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How to write a business plan: A step-by-step guide and template

Download our editable business plan template that you can fill out with your own information as you follow along with this guide.

No matter what kind of business you’re starting, it will benefit from great planning. Creating a detailed business plan puts you, the entrepreneur, in forward-thinking mode, which increases the likelihood of your success. You can use this plan to help you navigate your market and grow your small business, or share your plan with external stakeholders such as your major customers, leasing agents or lenders.

Creating a detailed business plan puts you, the entrepreneur, in forward-thinking mode, which increases the likelihood of your success.

For your plan to be effective, you’ll need to keep it specific and succinct. In this post, I’ll outline the nine key elements of a business plan step by step:

  1. Background and executive summary
  2. Products and services
  3. Industry or market overview
  4. Competitive position
  5. Go-to-market strategy
  6. Management
  7. Technology and operations
  8. Financial plan
  9. Financing

1. Background and executive summary

This section provides basic information about your company. In 100 to 200 words, include the following information:

  • Your business plan’s purpose (e.g., to help you clarify your business, obtain funding or secure a lease
  • Your primary business goals and their projected time frame
  • Your business’s ownership, including owners’ names and their percent of ownership
  • Your legal business name and when it was formed
  • Your business’s location and operating area

If you have a vision or mission statement for your business, include them in this section.

Using my free template makes writing a business plan easy.

2. Products and services

In 100 to 500 words, depending on the complexity and breadth of your offerings, summarize the types of products and services your company offers, as well as the industry, market or consumer audience you serve.

  • Example: Our company specializes in exterior concrete landscape services. We provide walkways, paths, driveways, curbs and garden forms.

If you offer multiple products or services, organize them into categories as applicable. Explain these categories and describe the products and services within.

3. Industry or market overview

This section will convey the market opportunity in 200 to 500 words. If your chosen market is too small, you may need to shift to a different niche or broaden your market pursuit. You will need to research the market to ensure you fully understand the opportunity and size of the total addressable market (TAM).

If your chosen market is too small, you may need to shift to a different niche or broaden your market pursuit.

Once you’ve finished your research, create an overview of your industry or market:

  • Summarize the research you conducted on your industry’s size, growth rates and important trends. Focus on proving that the TAM is large enough for your new business to be successful.
  • Reference credible reports on industry research from sources such as IBISWorld, Deloitte and PwC, or sources such as Hoover’s, the Bureau of Labor Statistics (BLS) or 10Ks. Sometimes, research reports are free, or you can glean sufficient information from the report’s press release. A 10K is essentially a highly detailed annual report provided by publicly traded companies in a Security and Exchange Commission (SEC)-mandated format. With valuable insights in their industry and risks section, these reports are available online from the SEC’s Edgar database.
  • Provide a brief overview of your business’s local or regional market, as applicable. If you were opening a bakery, for example, your competition would be other bakeries, caterers or restaurants with in-house bakeries within a certain radius.

4. Competitive position

Understanding your competitors is key to optimally positioning yourself in your market.

  • Describe three of your competitors (50 to 75 words each, in separate paragraphs) that most closely match your business’s profile. Provide each business’s name, location, service area, products and services as well as any of your competitive advantages.
  • Summarize your ideal customer in two sentences, including the applicable industries and demographics.
  • Specify the advantages that set you apart from your competitors and allow you to charge more. In two sentences, include examples such as stellar customer service, rapid response rate, after-hours service or a strong distribution network.

A step-by-step business plan is a key document when you are starting a new business

5. Go-to-market strategy

The objective here is to succinctly lay out the strategy you’ll use to pursue your market, in under 500 words.

  • First define your goals (sales and otherwise) for the next year, the next three years and the next five years, if you know them.
  • Product and service delivery: In this subsection, answer the following questions:
    • How will you deliver your offerings to your market? If you’re a baker, for example, will you deliver your offerings through a retail bakery, a commercial bakery or a catering service? Choose the option that best leverages your resources and strengths.
    • Will you use direct sales, partnerships, distributors or a combination? How do your customers want to be served?
    • What business technology tools do you need to operate efficiently?
How will you deliver your offerings to your market? Choose the option that best leverages your resources and strengths.
  • Marketing and sales: In this subsection, explain how you’ll advertise your business to the market and help drive sales. First, answer this question: Where are your customers, and where do they like to hang out? Then, get more specific:
    • If they hang out on social media, do they interact with groups, ads or influencers?
    • If they attend workshops or read blogs, can you speak at relevant events or write articles?
    • Will time-tested strategies like cold calling or flyers work best?

