How to Write a Business Plan Step-By-Step in 2023 (+ Examples and FREE Template)
This is the ultimate guide to creating a comprehensive and effective plan for your new venture. In today’s dynamic business landscape, having a well-crafted business plan is an important first step to securing funding, attracting partners, and navigating the challenges of entrepreneurship.
This guide has been designed to help you create a winning plan that stands out in the ever-evolving marketplace. Using real-world examples and a free downloadable template, it will walk you through each step of the process.
Whether you’re a seasoned entrepreneur or launching your very first startup, the guide will give you the insights, tools, and confidence you need to create a solid foundation for your business.
What is a Business Plan?
A business plan is a strategic document that outlines an organization’s goals, objectives, and the steps required to achieve them. It serves as a roadmap as you start a business, guiding the company’s direction and growth while identifying potential obstacles and opportunities.
Typically, a business plan covers areas such as market analysis, financial projections, marketing strategies, and organizational structure. It not only helps in securing funding from investors and lenders but also provides clarity and focus to the management team.
A well-crafted business plan is a very important part of your business startup checklist because it fosters informed decision-making and long-term success.
Why You Should Write a Business Plan
Understanding the importance of a business plan in today’s competitive environment is crucial for entrepreneurs and business owners. Here are five compelling reasons to write a business plan in 2023:
- Attract Investors and Secure Funding: A well-written business plan demonstrates your venture’s potential and profitability, making it easier to attract investors and secure the necessary funding for growth and development. It provides a detailed overview of your business model, target market, financial projections, and growth strategies, instilling confidence in potential investors and lenders that your company is a worthy investment.
- Clarify Business Objectives and Strategies: Crafting a business plan forces you to think critically about your goals and the strategies you’ll employ to achieve them, providing a clear roadmap for success. This process helps you refine your vision and prioritize the most critical objectives, ensuring that your efforts are focused on achieving the desired results.
- Identify Potential Risks and Opportunities: Analyzing the market, competition, and industry trends within your business plan helps identify potential risks and uncover untapped opportunities for growth and expansion. This insight enables you to develop proactive strategies to mitigate risks and capitalize on opportunities, positioning your business for long-term success.
- Improve Decision-Making: A business plan serves as a reference point so you can make informed decisions that align with your company’s overall objectives and long-term vision. By consistently referring to your plan and adjusting it as needed, you can ensure that your business remains on track and adapts to changes in the market, industry, or internal operations.
- Foster Team Alignment and Communication: A shared business plan helps ensure that all team members are on the same page, promoting clear communication, collaboration, and a unified approach to achieving the company’s goals. By involving your team in the planning process and regularly reviewing the plan together, you can foster a sense of ownership, commitment, and accountability that drives success.
What are the Different Types of Business Plans?
In today’s fast-paced business world, having a well-structured roadmap is more important than ever. A traditional business plan provides a comprehensive overview of your company’s goals and strategies, helping you make informed decisions and achieve long-term success. There are various types of business plans, each designed to suit different needs and purposes. Let’s explore the main types:
- Startup Business Plan: Tailored for new ventures, a startup business plan outlines the company’s mission, objectives, target market, competition, marketing strategies, and financial projections. It helps entrepreneurs clarify their vision, secure funding from investors, and create a roadmap for their business’s future. Additionally, this plan identifies potential challenges and opportunities, which are crucial for making informed decisions and adapting to changing market conditions.
- Internal Business Plan: This type of plan is intended for internal use, focusing on strategies, milestones, deadlines, and resource allocation. It serves as a management tool for guiding the company’s growth, evaluating its progress, and ensuring that all departments are aligned with the overall vision. The internal business plan also helps identify areas of improvement, fosters collaboration among team members, and provides a reference point for measuring performance.
- Strategic Business Plan: A strategic business plan outlines long-term goals and the steps to achieve them, providing a clear roadmap for the company’s direction. It typically includes a SWOT analysis, market research, and competitive analysis. This plan allows businesses to align their resources with their objectives, anticipate changes in the market, and develop contingency plans. By focusing on the big picture, a strategic business plan fosters long-term success and stability.
- Feasibility Business Plan: This plan is designed to assess the viability of a business idea, examining factors such as market demand, competition, and financial projections. It is often used to decide whether or not to pursue a particular venture. By conducting a thorough feasibility analysis, entrepreneurs can avoid investing time and resources into an unviable business concept. This plan also helps refine the business idea, identify potential obstacles, and determine the necessary resources for success.
