You’ve had your big idea floating around your head for months, years, maybe even a decade. But now it’s time to take all those little details and hammer them out on paper. This is where your business is born.
But how do you write a business plan, and what are you supposed to put in it? There are a lot components to a solid business plan, and as the document that is going to define your business, the whole concept may be a little overwhelming. That’s why we’re going to break down, piece by piece, how to write a business plan.
Why Make A Business Plan
To write an effective business plan, it’s important to keep in mind who you’re writing it for. Here are some essential roles your business plan is going to play as you turn your business from an idea into a reality:
It helps you make key decisions: A business plan is a dynamic document that will grow and change along with your business. When you are making big decisions for your business, you’ll be making them part of your business plan, and referring back to the document as future decisions are made.
It gets you money: You’ll be sharing your business plan with investors and lenders, so make sure you’re laying out every element of your business’s finances. This will assure people with money that their investment is going to pay off.
Matching the market: A business plan isn’t just about your business; it also will include information about your competition and the market you’re operating in. Make space in your business plan for what’s happening in the market and how you’re going to address those factors.
What If You Already Have a Business?
Every business needs a business plan, including established businesses. This document helps keep you on the same page with others involved in running your business by defining goals, operational guidelines, and key values. If you’re already operating but don’t have your business plan written out, now is the time to write it!
Prep Steps for Writing a Business Plan
Choose Your Business Plan Type: Are you ready to do a full, 12+ page traditional business plan, or do you want to start with a 1-page lean plan for pitches and basic planning? For those just starting, it may help to start with a more basic, lean plan, then use that as a launching point for creating your larger, more fleshed-out plan.
Make Big Decisions: Now is the time to commit to details for your business, including everything from where your startup funding is coming from to choosing a business name. Writing down these decisions as you make them can be a great start to your first business plan draft!
Research Your Market: What are some big challenges you face entering your market, and how your competitors facing them? Do the research on your industry so you can make informed decisions for your business while laying out your business plan.
Make Your Vision Board: When laying out the details of your business plan, there are a lot of moving parts to juggle. Instead of starting in a word document, try laying everything out on a vision board, with pictures, charts, and colorful push pins.
Assign Responsibilities: Your startup team may be made up of people wearing many hats, but now it’s time to decide who is truly responsible for what. That means giving out titles, assigning setup projects, and laying out compensation terms. Make sure everyone is on the same page for the how, where, and when of every element of your business.
7 Components for How to Draft a Business Plan
Not sure what needs to be in a business plan? A business plan should cover pretty much everything involved in the operations of your business, from the finances to the people involved. How deep you go in detail depends on who the business plan is for. To get you started, here is a 7-item checklist for a business plan that you can take anywhere.
The What, Where, and Why: What are you selling? Where are you selling it? Why will people be interested? This should be laid out as specifically as possible in your business plan.
Funding Plans: Where are your startup funds coming from? Where will they be kept? How will money be distributed in your company? What are your company’s operational costs and income? When will you be profitable? Remember, many creditors require a business plan, so write with them in mind!
Operational Structure: Who is in charge of what in your company? How will they be compensated? What is the flow of command? Make sure your company’s management hierarchy is fully fleshed out on paper so everyone knows who to turn to for decision making. Even if you’re a one-person business, you may need to include details like vendors and freelancers in your business plan.
A Timeline: When does your business begin operating? What are your expectations for the first week, the first quarter, the first year? What are your goals during that time, and what steps will you be taking to achieve them? Plan out the first five years of your business on paper so everyone can operate with the same goals in mind. This also helps you see where changes need to made later if you aren’t meeting those goals.
Market Analysis: What’s happening in your industry, and how will that affect your business? Is there a gap in the market that you’re taking advantage of? Are there other companies doing something similar to you? How are you going to stand out from the rest? Address these things in the market research portion of your business plan.
How to Promote: This is something that many business plans forget to include, but your business isn’t going to take off if you don’t have a plan for promoting it. Are you using social media, traditional ads, flyers, or a combination? Who will be in charge of your marketing, and what budget are you allocating for it? What is your plan if your marketing isn’t working? Check out our blog for tips on marketing your business. We also recommend investing in promotional products as part of your startup marketing plan.
An Appendix: Words are great, but many investors and creditors are going to expect you to back them up with some evidence. This section is where you’ll add additional documentation, including product pictures, patents, licenses, legal documents, financial documents, and more.
Free Resources for Writing a Business Plan
Putting together a professional business plan can be daunting, but thanks to the wonders of the internet, you have lots of free resources at your disposal! Here are a few big ones to help you get started:
Not sure how to put everything together? The US government has created their own guide for how to write a business plan, plus business plan templates and examples!
This free accounting software does more than manage your ongoing business finances, it also has specialized programs to help you plan your business finances and lay it all out in functional spreadsheets designed for business plans.
Worried you’re missing something, or want a second opinion? This site offers free mentorships, business classes, business plan reviews, and more for budding entrepreneurs.
A good chart or graph is an excellent way to make data come together on your business plan, and these sites offer free tools to help you create those assets!
AI or No AI?
There are lots of free AI business plan writing tools online, but should you use them? Yes and no. If writing isn’t your greatest strength, AI can be a great tool to help you clean up your word choice and create your layout.
However, there shouldn’t be a single word in your business plan that you haven’t personally read and approved. Remember, this is the DNA of your business. Don’t leave it up to a generative word program to make decisions on how your business will function! If you’re still feeling lost on how to write a business plan, a writer or business consultant is a great way to get personalized help throughout the process.
1 month ago
Katie Yelisetti
From marketing tips to product recommendations, I’m here to help small businesses be their best.
