How to Write a Business Plan [Updated for 2019]

how to write a business plan

This article is part of both our Business Startup Guide and our Business Planning Guide—curated lists of our articles that will get you up and running in no time!

If you’ve reviewed what a business plan is, and why you need one to start and grow your business, then it’s time to dig into the process of actually writing a business plan.

In this step-by-step guide, I’ll take you through every stage of writing a business plan that will actually help you achieve your goals. If you’re just looking for a downloadable template to get you started, you can skip ahead and download it now. Or, if you just want to see what a completed business plan looks like, check out our library of over 500 free sample business plans.

Download the Business Plan Template today!

3 rules for writing a business plan:

1. Keep it short

Business plans should be short and concise.

The reasoning for that is twofold:

  1. First, you want your business plan to be read (and no one is going to read a 100-page or even 40-page business plan).
  2. Second, your business plan should be a tool you use to run and grow your business, something you continue to use and refine over time. An excessively long business plan is a huge hassle to revise—you’re almost guaranteed that your plan will be relegated to a desk drawer, never to be seen again.

2. Know your audience

Write your plan using language that your audience will understand.

For example, if your company is developing a complex scientific process, but your prospective investors aren’t scientists, avoid jargon, or acronyms that won’t be familiar.

Instead of this:

“Our patent-pending technology is a one-connection add-on to existing bCPAP setups. When attached to a bCPAP setup, our product provides non-invasive dual pressure ventilation.”

Write this:

“Our patent-pending product is a no power, easy-to-use device that replaces traditional ventilator machines used in hospitals at 1/100th the cost.”

Accommodate your investors, and keep explanations of your product simple and direct, using terms that everyone can understand. You can always use the appendix of your plan to provide the full specs if needed.

3. Don’t be intimidated

The vast majority of business owners and entrepreneurs aren’t business experts. Just like you, they’re learning as they go and don’t have degrees in business.

Writing a business plan may seem like a big hurdle, but it doesn’t have to be. You know your business—you’re the expert on it. For that reason alone, writing a business plan and then leveraging your plan for growth won’t be nearly as challenging as you think.

And you don’t have to start with the full, detailed business plan that I’m going to describe here. In fact, it can be much easier to start with a simple, one-page business plan—what we call a Lean Plan—and then come back and build a slightly longer, more detailed business plan later.

how to write a business plan

6 elements to include in a business plan

Now that we have the rules of writing a business plan out of the way, let’s dive into the elements that you’ll include in it.

The rest of this article will delve into the specifics of what you should include in your business plan, what you should skip, the critical financial projections, and links to additional resources that can help jump-start your plan.

Remember, your business plan is a tool to help you build a better business, not just a homework assignment. Here are the basic components of the business plan you’re going to write.

1. Executive summary

This is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. Most people write it last, though.

2. Opportunity

This section answers these questions: What are you actually selling and how are you solving a problem (or “need”) for your market? Who is your target market and competition?

3. Execution

How are you going to take your opportunity and turn it into a business? This section will cover your marketing and sales plan, operations, and your milestones and metrics for success.

4. Company and management summary

Investors look for great teams in addition to great ideas. Use this chapter to describe your current team and who you need to hire. You will also provide a quick overview of your legal structure, location, and history if you’re already up and running.

5. Financial plan

Your business plan isn’t complete without a financial forecast. We’ll tell you what to include in your financial plan.

6. Appendix

If you need more space for product images or additional information, use the appendix for those details.

Let’s dive into the details of each section of your business plan and focus on building one that your investors and lenders will want to read.

how to write a business plan

Executive summary

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, I generally advise that you write it last.

Why? Because once you know the details of your business inside and out, you will be better prepared to write your executive summary. After all, this section is a summary of everything else you’re going to write about.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. In fact, it’s very common for investors to ask for only the executive summary when they are evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation, and more in-depth financials.

Because your executive summary is such a critical component of your business plan, you’ll want to make sure that it’s as clear and concise as possible. Cover the key highlights of your business, but don’t into too much detail. Ideally, your executive summary will be one to two pages at most, designed to be a quick read that sparks interest and makes your investors feel eager to hear more.

The critical components of a winning executive summary:

One sentence business overview

At the top of the page, right under your business name, include a one-sentence overview of your business that sums up the essence of what you are doing.

This can be a tagline, but is often more effective if the sentence describes what your company actually does. This is also known as your value proposition.

Problem

In one or two sentences, summarize the problem you are solving in the market. Every business is solving a problem for its customers and filling a need in the market.

Solution

This is your product or service. How are you addressing the problem you have identified in the market?

Target market

Who is your target market, or your ideal customer? How many of them are there? It’s important here to be specific.

If you’re a shoe company, you aren’t targeting “everyone” just because everyone has feet. You’re most likely targeting a specific market segment such as “style-conscious men” or “runners.” This will make it much easier for you to target your marketing and sales efforts and attract the kinds of customers that are most likely to buy from you.

Competition

How is your target market solving their problem today? Are there alternatives or substitutes in the market?

Every business has some form of competition and it’s critical to provide an overview in your executive summary.

Company overview and team

Provide a brief overview of your team and a short explanation of why you and your team are the right people to take your idea to market.

Investors put an enormous amount of weight on the team—even more than on the idea—because even a great idea needs great execution in order to become a reality.

Financial summary

Highlight the key aspects of your financial plan, ideally with a chart that shows your planned sales, expenses, and profitability.

If your business model (i.e., how you make money) needs additional explanation, this is where you would do it.

Funding requirements

If you are writing a business plan to get a bank loan or because you’re asking angel investors or venture capitalists for funding, you must include the details of what you need in the executive summary.

Don’t bother to include terms of a potential investment, as that will always be negotiated later. Instead, just include a short statement indicating how much money you need to raise.

Milestones and traction

The last key element of an executive summary that investors will want to see is the progress that you’ve made so far and future milestones that you intend to hit. If you can show that your potential customers are already interested in—or perhaps already buying—your product or service, this is great to highlight.

You can skip the executive summary (or greatly reduce it in scope) if you are writing an internal business plan that’s purely a strategic guide for your company. In that case, you can dispense with details about the management team, funding requirements, and traction, and instead treat the executive summary as an overview of the strategic direction of the company, to ensure that all team members are on the same page.

how to write a business plan

Opportunity

There are four main chapters in a business plan—opportunity, execution, company overview, and financial plan. The opportunity chapter of your business plan is where the real meat of your plan lives—it includes information about the problem that you’re solving, your solution, who you plan to sell to, and how your product or service fits into the existing competitive landscape.

You’ll also use this section of your business plan to demonstrate what sets your solution apart from others, and how you plan to expand your offerings in the future.

People who read your business plan will already know a little bit about your business because they read your executive summary. But this chapter is still hugely important because it’s where you expand on your initial overview, providing more details and answering additional questions that you won’t cover in the executive summary.

The problem and solution

Start the opportunity chapter by describing the problem that you are solving for your customers. What is the primary pain point for them? How are they solving their problems today? Maybe the existing solutions to your customer’s problem are very expensive or cumbersome. For a business with a physical location, perhaps there aren’t any existing solutions within reasonable driving distance.

Defining the problem you are solving for your customers is far and away the most critical element of your business plan and crucial for your business success. If you can’t pinpoint a problem that your potential customers have, then you might not have a viable business concept.

To ensure that you are solving a real problem for your potential customers, a great step in the business planning process is to get away from your computer and actually go out and talk to potential customers. Validate that they have the problem you assume they have, and then take the next step and pitch your potential solution to their problem. Is it a good fit for them?

Once you have described your target market’s problem, the next section of your business plan should describe your solution. Your solution is the product or service that you plan on offering to your customers. What is it and how is it offered? How exactly does it solve the problem that your customers have?

For some products and services, you might want to describe use cases or tell a story about a real user who will benefit from (and be willing to pay for) your solution.

Target market

Now that you have detailed your problem and solution in your business plan, it’s time to turn your focus toward your target market: Who are you selling to?

Depending on the type of business you are starting and the type of plan you are writing, you may not need to go into too much detail here. No matter what, you need to know who your customer is and have a rough estimate of how many of them there are. If there aren’t enough customers for your product or service, that could be a warning sign.

Market analysis and market research

If you are going to do a market analysis, start with some research. First, identify your market segments and determine how big each segment is. A market segment is a group of people (or other businesses) that you could potentially sell to.

Don’t fall into the trap, though, of defining the market as “everyone.” The classic example is a shoe company. While it would be tempting for a shoe company to say that their target market is everyone who has feet, realistically they need to target a specific segment of the market in order to be successful. Perhaps they need to target athletes or business people who need formal shoes for work, or perhaps they are targeting children and their families. Learn more about target marketing in this article.

TAM, SAM, and SOM

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 to look at market sizes from a top-down approach as well as a bottom-up approach.

Here are some quick definitions:

  • TAM: Your Total Available or Addressable Market (everyone you wish to reach with your product)
  • SAM: Your Segmented Addressable Market or Served Available Market (the portion of TAM you will target)
  • 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)

Once you have identified your key market segments, you should discuss the trends for these markets. Are they growing or shrinking? Talk about the market’s evolving needs, tastes, or other upcoming changes to the market.

Your ideal customer

When you have your target market segments defined, it’s time to define your ideal customer for each segment.

One way to talk about your ideal customer in your plan is to use your “buyer persona” or “user persona.” A buyer persona is a fictitious representation of your market—they get a name, gender, income level, likes, dislikes, and so on.

While this may seem like additional work on top of the market segmentation that you have already done, having a solid buyer persona will be an extremely useful tool to help you identify the marketing and sales tactics you’ll need to use to attract these ideal customers.