- Growth Business Plan: Also known as an expansion plan, a growth business plan focuses on strategies for scaling up an existing business. It includes market analysis, new product or service offerings, and financial projections to support expansion plans. This type of plan is essential for businesses looking to enter new markets, increase their customer base, or launch new products or services. By outlining clear growth strategies, the plan helps ensure that expansion efforts are well-coordinated and sustainable.
- Operational Business Plan: This type of plan outlines the company’s day-to-day operations, detailing the processes, procedures, and organizational structure. It is an essential tool for managing resources, streamlining workflows, and ensuring smooth operations. The operational business plan also helps identify inefficiencies, implement best practices, and establish a strong foundation for future growth. By providing a clear understanding of daily operations, this plan enables businesses to optimize their resources and enhance productivity.
- Lean Business Plan: A lean business plan is a simplified, agile version of a traditional plan, focusing on key elements such as value proposition, customer segments, revenue streams, and cost structure. It is perfect for startups looking for a flexible, adaptable planning approach. The lean business plan allows for rapid iteration and continuous improvement, enabling businesses to pivot and adapt to changing market conditions. This streamlined approach is particularly beneficial for businesses in fast-paced or uncertain industries.
- One-Page Business Plan: As the name suggests, a one-page business plan is a concise summary of your company’s key objectives, strategies, and milestones. It serves as a quick reference guide and is ideal for pitching to potential investors or partners. This plan helps keep teams focused on essential goals and priorities, fosters clear communication, and provides a snapshot of the company’s progress. While not as comprehensive as other plans, a one-page business plan is an effective tool for maintaining clarity and direction.
- Nonprofit Business Plan: Specifically designed for nonprofit organizations, this plan outlines the mission, goals, target audience, fundraising strategies, and budget allocation. It helps secure grants and donations while ensuring the organization stays on track with its objectives. The nonprofit business plan also helps attract volunteers, board members, and community support. By demonstrating the organization’s impact and plans for the future, this plan is essential for maintaining transparency, accountability, and long-term sustainability within the nonprofit sector.
- Franchise Business Plan: For entrepreneurs seeking to open a franchise, this type of plan focuses on the franchisor’s requirements, as well as the franchisee’s goals, strategies, and financial projections. It is crucial for securing a franchise agreement and ensuring the business’s success within the franchise system. This plan outlines the franchisee’s commitment to brand standards, marketing efforts, and operational procedures, while also addressing local market conditions and opportunities. By creating a solid franchise business plan, entrepreneurs can demonstrate their ability to effectively manage and grow their franchise, increasing the likelihood of a successful partnership with the franchisor.
How to Write a Business Plan
Embarking on the journey of creating a successful business requires a solid foundation, and a well-crafted business plan is the cornerstone. Here is the process of writing a comprehensive business plan and the main parts of a winning business plan. From setting objectives to conducting market research, this guide will have everything you need.
The executive summary is a brief overview of your entire business plan, highlighting the most critical points. It should be concise and engaging because it is often the first thing investors read. Include your business’s mission statement, key products or services, target market, and financial highlights.
Example: EcoTech is a technology company specializing in eco-friendly and sustainable products designed to reduce energy consumption and minimize waste. Our mission is to create innovative solutions that contribute to a cleaner, greener environment.
Our target market includes environmentally conscious consumers and businesses seeking to reduce their carbon footprint. We project a 200% increase in revenue within the first three years of operation.
Overview and Business Objectives
This section outlines your company’s goals and the strategies you’ll employ to achieve them. Be specific and set measurable, time-bound objectives.
Example: EcoTech’s primary objective is to become a market leader in sustainable technology products within the next five years. Our key objectives include:
- Introducing three new products within the first two years of operation.
- Achieving annual revenue growth of 30%.
- Expanding our customer base to over 10,000 clients by the end of the third year.
Provide a detailed description of your company, including its history, mission, vision, and unique selling proposition. Explain what sets you apart from the competition.
Example: Founded in 2023, EcoTech is committed to developing cutting-edge sustainable technology products that benefit both the environment and our customers. Our unique combination of innovative solutions and eco-friendly design sets us apart from the competition. We envision a future where technology and sustainability go hand in hand, leading to a greener planet.
Define Your Target Market
Identify your ideal customers by describing their demographics, psychographics, and pain points. This information will help you know your target market and develop targeted marketing strategies.
Example: Our target market comprises environmentally conscious consumers and businesses looking for innovative solutions to reduce their carbon footprint. Our ideal customers are those who prioritize sustainability and are willing to invest in eco-friendly products.
