How to Write a Killer Business Plan: A Step-by-Step Guide
Every entrepreneur needs to know how to write a business plan. It's a crucial skill that you should cover when you learn how to start a business from the ground up.
If you want to attract investors or top-level talent to your business, you won't get far without a business plan. And if you're launching as a one-person operation, learning how to write a business plan will ensure that you don't neglect anything as you grow.
But what does developing a business plan look like? The following steps outline the basics of how to create a business plan, as defined by the U.S. Small Business Administration:
Executive Summary – Your company’s value proposition.
Company Description – An overview of your company’s history, leadership, locations, and team.
Market Analysis – A look at your industry and how your company sets itself apart.
Business Organization – Your legal structure and key executives.
Products and Services – A showcase for your product or service and pricing.
Marketing and Sales – Your company’s plan to attract and keep customers.
Funding Request – How much financial support you'll need for the next three to five years.
Financial Plan and Projections – A comprehensive financial plan and at least three years of projections.
Appendix – A spot for additional information, like your curriculum vitae.
What is a Business Plan?
Essentially, your business plan is a map that anyone (not just you) can use to understand where your business is going and why it'll succeed. It's as fundamental as researching the current state of small businesses or registering your business.
As you draw the map that is your business plan, you'll face several questions, such as:
Where are you getting funding from?
How will you handle growth?
What makes your business unique in your market?
How will you handle credit card processing?
Will you need a mobile POS (point of sale)? What about a virtual terminal?
If this seems like a lot of information and research, you’re right. It’s not like drafting a quick business outline on a napkin. Save that for your next genius business idea. You'll want to follow a proven business plan format to make sure you include all the vital information you need to succeed.
Why is Developing a Business Plan Important?
If you were about to go on an adventure into dangerous lands, you'd want a map with you, right? Even if it meant doing some research to draw the map yourself.
The thing is, something most people don’t think of making a business plan when they decide to start a business. And that's okay! You've been too busy thinking about branding, how to set yourself apart, what product or service you'll offer, and the adventure that you're about to go on.
Developing a business plan will tell you if your company is viable, which is the first reason you should make one. Viability is precisely why investors don't put a dime into a company without a plan.
Once you're confident your endeavor is viable, your business plan will act as a step-by-step guide to accomplishing your goals and making a profit. Even if profit isn't your goal, all businesses need to focus on their bottom line.
How to Write a Business Plan Step-by-Step
Let’s take a closer look at the business plan outline from earlier.
Step 1: Executive Summary
Your executive summary is the first chapter of your business plan. It should be between one and two pages in length, and it's one of the most crucial parts of learning how to write a business plan. A basic executive summary format includes:
Basic Company Information
Highlights
Products and Services
Financial Information
Future Plans
Keep it short and sweet. You'll get into plenty of details later.
PRO TIP: If you struggle with this at first, come back to it after everything else. It'll make it easier.
Step 2: Company Description
Your company description might feel similar to your executive summary, but it’s more of a top-level inspection of what your business does and how it’s structured. Keep it short. There's no need to dive deep here, it's just another quick pitch to investors before they get into the rest of your plan. A basic company description might include:
Company Overview
Industry and Marketplace Snapshot
Elevator Pitch
Legal Structure (i.e., LLC, C-Corp, etc.)
The point of this section is to tell potential investors what they’re looking at.
Step 3: Market Analysis
Your market analysis is the first detailed section of your business plan. It needs to make readers feel confident that you understand your competitors, market, and industry, and where your business fits in. A basic market analysis includes:
Industry Description
Target Market Description
Target Market Characteristics
Target Market Size
Target Market Growth
Market Share Potential
Market Pricing
Market Entry Barriers
Competitor Research
This section can take longer than almost any other part of your business plan.
Step 4: Business Organization
The business organization section is all about your organizational and executive structure. It needs to tell the reader who does what in your management, what experience everyone has, and what their backgrounds are. It’s a who’s who of your company. A basic business organization section might include:
Legal and Organizational Structure
Ownership Structure
Background of the Board of Directors and Owners
Necessary Hiring for Three to Five Years
This section shows your reader that you have a reliable organizational structure.
Step 5: Products and Services
As you dive into products and services, you'll be planning for positioning and explaining what your business offers. If an investor isn't impressed by your products and services, the rest of the business plan loses weight. Your products and services section might contain:
Description of Product or Service
Current Product Status
Research and Development Goals and Accomplishments
Intellectual Property
Product Sourcing
Product Fulfillment
Make sure your business’s products and services shine. Now’s the time to toot your own horn a bit.
Step 6: Marketing and Sales
The marketing and sales section shows that you know what you're doing. Without reliable marketing and sales strategy, even the best products can fail. Your marketing and sales section might contain information about:
Brand Promotion
Sales Force
You're not expected to predict how it will all or what will be successful. You do need to provide a clear overview of how you plan to sell your products and services, though.
Step 7: Funding Request
The SumUp Air Lite Card Reader enables small businesses to accept credit, debit and contactless payments with a single device.
Tired of confusing payment schemes? Get the SumUp Card Reader!
Simply get paid with the SumUp Card Reader by taking debit, credit and contactless payments. Pay only 2.65%. No monthly fees. No minimums. Ever.
If you’re looking for investors, your funding request section is where your requirements will go. You want your funding request section to cover how much money you’ll need for the next three to five years to operate your business. It might include:
Current Funding Requirements
Future Funding Requirements
Purpose of Funds
Impact of Funds
Debt vs. Equity Preference
Terms
Future Strategic Financial Plans
Step 8: Financial Plan and Projections
The financial plan and projections come at the end of your business plan. This section is more important than almost any other part of the business plan. Businesses run on finances, and if your investors don’t trust you with money, they’re not going to put anything into your endeavor. No matter how promising everything else is. Basic information might include existing and projected:
Income Statements
Cash Flow Statements
Balance Sheets
Accounts Receivable/Payable
Debt Documentation
You’ll need to show that you have a solid plan and at least three years of projections.
Step 9: Appendix
Your appendix is attached at the end of your business plan. It’s for all the additional information that didn't make the cut for the rest of your document. You might include:
Business Plan Table of Contents
Your Curriculum Vitae
Curriculum Vitae for Members of Management
Footnotes
Charts and Statistics
Anything that you want to show investors but can’t fit into the basic business plan belongs in your appendix.
In Conclusion
As you go through the process of writing a business plan, you'll likely hit points that require additional research and planning. These points allow you to shape your small business plan into something that will engage and excite your readers.
Consider implementing SumUp in your plan as an affordable, reliable way to accept credit card payments. With an easy-to-use mPOS and transparent pricing, SumUp could make your financial sections much more enticing.
Want to keep learning how to make sure your business succeeds? Check out these articles:
