How to Write a Business Plan
The master manuscript for your business, your business plan, is arguably the most important document you'll have by your side when starting, launching, growing, and scaling your business. Your business plan creates a strong foundation on which to build your business and articulates the steps required to reach the overall vision of your business. The SMART goals, feasible milestones and projections, as well as clear action plans outlined in this document will serve as your guide. Here’s your comprehensive guide on how to create a business plan.
What is a business plan?
A business plan is a detailed document that serves as a guide for those involved with the business, covering a crucial topic: how the business will achieve its overall vision, goals and objectives. This ‘how’ refers to the various strategies of your business and the subsequent decisions, actions, supports, and resources within those strategies - carefully crafted and defined to ensure you reach the vision, goals and objectives of the business.
Business plan format: 10 things to include
1. Executive summary
Your executive summary serves as an overview of the most important sections within your business plan, and if done well it could be repurposed as a mini or one-page business plan. The executive summary is typically written once every section of the business plan has been crafted and refined. Remember, this is the very first section within your business plan and should include the most vital details about the business.
- Business overview: You'll provide an overview of your industry, your market and your business. This section essentially describes the nature of your business, in the context of your selected industry and market segment.
- Target market: You'll include an overview of your ideal target market, as well as the primary problems or challenges they're experiencing or the needs that you've recognized.
- Offering overview: You'll include an overview of your core offering, whether a product or a service, as well as (1) how the offering addresses the problems/needs identified and (2) its desired features and benefits.
- Rival overview: This would include an overview of key competitors, as well as the points of similarities and differentiation, but more importantly your unique selling proposition. In other words, highlight what makes your business and offering unique, and the value you're offering your intended customers that your rivals aren't offering.
- Resource overview: Here, you'll include an overview of your current team members, as well as your current capabilities and capacity. You'll also include the support resources either on hand or required, that will assist current team members to perform their duties. This is where you'll also get the chance to brag about the capabilities of you and your team members - including professional experience, unique skill sets, and any possible accolades.
- Financial outlook: Within this subsection, you'll provide a summary of your financial forecasts, your startup costs, planned short-term and medium-term revenue, as well as possible investment and funding/support requirements.
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2. Business overview
- Business vision: Within this section, you'll include your business vision and mission, as well as your philosophy and core values. This section would essentially provide a refined version of the outcomes of your business visioning process.
- Nature and structure: Next, you'll include the nature of your business, as well as the legal structure. Outline what type of business you have, any potential shareholder percentages, ownership descriptions, and so forth.
- General direction: You'll include the overarching goals and objectives of your business. Your goals refer to your desired future state and your objectives are action-oriented strategies that will assist you in reaching that desired future state. Each goal will have coinciding objectives, as well as Key Performance Indicators (KPIs) or Critical Success Factors (CSF) linked to it. This section thus serves as an overview of every strategy within your business plan.
- Milestones and actions: Within this subsection, you'll include an overview of your milestones - in other words, what projects/tasks you'll want to achieve and by when, as well as an overview of the action plans put in place to reach those milestones. Again, this subsection provides a high-level overview of the execution plan of every strategy within your business plan.
3. Industry overview
- Industry outlook: Here, you'll provide an overview of your overall industry, including its prospects, current trends within the industry, the size of the industry, the competitiveness of the industry, and so forth. Essentially, this section should provide the reader with a high-level overview of the industry in which you're aiming to operate, without having to conduct further research as to the viability of your business within your industry. This section should thus include well-researched statistics and evidence.
- Market outlook: Moving one level down, you'll provide an overview of your intended market segment or segments you wish to cater for. As with your industry outlook, you'll include your market prospects, trends, size, and competitiveness. You'll also indicate as to whether you're serving a niche market, and what the characteristics of that market is.
- Research findings: Within this section, you'll provide a holistic overview of your market research findings linked to every strategy within your business plan. This section thus serves as an action plan or guide in itself, and sets the parameters for strategic decisions and actions for every business unit/department within your business.
Important Note: As you can see, these three sections provide a summary or overview of the content. These are the first sections that your reader will encounter, and should provide a strong overview of your industry, market and business. Only when describing each strategy in isolation, will you expand on the specifics.
