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Writing A Business Plan

When starting your own business there are a number of considerations you must review. Here are some critical questions to ask yourself:

  • How much time will this business take to operate?

  • What will it cost to run?

  • How long will it take to break even?

  • Who or what is my target market?

  • How can I find investors and financing?

In order to be sure you are on the right course, and you are able to stay that course for the duration, one of the first steps to take in starting a business is to develop a business plan. In this course, we will provide you with the critical steps necessary to create an effective business plan for your business.

Why is a Business Plan Necessary?

Imagine you are asked to make a delivery to a far off location (which you are not familiar with), and you have no access to directions. Would you be able to complete the delivery? Starting a business without a plan in place can be similar to making a delivery to an unfamiliar location. Basil S. Walsh, an early twentieth century insurance mogul summed it up best when he said, “If you don’t know where you are going, how can you expect to get there?”

A business plan is essential to the success of a business because it outlines not only where you want to go with your business, but also how to get to there. Now let’s take a look at how to put together a good business plan.

Getting Started on Your Business Plan

Here are some questions to consider before you start writing your business plan:

  • What are you trying to accomplish?

  • Will you seek financing/investors?

  • What are the pros and cons of the venture?

  • Who would be a good mentor to help through the development process?

After you have considered these questions, you will be ready to begin writing your very own business plan.

The Nuts and Bolts of a Business Plan

An important consideration to keep in mind throughout the business plan drafting process is to keep it simple, yet professional. Be sure your plan is easy-to-read, easy to navigate, and easy to understand. Make sure you develop a clear table of contents, use section tabs, and avoid uncommon or difficult to read fonts and graphics.

Now let’s move on to the specific sections of a business plan.


Executive Summary

The Executive Summary should be the first section in your business plan. It is here where you provide an overview of the entire plan. This will be the portion of the plan that potential investors or business partners will read first, so it must be an attention grabber.

Although this is the first section of a business plan, it is usually the final portion drafted. After you have completed the remaining sections of your business plan, you will be better able to summarize your business succinctly.

Let’s review the important sections of an appropriate Executive Summary.

Components of an Executive Summary

The following is a list of the contents you should include in the Executive Summary of your business plan:

  • Mission statement that is easy to remember, and clearly illustrates your goals and purpose

  • Business start-up date

  • Number of employees

  • Locations of offices, branches and facilities

  • Products or services offered

  • Financial information – banking and investor relationships

  • Summary of growth (and/or growth projection)

  • Summary of future management plans and goals

Elements of an Effective Executive Summary

The Executive Summary may be the most important part of your business plan, especially if you intend to seek investors or credit to help finance your business. Some keys to making this section eye grabbing and most effective are:

  • Use short bulleted statements

  • Use language and terms familiar to your target audience

  • Give details rather than broad generalities

  • Use a format that is consistent with your target audience

Your business plan is a living document; therefore, as you create your business plan, you need to adjust and update it as often as circumstances dictate changes. As your business grows, you will be able to add to your plan, and enhance your Executive Summary as well.


Market Analysis

The Market Analysis should be the first section of the business plan. In this section, you will outline your knowledge of the industry you intend to conduct business in, as well as the portion of that market you intend to target. Depending on your industry, this portion of the business plan could be basic (e.g., lemonade stand) or complex (e.g., multi-national marketing firm).

Let’s take a look at some specific details to include in this section of your business plan. 

Components of the Market Analysis

The first portion of your Market Analysis should be an overview of the industry your business will operate in. Details such as the size of the industry and its rate of growth (both historic and current), trends and characteristics of the industry, geographic industry factors, current industry cycle and industry customer groups are all important items to consider and detail in your market analysis.

As you describe your industry and the future expectations for that industry, you should also address any other factors which are unique to that industry, or would be important for your business to keep track of as time progresses.

Target Market

In the Market Analysis section of your business plan, you will also want to clearly identify your target market, or the specific group of customers with which you intend to do business. Some important items to consider as you narrow your target market to a manageable size include the following:

  • Characteristics unique to your market (needs, demographic, geographic)

  • Size and product consumption of your market

  • How and why you can gain market share

  • Product pricing and potential margin (include potential incentives)

  • Target market resource mining, or how you will get information about your market

  • Media  plan which includes how you will reach your target market

  • Customer cycles, or when potential customers will need your product or service

  • Target market trends and potential changes within the market

Researching and developing this portion of your Market Analysis will help you to focus on a clearly defined customer base for your business.