Key customers

The final section of your target market chapter should discuss key customers.

This section is really only required for enterprise (large) companies that have very few customers. Most small businesses and typical startups can skip this and move on.

But if you selling to other businesses (B2B), you may have a few key customers that are critical to the success of your business, or a handful of important customers that are trend leaders in your space. If so, use this final portion of your target market chapter to provide details about those customers and how they are important to your business’s success.

Competition

Immediately following your target market section, you should describe your competition. Who else is providing solutions to try and solve your customers’ pain points? What are your competitive advantages over the competition?

Most business plans use a “competitor matrix” to easily compare their features against their competition. 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.

The simple fact is that all businesses have competition. Competitors may not always come in the form of “direct competition,” which is when you have a competitor offering a similar solution to your offering. Often times, you may be dealing with “indirect competition,” which is when consumers solve their problem with an entirely different kind of solution.

For example, when Henry Ford was first marketing his cars, there was very little direct competition from other car manufacturers—there weren’t any other cars. Instead, Ford was competing against other modes of transportation—horses, bikes, trains, and walking. On the surface, none of these things look like real direct competition, but they were how people were to solving their transportation problems at that time.

Future products and services

All entrepreneurs have a vision of where they want to take the business in the future if they are successful.

While it’s tempting to spend a lot of time exploring future opportunities for new products and services, you shouldn’t expand too much on these ideas in your business plan. It’s certainly useful to include a paragraph or two about potential future plans, to show investors where you are headed in the long term, but you don’t want your plan to be dominated by long-range plans that may or may not come to fruition. The focus should be on bringing your first products and services to market.

how to write a business plan

Execution

Now that you’ve completed the opportunity chapter, you’re going to move on to the execution chapter, which includes everything about how you’re actually going to make your business work. You’ll cover your marketing and sales plans, operations, how you’ll measure success, and the key milestones that you expect to achieve.

Marketing and sales plan

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.

Your positioning statement

The first part of your marketing and sales plan is your positioning statement. Positioning is how you will try and present your company to your customers. Are you the low-price solution, or are you the premium, luxury brand in your market? Do you offer something that your competitors don’t offer?

Before you start working on your positioning statement, you should take a little time to evaluate the current market and answer the following questions:

  • What features or benefits do you offer that your competitors don’t?
  • What are your customers’ primary needs and wants?
  • How are your competitors positioning themselves?
  • How do you plan on differentiating from the competition? In other words, why should a customer choose you instead of someone else?
  • Where do you see your company in the landscape of other solutions?

Once you’ve answered these questions, you can then work on your positioning strategy and define it in your business plan.

Don’t worry about making your positioning statement very long or in-depth. You just need to explain where your company sits within the competitive landscape and what your core value proposition is that differentiates your company from the alternatives that a customer might consider.

You can use this simple formula to develop a positioning statement:

For [target market description] who [target market need], [this product] [how it meets the need]. Unlike [key competition], it [most important distinguishing feature].

For example, the positioning statement for LivePlan, our business planning product, is: “For the businessperson who is starting a new company, launching new products or seeking funding or partners, LivePlan is software that produces professional business plans quickly and easily. Unlike [name omitted], LivePlan creates a real business plan, with real insights—not just cookie-cutter, fill-in-the-blank templates.”

Pricing

Once you know what your overall positioning strategy is, you can move on to pricing.

Your positioning strategy will often be a major driver of how you price your offerings. Price sends a very strong message to consumers and can be an important tool to communicate your positioning to consumers. If you are offering a premium product, a premium price will quickly communicate that message to consumers.

Deciding on your price can feel more like an art than a science, but there are some basic rules that you should follow:

  • Covering your costs. There are certainly exceptions to this, but for the most part, you should be charging your customers more than it costs you to deliver your product or service.
  • Primary and secondary profit center pricing. Your initial price may not be your primary profit center. For example, you may sell your product at, or even below, your cost, but require a much more profitable maintenance or support contract to go along with the purchase.
  • Matching the market rate. Your prices need to match up with consumer demand and expectations. Price too high and you may have no customers. Price too low and people may undervalue your offering.

3 approaches to pricing strategy

  • Cost-plus pricing. You can establish your pricing based on several factors. You can look at your costs and then mark up your offering from there. This is usually called “cost-plus pricing” and can be effective for manufacturers where covering initial costs is critical.
  • Market-based pricing. Another method is to look at the current landscape of competitors and then price based on what the market is expecting. You could price at the high-end or low-end of the market to establish your positioning.
  • Value pricing. Yet another method is to look at a “value pricing” model where you determine the price based on how much value you are providing to your customer. For example, if you are marketing lawn care to busy professionals, you may be saving your customers 1 hour/week. If that hour of their time is valued at $50/hour, your service could charge $30/hour.

Promotion

With pricing and positioning taken care of, it’s time to look at your promotion strategy. A promotion plan details how you plan on communicating with your prospects and customers. Remember, it’s important that you’ll want to measure how much your promotions cost and how many sales they deliver. Promotional programs that aren’t profitable are hard to maintain in the long term.

Here are a few areas that you might consider as part of your promotional plan:

Packaging

If you are selling a product, the packaging of that product is critical. If you have images of your packaging, including those in your business plan is always a good idea.

Be sure the packaging section of your plan answers the following questions:

  • Does your packaging match your positioning strategy?
  • How does your packaging communicate your key value proposition?
  • How does your packaging compare to your competition?

Advertising

Your business plan should include an overview of the kinds of advertising you plan to spend money on. Will you be advertising online? Or perhaps in traditional, offline media? A key component to your advertising plan is your plan for measuring the success of your advertising.

Public relations

Getting the media to cover you—PR—can be a great way to reach your customers. Getting a prominent review of your product or service can give you the exposure you need to grow your business. If public relations if part of your promotional strategy, detail your plans here.

Content marketing

A popular strategy for promotion is engaging in what is called content marketing.

Content marketing is what Bplans is all about. It’s when you publish useful information, tips, and advice—usually made available for free—so that your target market can get to know your company through the expertise that you deliver. Content marketing is about teaching and educating your prospects on topics that they are interested in, not just on the features and benefits that you offer.

Social media

These days, having a social media presence is essentially a requirement for the vast majority of businesses.

You don’t need to be on every social media channel, but you do need to be on the ones that your customers are on. More and more, prospects are using social media to learn about companies and to find out how responsive they are.

Strategic alliances

As part of your marketing plan, you may rely on working closely with another company in a form of partnership.

This partnership may help provide access to a target market segment for your company while allowing your partner to offer a new product or service to their customers.

If you have partnerships already established, it’s important to detail those partnerships in your business plan.

Operations

The operations section is how your business works. It’s the logistics, technology, and other nuts and bolts. Depending on the type of business you are starting, you may or may not need the following sections. Only include what you need and remove everything else.

Sourcing and fulfillment

If your company is buying the products it is selling from other vendors, it’s important to include details on where your products are coming from, how they get delivered to you, and ultimately how you deliver the products to the customer—that’s sourcing and fulfillment.

If you are sourcing products from manufacturers overseas, investors are going to want to know about your progress working with these suppliers. If your business is going to be delivering products to your customers, you should describe your plans for shipping your products.

Technology

If you are a technology company, it’s critical for your business plan to describe your technology and what your “secret sauce” is.

You don’t have to give away trade secrets in your business plan, but you do need to describe how your technology is different and better than other solutions out there. At a high level, you will want to describe how your technology works. You don’t need to go into excruciating detail here, though—if an investor is interested in more detail they will ask for it, and you can provide that information in your appendix.

Remember, your goal is to keep your business plan as short as possible, so too much detail here could easily make your plan much too long.

Distribution

For product companies, a distribution plan is an important part of the complete business plan. For the most part, service companies can skip this piece and move on.

Distribution is how you will get your product into the hands of your customers. Every industry has different distribution channels and the best way to create your distribution plan is to interview others in your industry to figure out what their distribution model is.

Here are a few common distribution models that you may consider for your business:

Direct distribution

Selling directly to consumers is by far the most simple and most profitable option.

You could consider passing the savings of selling directly on to your customers or you could simply increase your profit margins. You will still need to cover the logistics of how you will get your products to your customers from your warehouse, but a direct distribution model is usually fairly simple.

Retail distribution

Most large retailers don’t like the hassle of dealing with thousands of individual suppliers.

Instead, they prefer to buy through large distribution companies that aggregate products from lots of suppliers and then make that inventory available to retailers to purchase. Of course, these distributors take a percentage of the sales that pass through their warehouses.

Manufacturers’ representatives

These are typically salespeople who work for a “repping” agency. They often have relationships with retailers and distributors and work to sell your products into the appropriate channel. They typically work on commission and it’s not uncommon for a rep to be necessary for getting a new company access to a distributor or retailer.

OEM

This stands for “original equipment manufacturer.” If your product is sold to another company that then incorporates your product into their finished product, then you are using an OEM channel.

A good example of this is car parts suppliers. While large auto manufacturers do build large components of their cars, they also purchase common parts from third-party vendors and incorporate those parts into the finished vehicle.

Most companies use a mixture of distribution channels as part of their plans, so don’t feel that you need to be limited to a single channel. For example, it is very common to both sell direct and via distributors—you can purchase an iPhone directly from Apple, or go into a Target store and get one there.

Milestones and metrics

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.

While the milestones and metrics section of your business plan may not be long, it’s critical that you take the time to look forward and schedule the next critical steps for your business. 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. For example, if you are producing a medical device, you will have milestones associated with clinical testing and government approval processes. If you are producing a consumer product, you may have milestones associated with prototypes, finding manufacturers, and first-order receipt.

Traction

While milestones look forward, you will also want to take a look back at major accomplishments that you have already had. Investors like to call this “traction.” What this means is that your company has shown some evidence of early success.

