How to Write a Good Business Plan [Beginner’s Guide]

Creating a good business plan can feel overwhelming; there’s so much to consider! You might even wonder, “Is my idea good enough?” Will anyone else share my excitement? You’re not alone and you don’t have to worry. All that you need is a well-written business plan.

A well-written business plan is more than just impressing banks or investors; it is your roadmap to building a profitable, long-lasting company. The best part is that there isn’t just one “correct” method to write one. You can succeed if you focus on what matters and give lenders and investors the necessary information. Let’s see how this is done!

What is a Business Plan?

A business plan is a written document that defines the aims, objectives, and strategies of a business. It serves as your company’s road map, offering direction to both the management group and employees.

A business plan can also help you secure the necessary capital and investments to start your business.

Why Do You Need a Business Plan?

Having a good business plan offers you various advantages, whether you’re starting a new company or growing an already-existing one:

• Clarifies Your Vision: A good business plan will help you define your goals and the steps needed to reach them.
• Secures Funding: A clear, realistic plan is also what your prospective lenders and investors want to see.
• Determines Risks: A good business plan will force you to consider potential obstacles and how to overcome them, long before you encounter them

What are the Types of Business Plans

There are different types of business plans that serve various functions at stages for your business development. These are a few examples of the most popular business plan formats.

1. Startup Business Plan

An entrepreneur’s first business plan is usually at the startup stage which is referred to as a startup business plan. This document assists entrepreneurs in expressing their business ideas when they start a new company.

Are you having trouble creating a startup business plan? It is quite similar to a standard business plan, with the main difference being that a startup business plan’s main goal is to convince investors to fund the business. A startup business plan also includes financial projections, marketing strategies, product or service offerings, and possible target markets.

2. Strategic Business Plan

A strategic business plan is a long-term goal that describes the overall goals, tactics, and strategy of a business. This type of strategy focuses on the big picture and assists business owners in setting goals, prioritizing tasks, and measuring success.

A strategic business plan’s main goal is to give the management team and stakeholders of the company direction and guidance. This plan usually lasts between three and five years.

3. Operational Business Plan

An operational business plan is a thorough document that covers the day-to-day operations of a business. It focuses on the particular tasks and procedures needed to operate the business, such as:

• Structure of the organization
• Plan for staffing
• Plan of production.
• Control of quality
• Management of inventories
• Chain of supply 

The primary goal of an operational business plan is to ensure that the business functions smoothly and efficiently. It assists entrepreneurs with resource management, performance monitoring, and improvement identification.

4. Growth Business Plan

A growth business plan is a strategy that describes how a business plans to increase its operations. It helps entrepreneurs in finding new markets and increasing sales and profits. A growth business plan’s primary goal is to offer a road map for the company’s development and growth.

5. One-Page Business Plan

A one-page business plan is a simplified form of a full business plan that focuses on the most important parts of a company. It’s a useful tool for entrepreneurs who want to quickly pitch their business idea to potential investors, partners, or workers.

Typical components of a one-page business plan include the value proposition, income streams, cost structure, and business concept.

How to Write a Good Business Plan

Every successful business starts with a solid plan. A good business plan is more than just a formality; it serves as your road map for carrying out ideas, guiding your decisions, and convincing others to believe in your vision.

The steps below will walk you through the process of creating a good business plan and identifying the main components you should include.

1. Write a Good Executive Summary

This is your sales pitch. It should contain a purpose statement, a summary of the products and services that your company provides, and an overview of your financial growth strategies.

You can try out TechDella’s Pitch Deck Builder is designed to help entrepreneurs create a great pitch deck filled with visuals, storytelling, and data that speaks directly to investors. It allows you to showcase your company’s capacity to differentiate itself, its financials, and its growth prospects in an appealing manner.

This executive summary is the first thing investors read, but writing it last can be easier. It allows you to emphasize facts you’ve identified while writing the more in-depth parts.

2. Describe your company

The next step is to describe your business. This includes fundamental details such as:

• Your registered business name.
• The address of the business’s location.
• Include the names of notable individuals within the business. Make sure to emphasize each team member’s special abilities or technical skills.

Your company description must specifically outline your business structure. Determine if your company operates as a sole proprietorship, partnership, or corporation. Additionally, the business’s ownership percentage and each owner’s stake are crucial factors that you must consider.

Finally, briefly describe your company’s history and current business operations. This prepares an environment for the reader to know your goals in the next section.

3. State your business goals

The third component of a business plan is the goal statement. This section outlines your goals for the coming years as well as for the near future.

If you’re looking for a business loan or an outside investment, use this part to explain how the finance will help your company grow and how you aim to meet those growth goals. Giving the lender a thorough explanation of the opportunities your company offers is important.

For instance, if your company is introducing a second product line, you can describe how the loan will support the launch of the new product and the anticipated growth in sales over the following three years.

4. Describe your products and services

In this section, describe in detail the products or services you already offer or aim to offer. You need to include the following:

• By providing a well-detailed breakdown of how your service or product functions.
• Your product or service’s pricing structure.
• The average customer you service.
• Your order fulfillment and supply chain plan.

