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A strong business plan can help you succeed at any stage in your company’s growth. As a concise overview of your business, it lays out your plans, products, services, detailed marketing analysis, and realistic financial projections.
When you launch, this overview helps you prioritize and manage your funds. As your business continues to evolve, the plan gives you a roadmap to execute new opportunities. And at any point in time, a business plan could be used to apply for loans and grants or set up a crowdfunding campaign.
Find out how to write a business plan for a small business that is designed to help you achieve your company’s unique goals.
Key Points
• A business plan should start with an executive summary, which is a concise overview of your business, including its mission, vision, products/services, target market, and financial projections. It should grab attention and summarize the plan.
• The plan should also contain a detailed analysis of your industry, target audience, competition, and market trends to demonstrate demand for your product or service.
• A business plan should provide realistic financial forecasts, including profit/loss statements, cash flow, and break-even analysis. Highlight how you’ll fund the business and achieve profitability.
• Tips for writing an effective business plan include being specific, clear, and concise in your writing; using data and research to back up your claims; and revising and updating your plan regularly.
• A business plan is important to both outline your own business goals and to show lenders or investors how the business will be run efficiently. This is crucial if you ever wish to apply for small business grants or loans.
The Importance of a Business Plan
Creating a business plan allows you to map out every detail in launching and managing your company. Walking through each step helps you define your business goals, financial strategies, and both legal and organizational structures.
The document helps ensure that you focus on your core areas without getting distracted by opportunities that don’t support the plan. Externally, the business planning process helps identify funding needs and serves as support for financing applications, investor pitches, and even crowdfunding for small businesses.
When deciding how to make a business plan, first identify which type is better suited for your company. There are two primary categories: a traditional business plan and a lean startup plan.
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Traditional Business Plan
A traditional business plan is the more in-depth option, discussing the company’s past, present, and future. The goal of writing a business plan is to provide a roadmap for the company. As such, it often includes:
• A discussion of the broader market to identify both upcoming challenges and opportunities the business may face.
• Any relevant expansion plans. The business plan generally outlines where the funding will come from (such as a small business loan) and what hiring needs to be done.
• An explanation of duties for current employees.
• A strategy in case certain setbacks occur.
• A five-year forecast of company financials.
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Lean Startup Plan
For a more basic business plan, you could opt for a lean startup model. Writing a lean startup model business plan requires less detail than a traditional plan and takes a more general approach to outlining the company’s information.
A lean startup business plan typically doesn’t have enough information to satisfy a lender or investor, but it can be a useful internal tool when you’re just starting out. It also provides the flexibility to experiment with business models and other details. In other words, it gives you more room to pivot as you gain experience with managing the company.
According to the Small Business Administration (SBA), some elements of the lean startup plan are:
Partnerships: Highlight the strategic partnerships that will help your business operation. This may include suppliers or manufacturers.
Activities: In what ways will the company have a competitive advantage in the existing market? Things to consider here may be technology that could set you apart.
Resources: What resources will allow you to create value for customers? This may be staff or intellectual property.
Value proposition: What unique value does your company bring to the existing market?
Customer relations: How will consumers interact with your company? Will their experience be in-person or online?
Customer segments: Identify your target market. Defining and understanding who your target market is can help inform overall business and marketing strategies.
Cost structure: This section should explore the costs your business will face, such as labor or supplies. It can also be helpful to define whether your company will work on a cost-driven model or a value-driven model. Cost-driven models focus on lowering costs while value-driven models focus on creating premium value for customers.
Revenue streams: How is the company going to make money?
There are a variety of templates, examples, and online resources that can help business owners navigate how to write a lean startup business plan.
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Benefits of Having a Business Plan
A business plan is indispensable for managing the details of structuring, running, and growing your new company. It helps you clarify your business goals and set up your financial, legal, and organizational frameworks. As your business grows, you can see where and when your plan succeeded or how you might tweak it for better results.
Clarity for Strategic Decision-Making
Building your plan forces you to make decisions about business needs and priorities. You can figure out how you’ll maximize revenue and scale up your production as you smooth out needless complications. It also leads you to identify timelines and financial milestones.
Attracting Investors and Securing Funding
A business plan should be very specific about where funding will come from. A plan showing that you’ve carefully considered all the budget details is likely to help your business attract investors and appeal to lenders. Funders may feel more confident they’ll see a return on their loan or investment.