Traction could be some initial sales, a successful pilot program, or a significant partnership. Sharing this proof that your company is more than just an idea—that it has actual evidence that it is going to be a success—can be critically important to landing the money you need to grow your business.

Metrics

In addition to milestones and traction, your business plan should detail the key metrics that you will be watching as your business gets off the ground. Metrics are the numbers that you watch on a regular basis to judge the health of your business. They are the drivers of growth for your business model and your financial plan.

For example, a restaurant may pay special attention to the number of table turns they have on an average night and the ratio of drink sales to food sales. An online software company might look at churn rates (the percentage of customers that cancel) and new signups. Every business will have key metrics that it watches to monitor growth and spot trouble early, and your business plan should detail the key metrics that you will be tracking in your business.

Key assumptions and risks

Finally, your business plan should detail the key assumptions you have made that are important for your businesses success.

Another way to think about key assumptions is to think about risk. What risks are you taking with your business? For example, if you don’t have a proven demand for a new product, you are making an assumption that people will want what you are building. If you are relying on online advertising as a major promotional channel, you are making assumptions about the costs of that advertising and the percentage of ad viewers that will actually make a purchase.

Knowing what your assumptions are as you start a business can make the difference between business success and business failure. When you recognize your assumptions, you can set out to prove that your assumptions are correct. The more that you can minimize your assumptions, the more likely it is that your business will succeed.
how to write a business plan

Company overview and team

In this chapter, you’ll review the structure of your company and who the key team members are. These details are especially important to investors as they’ll want to know who’s behind the company and if they can convert a good idea into a great business.

Team

The old adage is that investors don’t invest in ideas, they invest in people. Some investors even go as far as to say that they would rather invest in a mediocre idea with a great team behind it than a blockbuster idea with a mediocre team.

What this really means is that running a successful business all comes down to getting the work down. Can you actually accomplish what you have planned? Do you have the right team in place to turn a good idea into a great business that will have customers banging down your doors?

The company overview and team chapter of your business plan is where you make your best case that you have the right team in place to execute on your idea. It should show that you have thought about the important roles and responsibilities your business needs in order to grow and be successful.

Include brief bios that highlight relevant experiences of each key team member. It’s important here to make the case for why the team is the right team to turn an idea into a reality. Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before?

A common mistake novice entrepreneurs make in describing the management team is giving everyone on the team a C-level title (CEO, CMO, COO, and so on). While this might be good for egos, it’s often not realistic. As a company grows, you may require different types of experience and knowledge. It’s often better to allow for future growth of titles rather than to start everyone at the top with no room for future growth or change.

Your management team doesn’t necessarily need to be complete in order to have a complete business plan. If you know that you have management team gaps, that’s O.K. In fact, investors see the fact that you know you are missing certain key people as a sign of maturity and knowledge about what your business needs to succeed. If you do have gaps in your team, simply identify them and indicate that you are looking for the right people to fill certain roles.

Finally, you may choose to include a proposed organizational chart in your business plan. This isn’t critical and can certainly live in your business plan’s appendix. At some point, as you explore funding options, you may be asked for an “org chart,” so it’s good to have one. Beyond raising money, an org chart is also a useful planning tool to help you think about your company and how it will grow over time. What key roles will you be looking to fill in the future and how will you structure your teams to get the most out of them? An org chart can help you think through these questions.

Company overview

The company overview will most likely be the shortest section of your business plan. For a plan that you intend to just share internally with your business partners and team members, skip this section and move on.

For a plan that you will share with people outside of your company, this section should include:

  • Mission statement
  • Intellectual property
  • A review of your company’s legal structure and ownership
  • The business location
  • A brief history of the company if it’s an existing company

Mission statement

Don’t fall into the trap of spending a day or more on your mission statement. An hour or two should be plenty of time.

Avoid putting together a long, generic statement about how your company is serving its customers, employees, and so on. Your company mission should be short—one or two sentences at most—and it should encompass, at a very high level, what you are trying to do. Frankly, your mission statement and your overall value proposition might even be the same thing.

Here at Palo Alto Software (makers of Bplans), our mission statement is this: “We help people succeed in business.” It’s simple and encompasses everything we do from the types of products that we build to the kind of marketing that we do.

Intellectual property

This mostly applies to technology and scientific ventures, so just skip this if you don’t need to discuss your patents and other intellectual property.

But, if you have intellectual property that is proprietary to your business and helps your business defend itself against competitors, you should detail that information here. If you have patents or are in the patent application process, this is the place to highlight those patents. Equally important to discuss is technology licensing—if you are licensing core technology from someone else, you need to disclose that in your business plan and be sure to include details of the financial relationship.

Business structure and ownership

Your company overview should also include a summary of your company’s current business structure. Are you an LLCA C-corpAn S-corpA sole proprietor? In a partnership?

Be sure to define provide a review of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Company history

If you are writing a business plan for an existing company, it’s appropriate to include a brief history of the company and highlight major historical achievements. Again, keep this section short—no more than a few paragraphs at most.

This section is especially useful to give context to the rest of your plan, and can also be very useful for internal plans. The company history section can provide new employees with a background on the company so that they have a better context for the work that they are doing and where the company has come from over the years.

Location

Finally, the company overview section of your business plan should describe your current location and any facilities that the company owns.

For businesses that serve consumers from a storefront, this information is critical. Also, for businesses that require large facilities for manufacturing, warehousing, and so on, this information is an important part of your plan.
how to write a business plan

Financial plan

Last, but certainly not least, is your financial plan chapter. This is often what entrepreneurs find most daunting, but it doesn’t have to be as intimidating as it seems. Business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. That said, if you need additional help, there are plenty of tools and resources out there to help you build a solid financial plan.

A typical financial plan will have monthly sales and revenue projections for the first 12 months, and then annual projections for the remaining three to five years. Three-year projections are typically adequate, but some investors will request a five-year forecast.

Following are details of the financial statements that you should include in your business plan, and a brief overview of what should be in each section.

Sales forecast

Your sales forecast is just that—your projections of how much you are going to sell over the next few years.

A sales forecast is typically broken down into several rows, with a row for each core product or service that you are offering. Don’t make the mistake of breaking down your sales forecast into excruciating detail. Just focus on the high-level at this point.

For example, if you are forecasting sales for a restaurant, you might break down your forecast into these groups: lunch, dinner, and drinks. If you are a product company, you could break down your forecast by target market segments or into major product categories.

Your sales forecast will also include a corresponding row for each sales row to cover Cost of Goods Sold, also known as COGS (also called direct costs). These rows show the expenses related to making your product or delivering your service. COGS should only include those costs directly related to making your products, not regular business expenses such as rent, insurance, salaries, etc. For restaurants, it would be the cost of ingredients. For a product company, it would the cost of raw materials. For a consulting business, it might be the cost of paper and other presentation materials.

Personnel plan

Your personnel plan details how much you plan on paying your employees. For a small company, you might list every position on the personnel plan and how much will be paid each month for each position. For a larger company, the personnel plan is typically broken down into functional groups such as “marketing” and “sales.”

The personnel plan will also include what is typically called “employee burden,” which is the cost of an employee beyond salary. This includes payroll taxes, insurance, and other necessary costs that you will incur every month for having an employee on your payroll.

Profit and loss statement

Also known as the income statement, the profit and loss (or P&L) is where your numbers all come together and show if you’re making a profit or taking a loss. The P&L pulls data from your sales forecast and your personnel plan and also includes a list of all your other ongoing expenses associated with running your business.

The P&L also contains the all-important “bottom line” where your expenses are subtracted from your earnings to show if your business is making a profit each month or potentially incurring some losses while you grow.

Download the Business Plan Template today!

A typical P&L will be a spreadsheet that includes the following:

  • Sales (or income or revenue). This number will come from your sales forecast worksheet and includes all revenue generated by the business.
  • Cost of goods sold (COGS). This number also comes from your sales forecast and is the total cost of selling your product. For service businesses, this can also be called cost of sales or direct costs.
  • Gross margin. Subtract your COGS from your sales to get this number. Most profit and loss statements also show this number as a percentage of total sales (gross margin / sales = gross margin percent)
  • Operating expenses. List all of your expenses associated with running your business, excluding the COGS that you already detailed. You should also exclude taxes, depreciation, and amortization. However, you do include salaries, research and development (R&D) expenses, marketing expenses, and other expenses here.
  • Total operating expenses. This is the sum of your operating expenses.
  • Operating income. This is also known as EBITDA, or earnings before interest, taxes, depreciation, and amortization. This is a simple calculation where you just subtract your total operating expenses and COGS from your sales.
  • Interest, taxes, depreciation, and amortization. If you have any of these expense streams, you will list them below your operating income.
  • Total expenses. Add your operating expenses to interest, taxes, depreciation, and amortization to get your total expenses.
  • Net profit. This is the all-important bottom line that shows if you’ve made a profit, or taken a loss, during a given month or year.

Cash flow statement

The cash flow statement often gets confused with the profit and loss statement, but they are very different and serve very different purposes. While the P&L calculates your profits and losses, the cash flow statement keeps track of how much cash (money in the bank) that you have at any given point.

The key to understanding the difference between the two statements is understanding the difference between cash and profits. The simplest way to think about it is when you make a sale. If you need to send a bill to your customer and then your customer takes 30 or 60 days to pay the bill, you don’t have the cash from the sale right away. But, you will have booked the sale in your P&L and shown a profit from that sale the day you made the sale.

A typical cash flow statement starts with the amount of cash you have on hand, adds new cash received through cash sales and paid invoices, and then subtracts cash that you have paid out as you pay bills, pay off loans, pay taxes, etc. This will then leave you with your total cash flow (cash in minus cash out) and your ending cash starting cash + cash in – cash out = ending cash).

