How to Write the Perfect Business Plan: A Comprehensive Guide
Starting a business is an exciting adventure. Business is rewarding but it takes blood, sweat, and tears. You can make it less difficult and increase your chances for success if you start with a business plan.
Writing a business plan gives you a long-term vision for your business. It gives you direction and helps you stay on course. Your chances of success with a GOOD business plan are fairly high as compared to starting without a business plan.
How to write a business plan? You can write a business plan easily by following this guide. All you have to do is to think hard about your business and fill in the details. Writing a business plan is more brain-storming than writing.
Learn how to write a business plan with our comprehensive guide and start on the right footings.
Why You Need A Business Plan
Know your Product
Writing a business plan will force you to ask yourself hard questions. You will have to understand your product or service better. You will know if and how your product is a good product-market fit. You will see how you can improve your product.
Know your Industry
A business plan will discuss your industry in detail. You will delve into your industry dynamics. This will help you plan for the changes and be better future-ready.
Know your Competitors
A surface knowledge about competition is not enough. Any entrepreneur will have to know as much as they can about competition. You will see their unique strengths, weakness, how they are surviving and how you can beat them in the long-run.
Set Clear Goals
Business plans typically cover the next three to five years, outlining all of your goals and objectives. It is also a management tool that allows you to analyze results, make strategic decisions, and showcase how a business will grow.
Stay on Track
It is a business plan that makes or breaks a small business. Having a solid, detailed plan provides a clear roadmap for the future, forces you to evaluate the validity of a business idea, and can give you a greater understanding of your business’s finances and competitors.
Secure Funding
If you write it well, a good business plan will convince potential lenders and investors to consider your business. It is important to know how the investors and lenders will look at your investor business plan.
You don’t have to be a business plan expert to write one. My comprehensive guide will teach you how to write a business plan that will help you achieve your goals. As you work through this guide, you can download our free business plan samples to begin writing your own.
Business Plan Formats
You will need a different business plan for different business models.
We have discussed three top business plan formats, traditional, lean, and nonprofit business plan. Each business plan format achieves a different goal.
Traditional Business Plan
A traditional business plan is the one most used and most requested. It is a thorough document that discusses every aspect of your business plan.
A traditional business plan spans many pages. Investors and lenders will request this business plan from you.
Lean Business Plan
A lean business plan or a startup business plan is a one-page business plan document that briefs about key business aspects.
A lean business plan is used in the startup ecosystem mostly. This type of business plan is not popular with lenders or investors and they will ask for more information.
Nonprofit Business Plan
A nonprofit business works for social welfare. Nonprofit business plan is like the traditional business plan with the addition of a section about the change the company will bring.
How to Write a Business Plan, Step by Step Guide
Executive Summary
When you are searching for how to write a business plan?
Executive Summary explains the whole business plan in a nutshell. It should be written precisely and in simple words telling what you want to do – whether it is services or products that you want to sell.
Highlight the key points of your business briefly, don’t go into details. A good summary should be one to two pages at most. Executive summary should be a quick read that engages your investors and makes them want to learn more.
Write executive summary after you have finished writing your business plan.
Introduction
Describes the organization’s goals and objectives and how they will be achieved.
Company Description
The following details should be included in the company description:
- Business name and address
- Detailed contact information
- Goals and objectives
- Your company’s leadership, founders, and investors
- The team behind the project
Services And Products
Explain briefly the problem you’re going to solve. You should include your findings if you’ve done research showing the need for the proposal. Be sure to explain how you will attain the project’s goals and what you will need for its success.
Target market
Include a clear and concise definition of your target market, as well as the need or pain point that you hope to solve.
Competitive analysis
Your competitive analysis should include the following questions:
- What are your competitors?
- How does your product or service stand out from the competition?
- Have you dealt with competitors before?
- What are the current and future opportunities?
- What are the risks specific to this niche or product line?
- How will you address the roadblocks?
Funding Needs
If you are seeking financing for your business, you should state that in your executive summary. Investors will want to know this in advance, not have to dig through a business plan.
Financial Overview
Make sales projections for the next five years after your business plan is implemented. Inform your audience about your breakeven point and your expected profit.
Conclusion
The conclusion summarizes the problem and the solution. Ask the reader to make a decision. It is advisable to make the outcome obvious but still leave room for intrigue so that they want to read on.
Checkout these real executive summary examples to help you write own.
See this example of an Executive Summary with all the important information included.
Describing Your Business
Business overview section provides an overview of your small business.
It includes registered name, physical addresses, names of key people in the company, the history of the company, its nature, and details about products or services it offers or will offer.
This part of the document should detail about the business that you intend to have and its future goals. This could also include markets, new products, or developments.
Having the details about the markets is to give an idea about the customer base and the basis of selling.
