A well-written business plan serves as a roadmap for your business. As you write, you’ll think through the most critical aspects of running a company, setting yourself up for success. If you use a business plan template, your plan can also help you structure, run, and grow your business properly.
Your business plan can even help you qualify for funding from banks or potential business partners. When you apply for loans, bankers want to see that you have a realistic plan for generating revenue and repaying your debts. Before they invest in your company, investors need to know they can trust you to make good decisions. A strong business plan gives investors more confidence in your business.
Pick a Business Plan Format that Works for You
There’s no single business plan format that works for every business. Writing a business plan that meets your needs is more important than worrying about formatting.
Most plans are based on one of two business plan templates: traditional and lean startup. Traditional plans are the most common. They follow the same recommended structure and have a lot of detail in every section. Because they’re so detailed, traditional plans require a lot of work and may be dozens of pages long when they’re finished.
Lean startup business plans are not as common as traditional business plans. Although they use a standard structure, they don’t have the same level of detail as the traditional type. Because they only cover the most critical elements of your business, a lean startup plan may be as short as one page. Lean startup business plans also take much less time to complete than traditional plans — as little as one hour in some cases.
Traditional Business Plan
- Full of details
- Takes longer to write
- Preferred by lenders and investors
Lean Startup Business Plan
- High-level focus
- Fast to write
- Contains vital elements only
- Lenders and investors may request more information after reviewing this type of plan
Traditional Business Plan Format
When you write your business plan, a traditional business plan is a good choice if you’re detail-oriented, want a comprehensive plan, or plan to request funding from traditional sources. Even if you choose a traditional business plan template, you don’t have to follow it exactly. Instead, use the sections that make the most sense for your business and your own needs. Traditional business plans have some combination of the following nine sections.
1. Executive Summary
The executive summary helps the reader understand what to expect from your business plan. It should mention what your company is and why it will be successful. You should also include the following:
- Company’s mission statement
- Description of your product or service
- Overview of your company’s leadership team, staff, and location
If you plan to ask for funding, add a summary of your financials and a high-level growth plan to this section.
2. Company Description
Use this section of the business plan template to provide a detailed overview of your company. Explain what problem your business solves, and be specific about the customers you’ll serve. What consumers, businesses, or nonprofit organizations have a need for your products or services?
Once you write a basic description, describe your company’s competitive advantages in detail. A competitive advantage is any characteristic of your business that helps you outperform your competitors. In other words, it’s something that makes your company different from the other firms in your industry.
Does your store have the perfect location for bringing in foot traffic? Do you have an industry expert on your executive team? Does your product do something that no one else’s product can do? All of these are examples of competitive advantages to include in your company description. When you write your business plan, focus on your strengths in this section.
3. Market Analysis
To succeed in business, you must have a strong understanding of your industry and target market. Taking time to research your competitors can help you find out what they’re doing and determine the best way to outperform them.
The Bureau of Labor Statistics offers industry outlook reports for more than 100 industries. These reports can help you find out how fast your industry is growing. They’ll also help you identify key trends in your industry and determine how they might affect your business.
When you research your competitors, ask yourself several important questions: What do successful companies in your industry do? Why does it work? Can you do it better? The market analysis section of your business plan is the place to answer these questions in detail.
4. Organization and Management
The next section of a traditional business plan template focuses on how your company is organized and who is managing it. Here you’ll explain how your business is structured. Do you plan to form a limited liability company (LLC), S corporation, or C corporation? Is it a sole proprietorship, general partnership, or limited partnership?
Create an organizational chart that shows who’s in charge of the business. Then explain how each person’s expertise will contribute to the firm’s success. Consider adding resumes for key members of the management team.
5. Service or Product Line
Selling products and services is what generates revenue for a business. When you write your business plan, this section will describe your main product or service in detail. Be sure to mention how it benefits customers and what stage of the product life cycle it’s in. The product life cycle has four stages: introduction, growth, maturity, and decline.
This section should also explain how you plan to protect your intellectual property. If you already have patents or trademarks, list them here. If you’re still doing research and development for your product and service, explain the research in detail. Let the reader know if you plan to file for patent or trademark protection at a later date.
6. Marketing and Sales
There’s no one-size-fits-all approach to marketing that works for every business. Your marketing strategy should be unique to your needs and based on the results of your market research.