Your cash flow statement will show you when you might be low on cash, and when it might be the best time to buy new equipment. Above all, your cash flow statement will help you figure out how much money you might need to raise or borrow to grow your company. Since an operating business can’t run out of cash without having to close its doors, use your cash flow statement to figure out your low cash points and consider options to bring in additional cash.

Balance sheet

The last financial statement that most businesses will need to create as part of their business plan is the balance sheet. The balance sheet provides an overview of the financial health of your business. It lists the assets in your company, the liabilities, and your (the owner’s) equity. If you subtract the company’s liabilities from assets, you can determine the net worth of the company.

Instead of providing additional detail on the balance sheet here, I’ll refer you to this article on building and reading balance sheets.

Use of funds

If you are raising money from investors, you should include a brief section of your business plan that details exactly how you plan on using your investors’ cash.

This section doesn’t need to go into excruciating detail about how every last dollar will be spent, but instead, show the major areas where the investors’ funds will be spent. These could include marketing, R&D, sales, or perhaps purchasing inventory.

Exit strategy

The last thing that you might need to include in your financial plan chapter is a section on your exit strategy.

An exit strategy is your plan for eventually selling your business, either to another company or to the public in an IPO. If you have investors, they will want to know your thoughts on this. If you’re running a business that you plan to maintain ownership of indefinitely, and you’re not seeking angel investment or VC funding, you can skip the exit strategy section. After all, your investors will want to get a return on their investment, and the only way they will get this is if the company is sold to someone else.

Again, you don’t need to go into excruciating detail here, but you should identify some companies that might be interested in buying you if you are successful.

how to write a business plan

Appendix

An appendix to your business plan isn’t a required chapter by any means, but it is a useful place to stick any charts, tables, definitions, legal notes, or other critical information that either felt too long or too out-of-place to include elsewhere in your business plan. If you have a patent or a patent pending, or illustrations of your product, this is where you’d want to include the details.

Further reading

If you want even more details on creating your business plan, please take a look at these articles. They will guide you through the details of creating a winning plan that will impress your investors:

Business planning tools and downloads

It can be very helpful to view some completed business plans as you go through the planning process. I encourage you to take a look at our sample business plan library and download our free business plan template.

You might also want to check out our business plan template available through our software, LivePlan. You can also check out LivePlan’s business plan consulting, which will give you a professional business plan written by an MBA in five business days.

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Solopreneurs Can Grow Faster and Smarter With a Lean Business Plan

solopreneur business planning

Congrats! You’ve made the decision to strike out on your own as a solopreneur to start the business you have been dreaming of for months, or even years.

You know exactly what product or service you are going to provide and have been honing your skills. You may want to be a consultant, a coach, a designer, or a writer. You know there is demand.

You know this can work.

But do you really?

Though you may be tempted to immediately throw yourself into your new small business, don’t forget a crucial element: creating a business plan. Yes, the words “business plan” might trigger some dread about epic documents that take a ton of time to produce—but that’s not necessarily what a business plan needs to be.

The Lean Plan for solopreneurs

Even if you’re not thinking about writing a traditional business plan for a bank loan or investor pitch, creating a simple business plan that can act as your strategic roadmap can help you make better business decisions.

To be realistic and smart about your investment of time and resources, you need a well-researched document that will prove to you that your idea is viable and that your time, money, and effort will be well spent.

This shorter, more nimble type of business plan is called a Lean Plan, and you can create one in just a few hours, rather than a few weeks or months. It’s the perfect approach for a solopreneur who’s looking to expand their occasional freelancing gig into being full-time self-employed.

Keep it simple

Your Lean Business Plan is going to get you organized and help you be clean and concise about what your business is and how you’ll run it. This plan is the blueprint for your business and will help you think through your target market (who you’ll sell to) and how you’ll reach them. Keeping it simple helps you in the long run because if it’s easy to review and revise, you’ll be more likely to revisit it, and use it as a tool to grow your business.

The Lean Business Plan Template

Do your research

Before you can make projections for your future solopreneur business, it’s important to get a realistic picture of what you can achieve. Here’s where old-fashioned networking comes in. Don’t just guess how much you can potentially make; talk to real-live people in the field.

For example, you may assume that your earnings could take you into the six-figure range. That’s what they earn at Deloitte, right? Wrong. According to consulting.com, “The average annual salary for a Business Consultant is $72,900.” Still not chump change, but not what you may have expected, either.

Regardless of what you read and guess, it’s important to talk to experienced individuals who can set you straight with honest expectations. Even if your field is yet-to-exist (talking parakeets on-demand, anyone?), you can still reach out to those with similar business and revenue models.

From there, do an actual sales forecast to model the revenue you think you’ll be able to bring in. Put together a list of your personal expenses for the standard of living you require. Compare the two—this will help you understand how much revenue you’ll need to bring in each month to make your venture your primary work. Don’t forget to factor in self-employed (sole proprietor) taxes!

Profile the competition

Once you have identified and spoken with at least a couple of individuals succeeding in your field, it’s time to dig deeper and profile your competition.

As noted above, because solopreneur small businesses often tend to be extremely niche, you may fail to identify direct competition. That’s O.K. This exercise will help you anyway. Everyone has some kind of competition.

Answer the following questions about your competitors, and try to be as objective as possible:

  • What is this person/business’s competitive edge? Is it the offering itself, or perhaps price, convenience, or another factor?
  • What are their weaknesses or what do they lack? This question will help you determine where to invest the most energy.
  • What about their approach inspires their customers?
  • How do they effectively market their products or services?
  • How can you capitalize on what they are already doing to win customers? For example, if they advertise in a certain publication with much success, can you advertise there, too? 

Essentially, you’re doing a SWOT analysis on your competition—looking at their strengths, weaknesses, opportunities, and threats. You can learn more about SWOT here, and download a free SWOT analysis matrix template here. These profiles will give you a wealth of information that will help you fine-tune your approach.

Profile your ideal customers

Profiling your customer can be a simple or incredibly exhaustive endeavor. Be realistic about how much detail will be helpful to you, and don’t be afraid to go and speak to real people about their likes, preferences, and spending habits—this is about defining your target market through some simple market research.

For solopreneurs, it’s best to start by creating a few realistic buyer (user) personas. A buyer persona is a very specific, fictional representations of your ideal client. Creating a buyer persona can help you better understand your potential clients and see them as real humans. Then you’re better positioned to tailor your products and services, as well as your marketing messages.

Some helpful questions include:

  • What is the background of your ideal client or customer? Are they wealthy? Educated?
  • What are their demographics? Are they young or old? Give a specific age.
  • What motivates them to purchase your product or services?
  • What needs are they looking to fulfill or problems are they looking to solve?

For your solopreneur business, you may start out with as few as one or two personas, and you can always develop additional personas later on.

Clarify your mission and purpose

In today’s idealistic work environment, the word mission or purpose can seem like a catch-all for anything positive about work.

As a solopreneur, more than selling your product or service, you are selling yourself. And without passion and purpose, your customers will not be lining up to buy. Ready to define your purpose? Start by writing your company’s mission statement.

By articulating why you care about your business and the change you will create in the world, you are allowing others to connect emotionally with you and your work. Emotional factors are perhaps the most important elements in the decision-making process.

Include only what’s needed in your Lean Business Plan

Include details that will serve as a guide for your first few months of operation. This will save you a lot of guesswork when difference scenarios pop up (though they always will, and that’s part of the fun of it!).

You can use this list to create your Lean Business Plan outline:

  • Identity: What do you do and who do you do it for (or your mission statement)
  • Problem worth solving
  • Solution
  • Target market (or customer analysis)
  • Competition
  • Sales channels and strategies
  • Marketing strategies
  • Revenue and expense projections, break-even analysis
  • Goals and milestones
  • Team and key roles
  • Partners and resources
  • How the business will be funded

You can also read more about putting together a Lean Plan here,  download a free Lean Planning template here, to make it easier to get started.  

Analyze and adapt

Your business plan should be logical and easy to follow. Be realistic. If after some thought and research you have determined that part (or even all) of your idea is not viable (because of competition, lack of funds, or a weak or nonexistent market), be willing to put it aside or make changes to your business model. Hopefully, that won’t be the case, but be prepared.

As you start your business, you may discover unanticipated challenges. Maybe the competition is steeper than expected, or the market is smaller and less willing to pay than you thought.

You may discover that your core idea is strong, but your entire approach to marketing and sales won’t work.

Successful solopreneurs identify challenges and act quickly to remedy them. The more you can do this upfront, the more energy you will have to devote to actually doing the work that you love.

And don’t view your business plan as a static document. As you refine your strategy, update your plan accordingly. Creating different iterations of your business plan will help you understand past and projected growth, and will keep you on track with a concrete plan and purpose.

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Margaret Kerr-Jarrett
Margaret Kerr-Jarrett

Margaret Kerr-Jarrett is a business writer from Indianapolis who has lived in Jerusalem, Israel for the past five years. In addition to freelancing, she serves as content director for the branding and marketing agency Tribe Creative. Margaret is passionate about bridging the divide between mindfulness and technology, as well empowering people of all types (but especially moms!) to take their skills solo through online businesses and flexible careers.



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How to Write a Business Plan: Use This Checklist to Keep Yourself on Task

business plan checklist

First, why are you writing a business plan? Usually, the reasons fall into one of the following areas:

  • For idea validation: You have a business idea and just need to get all the details on paper so you can start to really understand whether you have a good business model.  
  • For a bank: Do you need a formal business plan to give to your bank as part of your small business loan application?
  • For investors: Are you seeking funding for your startup from angel investors or venture capitalists?
  • For strategic reasons: Does your company need an internal roadmap for growing and managing your business?