Here is an example of what you should include in your company description.
Business Objectives and Goals
The company’s objectives should be clearly defined, along with a business strategy detailing how you plan to achieve them. Describe exactly what you want to achieve, both in the short and long term.
This section can be used to explain why your business needs funding, how the funds will help your business grow, and how you plan to achieve your growth goals. A clear explanation of the opportunity and how the loan or investment will benefit your company is paramount.
In case of developments to services or enhancement of products are also to be described as it would portray how you take care of customer needs and foresee changes.
Moreover, it is best to detail whether those developments have a positive impact and how you would modify your process without impacting the structure.
This is how ‘Business Objectives and Goals’ section will look like on your business plan.
Analysis of Your Competitors
As the word says, this description is to brief upon the weak areas of the competitors. By doing so, you may be able to take advantage of the aspect of your business and give shape to your plans.
It could be in the form of making developments to products or in the services provided. Whatever be it, through proper analysis, you would be able to bring out the advantage that you would be taking.
Learn about your competition, analyze their strengths and weakness and how you can beat them.
Defining the Market
The market for your business can be defined based on the analysis you did before writing business plan.
This is to know what is the business intended for and which sector it will target to bring sales.
Explain size of the market, market trends, and the changes that you see for the future. This indirectly indicates your target customers, their needs, and their locations.
Bonus Tip: You can calculate your market size using TAM, TOM and SOM. Here is what are they and how you can use they to calculate your your potential target customers.
Describe your ideal market. Include specific details about distinguishing characteristics of the people you plan to sell to. Demographic information should include :
- Age, gender, and general lifestyle of the targeted market
- The general size of your primary market
- Purchasing trends of your market
Additionally, information on how you plan to reach your market through media and marketing should be included. List the resources you plan to use to let people know about your business.
Go into detail about your target market and discuss your growth prospects and your marketing strategy.
Recommended Sources: Learn how to write a market analysis in business plan.
Products and Services
Including products and services in a business plan is more than just listing what your company offers. A good products and services section should show off the quality, value, and benefits your business offers, especially if you intend to gain funding or find partners.
- Explain how your product or service works
- The pricing model for your service or product
- Your typical customers
- The sales and distribution strategy of your business
- What makes your product or service superior to the competition
- An explanation of how orders from your customers will be processed or fulfilled
- Your needs for developing or delivering your products, such as up-to-date computer equipment
- Your intellectual property, such as trademarks, or legal issues
- Products or services you plan to offer in the future
Your business plan’s products and services section is its core. Although the other sections of the business plan are important, the products and services section is the heart of your company and the foundation of everything else in the business plan.
This is an example of how product and service segmentation works.
Operations Planning
The operations should include all the stages necessary for executing the business on a long-term basis.
This aspect of the plan should include the details of logistics, duties for every department of the business and responsibilities of the team working for the business.
Not to miss out on the main aspect, the cost of running a business. Be it machinery or services, each has its capital requirements.
Pro Tips: Learn how to write a operation plan in business plan.
Structure Of The Business And Management
In this section, you will list the legal structure of your business – as well as key employees, managers, or business owners.
It should also indicate what percentage each owner holds and how involved each is in the business. The most common business structures are:
You should also discuss the ownership of the business. How much ownership does each business partner have? How is it divided?
A potential lender or investor will want to know the structure of the business before they consider lending or investing.
Business Financial Analysis
Starting a business may not give you much information on your financials.
When you’re looking for small-business loans for an existing business, you’ll want to include P & L or income statements, a balance sheet that lists your assets and debts, as well as a cash flow statement that shows how much cash came in and went out of the business.
You may also include ratios that indicate the financial health of your business, such as:
- Profitmargin: the percentage of revenue you keep as income
- Current ratio: a measure of your liquidity and ability to repay debt
- Accounts receivable turnover ratio: measures how often receivables are collected per year
A business financial analysis includes about ratios and reports.
Financial projections
If you are seeking funding or investors, this is an important part of your business plan. These plans demonstrate to bankers and investors how you plan to repay loans, what you intend to do with your money, and how you plan to grow.
This section asks for your business’s monthly or quarterly sales, expenses, and profits over the next three years assuming you’ve obtained a new loan. Analyze your past financial statements carefully before making projections.
A few helpful tops on making good financial projections:
- Keep your financial projections realistic
- Don’t overestimate your earnings
- Make financial projections for 5 years
Marketing and Sales Plan
In order to make a profit, you need a specific sales plan. Add the definitions of the following :
- The cost of each service or product
- The plan for growth or expansion for each product
- The strategy of how your business plans to make a profit.
Figure out how your sales team or representatives will find prospects and include the details on how they will sell the product or service.