4. Offering strategy
- Section overview: Within this section, you'll provide your reader with a comprehensive overview of your product or service, as well as every action plan, expense and resource linked to its initial ideation through to its delivery to the consumer.
- Offering research: Included in this section, is an overview of the market research and the findings of your market analysis process. It would provide the reader with an overview as to the customer problem or need found, as well as how the offering could solve the problem or satisfy the need identified.
- Offering development: This subsection would include a comprehensive overview of the product or service that will be offered to the end-consumer to solve their problem or satisfy their needs. It will include the core outcomes of the product/service visioning process, as well as describe the composition and features of the offering. Speaking of features, you could include a competitor offering analysis and feature comparison, where you'll indicate points of similarity and points of difference. Points of difference would primarily include unique features that rivals aren't offering and indicate the unique value offered to potential customers. The latter would be described in the form of a unique selling or value proposition.
- Offering delivery: Included in this section, is a detailed description of your supply chain process, as well as the process from offering ideation to delivery. It would include your product/service blueprints, including design elements and criteria, materials and resources, as well as technical specifications. You could also include the lifecycle of the product/service, indicating the minimum viable offering and its features, as well as how the offering could be expanded into the future.
- Quality control: A very important section within your offering strategy, are the strategies and policies around quality control - not only within and throughout your supply chain process, but also the design and development of your product/service. This would include an overview of how advanced technological innovations could assist in ensuring and enhancing the quality throughout.
- Offering financials: And of course, any costs and expenses around your offering should be included as a separate forecast and budget. This section would include your overall supply chain costs, as well as the costs of designing, developing and delivering your offering to your end-consumer. This section would also include your pricing strategy.
- Section overview: Within this section, you'll provide an extended version of your industry and market overview, detailing exactly how your business could perform within and how it will ensure sustainable relevance.
- Market research: Included in this section is an overview of the market research and the findings of your market analysis process, specifically geared towards the actual industry and market in which you'll operate. It would provide the reader with an overview as to the composition of your industry and market, as well as how your business fits into the picture. This section would include a SWOT and a PESTEL analysis.
- Competitor analysis: A very important section within your market strategy is your competitor analysis. This would describe your direct and indirect rivals, as well as a detailed comparison of their offerings and subsequent features. Here, you'll include a positioning matrix, to see how your business would compete based on specific points of similarity and differentiation. You would also indicate whether your market strategy would focus on segmentation, differentiation, or positioning.
- Sales & marketing: You'll also include your sales and marketing strategy. This section would include a comprehensive overview of your target market, as well as include customer personas/profiles - detailing the exact characteristics of your ideal customer. Based on these profiles, the sales and marketing strategy would describe how to best sell the product/service to the customer - keeping in mind various traditional and digital methodologies.
- Quality control: Quality control doesn't always refer to only the quality of your offering. It also includes various management methodologies, as well as accompanying processes, systems and controls to track the go-to-market activities. This section would also include various policies and protocols around customer service and optimal go-to-market standard operating procedures (SOPs).
- Go-to-market financials: And of course, you'll include any costs related to your go-to-market strategy. This would include costs around your sales and marketing activities, as well as the management thereof.
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6. Operations strategy
- Section overview: Within this section, you'll provide an overview of the daily operations within your business, as well as how these operations are integrated. This would not only include descriptions around your general business activities but those within every department/unit within your business - including your supply chain.
- Business structure: You would include an overview of your business, including the roles and responsibilities of each business unit/department. This would describe the KPIs/CSFs of each unit/department, including various policies and protocols for optimal support and performance.
- Operations management: This section would include sub-strategies such as supplier, stakeholder, inventory, production, and resource processes and controls.
- Execution & tracking: It also includes various management methodologies, as well as accompanying processes, systems and controls to track operational activities. This section would also include various policies and protocols around stakeholder and resource management, for example.
- Operations financials: And of course, you'll include any costs related to your operations and daily activities - whether internal or external.
7. Management strategy
- Section overview: For every unit/department within your business, you'll provide an overview - focusing on specific individuals, as well as their capacity, capabilities and responsibilities.