How you format your plan and how detailed it will depend on why you’re writing it and who will look at it when you’re done. If you’re looking to validate an idea, start with a very simple one-page pitch. If you’re seeking funding, you’re probably going to need a traditional, formal business plan. If you want to use your business plan as a tool for strategic management and growth, write a Lean Plan so you can update it easily and often.

Here, you’ll find a checklist for writing each of these types of plans, so you can choose the one that fits your particular needs.

If you have any questions, be sure to reach out to us on Twitter @Bplans and we’ll be happy to point you in the right direction.

1. The simplest business plan: A One-Page Pitch

A One-Page Pitch is the simplest business plan you can write.

There’s not much difference between it and the executive summary in the standard business plan—though of course, as the name implies, it should fit onto just one page.

You can use this version of the business plan to validate your idea (more on that here), or to provide investors with a clear and succinct introduction to your business.

You can also use it to get all of your ideas onto paper and distill your thoughts into the essential business plan elements before you begin writing a standard plan. You can create a One-Page Pitch in LivePlanuse this free templateor follow along with the checklist below.

One-Page Pitch checklist:

  • Describe your business in one sentence (what do you do, and who do you do it for?)
  • Describe the problem your potential customers have
  • Describe your solution to the problem—this is your product or service (how does it solve your customer’s problem?)
  • Explain who your target market is and how large it is
  • Describe your competitive advantage (talk about how your customers are solving their problem currently as well)
  • Describe how you will sell to your customers (will it be directly, or via a storefront, distributors, or a website?)
  • Describe what marketing activities you will use to attract customers
  • Detail your business model—this is how you will make money (what are your revenue streams?)
  • List your major initial expenses—startup costs (don’t go into a lot of detail here—it’s early days at this point)
  • List your primary goals and milestones that you want to accomplish over the next few months
  • Outline your management team and any people you want to hire to help you launch your business
  • List any partners and resources you need to help you launch

The Lean Business Plan Template

2. A Lean Plan: A nimble tool for growing your business

Lean Planning is a methodology that will help you grow a better, smarter business a lot faster.

While you can use Lean Planning to help you produce a business plan document, you should think of Lean Planning as a tool, rather than a path to a finished product. If you’ve heard of a business model canvas, a Lean Plan is really a better, more useful version of that idea.

The goal here is to write a business plan that has more detail than a one-page pitch, but that’s still quite brief. It should be a truly useful tool that you review and update regularly. It’s a great framework for reviewing your financial goals and progress on a regular basis. For more resources on Lean Planning, check out this guide.

Lean Business Plan checklist

  • Write a One-Page Pitch (as outlined above—this is how every Lean Plan begins)
  • Test your idea (get out and talk to your potential customers—make sure you’re on the same page as they are)
    • Do they have the problem you think they have?
    • What do they think of your solution?
    • What’s the best way to sell to them?
    • What marketing tactics will work? What won’t work?
  • Review your results (you will likely do this throughout the life of your business)
  • Review your financial performance if you’re already up and running
  • Revise your plan based on what you’ve learned and set new milestones
  • Set your sales forecast and create a budget for your expenses
  • Once you’re up and running, be sure to hold regular plan review meetings to ensure you stay on track

3. The standard business plan

For most people who are pitching a bank or an investor, a standard business plan will be the required format for the business plan. This is the version of the plan these investors are most familiar with, and the version that will give them the most information. It contains all the needed business plan components that banks and investors expect.

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If you want to increase your chances of getting funded, follow this format. Check out our definitive guide on how to write a business plan. You can also download a free business plan template here, or use LivePlan to walk you through writing an investor-ready business plan.

  • Define the opportunity
    • Go into more detail here about the problem and why it is worth solving
    • Discuss your solution to the problem (your product or service)
    • Talk a little more about how you validated your idea and what your future plans look like
  • Write the market analysis summary
    • Include more detailed information about your market segmentation and your target market segment strategy, key customers, future markets, and the competition
  • Outline how you’ll execute the plan
    • Discuss your marketing plan and your sales plan
    • Include information about your location, facilities, technology, equipment, tools, key metrics, and important milestones
  • Write the company and management summary
    • Write about the organizational structure of your company, the management team, any gaps in the team, and your personnel plan
    • Include information on your company’s history, as well as information about ownership
  • Write the financial plan
    • Arguably one of the most important business plan components, this will include:
  • Write the appendix
    • This is the spot for anything that’s important, but that would otherwise bog down someone reading your business plan for the first time; include extra detail, charts and graphs here
  • Write an executive summary (this goes at the beginning of the plan document, but we recommend you write it last)
    • Talk about the problem you are solving, what your solution is (your product or service usually), the market, the competition, and some key financial highlights

Whatever your reasons are for writing a business plan, you should know that it’s scientifically proven that planning makes you more successful. If you’re looking for more information on how to write a business plan, check out our business plan writing guide.

If you have any questions about writing your business plan, or about what format to use, be sure to reach out to us on Twitter @Bplans.

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How to Get the Most Out of a Sample Business Plan

sample business plans

The basic idea of a sample business plan makes perfect sense. If you haven’t done a business plan before, a sample plan gives you an instant idea of what you should include, how to structure it, and even what to write.

Bplans offers a library of more than 500 sample business plans across a wide variety of industries. Here’s how to get the most of any sample business plan.

What is a sample business plan?

A sample business plan gives you an idea of how another small business or startup in your industry built their own plan. A good business plan example will have all the elements your bank or angel investor (or venture capitalist) will expect to see when you ask them for funds.

The most important thing to remember when looking at sample business plans is that they’re samples (that’s why we call them that). They’re not pre-written plans that you can pick up and use right out of the box for your business. And anyone who tries to tell you that you can is wrong—or is trying to make a buck off of you.

Can I really write my business plan myself?

You don’t have to be a business planning expert to develop a business plan; you just need to know your own business. With that alone, you can use a sample plan as a tool to write a business plan that serves your business needs.

It can be as simple as a short, Lean Business Plan that serves as a strategic roadmap for your business, or as comprehensive as a formal business plan that instills confidence in bank lenders and investors.

This article will help you understand how to make the most of a sample business plan while avoiding some of the following common mistakes.

Download the Business Plan Template today!

Mistake 1: Looking for a sample plan that’s an exact match

Let’s say you’re opening a Pakistani restaurant. You’d probably have to look long and hard to find a sample Pakistani restaurant business plan. But right here on Bplans, you could find more than three dozen restaurant sample plans.

It really doesn’t matter if it’s an exact match in this case. An Italian restaurant plan will still show you the layout and structure of the document. Even specific things, like whether the tables and chairs you buy will be assets or expenses, will translate from one type of restaurant to another.

Look for a sample plan that’s a relatively close match, but don’t get hung up on the details. Because you’re the expert on your own business, the research you do to understand your target market, your competition, and your particular business model will help you fill in the details and really make your business plan useful and credible to potential funders.

Mistake 2: Assuming the sample is perfect

On Bplans and in business planning software like LivePlan, our free sample business plans are all real business plans written by real people. But that doesn’t mean they’re all perfect. If you are looking at a business plan and a piece of it doesn’t fit your business model or just doesn’t sound right to you, don’t be afraid to discard it.

Too often, people think a sample plan is a model, when really it’s just an example of what one person did. One size doesn’t fit all, so don’t try to cram your business idea into a sample plan just because it seems like it’s close.

Remember, if you just need a Lean Business Plan, not a formal business plan, shorter is better. The formal business plans you’ll find as samples tend to be extremely comprehensive. If you don’t need all that, don’t do it.

Mistake 3: Wholesale cut and paste

As already mentioned in the intro, a sample plan isn’t going to work as a pre-written plan for your business that you can copy and paste and hand to your lender. If you’re planning to open a pet boarding kennel, for instance, you might take one look at the Noah’s Arf sample plan and think your work is done for you.

While Noah’s Arf is a great example of a dog and cat kennel business plan, even if your business model and Noah’s Arf’s are identical, you can’t just swap out the names and call it a day.

Some of your business plan elements will invariably be different, so you’ll want to ask the following questions:

For instance, in the Noah’s Arf plan, full-time employees will be making $1,280 a month, which would be $8 an hour. That might have been fine in 2001, but if you were opening a kennel in the state of Oregon today, you’d get in big trouble with those numbers, since you’d be planning to pay your staff $.50 below the state’s current minimum wage. So be sure to edit thoroughly!

Mistake 4: Misunderstanding the business plan purpose

Your business plan should suit your business purpose. You don’t need a full formal business plan if you don’t have to show a plan to outsiders for some business purpose, such as a loan or an investment.

A Lean Business Plan is way easier to develop than a full formal plan; and for most businesses, the Lean Plan serves the purpose better. Every single business, whether you’re launching next week or have been around for 50 years can benefit from business planning.

It’s scientifically proven. If you’re doing it to give your company a better strategic roadmap, keep it short so you can easily review and edit it often. Form follows function. Don’t do what you won’t use.

So, for example, if you aren’t writing a plan for outsiders, then you probably don’t need descriptions of the product, team, or exit strategy. Just cover the key points—strategy, tactics, milestones, and essential numberswith simple bullet point lists and tables.

What’s the point of a business plan?

It might seem like turning out a printed document is the sole purpose of writing a business plan. But at Bplans, we believe that the most important part is not the finished product, but the process itself.

Whether you’re writing your business plan for your own peace of mind, to present to investors, or because a banker or advisor told you that you have to do it, there is tremendous value in the process of thinking critically about your business. You gain insight into your market, intimately understand your financial forecasts, and get a deeper understanding of the details of running your own business.