It explains what your marketing strategy is and how you plan to implement it. You can explain how you plan to persuade customers to purchase your products or services, or how you plan to build customer loyalty.
Additionally, sales and marketing plan in business plan can highlight what sets your business apart from your competitors. To make a profit, you need a specific sales strategy.
Consider how your sales team or representatives will find prospects and how they will sell the product or service to each client.
Appendix
If you have any supporting information or additional information that couldn’t fit elsewhere, you can include it here, including resumes of key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts, and personal and business credit history.
This last step should include information that potential partners or investors would have questions about. Some examples include :
- Your credit history
- Blueprints or photographs of the business location
- Details on the management team
- Photographs of products
- Legal documents
Next Steps For Writing Your Business Plan
Business planning can help you validate your idea, set goals, manage, and pitch your business successfully. While planning, viewing some completed business plans during your business planning process can be very helpful if you aren’t sure where to start.
Download our free business plan samples to access an outline of the information we covered in this article.
You can also download our 300+ free business plan templates covering a wide range of industries.
Common Mistakes When Writing A Business Plan
Writing a business plan is easy but it needs your attention. However, still, you may make some mistakes in the business plan.
We have listed some common mistakes that happen when people write a business plan. Have a look and make a note of them to avoid making them yourself.
Unrealistic Financial Projections
Being unrealistic decrease your chances of getting funding and making progress. If the investors or lenders are looking closely, they may refuse to fund you. If they agree, you are highly likely to become bankrupt or go broke as your projections were not aligned with the actual situation. You will not be able to make proper use of resources.
Undermining Competition
Many new entrepreneurs think they do not have competition or minimal competition. That is not correct. Every business has competition. Even if you see no competition, your customers can still spend their money on other things. Being slightly pessimistic about the competition will help you prepare better.
Bad Research
Leap when you know your industry to the best of your efforts.
Reading only a few research articles or interviewing an unrepresentative group of customers won’t cut it. Conduct extensive research about your market, customer base, and product will determine how quickly you will become successful.
Don’t fall into the traps of wishful thinking. There is a lot at stake in business so try to be as thorough and reality-based as possible.
Aggressive Timelines
Quality takes time. Your passion won’t hasten things on the ground.
Many entrepreneurs are tempted to set aggressive timelines. Consider your resources and timelines to see how much time you need to produce quality products or services. Get a fresh perspective from a friend if you feel the need.
Delaying your product or service is better than launching a faulty one. Setting a reasonable timeline is the way to go.
Learn more about the these mistakes in our article on top 11 common business plan mistakes to avoid.
11 Tips to a Winning Business Plan
While we may not be able to be ‘Winning’ all the time like Charlie Sheen, we can improve our chances of having our business plan taken seriously by following a few rules of thumb (and no, drinking ‘tiger blood’ is not one of them!)
- Write your own business plan only after you’ve done lots of research.
Since you’re going to have to take many decisions about your business, including finances, marketing strategies, and structure, you need to do your homework before you start writing your business plan. When you have the right info on hand, it’s much simpler to be accurate in your analysis and forecasts.
- Who is Your Business Plan For?
Will there any third parties be involved in your business plan? Are you going to use it internally? What purposes does it have? Also, if you’re going to involve a third party, what exactly are they interested in? How to write a business plan step by step? By asking yourself these questions, you’ll be able to write a much more articulate business plan that can help you understand your business better and how you can easily take it off the ground.
Keep in mind that if you have any third parties involved, they’ll be looking for the whole package, not just the finance part of your business.
- Completing Your Business Plan From A To Z is Not Recommended
When writing your business plan, it’s important to decide on the sections which are relevant for your business and those that aren’t. Other sections can always be focused on later.
Don’t be afraid to ask for help though if you think that you cannot manage writing your own business plan. For instance, you can call Wisebusinessplans and they’ll help you push forward with writing your business plan so it applies 100% to your specific industry.
- Expected Versus Actual Figures
A lot of entrepreneurs will certainly include actual figures when writing a business plan, but if you’re just starting out with yours and use expected figures for finances and turnover, then you need to show clearly that these are estimates.
As for the summary, it should be carefully written and be as concise as possible. Important facts should never be overlooked and don’t forget that this is also the chance for you to sell yourself. Do it cautiously and don’t exaggerate. Your business plan needs to sound realistic, not over the top.
MD: Business plan writing shouldn’t be attempted by non-experts for obvious reasons. If you need a business plan writer, Call us to get your own business plan writer today.
- Clarity is the first ‘must have’ for a well written business plan.
Don’t be tempted to show off how smart you are by using big words and indulging in complex run-on sentences. Start at the beginning, add the middle, and finish up with the end, laying out your key points in a logical manner.
- Countering possible obstacles and arguments is step two.
