Business plans aren’t just for startups. In fact, most small business owners can benefit from creating and implementing a business plan in their day-to-day operations.
The benefits of developing a business plan at any stage of business are plentiful. In business planning, you will build a better understanding of your competitors and how to rise above them. You will also see the bigger picture of your company and appreciate the unique role each of the numerous elements plays in driving its success.
Of course, this plan will ultimately create a reference point for investors and other stakeholders to make decisions regarding your business by accurately representing it in its current and projected state.
As it is known to be a service provided by business professionals, writing a business plan by yourself may sound daunting, but it doesn’t have to be. Unless you are approaching investors that have very specific criteria for the way your business plan should be presented, you are free to keep it simple.
We’ve broken the plan writing process down into nine easy steps for you to follow in sequence.
You may wish to follow along with one of our 50+ business plan templates. We’ve developed a business plan template for businesses in almost every industry, so we’re confident you’ll find one that fits your niche.
Note that the below steps may appear in a different order than the template you are using (i.e. the completion of the executive summary comes last). Just scroll to the appropriate section as you work through each step and you will have a completed plan by the end of step #9.
Our templates also include prompts and instructions throughout to keep the business plan juices flowing.
Without further adieu, let’s proceed with step one.
Step 1 - Describe Your Company
Your first task when writing a business plan is to describe your company to potential investors and to others reviewing your plan. Aim to achieve this in 3 to 5 paragraphs.
In the first or second paragraph, introduce the current business players, such as the founders, owners, as well as the location of your business and how this location is suitable for your business.
Other important elements that you will want to include in your company description are your values, mission and vision, a general summary of the products and services you offer, and the societal need you intend to address by providing these products and services (include your target audience).
The company description should include the key elements of your business that will give potential investors and stakeholders (including yourself) a clear picture of where your company fits in the market and how it will benefit your target audience.
Your business description will evolve with time, so be sure to review this description regularly or as appropriate.
Step 2 - Outline Your Goods and Services
Once you’ve finished describing your company, you will need to compile a detailed list of your products and services. This task will take some time, but you will walk away with a better understanding of your business offerings and likely several epiphanies for how to effectively market them.
When formatting the presentation of your product and service offerings, start by grouping them into classes and then add the appropriate products and services as subheadings beneath each group heading.
Include a general description for each group and explain how that class of products or services serves your target audience. Under each subheading, describe the product or service’s unique fit within your offerings and how it is complementary to the general need of your target audience addressed by its corresponding group.
Step 3 - Define Your Target Market
The first two steps pushed you to start building the whole picture of your target market in your head. In this section, you will pinpoint exactly who your target market is.
If you are targeting individual end users, the definition of your target market should include age, gender, culture, location, relationship status, sexual orientation, religion, personality type, interests, mental state or any other characteristics unique to your target population.
If your target market is comprised of other businesses, include the company size, industry, niche, location, and other key elements of your target business audience.
Target markets are best expressed in a paragraph or two (as opposed to jot structure) for more fluent reading. If you are targeting both individuals and businesses, be sure to note this and provide a breakdown for each. You may also be marketing to multiple individual populations or multiple business populations.
If you have a detailed marketing plan, include it in the appendix.
Step 4 - Identify Your Competitors
Understanding what you’re up against plays a critical role in succeeding at growing your business. It is helpful if you already have an idea of who your competitors are. If you have not yet researched your competition, you will want to do so now.
As a general rule (but not always), your competitors will be in the same vicinity as you. Take stock within a reasonable radius to identify other businesses in your industry that overlap with your niche. If you are working with an e-commerce platform, many of your competitors will be in cyberspace.
Once you’ve identified the key players in your industry, ask yourself what are they doing right? How are they achieving customer loyalty? How are they creating the best value for money?
It is important to note all of the things that your competitors are doing well so that you can find ways to do them better.
You should have a separate heading for each main competitor and include a 1 to 2 paragraph analysis of their strengths and weaknesses.
Step 5 - Perform a SWOT Analysis
If you haven’t heard of a company SWOT analysis before, it is an evaluation of a company’s strengths (S), weaknesses (W), opportunities (O), and threats (T). Being brutally honest with yourself about these traits will likely feel uncomfortable, but it is necessary to address potential issues before they arise.
Create a subheading for each element of the analysis (Strengths, Weaknesses, Opportunities, Threats) and complete each section in sequence, beginning with strengths and ending with threats.
It is helpful to jot factors down before proceeding to write an analysis. This will also give you a chance to go over each section a few times to brainstorm things you may have missed.
Under each category heading, write two paragraphs: one about what your strengths, weaknesses, opportunities, or threats are and a second paragraph about how each will affect your business and how you will capitalize on or circumvent as needed.
Step 6 - Illustrate Your Organizational Structure
At this point, take a break from the rigorous writing to draw a detailed diagram of how your business works via the chain of command and distribution of responsibility. This diagram should show each employee (including yourself) and where they fit in the organizational structure. You may also want to include subcontractors and the end user to demonstrate how and when each member interacts with clientele.
Then, back to writing again, add each employee’s position as a heading below the diagram and complete a brief job description for each.
In this process, you may realize that a new position is necessary for smoother operations. Go ahead and adjust your diagram and descriptions as needed. You will also want to revisit this setup periodically as your business evolves.
Step 7 - Highlight Key Financial Data
This key financial data will be drawn from the business budget that you include in the appendix of your business plan.
If you don’t have a business budget prepared, do so now with our step by step guide. If your existing budget hasn’t been updated in a while, make sure to review the figures and adjust accordingly.
Your key financial data will outline the goals and reasoning behind your business budget figures. Investors will be primarily concerned with the figures you allot for revenue, how you came to those figures and what indicators there are to support the sales volumes that will result in those figures.
This section should also reference the sources you used to arrive at notable expenses as well as any additional financial goals you have for the period.
Step 8 - Summarize Your Plan
Now it’s time to prepare your executive summary. The executive summary is located at the beginning of your plan and should give investors a good idea of what to expect from your business plan without going into a great amount of detail.
Select the key elements of your business plan to include in the executive summary. You may wish to include each section of the plan as a subheading of the executive summary and provide a small brief of each section.
If you are following along with a business plan template, this section should provide guidance on the appropriate elements of an executive summary for your specific business type.
Step 9 - Create an Appendix
The appendix will be comprised of supporting documentation for the information contained within your business plan. We’ve already established that you will include a business budget and a detailed marketing plan, if desired.
You may also wish to include relevant business data you’ve uncovered in your research, such as business bank graphs to support your claims, competitor financials, staff qualifications, or any patents or trademarks you’ve received.
Any supporting documentation you have referenced (or will go back and reference to strengthen your plan) goes here.
And there you have it, a simple step by step guide to creating a business plan, appropriate for myriads of uses for your business, including loan applications, certifications, presentations and management consultations. It is now time to put it into action and remember to adjust as you grow and flourish!