So when you find a sample plan that you think you like, don’t cheat your business by taking too many shortcuts. Use the sample for inspiration and guidance, and to get a clearer sense of what the necessary business plan sections really are. But do your own work, so you can reap your own rewards.

Visit the Bplans sample business plan library >>

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Sabrina Parsons
Sabrina Parsons

Sabrina has served as CEO of Palo Alto Software since 2007.



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Start With an Initial Assessment

initial assessment business planning

Get all your ducks in a row with an initial assessment of your business opportunity.

This article is part of our Business Planning Guide—a curated list of our articles that will help you with the planning process!

Start your business planning with a quick assessment.

Even an established business should take the time to step away from daily operations and look at the basics. Do your business numbers make sense? One of my business school professors used to refer to this process as finding out, “Is there a there there?”

There’s no single right way to do an initial assessment, and the words and phrases vary. My favorite is the Lean Business Plan, a collection of bullet-point lists and tables that lay out strategy, tactics, milestones, and essential numbers. People also like a one-page business plan, which is a really brief summary. For LivePlan users, the LivePlan summary is called the Pitch Page.

All of these are valid ways to approach assessing your business and its current health or potential viability; the difference is mainly a matter of preference. Focus on following through, keeping your eyes open, and being honest with yourself about what you find.

The Lean Business Plan

In its pure form, the Lean Business Plan is simple, just bullet points and lists and tables. Here’s a downloadable template: it’s a good alternative to the business model canvas. It includes a very simple definition of essential strategy, plus a list of tactics, milestones, and essential numbers.

Strategy is about focus and, in many cases, what you aren’t doing. What problem you solve, what solution you offer, your target market, and what makes you and your business qualified and different.

Tactics are the things you’ll do to achieve your goals, like the way you’ll talk about product benefits, how you’ll structure and test your pricing, methods for distribution, marketing activities, and so on. In a Lean Plan as a simple assessment, you keep this to simple lists.

Milestones are what is supposed to happen. Where do you start? What are the steps to follow? You answer these questions with a simple list.

Essential numbers or your financial plan might be simpler for an initial assessment than the projected sales, spending, and cash flow that are normally part of a Lean Business Plan. For an initial assessment, just do a sales forecast.

The one-page business plan

There’s really not much difference between a “one-page business plan, ” a Lean Plan, and a good executive summary. The only real possible difference is the that the “one-page plan” must absolutely fit on one page in a font that most people can still read, while a traditional executive summary can extend to two or three pages, but really should never be longer than that.

If you can condense your executive summary to one page, that’s great. Investors don’t have lots of time to read and a one-page executive summary will get the idea of your business across succinctly. It’s actually a very good exercise to reduce your executive summary to the absolute minimum. This will force you to trim needless words and communicate your business idea clearly and with minimal clutter.

The Lean Business Plan Template

The LivePlan summary

The LivePlan pitch page isn’t just about the pitch—it also serves as a strategy summary or an initial assessment. It’s a standardized one-page description including a logo, a short tagline, a market summary, bullet points for main business activities, a summary of financials, and the team.

The LivePlan summary business planning

Yes, I’m biased on LivePlan because it’s our product, but I see it used as a business summary now in the programs of several of the most prestigious business plan competitions, and my angel group is now using it to summarize some of the companies that submitted for our annual community event.

In my work on Lean Planning, I recommend that a Lean Business Plan includes just a brief strategy summary. That’s just a few bullet points for most people, but for LivePlan users I recommend using the LivePlan pitch. And I use it as a business summary, despite the name pitch page.

I can’t resist adding that LivePlan also includes some features designed to help with the real business pitch, the one I refer to as the pitch, the presentation for investors. It has graphics and summaries you can export as visuals for your slide deck for that first kind of pitch.

Market analysis

It’s hard to imagine an initial assessment that doesn’t include a market analysis. In the Lean Business Plan, it’s part of strategy, and it includes identifying your target market. Most one-page business plans include a brief market summary. So does the LivePlan Pitch. This section applies to any and all of them.

Whichever way you go with your initial assessment, determine if there is a sufficient market to support your business. You don’t need to do major market research for this initial market analysis. You may want, and even need, to do real research later on. For now, however, you want to get a good educated guess about how many potential customers you might have.

What you want at this point is a reality check. You’ve already developed a quick break-even analysis that ties your initial business numbers to your required sales. Now you’re going to look at how many customers you might have so you can think about the importance of breaking even.

Develop a basic market analysis table. This table gives you a simple list of market segments. Each segment is a group of customers. Define the groups according to what needs you supply, demographic characteristics, buying habits, preferences, or whatever other classification system works for your plan. Fill in the total potential customers estimated and the annual growth rate expected for each segment.

The following illustration shows a summary market analysis. You can also use a market analysis chart as a visual guide to your market segments.

business plan market analysis

Pause for reflection

Now it’s time to give your planning an objective appraisal.

At this point, you’ve defined your business, your financial break-even point, and your total potential market. How does your business look from this viewpoint? Does it make sense? Can you make the sales you need to break even? Is the market big enough? Are your projections realistic? Can you bring together the keys to success?

Especially for potential startup companies, a moment of reflection is critical. Many people dream of starting a business, but that dream turns into a nightmare if the new business isn’t successful. If you think you can make your break-even numbers work and you believe you have enough customers to make it, then go on to develop your full business plan. If not, either do more research and revise the idea, or give it up and try something else.

Short on time and need a business plan? Have an MBA write your business plan in five business days with LivePlan’s business plan consulting.

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How to Write a Business Plan for a Subscription Box Service

starting a subscription box business

The subscription box industry is growing rapidly thanks to a steady revenue model and tapping into people’s love for surprises. Ipsy, Birchbox, and Dollar Shave Club are the premier companies doing exactly this and therefore reach the 15 percent of online shoppers signing up for subscription boxes.

But with so many people trying to get their share of the growth, many subscription box businesses fold within a year or two. Lots of new box companies have trouble ironing out the kinks in their process: their customer can’t easily unsubscribe, their boxes just aren’t exciting or well-curated, and more. Any of these can lead to failure.

There are several different types of business plans that can help you stay on track. If you’re seeking a bank loan or outside investment, you probably need a traditional business plan. But if you’re writing a plan as an internal guide for strategic growth, you should consider a lighter version—a Lean Plan. A Lean Plan can also serve as an initial plan that helps you think through all the aspects of starting your business.

This guide to writing a subscription box business plan will help you through the process either way. If you’re writing a traditional plan, you’ll provide more details and it will be more comprehensive. If you’re writing a Lean Plan, keep it shorter and think about making it easy to revisit and revise often.

A subscription box business plan will include the following components:

  1. Executive summary
  2. Your problem and solution
  3. Target market (intended customers)
  4. Marketing and sales plan
  5. Operations
  6. Team
  7. Company overview
  8. Financial plan
  9. Appendix (optional)

To help you get started, you can download this free business plan template for writing a traditional business plan for a loan or investment, or this Lean Plan template for a more nimble, easy to update plan.

1. Executive summary

The first element of every business plan is the executive summary. But, don’t write your executive summary first—it’ll be quite a bit easier to write after you’ve written the rest of the plan. It provides an overview of your business plan by compiling the most important information from the sections that come after.

Investors will read your executive summary first, so give enough information that they’re intrigued enough in your business to be interested in seeing your full plan.

This is what you’ll include:

  • Problem: State the problem your subscription box will solve.
  • Solution: How does your box and the products it contains solve that problem?
  • Target market: What groups of people will want your box?
  • Competition: What other subscription box companies target the same niche?
  • Team: Who are your coworkers and what’s their business experience?
  • Financial summary: Project your revenue for the first few years.
  • Milestones: List major long-term goals you hope to achieve.

starting a subscription box business

Opportunity: Proving there’s a market for your subscription box

Because you complete the executive summary last, you will begin your actual business plan writing process with the problem and solution section of your business plan.

Think of the opportunity as including the problem you’re solving, the solution to that problem, who you plan to sell to, and how your business fits into the existing competitive landscape.

2. Problem and solution

Defining the problem you’re trying to solve is an important part of your business plan because it’s the first place where you’ll demonstrate that idea is viable—that you can actually make money with your business model and idea. Your subscription box service could solve any number of problems.

Here are a few examples (but definitely not an exhaustive list):

  • Other boxes appealing to your niche are too expensive.
  • No box exists for your niche.
  • Online shopping for your product is difficult to some extent (hard to find, can’t return it, often doesn’t fit, so on).

Then, explain how your subscription box company solves the problem.

For example, if your box service will be cheaper than others in your niche, talk about your business model and how you’ll keep your box more affordable.

3. Target market

The target market section of your subscription box business plan identifies which subset of people you will focus your marketing and sales plan on. You can’t target everyone. If you’re selling a box that curates hair products for wealthy, curly-haired men, you probably don’t want to use your marketing dollars to advertise to people outside of your demographic.

Even narrower, not everyone who’s in your niche will want your box. A majority of men with curly hair probably have a product they always use, or they don’t use a product at all. The example box should, therefore, target men with that hair type who are looking for a new product.

Doing a formal market analysis can help you valid the assumption that people will actually pay for your box, as well as identify which people have the best chance of purchasing a subscription.

Additionally, you’ll want to have done some market research or analysis before you attempt to secure outside funding. Banks and investors will be looking to you to prove that you’ve had some initial sales success, but they’ll expect you to prove that you can continue to build your customer base in service of growing a profitable business.

The target market section of your business plan should include your TAM, SAM, and SOM, a brief buyer persona, your key customers, competition, and your pie in the sky future plans.

