How Do You Start a Business Plan?

Business plans are invaluable tools that can be used at any stage. They help startups create structure, maintain existing businesses, and facilitate funding requests. While there is no one-size-fits-all business plan, there are basic steps to complete to create a fool-proof plan that fits any situation.

To start a business plan:

• Determine which template you want to use
• Layout basic business information
• Conduct and organize market research
• Outline business structure and management
• Explain products or services
• Envision marketing plans
• Plan out your finances
• Gather all necessary documents

Keep reading to learn what goes into each of these steps and how they fit into creating your business plan. Whether you are just getting started or looking to expand, gathering this information is essential to running and evolving your business.

Determining Which Business Plan Template to Use

There are plenty of business plan templates out there, but they fit into two general categories. While you need to create a thorough plan for your business either way, determining which template you intend to use can help you focus on those areas and not waste time organizing useless information.

Traditional business plans are more common and contain much more detail. These can be dozens of pages long and cover every inch of your business.

Lean startup plans are less common, and they focus on summaries of key elements. These are better for quick plans and skimming over information.

As long as you cover the information you need, it does not matter if you use a traditional or lean startup template. The presentation is more important than sticking to template guides.

Traditional Business Plans

A traditional business plan is much more detail-oriented, and it contains a comprehensive plan for your business. These plans usually contain nine sections:

• Executive summary
• Company description
• Market analysis
• Organization and management
• Service and/or product line
• Marketing and sales
• Funding requests
• Financial projections
• Appendix

All of this information is necessary for creating a business plan (as you will see below), but you can adjust a traditional business plan to include or exclude any sections you do not need.

For example, not every business plan needs to include a developed funding request. If you are building a plan to organize all this information, you can forego any funding requests and add that section as needed.

Lean Startup Business Plans

Lean startup business plans are used to explain your business in a shorter format. They can help you get a quick start, and they work well for simple businesses. You may not have enough information for a traditional business plan, but a lean startup plan gives you some structure.

Sections include:

• Key partnerships
• Key activities
• Key resources
• Value propositions
• Customer relationships
• Customer segments
• Channels
• Cost structure
• Revenue streams

Lean startup plans rely more heavily on charts to outline the information. In most cases, these plans effectively visualize the value of your business on just one page. They resemble a resume for your business.

Basic Business Information

Before you can start diving into the meat of research, you need to determine what your company is and what they stand for. Basic information covers:

• Company background
• Business intent (mission statement)
• Details surrounding the company

The information you uncover here is used to direct research in other areas, such as industry and marketing.

Executive Summary

The executive summary should cover what the company is, and why it will be a success. One of the most important aspects to develop for the executive summary is a mission statement.

You need to be able to touch on:

• Products and services
• Basic leadership information
• Employees
• Location (prospects or current location)

You should also have a good idea what finances look like, especially if your plan is designed for funding requests.

Company Description

Whether you plan to have a detailed plan or not, you need to know all the information you would fit in a company description. These are basics like:

• Problems your company solves
• Consumers, organizations, or businesses your company will serve
• Competitive advantages your business has

Understanding the strengths of your business can help you determine what direction you will move in and give you a better chance with your requests.

Market Research

Market research surrounds the industry your business fits into, including the industry outlook.

Start by looking at other businesses to determine what they do and how well those tactics perform. This can include marketing techniques, prices, and product lines, but you should have a good idea of who you are up against.

You should notice trends and themes in what others do and what works. These observations can help you create your plan, feeding your marketing plan and bringing attention to areas that leave space for your business.

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Structure and Management

A business plan should cover how you intend to legally structure your business, who will manage the business, and who will do the work necessary to keep the business running.

There are five types of business structures:

• Sole proprietorships
• Partnerships
• Limited Liabilities Companies (LLCs)
• Corporations
• Cooperatives

Within each of these structures you can have different individuals in charge. Collect resumes or CVs of key members to display in businesses plans to convince others of their value.

Product and/or Service Development

Before you start a business plan, you should have a product or service you plan on selling. This needs to be fully presentable for your business plan, and you should know:

• Benefits
• What the life cycle of the product or service looks like
• Plans for copyrights or patenting

Make sure you include any research and development findings here to explain the value and success as it relates to your business.

Marketing Plans

You should have more than one way you intend to market your business. Before creating these plans, make sure you understand:

• Industry outlooks
• Your intended customer base
• Your competition

Marketing plans should include a blend of tactics, how much they cost, and how they will help your business. Look for a blend of outlets, including social media, print ads, competitions, raffles, collaborations, and anything else to attract business and retain customers.

Marketing plans also outline how sales will happen, and they are a great launching off point for financial projections.

Finances

The financial sections are especially important when sharing a business plan to gain funding, attract a partner, or understand the weight of your business. 

You may or may not need a funding request, but you should understand financial projections so you can measure the value, growth, and performance of your business.

Funding Requests

If you are requesting funds, make sure you explain how much you need and how you intend to use it in as much detail as possible. 

Some common reasons to request funds include:

• Purchasing equipment or materials
• Covering salaries
• Covering bills until revenue increases

You should reformat requests depending on the lender or investor. Let them know why you need their help specifically, how you intend to pay them back, and what the repayment timeline looks like.

Do not forget to explain what terms you want applied to the agreement. Leave as little up to imagination as possible.

Financial Projections

Financial projections can help with funding requests, but you should also have them to understand your business operations. Not only will they convince others that your business is successful, but they give you information you can use to gauge performance.

Projections are based on past performance, so dive deep to recover income statements, balance sheets, and cash flow statements. Projections usually cover the next five years, but you can adjust yours to fit your needs.

If you have a funding request, format the projections to fit your request. Show how the investment will affect projections and how your company will be able to pay back the loan without disruption.

Gathering Documents

The documents you need depend on the information you have gathered and what is requested of the other party. Whether you put these in an appendix or keep them at hand for quick access, you should have:

• Credit histories (business or personal)
• Resumes of key employees
• Product pictures and profiles
• Letters of reference
• Licenses
• Permits
• Patents

You can include any other legal documents and research findings. Make sure you also have copies of any business contracts.

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Frequently Asked Questions

Is a traditional business plan or lean startup formula better?

Both traditional and lean startup formulas are viable options, and you should choose which one is best for you. A traditional plan is much more detailed and works better for making requests and explaining your processes, while a lean startup plan highlights key points quickly.

Can you use charts or images in a business plan?

Not only can you use charts and images, but you should. Graphics are a great way to convey information quickly and in an easy-to-read format, and they break up the monotony of print in your plan. You want to display information in the most effective ways.

Can you hire someone to write your business plan?

You can hire someone to write your business plan, but you should have a complete understanding of all the information before presenting it. Make sure anyone you work with gets the details correct and that the plan reflects business background and intent properly.

To learn more on how to create your own business plan, click here!

Please note that the contents of this blog are for informational and entertainment purposes only and should not be construed as legal advice. Any action taken based on the information provided in this blog is solely at your own risk. Additionally, all images used in this blog are generated under the CC0 license of Creative Commons, which means they are free to use for any purpose without attribution.