Back away and look at your proposal with an investor’s eye. Where are the weak spots, and how can you strengthen them? Combat any possible objections with solid, logical options.
- Be interesting!
Too many business proposals are dull and boring. You don’t have to soup it up like a competitor on ‘Shark Tank’, but let your personality shine through in your proposal.
- A picture is worth a thousand words, so implement graphics into your plan.
Use graphs, pie charts and other visual aids in your PowerPoint or paper proposal to get your point across.
- Don’t hype.
Using overblown, exaggerated statements will weaken your business plan, not strengthen it. Don’t let yourself be tempted to oversell your idea – underselling and over delivery is still the best policy, and you can leverage this ‘exceeding expectations’ angle in your next business proposal.
- Ditch the boilerplate.
Investors and lenders see hundreds of these monthly, and it’s the death knell to many business plans,. Be original and specifically target the investor you are working with so your proposal comes off sounding as if it were written especially for them.
- Proofread.
Nothing can diminish confidence faster than a business plan full of typos and incorrect grammar. A sloppy business plan makes investors think you will be a sloppy business person.
A business plan writer is an excellent choice since you are dealing with a pro that knows language and how to write properly. Look into Wise Plan’s business plan consulting service for more direct assistance.
It is better for you to seek the advice of experienced and trusted business plan consultants. For this, you could submit or share the draft version of your plan to verify its correctness. It would surely motivate others to invest or become your partner!!
Recommended: For a good impression on your reader visit our Page on how to write a business plan cover page
What Does An Investor Want To See In A Business Plan?
By addressing their concerns, you can increase your chances of winning funding from lenders and investors.
- Emphasize the Market
Investors are interested in a market-driven product; they don’t really care about the technical features or attractiveness of your product.
If your product or service can prove value in the market, it is a candidate for investment.
- Show user benefit
The user benefit is essentially in the terms of payback for the purchase of the product or service.
Clearly mention and explain how soon your product will pay for itself in reduced costs or increased efficiency. The shorter this payback time is, the better.
- Find out the Market’s Interest
You will need to show the market’s interest convincingly. For innovative products or services, show customer testimonials from representative customers. For other products, discuss how your product is different and unique from the competition.
- Document your Claims
Your claims about the expected market share must be backed by data.
Entrepreneurs overestimate the target market, which is false optimism. See your target market critically and focus on only the group who will quickly benefit from your product or service.
- Address Investors’ Need
Investors commit for the long run. They need to see the concrete reward for their investment to offset the risk. See if your product or service is able to generate enough return over investment.
- Cashing Out
Venture capital investors want to cash out in the short-term, like 3-7 years. Investors consider when they can exit the business with good returns. Address their concern to change the odds of success in your favor.
- Making Sound Projections
Make financial projections based on reality. Don’t talk much about spreadsheets etc. and don’t make overoptimistic claims. If your projections are not believable, investors may not show interest.
- The Development Stage
A product in its development stage is not attractive to investors. A working product may win but an under-development product will always fail to convince investors.
- The Price
Investors seek good returns over investments. They will calculate your company’s expected worth in the fifth year after investment and see how much they should own to realize the desired reward.
Investors would want to earn 4.5x return over investment in five years. There is a bargain in the process; investors would want more share for semi-developed products with a less-experienced management team and less share for a developed product with an experienced team.
- Make it Happen
The job of a business plan is to convince the investors that your business idea will make them good money.
Presentation is important. Arrange and present your business idea in a way that appeals to the investors.
Lastly, using a fill-in-the-blanks business plan will not win you investment. Either sit down, spent a few days and write a thorough and convincing business plan, or hire a professional business plan writer for the task.
Frequently Asked Questions
These are the three chief goals of a business plan.
- Understand your business, competition, and product
- Understand financial needs and projections
- Secure funding from lenders and investors
Writing a business plan is not hard but it certainly demands attention for a few days. Here are the steps to writing a business.
- Executive summary
- Company description
- Market analysis
- Management and organization
- Products and services
- Customer segmentation
- Marketing plan
- Logistics and operations
- Financial plan
A marketing plan is a part of a business plan.
A marketing plan explains your marketing strategy. It is your advertising strategy that talks about the target market, how you will reach them, and how you will measure your marketing efforts.
There are three types of business plans.
- Traditional Business Plan
- Lean Business Plan
- Nonprofit Business Plan
You need qualified writers for your award-winning business plan. Wise Business Plans has MBA-qualified business plan writers.
Hey Joseph! I liked your explanation of how to write a business plan, but it left me wondering what it would cost to hire a business plan writer?
Thank you for asking a question. we would like to give you our blog link which briefly states on how to hire a business plan writer and all other information regarding cost to write a business plan
Thanks for your comment. I hope this will make a change.
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