TAM, SAM, SOM

TAM, SAM, and SOM are three indicators that can help you think through how big your opportunity really is. In the beginning, your SOM is the most important number to think about. Most products aren’t really marketable to every single person with a credit card.

It can be tempting to think that you’re going to advertise to everyone everywhere—but that’s a huge and fairly unnecessary expense. Figuring out who can can really reach and get to pay for your product will save you time and money in the long run.

Understanding TAM, SAM, and SOM:

  • Total Addressable Market (TAM): If you’re selling a men’ hair product subscription box, you might say that every man with hair is your TAM. That’s probably not completely accurate. Maybe your TAM is actually every man in a certain income bracket that is fashion conscious and has his hair styled by a professional.  
  • Segmented Addressable Market (SAM): This is how much of the TAM you’ll target. The SAM for our example might be men with curly hair because you curate products specific to that style.
  • Share of the Market (SOM): Your SOM is who you will reach in your first few years of business. The example’s SOM would, therefore, be a percentage of men with, curly hair based on the number of orders your business model can handle. It could also narrow the SAM by selecting specific regions that its box will be available in.

Buyer persona

Creating a buyer persona puts you in the customer’s shoes to guide marketing and sales decisions. You can see what your customer needs out of your subscription box, and why they need it.

It also gives you an edge over competitors without one. Keeping your buyer persona in mind can help you as you develop your marketing and sales plan, and think through crafting messages to potential customers that will compel them to convert, or subscribe to your box.

Key customers

This section is for businesses that sell to enterprise customers, not consumers. Companies that become a big subset of your revenue are likely strategic alliances, though, which is a later section. A key customer for a subscription box might be a large organization that contracts with you as an exclusive provider of something they need.

Maybe your subscription box is a monthly curated selection of comic books. If you partner with a large, wealthy private school district who wants you to provide comic book packages to all their eighth-grade students every month, that contract might be key your business survival for a period of time. They’re a key customer because without their business, you’d be in trouble.

Competition

Name the other subscription boxes that appeal to your niche. The men’s hair product example would list Birchbox, Dollar Shave Club, Bespoke Post, and Luxury Barber. Describe their pricing, what sort of products they include, how many items are in each box, and so on.

An easy and visual way to do this comparison is with a competitive matrix. A competitive matrix lists the company names down the left column and particular features across the top row. Check marks indicate which company has which feature—you should construct yours to highlight why your box is different and better.

Then, explain how your subscription box service differs, and how those differences appeal to your target market.

Future plans

This section is for your hopes and plans for scaling your business. Maybe your comic book subscription plan eventually wants to branch into comic book merchandise curation in the future. Maybe you want to start marketing your subscription boxes at different price points to increase your available market share. Put those ideas here.

starting a subscription box business

Execution: How you’ll do it

Now that you explained your opportunity thoroughly, it’s time to describe how you plan to take advantage of it. Now, you’ll describe your marketing strategies, sales plans, operations information, milestones, your team and company basics, and your financial plan.

4. Marketing and sales plan

For many businesses, marketing and sales effort stops once a particular customer purchases its product or service.

Subscription boxes are nice because they’re designed to retain customers. But a lot of subscription companies bill on a period basis, like monthly, so you’re always thinking about how to retain the customers you have while you seek new customers.

Your marketing and sales plan should include a positioning statement, your initial pricing tests, tactics for promoting your brand, and information about any strategic alliances that are critical to your success.

Positioning statement

Your positioning statement should explain how your subscription box is different than competitors. Most statements follow this template:  

“For [target market description] who [target market need], [this product] [how it meets the need]. Unlike [key competition], it [most important distinguishing feature].”

Pricing

Next, it’s time to determine your box’s pricing.

There are a lot of factors to consider when determining your monthly price:

  • Product itself
  • Fulfillment
  • Packing materials
  • Transaction and platform fees
  • Labor
  • Postage and shipping

With the total cost of each box in hand, calculate a price with at least a 40 percent profit margin, as suggested by CrateJoy. Cratejoy also has other resources for calculating the best price for your subscription box.

There’s one final aspect of pricing to consider. Established subscription box services generally offer different rates depending on the length of subscription. For example, the men’s hair product box might cost $39.95 per month, but if you commit to subscribing for a year, its monthly cost will drop to $36.95.

If you do this, make sure the annual plan with cheaper monthly payments still generates a profit.

Promotion

Most of your outreach will happen during the pre-launch stage. Subscription box services primarily use social media (Instagram, Facebook, Pinterest, and influencers) to show off some of its curated products and give offers prior to official launch.

Get the email addresses of interested customers by advertising email sign-ups rather than pre-orders on your website and social media. You can then personalize your pre-launch marketing plan with emails to these interested people. This will keep your leads warm and encourage a higher percentage to subscribe once you launch.

Consider landing page design, easy email sign up, and potential deals for pre-subscribers during the pre-launch promotion as well.

One thing to be cautious of: how you advertise the products in your box. Not getting permission from the manufacturers on their product limits how much you can advertise it.

Strategic alliances

What vendors can you partner with to give you discounted or free sample products for your box? Let them know that they get cheap advertising by sponsoring your box.

Your business has a lot of potential if you can attain such partnerships. They save time by lessening your product curation efforts, and they make the overall product cost cheaper.

The example box might reach out to popular hair product brands like American Crew, Baxter of California, or Kevin Murphy to get free samples. Customers try each one in their box and decide if any are worth buying a full bottle of. If none work perfectly, they wait until the next month’s box, plus they don’t waste any product because the samples are small.

You should also explore other types of strategic alliances, like brick and mortar locations or selling through Amazon. These, among other ideas, can help your store reach new target markets, expand business operations, and improve profit margins.

Finally, an overlooked alliance is the one with each of your customers. Subscription models depend on customers staying for a while and increasing their lifetime value. Make the boxes personal and provide reliable customer service to grow your business and retain customers.

5. Operations

The operations section includes the logistics, technology, and other behind-the-scenes pieces of your business. For a subscription box service, this section will primarily focus on product curation and box distribution.

Sourcing, fulfillment, and distribution

Where will you get your products? How you will assemble them in your box. What packing materials will you use and how will you make the inside of your box aesthetically pleasing?

Then, talk about the box itself. Will you have a custom box designed, or will you keep it super simple at first? Will you outsource your packaging and shipping?

Once your business can’t run out of your garage anymore you’ll probably want to consider outsourcing some of the work. If you don’t plan on outsourcing initially (as most don’t), explain how you will handle box distribution. Your explanation should include how you will ship boxes, keep track of shipments, and any other logistics for getting your product to the customer’s door.

Deliver your boxes on a regular schedule—customers should receive their order within the same time frame each month (or whatever time period) to avoid confusion. Also, offer tracking information so they can see where their package is in the shipping process.

Startup costs

There are several expenditures you need to address before starting your business operations. Your startup costs will include acquiring your initial inventory, or the products you plan to include in the first edition of your box service.

You’ll probably also want to include your first round of shipping materials: filling, boxes, and labels. Say where you will get these and why that’s the cheapest option—you’ll likely buy these supplies in bulk. And if you’re paying for space for storage or packing operations, you’ll want to include that too.

Away from the box itself, you will pay for a website to process payments and advertise your service. Will you need an app? Think that through from the beginning too. You’ll want to think through which tool is essential from the beginning.

At first, you might get away with manually billing each of your customers each month, but it probably won’t be long until you’ll need tools to help with automated re-billing, order management, shipping label generation, customer management and more. The key for startup costs is to decide what you can’t live without from day one.

Milestones

Set milestones to show your business plan’s audience where you realistically see your company going long term. Add the milestone’s name, due date, budget, and person responsible to a calendar to put “some bite into your plan and management.”

Stay up to date with these milestones once your business gets off the ground; they will keep you and your coworkers on track toward your original goals. Schedule monthly review meetings within your team (or schedule time to review by yourself, if you’re starting out solo) every month to monitor your progress on each milestone.

Traction

No investor will give away money to an unproven business idea. Even if you haven’t launched your subscription box yet, run a minimum viable product (MVP) to demonstrate that people will pay for your box. This can be as simple as selling a beta version of your boxes to verify that people will pay for it.

If your business is already up and running, include the milestones you already achieved. “Traction” shows that your subscription box is heading in the right direction and is important to investors as proof that your business is viable.

Key metrics

Going smaller, use key metrics to ensure that your business is on track to reach your milestones.

The five key metrics to judge your subscription model’s success are:

  • Churn and churn rate
  • MRR (monthly recurring revenue)
  • ARPU (average monthly revenue per user/customer)
  • LTV (lifetime value)
  • CAC (customer acquisition cost)

Most business owners would be terribly concerned their sales stagnated. That’s one benefit of the subscription pricing model—a slower sign up rate isn’t always bad for your business. Use these five metrics to track how many people are continuing their subscription and to know when you need to address stagnated sales.

Key assumptions and risks

State the key assumptions and risks of your subscription box service.

Knowing your assumptions helps maintain the business’ consistency because the subscription box industry is always changing. They become even more important when you revisit and update your business plan in the future.

Additionally, acknowledging potential risks can guide your business to reduce its susceptibility to them. Investors want to know that you’ve thought about situations that could negatively affect your service business, plus ways to avoid them.

Issues related to credit card fraud is a big risk with any ecommerce business model. Address the security risk with your website, as well as how you plan to stop any sort of fraud.

6. Team

You want to make your management team attractive and credible to investors. If they know your subscription box idea will get customers, show them why you and your team are the ones to make it happen.

Name the people involved with your subscription box service. Your team might change as the business grows, though. You might outsource packaging, shipping or both instead of hiring more people to work with you directly. 

Explain your business qualifications, along with any business partners or key team members. Also, describe why they are passionate or knowledgeable about the niche your box specializes in. Why do they know how to curate products that will surprise and satisfy customers?

