Until you’ve started a business of your own, it’s easy to grossly underestimate the amount of planning that goes into every decision along the way. This is especially true because getting start-up funding, either from an investor or a lender, requires a strong proof of concept. Potential employees, financers, and partners are going to need to know what your business is all about before they want anything to do with it.
A business plan acts as a way to demonstrate to the world where your business came from, how it operates, and where you see it heading in the future. Great business plans utilize a combination of storytelling and hard data to provide a comprehensive view of a company’s past, present, and future.
There’s no singular correct way to write a business plan. As many templates as there are available online, there are variations between these documents. However, this guide is meant to provide an overview of what you should strongly consider putting in your business plan. You may decide to customize the contents of your business plan as needed, but at least you’ll have a strong sense of what may be useful to include.
Parts of an Effective Business Plan
First, let’s cover the main parts of an effective business plan — which may, in total, reach 15-20 pages, depending on the amount of pertinent information needing to be conveyed.
Kicking things off is the executive summary, which commands the first few pages of the overall document — typically ranging from a single page to four pages, though no longer. This introductory section summarizes what is about to come in more detail in the following sections. This way, someone can read over the first few patches and still walk away with a well-rounded idea of your company’s values, objectives, and performance.
The U.S. Small Business Administration sums up the executive summary like this:
- What your company is (leadership, employees, location, products, mission statement)
- Why your business will succeed (financial information and growth blueprints)
Traditional business plans have been quite long, but there’s been a shift toward favoring concise yet thorough documents. It’s a real possibility a potential investor or partner will only have time to read through your executive summary ahead of a meeting, so make sure it contains all the vital information someone would need to feel like they understand your organization enough to back it.
The other 10 to 15 pages or so of your business plan will delve more deeply into the details surrounding your company’s ethos and operations. Here you’ll have the freedom to cover more ground than you did in the shortened executive summary. Common sections you’ll often find in business plans include:
- Goals and objectives
- Management structure
- Product/service lines
- Marketing and advertising strategy
- Financial performance
- Financial projections
While it’s absolutely important to include analytics and charts to demonstrate claims about your company’s performance, it’s also essential not to skimp on the parts that give your brand a personality — like your company’s missions, ethics, and unique selling proposition.
Striking a balance between hard data and branding will help your business plan not only contain all the quantitative data potential investors could ever need, but will also help you forge a genuine connection with anyone getting to know your firm.
Again, it’s entirely possible to omit certain sections or add sections not mentioned above. Your business plan can be as unique as your company is. These are merely suggestions to help you get started and identify some key areas that investors may expect to find within your document.
The final section contains supporting documentation that’d simply be too clunky to include in full in the main body of the business plan. Make a note wherever an add-on is necessary — i.e. “See Appendix B for revenue projections.” Your appendix may be made up of a combination of photographs, data visualizations, articles, awards, leadership resumes, and more.
Another Option: Creating a Lean Business Plan
Like we mentioned earlier, business plans are trending shorter and shorter — especially as modern readers of business plans get busier. This means sending someone a 20-page document may be viewed as downright overwhelming in this day and age.
A potential solution to a bulky business plan? The lean format, which includes many of the same sections just in a condensed format, capable of fitting on just one or two pages total.
As Value Penguin, lean business plans are meant to convey the information deemed most crucial for decision-making, including:
- Target audience
- What value your company brings to the table
- Marketing/branding channels
- Sources of revenue
- Main activities
- Costs of doing business
In this sense, lean plans are like an executive summary distilled down even more — to the point where every single word and bullet point must be intentional. Even if you don’t end up presenting a lean plan, it may be a helpful activity to create one for the purpose of clearly defining in no uncertain terms where your company stands.
Another possible advantage to going with a lean format rather than opting for the much longer traditional format? If something changes about your company, it tends to be easier to update a one- to two-page document to reflect the newest iteration of doing business than it is to go in and change a heftier document. In fast-paced sectors or when your start-up small business is still getting its legs under itself, the lean option may provide needed flexibility.
This guide for writing business plans is meant to provide an overview. At the end of the day, it’s up to you as the entrepreneur to decide which format most effectively gets your point across to investors and partners. When in doubt, try to keep it as succinct as possible without losing meaning.