Tracking Business Growth Over Time
Making and maintaining a business plan generally involves projections of revenue and market penetration. Over time, you can compare actual outcomes to your projections and see what actions or assumptions had the greatest impact. You may decide to update your plan accordingly.
9 Steps to Writing a Business Plan
Here’s how to write a business plan step-by-step that can help you create a solid strategy for both the near term and the long term. The following steps are for a traditional business plan.
Business owners may decide to pick and choose the sections that are most relevant for their goals.
1. Executive Summary
The executive summary provides a brief overview of your company as well as your goals. This section is particularly important if you’re applying for a small business loan or pitching new investors. Be direct with your funding goals, whether it’s receiving a certain loan amount or raising a specific amount of money.
Within no more than a few pages, the executive summary should outline what you’ll discuss in greater detail throughout the rest of the business plan. You may even opt to write this section last so you know exactly what you’re summarizing.
2. Business Overview and Structure
This section goes into more detail on the business, including the products or services you offer. Present information on why your company is (or will be) successful, such as a specific competitive advantage, unique expertise on your team, and intellectual property.
Also talk about your mission and vision statements to clearly communicate your goals and values. These can be updated over time as your company evolves. Finally, describe your target customer, location, and other structural details that are central to your business.
3. Market Analysis and Structure
Here’s where you show an assessment of your market. Discuss metrics and trends of the entire industry in which your company operates. This should largely discuss the competition and the demand for your product or service. Is your industry focusing major growth in one area, or price increases because of a general trend?
Also describe your various customer segments, including their general location and demographics. By the time a lender or investor finishes reading this section, they should understand how your industry works and where your company fits in among the competition.
4. Management and Team
The strength of a company’s management team can be an important part of any business plan. Even if there are only a couple of co-founders at the moment, present their full bios and how each individual contributes to the company’s success. Larger businesses could show an organizational chart to illustrate the reporting structure of the team.
Another important aspect to consider when you create a business plan, regardless of a company’s size, is the legal structure and ownership of the company. You can also introduce any advisory board members who lend their expertise to the business.
5. Marketing Plan
Tee up your funding request by explaining how you plan to get sales or how your current sales come in. Whether you’re selling a product or a service, go in depth about where and how you connect with customers, such as in-store or online. Also outline your pricing strategy and how that stacks up to the competition.
Next, describe your advertising strategy and any results that you’ve experienced so far. Are you advertising online or through traditional media channels? For more established companies, discuss any new or upcoming campaigns. You can also mention budget plans for your sales and marketing plans.
6. Operations Plans
This section may make sense if you want to give more detail on how your company operates, especially if you have multiple divisions rather than just a few team members. It can build off of information you included in the management section. Rather than focusing on each member’s expertise, here you would discuss the different responsibilities throughout the company.
Also provide details on operating expenses and overall budgets. You don’t need to go into revenue numbers yet, but instead talk about the capital and cash flow needed to run the business on a day-to-day basis. You may need to update your business plan if your company pivots to a new product or service.
7. Financial Projections
Your financial section contains both a historical account of your business finances (if you’re already established), as well as a forward-looking estimate, usually projecting the next three to five years. Data should include profit and loss statements, balance sheets, and cash flow statements.
Put in projections for each of these documents and get as specific as possible if you’re a new enterprise. Graphs and other visuals can also help your numbers pack more of a punch, especially when showing trends over time.
8. Funding Request
When you create a business plan to attract investors or apply for a small business loan, you’ll want to outline your exact financing needs and what you plan to accomplish with the funds. If you’re a startup, describe how much you’ll need to launch. (For startup loans with no collateral or subpar credit, factor in a little more for higher financing costs.) Existing businesses can describe expansion plans, such as salaries for new positions, research and development for a new product, or a brand new location.
For a loan application, you may give details about your preferred repayment plan. For an investor pitch, address your valuation and how much equity you’re willing to give up for a specific investment. Some small business grant applications will like to see a business plan, too.
Tie all of this information back to your projections and how much revenue growth you expect from this potential funding.
9. Appendix and Supporting Documentation
The final component of creating a business plan is putting your supporting documentation in the appendix. This could include requested materials, like resumes or a business credit report (although lenders will frequently do their own credit check).
You may also append letters of recommendation, customer testimonials, and product pictures. Consider adding your incorporation documents and any legal contracts or licensing information that could affect your business as it grows.
