure to note what your plan is to turn your sales into growth. Your final pricing structure should be comparable to others in your market, so plan accordingly. You must also go into what supplies you’ll be needing, where you get them from and if you plan to stay with your specific suppliers for the duration of this plan. If your main point is that you have a cheaper supplier than any other company, what makes that supplier so cheap? Investors will wonder if the quality is lacking, or perhaps the sustainability of such a supplier. So be sure to go into detail about what makes your suppliers trustworthy to provide a steady product of a certain quality for a constant price throughout the years. You must also provide the cost to revenue projections, for your products to show they are profitable. Do not pull numbers from the air, research and find a price that customers are willing to pay and factor that in accordingly. You should also note whether or not you plan to keep an inventory of your products, if so how many. If you have been in operation go into detail about your turnover rate. That is, how many products did you have and how many of them sold. With products that have a shelf life, you should focus heavily on this concept. Unless you have large wholesale clients off the bat you should plan on making your products in smaller batches when you are starting out. The fewer products you have go bad the better. If your product can go bad, be sure to note its lifecycle; How long can your product last before it expires? You should note whether or not you have any patents for your products or intellectual property in your name. Also, if you are performing any research development for new products be sure to go into detail about what your investors can look forward to. What kind of timelines do you picture for your research and development? 

Funding Requests or Financials: This section should be split into two, the first Funding Requests should go in your plan if you are looking for loans or investors. Though it is always good to write up just so you can plan for your funding goals, it is not always necessary for plans that are for partnerships or mergers. The main rule with Funding Requests is be specific! If you need 10K say so, don’t give a 5k-10k request, they may only give you 5k. Remember its best to ask for a little extra than you need, that way if they counter your request with an offer, it should land on what you need for your fundraising. Now, if you are approved for funding they will want to see exactly what you plan to do with it, and at what time frames you will need more funding. They, of course, will want to see when you plan to pay the back. Be sure to plan the growth of your business carefully and meticulously. Think ahead to what time periods you will need funding, what you will buy or put the money towards, and how that funding effectively will be returned through producing sales. If you have a long return rate think ahead to when you have many jobs in the finishing stages but need operating costs met before the final payments come in. These are times you will need to plan for additional funding from your investor. Of course not every sales strategy or business model will run that way, but be sure to be clear and concise on all the funding you will need or the next 3 - 5 years. You do not want to go back to your investors with oversights, and show them you can not live up to your end of the bargain.

Be sure to be specific as to what you will be using the funds for on a grander basis as well. Are you using it for working capital, debt retirement, or acquisitions? Whatever it maybe be sure to list it, and what percentage of the money goes where. Again, you must be very specific in how you handle this section. If you have any inconsistencies in your numbers they will cost you the funding opportunity. Also acknowledge your plans for the future if you have any exit strategy in place, when and for how much you may plan to be bought out for, or if and when you plan to sell your business, and for how much. The investors need to know what their money will be used for and when they will get it back, plus what kind of extra return they can expect. Your Financial Projections is absolutely the most important section of your business plan. As with the above section you need to focus on specific numbers, nothing inconsistent with your funding requests or what your income statements show. If you are an established business your reports should include the last 3 - 5 years of financial history. This includes your revenue, expenses, profit/loses, assets, liabilities, & net profit. Luckily there are four reports all investors or banks will require from you that will detail this information in reports and graphs.

These reports are: Projected Balance Sheet, which goes over your assets, debts, and overall net-worth. Best to show your overall financial standing Cash Flow Projection, this shows how much cash you have going out compared to coming in. This works best on a month to month basis. Profit and Loss Projection, this is your basic income to expenses statement. This is usually reported every 6 months to a year. Break-Even Analysis will tell the investor how many sales you need to make in order to start making a profit. Along with some market research, you can get a clearer idea of when the investor can expect a return by. Now you want to include 1-3 years of historical reports for these four target points, but also forecast up to three years ahead with the same reports. You can not predict the future but you should focus on realistic 6-month expectations for your finances. The more history you have the easier it will be to forecast what your future sales may be like. There are many free templates and tools to get your financial reports started, I have a few Linked Here: Appendix:

This is another optional section for your Traditional Business Plan but it is very important to investors and banks, for your financial reports and graphs. This is also the place to showcase pictures of your products, brochures, the success of your business in the press, or any contracts or leases that you made note of in your plan. Also, any market studies or research cases should be documented heavily here. This is the last time and place to provide any other piece of information that helps support your claims of being a powerful and successful business.

Bring it All Together:

Now that you have your business plan laid out in full, you must print out and compile the subject matter into a binder, with tabs sectioning out your plan. Of course, do not forget to add a table of contents and a sample cover letter to keep at the front of your plan. When you create a Traditional Business Plan you should compile your sections in this order, within a binder with tabs to separate.

Cover Page           

Executive Summary           

Table of Contents           

Company Description           

Market Research           

Organization & Management           

Product/Service Line           

Marketing and Sales Strategies           

Funding Request           

Financial Projections           


Remember there is no one way to create a professional business plan that will wow your investors or future partners, it's up to you to bring out the highlights of your business all the way through. This is your business and if you got through the entire plan and discovered your business is in fact sustainable then be proud of it! You know the worth of your company and you need to be sure you express your worth to other investors that can help your company get to the next level. You can do this, you are an entrepreneur that appreciates the challenge and the appreciation that comes with building your own business. Every good company starts with a plan, this is a great place to start planning, and a great way to start your path to success.

Here are some links to various templates for your business plan, and other links I’ve found helpful here:

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