This activity happens during startup. It may also happen later during a pivot, which involves similar steps to a startup. The business plan should be updated periodically as conditions change.
This is a cross-functional activity led by the executive team because it involves all aspects of the business.
What you put in your business plan will depend on who you expect to read it, and for what purpose. Investors, bankers, partners, and employees may be interested to see different aspects of the business in the plan, or different levels of detail on various aspects of the business.
Here is an outline of what needs to be in a business plan:
- Executive summary (includes the business purpose and vision)
- Company description (what problems do you solve, where do you operate, critical roles on your team)
- Market analysis (what is your target market, who are your competitors, comparison of your company or product with competitors, what problem has gone unsolved or what market niche will you be addressing that your competitors don’t)
- Organization and management (legal entity type, organizational structure, management team, permits and certifications, roles and responsibilities, supply chain, day-to-day operations)
- Product (what product or service you will offer, how it solves a problem for customers, what research or development is needed or has already been done, what trademarks or patents will be filed or have already been filed, and any other important information about your product which may be product-specific such as manufacturing plan, delivery plan, or customer support plan)
- Marketing and sales (target audience, ideal customer profile, how you plan to attract customers, offer and value proposition, sales channels, pricing, and how the sales process will work)
- Financial projections (income statements, balance sheets, cash flow statements, capital expenditure budgets)
- Capital requirements (how much money you’ll need to successfully execute the business plan over the next 5 years and how it will be used)
- Funding request (only if you’re sharing the business plan with someone as part of asking them for a loan or investment)
The quickest way to create a business plan is to grab a template and start filling it in. Here are links to free templates:
- Traditional and lean startup templates from Small Business Administration (SBA)
- Business plan template from Forbes
The activity guide below will help you create a business plan for yourself, to help you think through aspects of the business, and to help you prepare for actually starting the business. You can then take the same information and fill in the shorter templates that are linked above, to share a shorter version of the plan with others.
The business plan includes a plan for each of the business functions:
Some business plans, especially for small businesses, omit one or more sections that are not unique to the business or critical to getting started. Which sections are included or omitted, or which sections get more or less attention, is specific to each business. For example:
- A freelancer or solopreneur is not going to include a “personnel” section because they are the only person engaged in the business
- A business that involves manufacturing a product is going to need a logistics section to discuss the supply chain, manufacturing, and delivery
- Most businesses include a finance section to at least talk about projected cash flows and required capital
Compass
After writing your business plan, continue to execute the business plan.
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