How to Write a Business Plan That Outlines Your Goals, Secures Funding, and Beyond

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| Updated on: December 14, 2021

You may be tempted to think of a business plan as an unnecessary formality or something you must submit to authorities. However, the person who will derive the most value out of making a business plan is you. When you do your research and set down what you have planned in a document, you may be able to see flaws and generate ideas that you did not before. When written well, it will help you gain valuable investment and funding. If you are wondering how to write a business plan, read on.

How to write a business plan

You can make your business plan as unique to you as you desire. But, the basic template of a business plan generally stays the same. The sections are:

  • Executive summary
  • Company description
  • Market analysis
  • Organization and management
  • Products and services
  • Sales and marketing
  • Funding and financial projections

Even if the exact section names in your report differ, these are the essential aspects of a business that you should plan.

How to write a business plan

A business plan should contain all the important details about the company

What is an executive summary?

The executive summary is the overall summary of what your business is or will be about. It should summarise the other sections of the report. This section should be helpful for a person who wants all the aspects of the business succinctly presented. You can go into more detail about each of the section headings later in the report.

This section of the report should

  • Clearly describe what the business does
  • Present the mission statement
  • List the owners or stakeholders
  • Give details about the human resource requirements for the business as planned
  • List the location(s) of operation
  • Explain the financial aspects of the business
  • State the amount of money required to sustain and grow the business

If you find it challenging to be brief in this section, work on the detailed sections first. It will be easier to extract the highlights from those sections for this summary.

Small Business Management Tips for Success

Components Required to Create a Solid Business Plan

How do I write a company description?

The description of your business in this section is the most vital part of the business plan. When an investor or financial institution is impressed by this section, they will be more inclined to explore the rest of the report. Take the time to put your passion and belief in your business idea into words. This part of the report aims to create interest and excitement in the person who reads it.

Your company description should tell the reader in detail about what the business does or will do. Use this opportunity to explain what sets your business apart from others. Detail the business ownership structure (proprietorship, company etc.). Describe the target customers and why your offering is ideal for the described customer demographic. Tell the reader about where you will set up operations and the company’s mission statement.

What goes into the market analysis section?

It is vital to understand the market that the business will operate in. Study the market and describe the following:

  • Market size
  • Target demographic within the overall market
  • List of competitors and their market share
  • Analysis of your competitor’s strategy and the success or failure of the same

When you do the research for this section diligently, it will equip you to better compete with the others in the market. It will also tell the reader that you are aware of the competition and have a plan on how to fit into the market or capture market share from the competition.

How do I describe the organization and management structure?

The organizational structure of the business is described here. It will usually be one of the following:

  • Sole proprietorship
  • Partnership
  • Limited liability company (LLC)
  • Corporation
  • S corporation

Instead of merely stating the chosen company structure, tell the reader why you believe this is the best choice of organizational structure for your business. If there is scope for the business structure changing over time, state and explain it in this section.

The key members of management should also be listed here. List the people in the highest levels of management and detail their profiles. If you have enlisted people, describe the key employees. Detail the positions that are yet to be filled, if any.

This section should in detail tell the reader about:

  • The legal organizational structure of the business
  • Reasons for choosing the organizational structure
  • How the business structure can change in the future if required
  • Who will run the business
  • Descriptions of people in key positions
  • Descriptions of the positions that are yet to be filled

How do I write the products and services section?

This section describes the product or service that your business will sell. Most businesspeople find this section very easy to write. The products and services are the business factor that most entrepreneurs are the most excited about. This section will also detail what differentiates the product or service from the rest of the competition. The introduction to this topic was already set out in the market analysis section. This section of the report should tell the reader:

  • What is the product or service that you will sell and all the details about it
  • The lifecycle of the product or service
  • A comparison of your product or service with the competitors
  • Patent or copyright plans if any

What do I explain about my company’s sales and marketing?

No matter how good your product or service is, people need to know that it exists. You need to have good marketing and sales plan to capture potential customers’ attention. All the effort put into product development will be wasted if the marketing and sales aspect of the business plan is ignored.

Explain in detail what your marketing strategy is. List the different media streams that you plan to use. Describe the online and offline marketing plans. This section should convince the reader that you have a good marketing and sales plan to grow the business. You should describe:

  • The marketing strategy
  • Marketing channels
  • Mode of marketing online or offline
  • Mode of sales online or offline
  • The details of how you will calculate and manage profit margins

How do I write about funding and financial projections?

Once a person is convinced of how sound and attractive your business idea and plan is, they will read about the financials. This section of the business plan is vital to approaching investors and funding institutions for funding. A potential investor will judge the pros and cons of investing in your business based on your financial planning. They would need to know how safe their money will be and how you plan to repay a loan if any.

The details required for the funding section are:

  • How much funding the business requires
  • How do you plan to fund the business
  • How will the fund be spent
  • Loan repayment plan
  • Details of whether the financing will be through debt or equity

This section should demonstrate to potential investors and lenders how much money you need and for what. It should assure them that you have a solid repayment plan.

Financial projections tell the reader how you plan to budget and manage the finances of the business. It may be tempting to overestimate your business revenue but be as realistic as possible. If available, use historical data to sup[port your projections. You should also describe your alternative plan if you fail to achieve your financial projections.

Your financial projection should detail

Tips on writing a small business plan

Once you have the sections of your business plan outlined it is easy to edit and bring it all together. Here are a few more tips on how to write a business plan to impress.

  • Research: Take the time to do your research thoroughly. The information that you gather will make your business plan look good and help you plan and run your business better. Resist the temptation to use sources that make your business idea look good. Use authentic sources of market data for your business plan.

  • Keep it updated: Creating a business plan is not a one-time activity. You should keep your business plan updated periodically as your business grows. It is essential to update information on market research, financial details and products/services.

  • Make it look good: After you have done the hard work listed above on how to write a business plan, you need to polish its appearance. Spellcheck and grammar checks are essential. Lay out the information in an orderly and organized manner. Use subheadings generously. If you have pictures and graphs, use them. Format and layout the report attractively. If you are using the report in a digital format, make it easy to navigate and as small a file size as possible. If you are printing it, use the best quality paper and print that you can. Use a neat binder with separators or tabs for easy navigation between sections.

  • Do not make the report too long: Read and re-read it to eliminate sections of unnecessary text. It should be detailed but not too cumbersome to read.

  • Add an appendix with the relevant documents that are required: You can use a good software solution such as TallyPrime to generate cash flow statements, balance sheets and other reports for historical data.

A great business plan will communicate your goals and convince the readers that your business idea and plan is sound in all aspects. It should be able to impress investors and financial institutions so that you can quickly secure funding for your venture.

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