To conduct market research and perform a comprehensive market analysis, you’ll need to examine industry trends, customer needs, and competitor strengths and weaknesses. This information will help you identify opportunities and potential risks.
Example: The market for eco-friendly technology products has experienced significant growth in recent years, with an estimated annual growth rate of 10%. As consumers become increasingly aware of environmental issues, the demand for sustainable solutions continues to rise.
Our research indicates a gap in the market for high-quality, innovative eco-friendly technology products that cater to both individual and business clients.
A SWOT analysis is a strategic evaluation tool that helps identify your business’s Strengths, Weaknesses, Opportunities, and Threats. Including a SWOT analysis in your business plan allows you to recognize areas where you excel and those that need improvement. It also helps uncover opportunities for growth and potential risks, enabling you to make informed decisions and develop effective strategies.
- Innovative and eco-friendly product offerings.
- Strong commitment to sustainability and environmental responsibility.
- Skilled and experienced team with expertise in technology and sustainability.
- Limited brand recognition compared to established competitors.
- Reliance on third-party manufacturers for product development.
- Growing consumer interest in sustainable products.
- Partnerships with environmentally-focused organizations and influencers.
- Expansion into international markets.
- Intense competition from established technology companies.
- Regulatory changes could impact the sustainable technology market.
In this section, you’ll analyze your competitors in-depth, examining their products, services, market positioning, and pricing strategies. Understanding your competition allows you to identify gaps in the market and tailor your offerings to outperform them.
By conducting a thorough competitive analysis, you can gain insights into your competitors’ strengths and weaknesses, enabling you to develop strategies to differentiate your business and gain a competitive advantage in the marketplace.
Key competitors include:
GreenTech: A well-known brand offering eco-friendly technology products, but with a narrower focus on energy-saving devices.
EarthSolutions: A direct competitor specializing in sustainable technology, but with a limited product range and higher prices.
By offering a diverse product portfolio, competitive pricing, and continuous innovation, we believe we can capture a significant share of the growing sustainable technology market.
Organization and Management Team
Provide an overview of your company’s organizational structure, including key roles and responsibilities. Introduce your management team, highlighting their expertise and experience to demonstrate that your team is capable of executing the business plan successfully.
Showcasing your team’s background, skills, and accomplishments instills confidence in investors and other stakeholders, proving that your business has the leadership and talent necessary to achieve its objectives and manage growth effectively.
Example: EcoTech’s organizational structure comprises the following key roles: CEO, CTO, CFO, Sales Director, Marketing Director, and R&D Manager. Our management team has extensive experience in technology, sustainability, and business development, ensuring that we are well-equipped to execute our business plan successfully.
Products and Services Offered
Describe the products or services your business offers, focusing on their unique features and benefits. Explain how your offerings solve customer pain points and why they will choose your products or services over the competition.
This section should emphasize the value you provide to customers, demonstrating that your business has a deep understanding of customer needs and is well-positioned to deliver innovative solutions that address those needs and set your company apart from competitors.
Example: EcoTech offers a range of eco-friendly technology products, including energy-efficient lighting solutions, solar chargers, and smart home devices that optimize energy usage. Our products are designed to help customers reduce energy consumption, minimize waste, and contribute to a cleaner environment.
Marketing and Sales Strategy
A well-structured marketing plan is vital for reaching your target audience and driving sales. Outline your marketing channels, advertising campaigns, promotional activities, and sales strategies. Explain how these tactics will help you attract customers, generate leads, and achieve your revenue goals.
By detailing your marketing and sales approach, you show potential investors and partners that your business has a clear plan to build brand awareness, engage with customers, and drive sales growth.
Example: Our marketing strategy includes digital advertising, content marketing, social media promotion, and influencer partnerships. We will also attend trade shows and conferences to showcase our products and connect with potential clients. Our sales strategy involves both direct sales and partnerships with retail stores, as well as online sales through our website and e-commerce platforms.
Logistics and Operations Plan
This section details the day-to-day operations of your business, including supply chain management, inventory control, production processes, and quality control measures. Demonstrating a clear understanding of your operations will assure investors that your business is well-prepared to handle challenges and growth.
An effective logistics and operations plan also highlights your company’s commitment to efficiency, productivity, and customer satisfaction, emphasizing that your business has the systems and processes in place to ensure operational excellence.
Example: EcoTech partners with reliable third-party manufacturers to produce our eco-friendly technology products. Our operations involve maintaining strong relationships with suppliers, ensuring quality control, and managing inventory.