The main goal of this section is to explain how you’ll attract customers and keep them coming back for more. You also need to describe your company’s sales process. Let the reader know if you plan to hire sales representatives, sell products on an e-commerce website, or use another method. You’ll refer to this section frequently when you work on your financial projections, so take the time to be as detailed as possible.
7. Funding Request
If you need funding for your business, use this section of the business plan to explain your funding requirements in detail. Be specific about how much money you’ll need over the next five years. You should also explain how you’ll use the money to grow your business.
Let the reader know if you’d like a loan or if you’d rather give up some equity in your business in exchange for funding. Then explain your desired funding terms. Don’t forget to mention the length of time your request will cover.
Potential investors want to know that you’ll spend their money wisely. Use this section to give a detailed description of how you’ll use the money. You may want to pay salaries or buy needed equipment. Some business owners use their funding to cover specific expenses until revenue increases. Always include a description of your future financial plans, such as paying off debt or selling the business once it’s profitable.
8. Financial Projections
Use financial projections to support your funding request. The goal is to convince the reader that your business is stable and has a good chance of succeeding.
For an established business, you should provide financial statements for the past three to five years. This includes your balance sheets, income statements, and cash flow statements. If the business has assets that could be used as collateral for a loan, list them in this section.
If your business is new, use financial projections for the next five years. Include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, include monthly or quarterly projections to give the reader as much detail as possible.
This section should clearly explain your projections and match them to your funding request. Charts and graphs are especially helpful for telling the financial story of your business.
The appendix section of a business plan template is reserved for supporting documents. It may also contain information requested by potential investors. An appendix commonly contains the following:
- Credit histories
- Pictures of your company’s products
- Letters of reference
- Legal documents
Lean Startup Business Plan
A lean startup business plan template is ideal if you want to explain or start your business quickly. It’s also appropriate if your business is simple or you plan to make frequent changes.
The lean startup format uses charts to display critical information about your business. These charts include information about your company’s value proposition and customers. They also provide an overview of the firm’s infrastructure and finances.
Lean startup templates come in many versions, but one of the oldest and most common is the Business Model Canvas developed by Alex Osterwalder. You can search the Web to find a business plan template based on this model, or you can look for other versions to help you write your business plan. We’ll discuss the nine components of the Business Model Canvas version here.
1. Key Partnerships
List the other companies or services you’ll partner with to run your business. Include suppliers, subcontractors, manufacturers, and other potential partners.
2. Key Activities
Explain how your business will gain a competitive advantage. List things like selling directly to consumers or using technology to participate in the sharing economy.
3. Key Resources
List the resources you’ll use to create value for customers. The most important are capital, staff, and intellectual property. Be sure to check out HUBZone businesses. It is full of information about funding, programs, federal contraction, business guides, and local assistance for small businesses and business owners in the following groups:
- Native Americans
4. Value Proposition
Write a clear and compelling statement about the value your company brings to the market.
5. Customer Relationships
Explain how customers will interact with your business. Is the process automated, or is it personalized? Plan out each interaction from start to finish.
6. Customer Segments
The goal of running a business isn’t to sell to everyone. It’s to sell to the people who need your products or services. To get a clear sense of who your business will serve, be specific about your ideal customer.
List all the channels you’ll use to connect with your customers. Most companies use multiple channels and optimize them over time.
8. Cost Structure
First determine whether your company will focus on minimizing costs or maximizing value. Once you define your strategy, list the highest costs associated with pursuing it.
9. Revenue Streams
Explain how your company will make money. Examples include product sales, membership fees, and selling advertising space. If you have multiple streams of revenue, list them all.
Business Plan Example
If you need an example of what your business plan should look like, we offer a comprehensive business plan template. We’re here to help when you sit down to write your business plan.
Planning Your Business FAQ
- What are the three main purposes of a business plan?
A business plan has three main purposes: determining your company’s financial needs; developing a successful business strategy; and convincing potential partners that your business has a good chance of succeeding.
- What are the seven elements of a business plan?
A good business plan has at least seven elements: executive summary; company description; product and service description; market analysis; organization and management; and financial plan and projections. If you need funding, your business plan should also include a funding request. You may add more sections to your business plan as you see fit.
- What is the best business plan template?
There’s no single business plan template that’s right for every business. The Business Model Canvas is one of the most common examples of a lean startup business plan, but it’s not the only one available. If the Business Model Canvas doesn’t work for you, pick a different one. If you intend to request financing from traditional sources, you may want to use a traditional business plan template.