Creating A Business Plan
What is a business plan?
A business plan is a document that outlines the roadmap for a business’s success. It describes what the business is, what it does, and how it plans to achieve its goals. It covers everything from the business’s basic concept and model, to its strategies for marketing, operations, and finances.
Why do I need a business plan?
To make sure you understand your business and have thought out what might go wrong – and how to capitalize on what is right.
To provide to potential lenders and/or equity investors if you need, or want, outside money.
To help recruit early employers or business partners. Sure, you can explain your vision over coffee and they will be impressed, but in order for them to commit, they really want to see that you can develop a solid plan and put it in writing.
Types of Business Plans
Traditional Business Plan
These plans tend to be longer and more detailed than lean business plans. They require more work to put together, but can also be more persuasive and reassuring to potential investors.
Lean Business Plan
Lean business plans are much shorter and mainly highlight the key elements. These business plans are usually around one page and provide the most basic information.
Not sure where to begin? SCORE’s Business Model Canvas is a great starting point.
Business Plan Resources, Templates, & Examples
Key Components of a Business Plan
The key components listed here are commonly found in many business plans, but your specific business situation might require different or additional sections. Not every business will need all of these components. It’s important to tailor your business plan to fit your unique business needs, objectives, and context.
Executive Summary
What your company is about and why it will succeed
Think of the executive summary as an introductory paragraph or elevator pitch for your business. The main goal here is to introduce your business and your mission. Describe the “big picture” with a quick summary of what your business is, why you created it, and how you plan to execute it.
- Mission statement
- Brief description of your product or service
- Summary of plans and basic logistical details about your leadership team
Company Description
What your business does and what makes it unique
In your company description, you will further detail the logistics of your business, such as its registered name, address, and key people involved. Provide specific information about your product or service, including who your business serves and what problem you solve for the population.
- Business structure (sole proprietorship, general or limited partnership, incorporated company)
- Business model
- Industry
- Vision, mission, and value proposition
- Background information and company history
- Business objectives, both short and long term
- Your team, including key personnel and their salaries
Market Analysis
Research on your industry, market, and competitors
Where your business fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from currently existing businesses in that market.
Conducting thorough market research can help you understand the nature of your industry, as well as how to stand out from competitors. Include a summary of your research findings in this section. Consider any trends or themes that emerge, what other successful businesses in the field are doing (or failing to do) and how your business can do better.
Organization & Management
Business structure, details about ownership, profiles of leadership team
Include your business’s legal structure – whether you’re incorporating as an S or C corporation; partnership or LLC or sole proprietorship.
Describe your leadership team and key employees. Include each relevant individual’s percent of ownership and extent of involvement.
Product or Service
What you sell or the service you offer, and why it’s needed
Here, you will describe the products or services your business will offer or plan to introduce.
If you have pending or current intellectual property (trademarks, copyright, etc), include that in this section.
Include any research or development (R&D) conducted for your product or service.
You may also want to include pricing structures, product lifespan, and unique benefits to the customer.
- Product or service description
- Any intellectual property associated
- R&D conducted
- Pricing structures
- Product lifeplans
- Unique benefits to the customer
- Manufacturing processes
Sales & Marketing Plans
How you will attract and retain customers + your sales strategy
How your business plans to attract and keep customers, including any anticipated advertising or marketing campaigns.
Describe the distribution channels you will use to get the products/ services to consumers.
Logistics & Operations
How will you make this business plan a reality?
Although this step may seem mundane, these elements are vital to a successful business, and need to be fully thought out before the business is started.
- Suppliers
- Production
- Facilities
- Equipment
- Shipping & fulfillment
- Inventory
Funding Request
If you’re seeking funding, explain how much you need and what it will be used for
How much funding do you need? What type of funding are you seeking? How will the funds be used?
Be sure to include any future financial plans, such as selling the business or paying off debt.
This section may very depending on the type of funding you are seeking, as well as specific requirements from the potential lender or investor.
Financial Projections
Financial forecasts to back up your funding request
Use financial projections to show that your business is viable and worth the investment with real numbers and calculations.
Established businesses can include their financial statements, balance sheets, and other current information.
New businesses can provide financial targets and estimates for the first few years.
- Income Statements
- Balance Sheets
- Cash Flow Statements
Need help with these financial statements? SCORE offers great templates.
Appendix
(Optional)
The appendix will include any information that could not fit or did not apply to other sections.
- Employee resumes
- Permits
- Credit history
- Receipts
- Other legal documents
You’ve Got This!
Creating a business plan can seem daunting at first glance – it’s a document that’s both comprehensive and crucial to your success. While it might feel like there’s a lot to cover, don’t let the breadth of information overwhelm you. Each section is a step closer to turning your business vision into a reality!
If you have questions about your business plan, check out our Galaxy Community Forums, and our Ask an Expert page!
Frequently Asked Questions
How often should I update my business plan?
How frequently a business plan needs to be revised will depend on the nature of the business.
A business that has been around for a few years and is operating at a stable level may want to review its plan once a year and make revisions as necessary.
A startup or fast-growing business may want to revise it more often, like bi-annually or quarterly.
Which type of business plan should I use?
Deciding between a traditional business plan and a lean business plan depends on various factors including the nature of the business, its stage of development, funding requirements, and the intended audience for the plan. Here’s a breakdown of when each might be more appropriate:
Traditional Business Plans provide a detailed roadmap and strategy and include a thorough market analysis, financial forecasting, and operational plan. Some reasons you may want to use a traditional business plan include:
- Seeking External Funding: Investments and/or loans.
- Complex Business Models: Businesses with multiple products/ services, etc.
- Regulatory Requirements: Industries that require detailed compliance and review.
- Established Business Scaling: Larger, more established businesses that need a roadmap for growth or are pivoting their strategies.
Lean Business Plans are faster to write and easier to adjust, and focus on the essential elements of the business model. They are ideal for communicating quickly and clearly with internal teams or potential investors who don’t require extensive detail. Some reasons you may want to use a lean business plan include:
- Startups & New Ventures: Business model is still fluid and rapid changes are necessary.
- Internal Use: If the plan will only used for guidance by internal management.
- Frequent Updates: Fast changing industries where long-term forecasts aren’t accurate.
- Minimalist Approach: Suitable for businesses that don’t have complex operations or the product is simple.