A business plan is essentially a roadmap that clearly indicates your company’s financial and developmental goals and the steps you’ll take to achieve them over the next several years. Business plans typically include the different phases of your business’s development, from the initial structuring to long-term growth. They can also help you define your brand, assess risk, and forecast expansion opportunities.
A good business plan can show potential partners, investors, and lenders that you’re dedicated to the business’s success. This could help you find better funding opportunities, keep your venture on track, and solidify your company’s position in the market.
As a new business owner, having a business plan is essential to minimizing risk and increasing your venture’s chances of succeeding. But if you’ve never created one before, it can feel like a daunting task. Fortunately, it doesn’t have to be that complicated. Here’s how to write a business plan step by step.
What Is a Business Plan?
A business plan is a plan that contains the key milestones, short- and long-term financial goals, and other details regarding your business and how you plan to make it succeed. The exact details can vary, depending on the size and scope of the business.
In general, a thorough business plan will try to accomplish the following:
- Detail your product or service and what you can offer to your customer segment
- Identify the company’s core values
- Consider the competition and where your company fits in the current market
- Provide details about your cash runway (time you have until you run out of money) and outline how you plan to spend money for marketing, development, business loan, etc.
- Identify opportunities for new partners, employees, etc.
- Show potential investors that yours is a venture worth funding and help them feel confident they’ll see a return on investment.
- Detail the business’ overall budget and cash flow
- Help you uncover new opportunities for growth and profitability
Writing a business plan can also help reduce risks and inspire you to make savvy business decisions in the future. It could also help you brainstorm new ideas and find ways to innovate your existing business.
How to Write a Business Plan in 10 Steps
When it comes to writing a business plan, there are a series of basic steps to help your company succeed. With that in mind, here’s how to write a business plan step by step.
1. Pick the right format
When writing a business plan, consider the format and how you want the details about your venture laid out. Many options exist, but the two main ones are the traditional and lean startup formats.
The traditional format goes into a lot of detail about the various aspects of a business. This plan is separated into easy-to-read sections for partners or potential investors to review. Common sections include:
- Executive summary
- Business description
- Industry Outlook
- Target audience or market
- Business structure, organization, and management
- Marketing and sales strategy
- Financial projections
Opposite the traditional format is the lean startup format. This format can still include many of the above details but in a simpler way. These business plans usually contain precise, high-level information that’s easier for potential partners or investors to consume.
A traditional format may be better for businesses with more predictable growth and long-term development. A lean startup plan may be better for ventures with rapid development or changes over a shorter period.
2. Write the executive summary