We also prioritize efficient distribution through various channels, including online platforms and retail partners, to deliver products to our customers in a timely manner.
Financial Projections Plan
Provide a comprehensive financial forecast, including projected revenue, expenses, and profits for the next three to five years. Use realistic assumptions and support your projections with data from your market analysis and industry research.
By presenting detailed and well-supported financial projections, you demonstrate to investors and lenders that your business has the potential to generate significant returns, manage expenses effectively, and achieve long-term financial success.
Example: Over the next three years, we expect to see significant growth in revenue, driven by new product launches and market expansion. Our financial projections include:
- Year 1: $1.5 million in revenue, with a net profit of $200,000.
- Year 2: $3 million in revenue, with a net profit of $500,000.
- Year 3: $4.5 million in revenue, with a net profit of $1 million.
These projections are based on realistic market analysis, growth rates, and product pricing.
The income statement, also known as the profit and loss statement, provides a summary of your company’s revenues and expenses over a specified period. It helps you track your business’s financial performance and identify trends, ensuring you stay on track to achieve your financial goals.
Regularly reviewing and analyzing your income statement allows you to monitor the health of your business, evaluate the effectiveness of your strategies, and make data-driven decisions to optimize profitability and growth.
Example: The income statement for EcoTech’s first year of operation is as follows:
- Revenue: $1,500,000
- Cost of Goods Sold: $800,000
- Gross Profit: $700,000
- Operating Expenses: $450,000
- Net Income: $250,000
This statement highlights our company’s profitability and overall financial health during the first year of operation.
Cash Flow Statement
A cash flow statement is a crucial part of a financial business plan that shows the inflows and outflows of cash within your business. It helps you monitor your company’s liquidity, ensuring you have enough cash on hand to cover operating expenses, pay debts, and invest in growth opportunities.
By including a cash flow statement in your business plan, you demonstrate your ability to manage your company’s finances effectively.
Example: The cash flow statement for EcoTech’s first year of operation is as follows:
- Net Income: $250,000
- Depreciation: $10,000
- Changes in Working Capital: -$50,000
- Net Cash from Operating Activities: $210,000
- Capital Expenditures: -$100,000
- Net Cash from Investing Activities: -$100,000
- Proceeds from Loans: $150,000
- Loan Repayments: -$50,000
- Net Cash from Financing Activities: $100,000
- Net Increase in Cash: $210,000
This statement demonstrates EcoTech’s ability to generate positive cash flow from operations, maintain sufficient liquidity, and invest in growth opportunities.
Tips on Writing a Business Plan
1. Be clear and concise: Keep your language simple and straightforward. Avoid jargon and overly technical terms. A clear and concise business plan is easier for investors and stakeholders to understand and demonstrates your ability to communicate effectively.
2. Conduct thorough research: Before writing your business plan, gather as much information as possible about your industry, competitors, and target market. Use reliable sources and industry reports to inform your analysis and make data-driven decisions.
3. Set realistic goals: Your business plan should outline achievable objectives that are specific, measurable, attainable, relevant, and time-bound (SMART). Setting realistic goals demonstrates your understanding of the market and increases the likelihood of success.
4. Focus on your unique selling proposition (USP): Clearly articulate what sets your business apart from the competition. Emphasize your USP throughout your business plan to showcase your company’s value and potential for success.
5. Be flexible and adaptable: A business plan is a living document that should evolve as your business grows and changes. Be prepared to update and revise your plan as you gather new information and learn from your experiences.
6. Use visuals to enhance understanding: Include charts, graphs, and other visuals to help convey complex data and ideas. Visuals can make your business plan more engaging and easier to digest, especially for those who prefer visual learning.
7. Seek feedback from trusted sources: Share your business plan with mentors, industry experts, or colleagues and ask for their feedback. Their insights can help you identify areas for improvement and strengthen your plan before presenting it to potential investors or partners.
FREE Business Plan Template
To help you get started on your business plan, we have created a template that includes all the essential components discussed in the “How to Write a Business Plan” section. This easy-to-use template will guide you through each step of the process, ensuring you don’t miss any critical details.