You can also discuss any pending or existing patents and trademarks related to your goods or services.

5. Do your market research

Investors and lenders will want to know how your product is different from that of your competitors. Describe your competitors in your market analysis section. Talk about their strong points and highlight your areas for improvement. Explain if you’re targeting an underserved or different market.

6. Outline your marketing and sales plan

Here, you can talk about how you want to convince people to purchase your goods or services or how you want to build repeat business by developing customer loyalty.

Provide information about your distribution and sales plans, including the expenses invested in marketing each product.

7. Perform a business financial analysis

If your business is just starting out, you might not have much information about your finances yet. However, if your business is already well-established, you should incorporate a balance sheet that displays your assets and liabilities, an income or profit-and-loss statement, and a cash flow statement that illustrates the movement of funds into and out of the company.

You might be able to get these reports using accounting software. In addition, it could help you in calculating measures like:

• Net profit margin i.e. the percentage of revenue you retained as net income.
• The current ratio will measure your liquidity and debt repayment ability.
• The accounts receivable turnover ratio is a metric that gauges how often you collect your receivables annually.

This is a wonderful place to add graphs and charts that help readers of your plan understand the state of your company’s finances.

8. Make financial projections

This is an essential section of your plan if you’re looking for investors or funding. It describes how your company will make enough money to pay back the loan or how you will provide investors with a respectable return.

Here, you’ll submit projections of your company’s monthly or quarterly revenues, costs, and profits for a minimum of three years, with the future figures predicated on obtaining a fresh loan.

Before making any estimates, carefully review your previous financial statements because accuracy is crucial. Although your objectives can be ambitious, they should also be reasonable.

9. Summarize how your company operates

Before completing your plan, provide a summary of its structure and delineate the responsibilities of each team. This will help your readers understand who is responsible for each of the tasks you have outlined above, such as producing and marketing your goods and services as well as the associated costs.

You might want to include the credentials of any employees who possess outstanding skills in order to demonstrate the competitive advantage they offer you.

10. Include any more details in an appendix.

Lastly, include any additional materials or supporting details that you were unable to include elsewhere. That could consist of:

• Permits and licenses.
• Patents.
• Leases for equipment.
• Contract agreements.
• Bank statements.
• Details of your business and personal credit histories, if you’re looking for loans. 

Business Plan Tips and Resources

The following advice will help you create a thorough and convincing business plan:

• Avoid Being Overly Optimistic: If you’re looking for an investor or a loan, your business plan will be closely reviewed. Overly optimistic sales predictions can reduce your chances of getting approved. It’s important to keep your projections realistic and grounded in solid research

• Proofread: Grammatical, punctuation, and spelling mistakes can make a statement and turn off potential lenders and investors. Ensure you thoroughly proofread your plan, be it 1 or 20 pages, to identify any necessary omissions and errors. Additionally, pay attention to your audience and follow the guide discussed above. Avoid writing a plan that will leave the reader confused or bored. 
• Use Free Resources: SCORE is a nonprofit organization that has a broad network of volunteer business mentors and professionals who can assist you in writing or editing your business plan. Another resource is the Small Business Development Centers of the U.S. Small Business Administration, which offers free business consulting and assistance in creating business plans.
• Use Your Plan Effectively: Make sure that every word and image in your plan has a specific purpose. Conciseness and directness will make your plan easier to read and understand.
• Be Truthful: When you write your plan, don’t assume a fantastical universe. Be truthful and practical. Be cautious of exaggerated estimates, and use industry or sector benchmarks to identify those reasonable measurements. This is a common problem that isn’t helpful to anyone.

Final Thought

Writing a business plan can seem overwhelming, but it is a necessary step in turning your idea into a profitable business. A good business plan serves as a road map that can help you draw in investors and track your business’s growth. By following the steps in this guide, you’ll be able to create a plan that clearly defines your vision, goals, and strategies.

Although no plan is perfect, having a straightforward, sincere, and unambiguous one can provide you with the courage to take on challenges, seize chances, and establish a business that will thrive.

Need help creating a business plan? Try our business plan builder, which walks you through key steps like setting up strategy meetings, forecasting finances, and analyzing the market. It’s simple and user-friendly.

Do you have a specific challenge? Drop it in the comments, and we’ll find a solution for you!

FAQ

What Needs to Be in a Business Plan?

The exact contents of a business plan will vary from plan to plan, but in general, the typical plan should include an executive summary, a business description, a market or competitive analysis, a description of the proposed operational structure, a product description, and a pitch for capital, if applicable.

How To Write A Good Business Plan For A Loan?

The majority of lenders will ask applicants to provide a business plan. You should always consider your audience when writing a business plan. In this situation, you should highlight how your company is unique in the market, why it is likely to succeed, and how your plan involves timely and efficient loan repayment.

What’s the Difference Between a Traditional and a Lean Plan?

A lean plan will contain far less detail than a traditional plan, which is much more common. Although there are some similarities between the two in terms of structure and content, a lean plan just includes the most essential information. Lean plans are typically one page long and contain only enough information to provide a high-level description of the business. Use them only when the company is relatively new and speed is crucial.