If you’re driving cross-country to a destination you’ve never visited before, would you want to leave home without your GPS?
Probably not.
However, new business owners sometimes make the mistake of accelerating at top speed to launch their companies without having a business plan to guide them.
A business plan serves as your roadmap. It describes your objectives and the strategies you’ll use to achieve them. Like a GPS, it offers assistance to help you get to where you’re going. And like a GPS’s directions—which change depending on traffic conditions, detours, and other unexpected circumstances—a business plan is a flexible tool. As you encounter market demand changes, new competitive pressures, altered regulatory requirements, and more, you can revisit your business plan and make adjustments to reset your course.
What does a good business plan cover?
What a company includes in its business plan depends on the nature of its business, whether it wants to pursue funding, and other factors. Some companies might find that a simple two-page business plan provides enough direction while others will need one that’s far more extensive and detailed.
The following elements are commonly found in business plans:
- Executive Summary
- Business Details
- Market Analysis
- Management and Organization
- Description of Products and Services
- Marketing and Sales Strategy
- Financial Projections
- Supporting Data
Executive Summary
This section of a business plan summarizes what your company is, what it does, where it’s located, and its mission. You might decide to include an overview of your leadership team, staff, finances, and growth objectives.
Business Details
This includes detailed information about your company and the problems it solves for its customers. In this section, share about your business’s competitive advantages (e.g., team expertise, use of advanced technology, etc.)
Market Analysis
To complete this section, you’ll need to do some research to learn about your target market and industry outlook. This is where you’ll identify what your competitors are doing, the market challenges you anticipate, and how you intend to successfully compete in your market.
Management and Organization
This section explains how your company is structured and managed. Will you operate as a sole proprietor, partnership LLC, or some form of corporation? It should also share about the people who are running your company, including their level of experience, education background, and skills they bring to the table.
Products and Services
In this part of your business plan, share details about the products and services you offer. How do they benefit your customers? Are you safeguarding your intellectual property by applying for patents or copyright protection? What is your research and product development process? What is your pricing strategy?
Marketing and Sales
Describe your strategies and tactics for attracting new and retaining existing customers. How will you reach your target audience and what does your lead generation process look like?
Financial Projections
This portion of the business plan has a two-fold purpose. It’s for your own benefit (to help you establish your financial goals and expectations) and for potential lenders who want to assess how well your business might perform financially. Within this section, businesses often include sales and income projections, an expense budget, cash flow statement, balance sheet, and break-even analysis. Graphs and charts can be particularly helpful in this section to aid understanding and highlight key information.
Supporting Data
Having an appendix at the end of your business plan will allow you to provide supplementary documentation and information, such as credit history, resumes, patents, licenses and permits, contracts, product guides, or items specifically requested by a lender or investor.
Where to Find Help in Developing Your Business Plan
You can find many online resources that offer business plan templates. For example, the Small Business Administration has a Build Your Business Plan tool, which provides a step-by-step guide for creating a business plan. Also, SCORE has a downloadable Business Plan Template for startups. As you use these tools to get started with your business plan, consider reaching out to a SCORE mentor for guidance and feedback, too. With experience in helping business owners in nearly every industry start their companies, our mentors can offer valuable insight as you develop your business plan and use it as your company’s GPS to success.