Market Research and Testing Results

Depending on the complexity of the business you intend to undertake, you may need to include research regarding market testing and product lead time within you business plan.

Market testing data is gathered through a survey of potential customers (or current customers if you are revising your business plan). If this data is part of your business plan, it should include information such as:

  • Who was contacted,

  • Information provided to contacts,

  • Feedback on your product, and

  • Product pricing 

This section should only include a summary of any such survey. Complete data and any statistical analysis of that data should be included in an appendix to the business plan.

Lead time is the time between a customer order for a product or service and the customer receipt of that product or service. If this information is included in your plan, you will want to identify any lead time changes between initial orders, re-orders and large or bulk orders.

Market Analysis and Competition

The final analytical portion of the Market Analysis section of your business plan should include a breakdown of the competition within your industry. The Competitive Analysis should clearly identify your competition, their strengths and weaknesses, the target market of your competition and barriers to entry you would have to clear in order to enter the market.

Let’s take a look at some of the key aspects of a Competitive Analysis.

Competitive Analysis

The Competitive Analysis should be a comprehensive breakdown not only of your business, but also of current competitors and potential future competitors. These are some important questions which should be answered in this section:

  • Who are the key competitors?

  • How long will it take new competitors to enter the market?

  • Who are indirect competitors that could affect your business?

  • What are the strengths and weaknesses of each competitor related to your business?

Regulatory Restrictions

The final portion of the Market Analysis section of your business plan should include a review of any regulatory restrictions which will impact, or may impact, your business. These could include (but are not limited to) Federal, State and local government regulations. This is a very important part of your business plan because there may be costs associated with regulatory compliance as well as potential penalties for non-compliance. You cannot claim ignorance when it comes to the law.


Company Description

A good business plan must identify your business with a detailed company description. While this may seem like a simple part of the plan where you just list the name of the company, there is much more to this section than just the name of your business. Here is a list of several important items which should be covered in this section of your business plan:

  • Business name

  • Nature of the business (what type of work/service are you engaged in?)

  • Reasons or basis why your business will succeed

  • Market area where your business will operate

  • What client or customer base within the market you will serve

As you draft your business plan, you may identify additional descriptions that would be appropriate to add in this section.

Vision and Mission Statement

As part of your Company Description, you should include your vision and mission statements. Let’s take a look at how to create each type of statement in the next few pages.

Vision Statement

Creating a Vision Statement can be a daunting task for many people starting a business. But the reality is that without a strong vision statement you will not know the direction in which you want to head. A vision statement is sometimes called a “picture of your company in the future,” but it’s so much more than that. It is your inspiration and the framework for all your strategic planning. The vision statement answers the question, "Where do we want to go?"

To write a vision statement, you need to take all of your hopes and dreams of your company and put them into a usable form. Here is one formula to help shape your vision statement:

Five years from now, (my company name) will ___________________ by ________________________.

Here is an example:  Five years from now, Computers-R-Us, LLC, will have annual revenues of over $1 million by consistently providing timely, reasonably priced repair and instructional services.

Don’t be afraid to dream.  Remember, it is your vision of the company that will lead it to its success.


Mission Statement

A Mission Statement should express the purpose of your business in a way that inspires support and ongoing commitment. It must be articulated in a way that is convincing and easy to understand. It must use proactive verbs and be free of jargon. It must also be short enough so anyone connected to your business can readily repeat it. You can create a mission statement for you business by answering the following three questions:

  1. What are the opportunities or needs that we exist to address, or in other words, what is our purpose? Why do we exist?

  2. What are we doing to address these needs, or what is the “business” of your business?

  3. What principles or beliefs guide your business, or what are the values of your business?

Let’s take a look at an example of a mission statement that addresses these three questions:

ABC Financial provides exceptional financial service and solutions to our customers, a professional working environment that promotes employee growth and opportunity, and actively supports community efforts, while maintaining a strong, financial position.

Can you see how all of these questions are covered in this mission statement? If you look closely, you will see that all three questions are answered clearly in this statement.