- Leadership & employees: Here, you'll include the biographies, experience, contributions, skill sets, and responsibilities, as well as possible targets for each team member. You'll also include details regarding any outsourced services or staff that will support your daily operations. This is typically indicated via an organisational chart.
- Policies & procedures: Here, you'll include details regarding competitive payrolls, hiring, retention, benefit and training strategies for your employees.
- Execution & tracking: And of course, you'll include various protocols, processes, systems and controls for tracking and improving performance throughout the business - both vertically and horizontally. This would include performance review practices, training strategies, and so forth.
- Forecasts & budget: And lastly, you'll include every cost and expense related to the management of your human resources - including hiring, payroll, benefits and training.
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8. Financial strategy
- Section overview: This is probably the most challenging part of any startup business plan, but yet the most important. If this section is mapped out correctly, it will ensure money mastery and financial stability for the business in the long run.
- Startup finances: Here, you'll provide an overview of your startup costs and expenses, as well as any cash flows and forecasts. These would include one-off costs and ongoing expenses required to build, start, and launch the business.
- Funding requirements: You'd also include a detailed overview of where funding/capital will be sourced and indicate exactly where the funds will be allocated. This section doesn't necessarily include specific funding partners/investors unless the entrepreneur/business owner already secured external funding.
- Revenue models: You'll also include your revenue model and indicate your revenue streams.
- Execution & tracking: And, very important: include your financial management tracking strategy that will ensure your cash/funding is managed optimally. This section would include financial tracking and management tools and software that will be utilised throughout the business, as well as outsourced services.
- Forecasts & budget: And lastly, you'll include the entire budget and forecast for every cost and expense mentioned throughout your business plan. This section serves as a holistic and consolidated budget and forecast, aimed at giving the reader a full perspective of the incoming and outgoing cash - either current or potential.
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It's important to note that a business plan gets straight to the point within each section. However, when you have vital information to share with the reader, but can't include it within your actual business plan due to its size or format, you'll include it within your business plan addendum. These may include:
- Legal documents
- Intellectual property
- Marketing materials
- Brand identity
- Public relations
- Offering blueprints
- General equipment
- Market research
- Business assets
- Contact details
- Credit history
- Financial details
- Vision board
Why do you need a business plan?
Irrespective of the type of business you’re aiming to launch, whether traditional or digital, your business plan will be your best asset – especially during the seed and startup stages of your business. Don’t fall into the trap of thinking that you don’t need a business plan. If you fail to plan, you're planning to fail. Yes, crafting the optimal business plan that provides a strong roadmap to success for your business takes time, but the payoff is immense. Studies have shown that 70% of fast-growing companies have business plans.
Many aspiring entrepreneurs and professionals underestimate both the power and necessity of a business plan, especially when starting a business. There are four overarching reasons why a business plan is important:
A business plan, in whichever format it's created and whichever audience it's intended for, should provide a sense of clarity to the reader. This includes providing a clear picture of both the intended plans and the strategies in place to realise those plans. Moreover, the business plan should provide the reader with a clear vision of the end goal and how the business intends to reach that vision. It's particularly important to provide clear guidelines within a business plan, so those involved with the business - particularly decision-makers - understand what to expect.
A business plan also provides a sense of control for those involved with the business, as well as those directly affected by the action plans within the document. It not only provides clarity on the ultimate destination of the business, but clear action-packed paths and goals, objectives, milestones, and key performance indicators (KPIs) to assist those in performing and tracking their activities optimally. Without a business plan, a business is unable to track whether they're heading in the right direction.
Linked with clarity, a business plan should provide those involved in the business with context. The context refers to the clear guidelines and parameters relating to their tasks and responsibilities. This would also include clarifying how their responsibilities and performance contribute to the goals, objectives and KPIs/CSFs of the business.
The business plan also creates a strong foundation for collaborative efforts. Should a sense of clarity, control, and context be in place, those involved and directly affected will be able to understand their responsibilities, but also be assisted to work cohesively to reach the vision of the business. When a lack of clarity, control, and context exists, it will enhance the lack of overall cohesiveness and collaborative thinking within and throughout the business
Plan before you start writing
The planning process is crucial when it comes to launching your business, and without sufficient planning and research your business plan will be missing a lot. Here are four planning activities to take on before you write your business plan.