The Lean Business Plan Template

7. Company overview

In the company overview section, you’ll explain what your company values, how it will legally protect its products, follow certain regulations, and structure ownership. Include your business’ history and location as well.

Mission statement

The mission of your subscription box is what you ultimately want people to recognize the brand name for. A generic template for a mission statement is:

“The mission is to provide X (services) by doing Y (methods) for Z (target market).”

Keep it as short and meaningful as you can.

Intellectual property

Trademarking your business name, logo, and so on are the main intellectual property issues for a subscription box.

But if you have some sort of new technology or method that improves an aspect of your service, make sure to protect it with patents. That could be anything from improved packaging methods to automated product curation.

Legal structure and ownership

Each legal structure has its own pros and cons, so do your research so you can make in informed decision.

Location

Where is your distribution center? Is it in an optimal location for reaching your target market without expensive shipping costs? This might change at some point in the future if you choose to outsource it.

History

If you’re writing this business plan as a strategic guide and your startup is already up and running, talk about how it began. Highlight any major achievements you have already reached.

8. Financial plan

With so many fluctuating expenses to account for in the curation and distribution of your boxes, you need to make sure that you are still making a profit.

For a subscription box company, like any other business, there are eight elements you need to include in the financial section of your business plan.

Here are the components of the financial plan that you’ll need to include:

  • Sales forecast: There are two parts involved with your sales forecastannual revenue projections and cost of goods sold (COGS).
  • Personnel plan: How much will you pay each employee. Include “employee burden” costs as well—the cost of an employee beyond their salary.
  • Break-even analysis: Calculate when your business will break even and begin making a profit. Show what your profit numbers will look like from that point forward.
  • Profit and loss statement: Compare the revenue projections by time period with your expenses. The bottom line of a profit and loss statement is net profit, or how much money you’re making after all expenses are paid. Here’s a template to help you get started.
  • Cash flow statement: The cash flow statement helps you recognize what your startup’s cash position is—profit isn’t the be-all-end-all metric for the money you have. This statement tracks how much cash you have, where it’s coming and going from, plus on what schedule. Here’s a cash flow template you can use in Excel.
  • Balance sheet: Make sure your assets and liabilities balance out to show financial health. Your balance sheet is a snapshot of your businesses’ financial health. Here’s a balance sheet template you can use to get started.
  • Use of funds: Talk about where potential funding from investors or the bank will go and why the money is necessary there. Omit this bullet if you’re not seeking any funding.
  • Exit strategy: Name a few other subscription box services or outside companies who might want to take over if you decide to exit the industry down the line. Omit this bullet as well if you’re not seeking funding.

Appendix

Like with any appendix, add any charts, tables, pictures, or other necessary information that didn’t fit neatly into the business plan.

This section is not necessary—only include it if you have supplemental information that you need to cover.

Conclusion

Subscription-based business models are growing exponentially in all industries because people are figuring out how to maximize the profit margins, and subscription box businesses are one of the premier industries taking advantage of this new and popular business model. They supply customers with unique, curated products, and provide the excitement of the unboxing experience that no other industry can.

Before you enter this lucrative industry, ask yourself these seven questions to make sure it is right for you. Then, start working on your business plan—keep it as short and concise as you can so that it’s easier to use it as a tool to guide your business.

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Nate Mann
Nate Mann

Nate Mann recently finished his second year at the University of Oregon. He is pursuing a major in journalism, along with minors in business administration and computer science. He is currently a content marketing intern for Palo Alto Software. Outside of school and work, Nate is an avid basketball fan and writes about the Portland Trail Blazers for Rip City Project. He is also a data reporting intern for the University of Oregon’s School of Journalism and Communication.

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Why You Should Update Your Business Plan Regularly to Drive Growth

business planning for growth

I started an insurance agency two years ago. I had some friends who were all very successful in the industry, which led me to think that I would be blessed with the same fortune.

My business was in a highly competitive industry, rated as one of the best industries to start a new business in. Around 58 percent of businesses in the insurance sector survive longer than four years.

Things went well in the beginning, but just as I approached my first year, business started to slow down dramatically. It was like my business came to a halt.

The problem: Insufficient planning

My business came to a standstill.

I didn’t know what was wrong.

It was obvious that the market was saturated, but the insurance industry is evergreen and wasn’t going anywhere—I knew a significant number of people who were very successful with their own insurance firms.

I started to take a close look at my business.

After getting out an old document that was my business plan, I realized that I had reached the full potential of the plan I drafted when I first started the business. I also noted that I didn’t really leave room for further expansion, which explained a lot.

This was when I realized that I had to continuously plan for the future if I wanted my business to continue growing.

Even though life is unpredictable, many business-related aspects can be forecasted—often successfully.

The Lean Business Plan Template

Tips to help your business grow with a solid business plan

Because as my business became more established I basically ignored the business plan that I relied on when I started my business, I felt lost when everything started to slow down.

I was confused about what I could do to gain new customers. Thankfully, I wasn’t losing customers.

After a lot of research and dusting off my business plan, I was able to reverse the downtrend.

Below, I’ll share a couple of the lessons I have learned along the way.

1. Keep your business plan alive

Your business plan is not something that should be written once and then buried away.

Instead, it is a document that you should refer to frequently. Something that should be updated regularly and then compared to the actual results you’re achieving.

Keep your business in line with what is currently going on, as well as what you plan to come.

When you reach a goal, then mark it on your business plan and set out to reach the next goal. Sometimes these goals are called milestones and they can help you keep your business on track.

At least twice a year, schedule a day or two to plan ahead of time.

Ask yourself:

  • What worked in the last quarter? (Note: Do more of that!)
  • What didn’t work and why?
  • What can you do differently?
  • What goals would you like your business to reach in the next six months?
  • Where do you see your business in three years?

Focus on the short-term goals, but also plan for the long game. If you’re using a business dashboard, that can make it easier to see how your actual performance compared to your projections, and to model possible future scenarios.

2. Let your business plan be the light

As business owners, we are sometimes faced with an endless road of darkness.

I remember how much more effort it took to stay motivated and keep hustling. At times, it felt like things were over—there was little I could do.

When times are tough, you can quickly lose your motivation to rise to the top – or even to get back up and fight to keep your business alive.

Some businesses choose to give up at these times and I wouldn’t blame them. 

In these dreadful times, your business plan should be the light at the end of that dark tunnel. When you look at your business plan, there is a good chance that you will find some useful information that could reveal to you why you are going through your current situation. At the same time, you might just discover solutions you have been looking for by analyzing the data in your business plan.

3. Keep things organized for better decision making

A study that was published in the Personality and Social Psychology Bulletin explained how a clinical trial found being organized leads to improvements in cortisol levels, stress, anxiety, and even depression.

Especially in the business world, being organized will make a huge difference in your effectiveness.

When things are organized, it is easier to spot problems, as well as to make more accurate forecasts based on your company’s current situation.

4. Track your progress

How would you know how well your business is doing (or how poorly) if you don’t track your results and progress?

I was also a victim to this problem: When things were going great, I didn’t make time to look back and track how well I was heading toward my short or long-term goals.

Write S.M.A.R.T. (specific, measurable. action-oriented, relevant, and timely) goals in your business plan—dedicate an entire section to short-term goals and a separate section to long-term goals.

Add documents, scribbles, and anything else that has to do with your progress with your business plan.

Make some time every quarter to sit down and see how well you are really tracking so you can plan your next moves accordingly.

5. Keep it simple

A lot of people tend to overcomplicate a business plan.

While the document is important and will be extremely valuable for the future of your business, there is no need to compile an entire book.

Many businesses are turning toward a one-page business plan or Lean Plan to simplify things.

The single-page document would contain all of the most important elements of your business—a summary. I personally like to keep a one-page summary pinned at my desk, and keep the detailed information in the main document on my laptop.

As your business grows, so will your business plan and all the documents that go with the plan. Here’s a link to a downloadable template you can use to get started.

6. Consider your competitors

An often overlooked element of a good business plan is a thorough analysis of competitors.

You can learn a lot from watching your competitors. Competitor data allows you to see what they are doing, so you can decide if you should do the same or take a different approach.  If your competitors are doing something that works, consider copying them.

I used a variety of tools to help me gain valuable insight into how my competitors are marketing their products, who their target audience is, and what makes them unique.

Google is always a good starting point. Getting ahold of your competitor’s marketing material is another. If you come across a competitor’s customers, take a moment to ask them why they chose to do business with your competition.

By studying your competition, you may be able to pick up a few ideas to help grow your business.

Final words

Even though my business came to a standstill at one point and even caused me to lose some money, I did not regret starting my own company.

What I do regret, however, is that for a long time I didn’t pay enough attention to my business plan.

Only when my business seemed to be standing still did I revert back to my business plan, only to discover that the plan I had for my business mapped out all the success I had been riding all along.

Never underestimate the power of a business plan.

Frequently updating your business plan and comparing your real results to your forecasts will give you valuable insight to help your business grow into the future!

If you’re looking for sample business plans to give you a better sense of what you should include, check out Bplans’ examples specifically for insurance companies.

You can also download a free business plan template or even a Lean Plan template (it’s an alternative to a business model canvas) if you’re looking for a shorter version of a plan that can be updated quickly and easily on a regular basis.

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John Catibog
John Catibog

John Catibog is a business insurance broker and founder of Indagard Insurance Services. Based in Melbourne, Australia, John has an education in computer science, business and marketing and logistics. Combined with his insurance broking experience, he works closely with local business owners to cover the many risks they face in business today. John’s is a regular presenter on cyber insurance to protect against cyber risks. Over the years, John has worked in the healthcare, retail, and transport industries.

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