6. Management

Since your small business is brand new, your major customers, suppliers and investors will put significant emphasis on your management team. Regardless of your background or experience, you’ll want to position your management team to convey strength.

  • Provide a three-to-five-sentence summary of each founder and executive team member. If there’s only you but you intend to hire someone in the next six months, summarize this upcoming role and use a placeholder such as “TBD, General Manager.”
  • Advisory board: Add a brief bulleted list of people who’ll assist your business in areas outside your expertise, such as marketing, legal or accounting. Provide these people’s names, titles and existing roles.

Every business is different, but there are some key elements that should be in every good business plan.

7. Technology and operations

In this section, describe the basic operational structure of your business in 100 to 200 words.

  • Staffing: Describe the roles you will need help with and why, as applicable. Will you hire employees to fill these roles, or will you outsource?
  • Technology: Describe the technology you need to support your business and why. Business smartphones, for example, might be necessary for tracking product delivery or service personnel, and you might need accounting software to track financial performance.

8. Financial plan

Provide an overview of how you will generate money, how much you will generate, what your startup and capital expenses (CapEx) will be and what your ongoing operating expenses (OpEx) will be in 300 to 500 words.

  • Revenue model: Briefly describe how you’ll generate revenue. For example, will you sell your services on an hourly basis or as value-driven packages?
  • Operating expenses: What are the regular day-to-day, monthly and yearly expenses that your business will incur annually to keep it operating? Which of these fall under cost of goods sold (COGS), which varies based on production, and which fall under overhead or selling, general and administrative expenses (SG&A), which tend to stay fixed until you start adding assets?
    • COGS: Direct labor, fuel, raw material, inventory, shipping or delivery, commissions
    • SG&A: Marketing, legal, indirect labor (support personnel)
  • Startup expenses: List out the one-time expenses for legal formation, research, insurance, asset purchases and more that you need to get your business up and running. Total the amount.
Check your pricing against your competitors and adjust if needed, focusing on the overall value you deliver.
  • Capital expenses: These are investments in assets such as vehicles, equipment or office build-out that you will periodically incur as your firm grows. What are your expansion plans, what assets will be needed, and what is the timing? Since CapEx is not part of ordinary OpEx, forecast these out separately.
  • Pricing: What is your pricing? Have you built in enough of a profit margin for your business to be sustainable? Using your annual operating expense total, determine your break-even point, which is how many products or services you need to sell to make $0 profit. Does this seem reasonable? Check your pricing against your competitors and adjust if needed, focusing on the overall value you deliver.
  • Forecast: Project out your revenue and operating expenses for three or five years on a monthly basis. Include all your startup expenses in the first month. This will serve as your forecasted income statement. What are your assumptions? Write those down. Project out your capital expenditures for the same period.

9. Financing

Provide an overview (in 100 to 200 words) of your funding status and where you obtained or will obtain the money.

  • When you compare your forecasted income statement to your CapEx forecast, does your model produce enough profit to cover your startup costs and CapEx? If not, do you intend to pursue a bank loan, investors or other source for any of these or will you self-finance the gap?
    • When you map out funding sources, remember the matching principle. You want short-term capital for short-term items such as inventory and long-term capital for equipment or hiring long-term personnel.
  • Clearly state your financing objectives, including specifically what you need the money for.
  • If your forecast allows it, do you intend to grow by reinvesting profits? If so, state that here.
  • For outside financing, include a table outlining sources and uses of funds.
  • Finally, attach the income statement and CapEx forecasts at the back of this business plan.

Remember, your business plan is a living document. The market could shift at any time, and your predictions could prove incorrect. It’s critical to check your plan against what’s actually happening so you can identify trends as they’re unfolding. If you have a succinct plan, it will be easier to revisit at least semi-annually and adjust as needed to achieve your goals.

Don’t forget to download our business plan template for you to edit, retain and modify as your business grows.

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Tiffany C. Wright

Tiffany C. Wright is a former business owner and results-driven COO currently working as an SMB consultant helping owners drive major changes in their businesses and perspectives to achieve their objectives. Her clients have experienced cash flow improvement of 2 to 4 times, 20% to 250% increases in profitability, drastic increases in employee morale, transformation into salable businesses, and high owner satisfaction.

View more posts by Tiffany C. Wright