Tools and Resources for Business Plan Writing
As noted above, many tools and resources exist to help you put together your business plan. Software packages for this purpose aim to guide and streamline the creation of your plan. Among the features: SBA-approved sample plans, customizable templates, forecasting functions, and fundraising tools that connect you with investors. The best software option for you depends on your budget, your need for automation, and the level of guidance you want.
For personal advice and assistance, the SBA (and its partner SCORE) and many other government and non-profit organizations offer free mentorship, consulting, and extensive educational materials. Many universities house small business development centers (SBDCs) that provide in-person business consulting and training services at no cost.
Business Plan Software and Templates
Business plan software provides embedded financial tools, structured templates and AI assistance for planning and financial forecasting. Attractive templates and design software are commonly paired with business plan software for use in generating visual presentations and branded materials.
Financial Modeling Tools
Financial modeling tools help business owners analyze their data to do basic forecasting and planning. Spreadsheet programs offer familiarity and flexibility but require manual work, while specialized cloud-based platforms automatically input data and connect to existing accounting, payroll, and CRM systems.
Tips for Writing an Effective Business Plan
Some tips for writing an effective business plan are:
• Be clear and concise: Use simple language and avoid jargon to make the plan easy to understand.
• Tailor to your audience: Adjust tone and detail depending on whether it’s for investors, lenders, or internal use.
• Focus on the essentials: Include key sections like market analysis, financial projections, and business strategy without overloading with unnecessary details.
• Use data and research: Back up claims with facts, market data, and financial evidence to build credibility.
• Set realistic goals: Present achievable, measurable milestones for business growth and profitability.
• Highlight your unique value: Clearly explain what differentiates your business from competitors.
• Be flexible: Show an understanding of potential risks and outline contingency plans.
• Revise and update: Regularly review the plan as your business evolves to ensure it remains relevant.
Common Mistakes to Avoid in Business Plan Writing
When writing a business plan, try to avoid these common missteps.
• Being overly optimistic with financial projections: This can make the plan seem unrealistic.
• Failing to research the market thoroughly: This can lead to inaccurate assumptions about customer demand and competition.
• Lack of clarity or organization: This makes the plan hard to follow, diminishing its impact.
• Ignoring potential risks or challenges: This makes the plan appear incomplete.
• Using vague language instead of specific, actionable details: This may reduce the credibility and effectiveness of the plan.
The Takeaway
Understanding how to write a business plan can help business owners be better prepared for both requesting funding and actually running your business.
Writing a business plan requires research and clear communication about your company and your industry as a whole. You may not need to follow all of these business plan steps, especially if your company is new, but you can still provide a well-informed analysis of the market, your company’s competitive advantage, and your future plans.
As your business grows and evolves, it can be helpful to regularly update your business plan in the appropriate areas. This could give you the agility to jump on opportunities as they arise when you already have a well-prepared plan that only needs minor changes.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
FAQ
How long should a business plan be?
A business plan should typically be between 15 and 25 pages, depending on the complexity and stage of the business. It needs to be detailed enough to cover all key aspects — such as market analysis, financial projections, and operational plans — while remaining concise and focused to engage investors or stakeholders.
Do I need a business plan if I’m not seeking funding?
Yes, even if you’re not seeking funding, a business plan is essential. It helps you define your goals, develop strategies, and identify potential challenges. A business plan serves as a roadmap for growth; it guides decision-making, helps with resource allocation, and shows your progress as your business evolves.
How often should I update my business plan?
You should update your business plan annually or whenever significant changes occur, such as market shifts, new competition, or business expansion. Regular updates help ensure your plan remains relevant and aligns with your current goals.
What’s the difference between a business plan and a pitch deck?
A business plan is a detailed document outlining a company’s goals, strategies, financials, and operations, typically 15 to 25 pages long. A pitch deck, on the other hand, is a concise, visual presentation (usually 10 to 15 slides) designed to quickly engage investors or stakeholders by highlighting key aspects of the business.
What are the key components of a solid business plan?
There are two types of business plan, with different levels of detail. A traditional business plan contains a business overview, market analysis, marketing plan, operations plans, and financial projections (along with supporting documentation). A lean startup business plan is less specific, focusing on partnerships, activities, resources, value propositions, revenue streams, and other concepts.
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