Organizational and Ownership Structure

Within the Company Description, you should also explain the organizational and ownership structure of your company, as well as outline the background of key employees and directors. Even if you are starting out as a small business, it is important to give a clear picture of how your operation is organized and who does what for your business.

Let’s take a closer look at each part of this section. 


Organizational Structure

There are many different ways to outline the organizational structure of your business in your business plan; however, the simplest and oftentimes most effective way to outline the organizational structure of your business is to create an organizational chart. The organizational chart gives a concise picture of the management structure of your business.

In addition to the organizational chart, you should also include a brief narrative description of the organization of your business. In this brief narrative, you can give duties and responsibilities for each position, as well as a guide to how the structure will change in the future as your business grows.

Ownership Structure

The ownership portion of your business plan should identify what type of business entity you have selected along with the owner or owners of your business. In this section, you want to be technical and detailed. For example, if you are running the business on your own, and have not incorporated in any way, you should identify the business as a sole proprietorship, because that is the legal name for a simple person unincorporated entity.

You will also want to detail ownership percentage interests if you have more than one owner, the extent to which each owner is involved in the business and all of the information about stock in the business.

One of the most important indicators of success for a business is the ability and track record of not only the business owner, but also of the management team of that business. It is important for a business to highlight the talent it has by identifying who the management team members are, and what qualifications they bring to the table. Here is a list of many important items that should be included in the business plan for each member of your management team:

  • Name and position within the business

  • Educational background

  • Work experience and unique qualities/skills

  • Industry recognition

  • Time working with your business

This is similar to a resume, but for the entire business rather than just for one individual. You may want to add or subtract items from this list depending on who you will present the business plan to. For example, if you are presenting the business plan to a group of potential investors, you may want to include salary and bonus information. Whereas in other cases, such information may not be appropriate to include.

If your business is organized in way that requires a board of directors, you will want to include some information in your business plan about each board member. For example, you should include their names, positions, company involvement, industry experience, etc.


Marketing Plan

A successful Marketing Plan must contain the following components:

  • Marketing Objectives

  • Marketing Strategies

  • Tactical Strategies/Action Plans

  • Budget

  • Results/Recovery

Let’s take a look at each component with a little more detail.

Marketing Objectives

Within your Marketing Plan, you must outline your overall marketing objectives and strategies to meet those objectives. Meeting marketing objectives should lead to sales. If they don’t, you will need to set different marketing objectives. Marketing objectives should be clear, measurable and have a stated time frame for achievement. Let’s take a look at some typical marketing objectives below:

  • Increase product awareness among the Gen X target by 25 percent in one year. 

  • Inform our target base about features and benefits of our product and its competitive advantage, leading to a 10 percent increase in sales in one year. 

  • Decrease potential customers' resistance to buying our product, leading to a 20 percent increase in sales that are closed in six months or less.

If you have multiple objectives, they must be consistent with each other and not in conflict whatsoever. Additionally, the remainder of your marketing plan components must support your marketing objectives. Setting your marketing objectives and finalizing the remaining components of your marketing plan may sometimes serve as a reality check: Do you have the resources necessary to accomplish your objectives?

Marketing Strategies

Without a proper Marketing Strategies to meet your objectives, your business will not succeed. It is in this section where you outline your “game plan” for achieving your marketing objectives. Essentially, this is the “heart” of your marketing plan. This Marketing Strategy section should include information about your product, price, promotion, and place (distribution), or what is referred to in marketing as the “4 Ps.” Let’s take a look:

  • Product

    • What are the features and benefits of your product?

    • What is your competitive advantage?

    • How will you position and differentiate your product?

    • What complementary products are available?

    • What customer services are available?

  • Price

    • What are the costs associated with the product or service?

    • What will your pricing strategy be?

    • Will you give discounts or bonuses?

  • Distribution

    • Who are your suppliers or vendors?

    • How will you make the product or service convenient for the consumer?

    • What partnerships must be developed to effectively distribute the product?

  • Promotion

    • Where will you advertise?

    • What public relations activities will be required for success?

    • What type of sales strategy will be necessary?

    • What types of promotions will you roll out?

    • What sponsorship opportunities are available to you?

