In our experience, the process of creating and writing a business plan is as valuable as the end product itself - a document that will provide the priorities, context and sanity you’ll need as you start up your business.
Just remember that the most important audience for a business plan is YOU! You’ll be forced to be accountable to all of the statements, claims, stats and facts inside of it.
You may also use your business plan as a tool to generate interest from financiers, prospective employees and strategic partners.
We focus on 3 aspects of business planning to consider as you write a business plan:
- The "Defining Dozen" questions you must answer
- Key components of a business plan
- Writing a business plan
Sample Business Plans
Use these sample business plans for reference.
* pdf document. Adobe Acrobat Reader required
The "Defining Dozen" questions
To write a good business plan, you have to know the answers to the “Defining Dozen” questions, which we describe in detail in “StartupNation: Open for Business,” our book. Jot down the answers to each of these questions and hang on to them. You might not use every answer in writing your business plan, but they could be helpful when you update your plan as your new business grows.
- What’s your business idea? (Read the book excerpt)
- How does your idea address a need? (Read the book excerpt)
- What model suits you best? (Read the book excerpt)
- What’s so different about what you offer? (Read the book excerpt)
- How big is the market and how big will you grow? (Read the book excerpt)
- What’s your role going to be? (Read the book excerpt)
- Who's on your team? (Read the book excerpt)
- How will customers buy from you, and how much will they pay? (Read the book excerpt)
- How much money do you need, and how much will you make? (Read the book excerpt)
- Where's the startup money coming from? (Read the book excerpt)
- How will you measure success? (Read the book excerpt)
- What are your key milestones? (Read the book excerpt)
Once you’ve answered these questions, you should be prepared to write the actual business plan document.
Key components of a business plan:
Summarizes the most important information within the pages of your business plan - the people, the idea, the market, the competition, the strategy - typically no more than two pages long, the executive summary is usually written last. It takes discipline to keep the summary short, but it's a must.
Details the mission, goals, value proposition, business model, and key assets. After someone reads this section of the plan, they should be able to "get" what you're offering with total clarity!
Dives into the needs and wants of potential customers in the market, as well as your competition and the percentage of the market you expect to reach. Be sure to include any pertinent market research and competitive analysis you've done - and cite your sources.
Marketing and Distribution:
Discusses your strategy and timeline for achieving your marketing goals and defines how you get what you offer into customers’ hands. Be sure to include any new or novel ideas you have for marketing and distributing your product.
Describes the management team (existing or future) and any other key personnel that will be instrumental to the business’ success. Includes each team member's role and responsibilities, as well as any background information that illustrates why they are highly qualified for their role.
Puts into words what you see as the ultimate destiny of the company, especially as it may affect those who finance your new business, as well as other equity holders in the startup.
Cash Management Report (419K)
Best used with Microsoft Excel 2003. Other software or versions may experience problems.
Distills your strategies and assumptions into how much they’ll cost and how much money they’ll make you in the course of your new business.
The Financials section should map out your first few years of business and contain:
- Written narrative of key business assumptions
- Income statement
- Balance sheet
- Statement of cash flow
- Cash management report
We’ve developed an important tool to help you forecast and manage the financial side of your startup business - a cash management report. It looks at how cash moves in and out of your business on a monthly basis. By preparing a cash management report before the launch of your business, you’ll be able to determine if you’ll need to raise outside capital, when you’ll need it, and how much will be required.
Writing your Business Plan
Your business plan should be concise and neatly formatted. We suggest a Microsoft Word document for the bulk of the business plan, with financial documents as attached or embedded spreadsheets created in Microsoft Excel. Avoid fancy graphics, flowery language or photos. The easier you make it to read for a potential investor or partner, the better.
If you are the type of person who works better with templates and wizards, there are many business planning software packages available that cost around $100, as well as a few free online business plan templates.
The advantage to using business planning software is that it offers a step-by-step approach to the process (similar to a “wizard”), and can include sample business plans for specific types of businesses (e.g. restaurants, manufacturing, service) to help you outline some of the unique requirements or expenses associated with that particular business. It also formats your business plan for you.
A drawback to using business planning software is that it might not provide you the flexibility to convey some of the uniqueness and creativity of your new business, since it's written through the software system.