The template is divided into the following sections:
- Executive Summary
- Mission statement
- Business Overview
- Key products or services
- Target market
- Financial highlights
- Overview and Business Objectives
- Company goals
- Strategies to achieve goals
- Measurable, time-bound objectives
- Company Description
- Company History
- Mission and vision
- Unique selling proposition
- Target Market
- Pain points
- Market Analysis
- Industry trends
- Customer needs
- Competitor strengths and weaknesses
- SWOT Analysis
- Competitive Analysis
- Competitor products and services
- Market positioning
- Pricing strategies
- Organization and Management Team
- Organizational structure
- Key roles and responsibilities
- Management team backgrounds
- Products and Services Offered
- Product or service features
- Competitive advantages
- Marketing and Sales Strategy
- Marketing channels
- Advertising campaigns
- Promotional activities
- Sales strategies
- Logistics and Operations Plan
- Supply chain management
- Inventory control
- Production processes
- Quality control measures
- Financial Projections Plan
- Projected revenue
- Income Statement
- Net income
- Cash Flow Statement
- Cash inflows
- Cash outflows
- Net cash flow
Using Business Plan Software
Creating a comprehensive business plan can be intimidating, but business plan software can streamline the process and help you produce a professional document. These tools offer a number of benefits, including guided step-by-step instructions, financial projections, and industry-specific templates. Here are the top 5 business plan software options available to help you craft a great business plan.
LivePlan is a popular choice for its user-friendly interface and comprehensive features. It offers over 500 sample plans, financial forecasting tools, and the ability to track your progress against key performance indicators. With LivePlan, you can create visually appealing, professional business plans that will impress investors and stakeholders.
Upmetrics provides a simple and intuitive platform for creating a well-structured business plan. It features customizable templates, financial forecasting tools, and collaboration capabilities, allowing you to work with team members and advisors. Upmetrics also offers a library of resources to guide you through the business planning process.
Bizplan is designed to simplify the business planning process with a drag-and-drop builder and modular sections. It offers financial forecasting tools, progress tracking, and a visually appealing interface. With Bizplan, you can create a business plan that is both easy to understand and visually engaging.
Enloop is a robust business plan software that automatically generates a tailored plan based on your inputs. It provides industry-specific templates, financial forecasting, and a unique performance score that updates as you make changes to your plan. Enloop also offers a free version, making it accessible for businesses on a budget.
5. Tarkenton GoSmallBiz
Developed by NFL Hall of Famer Fran Tarkenton, GoSmallBizis tailored for small businesses and startups. It features a guided business plan builder, customizable templates, and financial projection tools. GoSmallBiz also offers additional resources, such as CRM tools and legal document templates, to support your business beyond the planning stage.
Business Plan FAQs
What is a good business plan?
A good business plan is a well-researched, clear, and concise document that outlines a company’s goals, strategies, target market, competitive advantages, and financial projections. It should be adaptable to change and provide a roadmap for achieving success.
What are the 3 main purposes of a business plan?
The three main purposes of a business plan are to guide the company’s strategy, attract investment, and evaluate performance against objectives.
Can I write a business plan by myself?
Yes, you can write a business plan by yourself, but it can be helpful to consult with mentors, colleagues, or industry experts to gather feedback and insights. There are also many creative business plan templates and business plan examples available online, including those above. We also have examples for specific industries, including a using food truck business plan, salon business plan, farm business plan, daycare business plan, and restaurant business plan.
Is it possible to create a one-page business plan?
Yes, a one-page business plan is a condensed version that highlights the most essential elements, including the company’s mission, target market, unique selling proposition, and financial goals.
How long should a business plan be?
A typical business plan ranges from 20 to 50 pages, but the length may vary depending on the complexity and needs of the business.
What is a business plan outline?
A business plan outline is a structured framework that organizes the content of a business plan into sections, such as the executive summary, company description, market analysis, and financial projections.
What are the 5 most common business plan mistakes?
The five most common business plan mistakes include inadequate research, unrealistic financial projections, lack of focus on the unique selling proposition, poor organization and structure, and failure to update the plan as circumstances change.
What questions should be asked in a business plan?
A business plan should address questions such as: What problem does the business solve? Who is the specific target market? What is the unique selling proposition? What are the company’s objectives? How will it achieve those objectives?
What’s the difference between a business plan and a strategic plan?
A business plan focuses on the overall vision, goals, and tactics of a company, while a strategic plan outlines the specific strategies, action steps, and performance measures necessary to achieve the company’s objectives.
How is business planning for a nonprofit different?
Nonprofit business planning focuses on the organization’s mission, social impact, and resource management, rather than profit generation. The financial section typically includes funding sources, expenses, and projected budgets for programs and operations.
Image: Envato Elements
This article, “How to Write a Business Plan Step-By-Step in 2023 (+ Examples and FREE Template)” was first published on Small Business Trends