Marketing Tactical Strategies/Action Plans

This is the part of the marketing plan where you put down exactly what you are going to do, when you are going to do it, and who is going to do it. While a marketing plan must be a flexible and fluid document because of outside influences, the more you can plan and secure the correct direction of your plan, the better.

For example, let’s say you own a dance studio and one of your marketing objectives for the year is to increase class enrollment by 25%. One of your marketing strategies for this is to improve your website presence so more people can sign up easily. The tactical strategy for this particular area would be to say that Elizabeth will revamp the website to include “live” enrollment options no later than March 31, 2XXX.

Tactical strategies or action plans are your literal road map for success. You can see how your year should pan out, and have a way to measure your results for success.


Marketing Budget

This is the part of the marketing plan where you determine what you can afford to do in your efforts to meet your marketing objectives. You should forecast results for all efforts you plan throughout the year. This way, you can look at what you anticipated versus what you have accomplished. The Marketing Budget is seen as an expenditure; therefore, the more you can fine tune and validate every aspect of the budget, the more overall success it will have within the business plan.

Marketing Results/Recovery

As we mentioned previously, the marketing plan is a fluid and flexible document; therefore, you must track your plan on a regular basis. Most people will take a look at it on a quarterly basis and adjust it based on results and other economic indicators. Be careful to maintain your marketing objectives and strategies unless a complete shift is necessary. If that is the case, you may need to start from the beginning, which is not recommended.


This portion of your business plan should include not only what funding you are seeking to obtain now, but also what funding you will be seeking in the future. You will want to outline how incoming funds, as well as both current and future funds, will be utilized by your business. Finally, you should also detail any future business plans that will affect the business’ ability to repay borrowed funds.


After you have completed a comprehensive review of the market you intend to do business in, and set clear goals for the direction you want your business to take, it is time to focus on the financial aspect of your business plan. Your business plan should contain a series of financial reports that will help outline not only the current financial condition of your business, but also the future financial prospects of your business.

There are two main categories of financial information that should be discussed in any business plan:

  • Historical Financial Data

  • Prospective Financial data

Each of these financial data categories will contain information to help paint a picture of the current or potential financial health of your business.

Historical Financial Data

Historical financial data is only going to be available if you have been operating your business for a period of time prior to the development or review of your business plan. If you are starting a new business, there will be no historical financial data; you should consider adding and updating this information either annually or semiannually. The following are items which you should include within the historical financial data portion of your business plan:

  • Income Statement

  • Balance Sheet

  • Cash Flow Statements

  • Collateral Available

Generally, historical data for the preceding three to five years will be included within your business plan.


Prospective Financial Data

Regardless of the age of your business, you will want to include prospective financial data within your business plan. This type of information will give a projection of what the financial circumstances of your company will be over the course of the upcoming three to five years. Some of the key forecast items to include are as follows:

  • Income Statement

  • Balance Sheet

  • Cash Flow Statement

  • Capital Expenditure Budget

  • Analysis of Financial Information Provided

If you are just starting your business, you will want to develop short-range projections, on a monthly and quarterly basis. After a year in business, you will have enough information to make a full two- to five-year projection with quarterly or annual markers. Finally, if you are submitting your business plan to potential investors or lenders, be sure your projections match-up with your funding requests.


The final portion of the business plan, the Appendix, should be created but not included in generally distributed copies of your business plan. This section will include information that may be sensitive in nature, and some of that information may not be necessary for each person who has access to your business to see. The information in the appendix should only be distributed with your business plan when you are required to do so.

For example if you are requesting an extension of credit from a materials supplier or a financial institution, that creditor will require more information than you would typically provide to a potential investor or potential business partner.

The following are items to consider including in your Appendix:

  • Credit History (Personal and Business)

  • Reference Letters

  • Management Resumes

  • Legal Documents (e.g., business formation, power of attorney, patents, etc.)

  • Copies of Contracts and Leases for the business

  • List of Professional Contacts (e.g., consultants, attorney, accountant, financial advisor, etc.)

  • Market Study Details (e.g., consumer surveys)

  • Product Information (e.g., research, photos, testimonials, etc.)

  • Industry Research and Information


You are now ready to begin to draft your own business plan. Review each section as many times as you desire to make sure you meet all of the markers within the module. Good luck to you and your business ventures.


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