Business visioning exercises
Before you create your business plan and launch your business, irrespective of its nature and structure, you must envision the desired future state of your business. This vision will create a strong foundation for your business and ensure your goals, decisions, and actions are guided by a long-term perspective. Although this vision might change as you clarify the nature and structure of your business, it will certainly provide you with the direction required to kick-start your entrepreneurial journey. The concept of business visioning essentially boils down to the creative and analytical process you undertake to both identify and design the desired future state of your business, then subsequently determine the strategies required, through business planning, to successfully reach that future state.
This process requires you to create a vivid mental image of what your future business could look like and then translate that image into an overall vision for your business. Once your vision statement has been drafted, you’ll be able to design your mission statement. Your mission statement includes the present steps required to reach your future vision. It essentially includes identifying and defining your who, what, when, where and how, and then crafting your business goals, objectives, and strategies accordingly. There are various business visioning exercises that you could engage in, to create your overall business and product/service vision. These include (1) IKIGAI Discover, (2) Business Vision Board, (3) Wall of Ideas and (4) Business Vision Canvas.
Do your market research and investigate competitors
Whilst you're completing these business and offering visioning exercises, or other visioning exercises you find useful, you might discover that you’re unable to answer some of the crucial questions addressed and necessary to move forward. However, that’s what market research and analysis is for! Once you’ve completed your initial visioning process, although it might adapt as you get answers to these questions, you've created a very strong foundation for your research endeavours. You now have to determine whether your vision and everything you’ve discovered are (1) feasible, (2) viable and (3) desirable, as well as how your prospective business would compare with your identified competitors.
Calculate your startup budget and costs
Once your visioning and research activities have been completed, you’ll be in a good position to calculate your startup costs. These are the costs that have to be taken into account when planning, building, and launching your business. These costs would include one-off costs, as well as recurring expenses.
- Once-off costs: These would typically include (1) business registration fees, (2) domain & digital platform creation, (3) rental deposits, (4) office furniture, (5) brand identity creation, (6) office supplies, and so forth. You’d also include various other once-off costs under each section within your business plan.
- Recurring costs: These would include (1) office rent, (2) staff salaries, (3) business insurance, (4) lease payments, (5) business utilities, (6) software licenses, and so forth. Of course, you’d also include various other recurring costs under each section within your business plan.
Business plan best practices:
- Quality: Ensure that your business plan is straightforward and to the point, by removing redundant and unnecessary content/information that won't necessarily aid the reader in making key decisions.
- Simplicity: Ensure that the content is of quality and that you make the business plan visually attractive. Although you'll include crucial keywords and phrases to prove your case, be careful not to overuse business jargon - keep sentences simple, and focus on quality over quantity.
- Language: Using too much jargon and fancy language will typically make it look like you're trying too hard. Make ruthless edits, to ensure the reader only receives what's necessary to persuade them. Many businesses lose deals only due to bad grammar and spelling mistakes, as it gives an impression of unprofessionalism and a lack of attention to detail.
- Identity: Don't be afraid to let your brand identity and corporate culture shine through within your business plan. Although a business plan is typically a formal document and should be treated as such, you should give the prospective business partner or reader an idea as to how and why you do things. Apart from aligned mandates, cultures are also sometimes kept in mind when considering a partnership. In addition, your brand identity should also shine through and should reflect the visual and messaging guidelines of your business.
- Evidence: As mentioned before, it's crucial to provide proof of your success and use this proof to further convince the prospective business partner to sign an agreement. You shouldn't just boast about your business and your capabilities, but provide hard evidence of key learnings and successful outputs.
Types of business plans
Depending on your business needs, there are various types and formats that are appropriate. Your business plan can be used for both internal and external purposes, depending on the purpose of the business plan and the audience it's intended for. A business plan can also be categorised according to its scope - referring to the depth and intricacy of the subject matter.
Internal business plan
An internal business plan is only geared towards those working within your business: usually, a specific business unit/department. This business plan requires less information about the background of your business and only includes key information that could assist those business units/departments with core decisions and actions. This business plan is typically informal and serves primarily as a guide for key decision-makers within the business.
