A business plan is a guide that helps you outline and achieve your goals. It’s also a management tool that allows you to analyze results, make strategic decisions, and showcase how your business will operate, and grow.

The business plan

<ul><li>Without a business plan as a baseline, it will be far more difficult to track your progress, make adjustments, and have historical information readily available to reference when making difficult decisions. </li><li>Investors and loan providers need to know that you have a solid understanding of the trajectory of your business. You need to prove that there is an attainable and sustainable need for your solution, that you have a strong business strategy, and that your business can be financially stable. </li><li>By having a written business plan that you’re regularly reviewing, you can make confident decisions.</li></ul>

Why write a business plan?

<ul><li>Keep it short. Business plans should be short and concise. You want your business plan to be read. </li><li>Accommodate your investors, and keep explanations of your product simple and direct.</li><li>Test your business idea. Working through your business plan, and starting with a one-page pitch, can help you test the viability of your business idea long before launching.</li><li>Establish goals and objectives. You should know what you want to get out of your business upfront. </li><li>Don’t be intimidated. Did you know that the vast majority of business owners and entrepreneurs aren’t business experts? </li></ul>

5 tips to write a great business plan quickly and easily

<ul><li>Executive summary: An overview of your business and your plans. </li><li>Opportunity: What are you actually selling and how are you solving a problem (or “need”) for your market? </li><li>Execution: How are you going to take your opportunity and turn it into a business? </li><li>Company and management summary: Investors look for great teams in addition to great ideas. </li><li>Financial plan: Your business plan isn’t complete without a financial forecast. </li><li>Appendix: If you need more space for product images or additional information, use the appendix for those details. </li></ul>

Key components of a business plan

The executive summary of your business plan introduces your company, explains what you do, and lays out what you’re looking for from your readers. Structurally, it is the first chapter of your business plan. And while it’s the first thing that people will read, consider writing it last, because once you know the details of your business inside and out, you will be better prepared to write your executive summary. Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan.

Executive summary

<ul><li>What are your business objectives?</li><li>What is your target market and how will you position yourself?</li><li>Who are the key players on your team?</li><li>What are your expectations for growth and how will you achieve it?</li><li>What are your funding requirements? </li></ul>

Key questions to answer with your executive summary

A good business plan will identify the target market segments and then provide some data to indicate how fast each segment is growing. When identifying target markets, a classic method is to use the TAM, SAM, and SOM breakdown:<ul><li>TAM: Your Total Available or Addressable Market (everyone you wish to reach with your product)</li><li>SAM: Your Segmented Addressable Market or Served Available Market (the portion of TAM you will target)</li><li>SOM: Your Share Of the Market (the subset of your SAM that you will realistically reach—particularly in the first few years of your business).</li></ul>

TAM, SAM, and SOM

Most business plans include market research and compare their features against their competition using a SWOT analysis. The most important thing to illustrate in this section of your business plan is how your solution is different or better than other offerings that a potential customer might consider. Investors will want to know what advantages you have over the competition and how you plan on differentiating yourself.One of the biggest mistakes entrepreneurs make in their business plans is stating that they don’t have any competition.

Competition

The opportunity section of your business plan should provide enough information and data to prove that there is a need for your business and that you understand how to position yourself in a given market. To help you develop this section, try to answer these questions:<ul><li>Who is my typical customer? Who is my ideal customer? How will I target them?</li><li>What pain points do my customers have? How do they currently alleviate that pain point?</li><li>How does my solution solve their problem? </li><li>Who are my competitors? How does my solution differ from competitors?</li></ul>

Key questions to answer with your opportunity analysis

The marketing and sales plan section of your business plan details how you plan to reach your target market segments (also called target marketing), how you plan on selling to those target markets, what your pricing plan is, and what types of activities and partnerships you need to make your business a success.Before you even think about writing your marketing plan, you must have your target market well-defined and have your buyer persona(s) fleshed out. Without truly understanding who you are marketing to, a marketing plan will have little value.

Marketing and sales plan

A business plan is only a document on paper without a real path to get the work done, complete with a schedule, defined roles, and key responsibilities. Investors will want to see that you understand what needs to happen to make your plans a reality and that you are working on a realistic schedule. Start with a quick review of your milestones. Milestones are planned major goals.

Milestones and metrics

This section covers the functionality of your business. To help you develop this section, try to answer these questions:<ul><li>What marketing and operational channels are best for my business?</li><li>How will my pricing strategy differ from competitors?</li><li>What technology or services will you need to invest in?</li><li>What will my branding look like? What elements do I need to create?</li><li>What metrics do I need to track? What does success look like?</li><li>What milestones do I need to hit? What steps are necessary to reach them?</li></ul>

Key questions to answer with your execution

The company overview will most likely be the shortest section of your business plan. For a plan that you will share with people outside of your company, this section should include:<ul><li>Mission statement</li><li>Intellectual property</li><li>A review of your company’s legal structure and ownership</li><li>The business location</li><li>A brief history of the company if it’s an existing company.</li></ul>

Company overview

The company overview is meant to help you identify how you will operate, as well as what positions, departments, or other structures you need to implement. To help you develop this section, try to answer these questions:<ul><li>Who makes up my current team? What roles need to be filled?</li><li>What is my core mission? How does it affect business operations?</li><li>Do I need a physical location? Where should it be located?</li><li>What is my company structure? How will that change over time?</li></ul>

Key questions to answer with your company overview

Your financial plan is meant to help you understand what your expenses are, what it will take to be profitable, how much cash you need to keep on hand, and what you will be doing with any funding. You don’t need to have actual financial data at this point.To help you develop this section, try to answer these questions:<ul><li>What are your sales expectations for the next year?</li><li>What expenses are necessary to operate?</li><li>When will you become cash flow positive?</li><li>How much cash do you need upfront to fund growth?</li><li>How will you use the loans or investments? What funding is necessary for specific endeavors?</li></ul>

Financial plan

Learn how to write a business plan, with our expert-driven step-by-step guide for 2021. Start writing your business plan today.

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