External business plan
An external business plan is distributed among specific individuals outside of your business. This business plan is typically geared towards obtaining some form of external support from a potential partner. This business plan is considered more formal and would include extensive details regarding the business and its overall strategies. Typically, an external business plan would accompany various documents submitted during an application process.
Lean business plan
Lean business plans are typically created for internal purposes and are used to both guide and track internal progress. This business plan is usually no more than 10 pages and includes various tactics and tools for achieving the business vision, goals and objectives. This business plan would also include sections such as budgets and cash flow allocated to specific internal projects.
Standard business plan
Standard business plans, usually around 40 pages, are typically created for external purposes and include a comprehensive overview of the business, its strategies and other crucial information that could reinforce the quest for external support. However, it's important to note that a standard business plan could also be used for internal purposes - depending on your business' needs.
Mini business plan
A mini business plan, otherwise described as a one-page business plan, essentially summarises the contents of either your internal or external, lean or standard business plan. This business plan highlights specific sections and information based on the purpose and intended audience thereof. This business plan tells the business' story, but only highlights specific sections and information - depending on the purpose and audience.
When this type of business plan is used for internal purposes, it's usually distributed among shareholders and employees - especially those who've recently come on board. This business plan is intended to inform the recipient of specific current or future strategies in a short amount of time.
When this business plan is used for external purposes, it typically serves as an elevator pitch - to garner the interest of a potential business partner. It includes the same ingredients as the standard business plan, but is intended to create a first impression and ease the decision-making process. Usually, a more extensive business plan is requested should interest be piqued.
Presentation and pitch decks
Any business plan can also be transformed into a presentation deck, typically in the form of a PowerPoint or Slides presentation. This type of business plan is intended for one specific purpose: to present core sections and information within the standard business plan to a specific audience.
From an internal perspective, you will use this presentation deck to present current and planned activities within the business to current business partners, shareholders and employees.
From an external perspective, you'll use a presentation deck to present your business to potential partners to acquire some form of support. Typically, when using this presentation deck to present to external parties, it's called a pitch deck.
Active business plans
Your active business plan, whether lean or standard, is typically used for internal purposes. This business plan is a working document, meaning that it will adapt as your operations or strategies change. The ingredients of this business plan, other than the overall vision, goals and objectives of the business, are adapted as the business progresses through the business lifecycle.
During your business lifecycle, you'll transform your business plan into 3 primary types of active documents
- During your seed and startup stages, you'll create your startup business plan and strategy.
- Once your business reaches the growth stage, you'll implement a growth business plan and strategy.
- Once your business reaches expansion, you'll implement your scaling business plan and strategy.
Startup business plan
A startup business plan would be the very first business plan you'll ever create - irrespective of the nature of your business, whether traditional or digital. This business plan contains more information about the future plans and prospects of your business than it would current strategies. This business plan doesn't necessarily include long-term strategies, but would rather focus on what can/should be executed in the short and medium term of your business. It essentially is your starter kit and will guide every effort before, during, and immediately after launching your business. This business plan is a vital asset for acquiring startup funding and resources for your future business.
Growth business plan
Your growth business plan, however, would include current strategies, as well as changes to those strategies to support business growth. It's essentially like a startup business plan but intended for the new lifecycle of your business. This business plan is built on key learnings during the seed and startup stages and would indicate both planned additions and improvements throughout the business, mostly internal, as well as the strategies that will be implemented to ensure the success thereof.
Scaling business plan
Your scaling business plan, also accompanied by current strategies and key learnings, would include clear strategies related to large-scale additions, improvements and expansions throughout and outside of the business.
What-if business plan
Your what-if business plan, otherwise known as a contingency plan, is typically used when facing unusual or unforeseen circumstances during your business life cycle. This business plan is based on the worst-case scenario and would usually be enforced when the decline stage within the business lifecycle is imminent. Some entrepreneurs believe that a contingency plan is developed and packed away - only to be used for when the going gets tough. However, it forms a vital part of your business plan addendum. Starting any business in a highly competitive market holds many risks and potential partners, as well as your internal stakeholders, would want to see that potential challenges have been forecasted and the appropriate strategies on standby.
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