How to Create a Good Business Plan: A Complete Overview

How to Create a Good Business Plan: A Complete Overview

For both new and more experienced entrepreneurs, starting a new business can be a creative and intoxicating process. But before floating off in our rafts into the metaphorical oceans of the business world, we must first reel ourselves back in and make sure we are equipped with all of the right supplies and navigational techniques and ask ourselves if we even have the appropriate vessel to make the journey. Before we begin our voyage to the mysterious islands where entrepreneurial adventure awaits, we must ensure that we take the appropriate measures, so we don't become shipwrecked or, even worse, lost at sea. Surely, we will encounter rough seas, storms, and perhaps even dangerous sea monsters. This gives us even more reason to prepare ourselves thoroughly for the expedition that lies ahead. By creating well-thought-out and detailed business plans, we can avoid peril and better navigate these troublesome waters in pursuit of the invigorating exploration and treasures we seek.

In this article, we will describe the basics of how to create a detailed and effective business plan in order to experience smooth sailing ahead.

What Is a Business Plan Exactly?

A business plan is the written blueprint for a business. It should detail the company's purpose and overall mission and should aim to describe as many facets of the company as possible. Essentially, a good business plan is your company's DNA laid out on paper, where it can be analyzed, tweaked, and fully understood before it is brought to life in the real world. Your business plan should make a realistic and objective case for the necessity of your business in the marketplace. It should show why your business is a good idea, how it will work, why it will work, who will help it work, where it will be based, and when it can be expected to reach sustainable profitability.

Why Do You Need a Business Plan?

  • Helps Convince Investors, Lenders, Business Partners, and Employees

    A good business plan can help you convince and secure investors, lenders, business partners, and employees by clearly illustrating why your business is practical and can become profitable. This can allow you to gain the financial capital you need through business loans or investors, as well as the business partners, management, and staff required to operate your business successfully.

  • Helps Evaluate Your Ideas and Strategies

    By writing out a well-detailed business plan, you will have the opportunity to analyze your business ideas and the strategies you will use to implement them. This gives you a valuable opportunity to evaluate what makes sense and what doesn't. You can work out changes and make improvements on paper before actually starting your business or even pitching it to others; as the saying goes, measure twice, cut once. This is an extremely useful process and can help you realize weak points and refine your business ideas while getting a better understanding of what it will take overall to operate your business successfully.

  • Market Research

    While writing out your business plan, you will have to do a lot of market research. This can give you valuable insights into who your target audience is and what your ideal customers want from the market. Useful information such as what demographics will make up your customer base and what these groups resonate with and respond to can help you in your marketing and branding efforts. Additionally, you can learn more about your competitors, typical profit margins within the industry, and what overhead costs you can expect. Data and statistics about the workforce in your industry and other vital information can also be used to help further develop your business strategy.

  • Can Help You Apply for Grants and Enter Business Competitions

    Having a great business plan can help you apply for and get awarded business grants from public sources, such as federal and state government organizations, and private sources, such as foundations or corporations. A business grant is an amount of money given to a business that does not have to be paid back and having a good business plan can be instrumental in obtaining a business grant. Additionally, a business plan could help you win a variety of different business competitions that offer beneficial rewards to winners.

What Information Do You Need in a Business Plan?

Laying out all of the ins and outs, inner workings, and details of how your business will function within its industry can seem like an overwhelming amount of information to formulate. But taking it step by step and detailing one aspect at a time can help you build momentum and piece it all together. The following list contains some examples of the type of details you can include within your business plan:

  • Overall Mission and Purpose
  • Products and Services Offered
  • Expected Profit Margins
  • Consumer Need and Demand
  • Consumer Response to Products and Services
  • How Products and Services Compare to the Competition's
  • Competition's Reaction to Products and Services
  • Type of Business Structure
  • Management and Partnership Roles and Responsibilities
  • Necessary Employees
  • Location of the Business
  • Operational Model
  • Sale Strategies
  • Marketing Strategies
  • Expected Timeframe to Reach Sustainable Profitability
  • Financing

How to Format Your Business Plan

With so much information about your business that needs to be delivered, it can be hard to imagine how to structure it all. Here we will go over an example format for a traditional business plan. You can add more sections or rearrange the order of these sections so that your plan makes the most sense to you while presenting the idea of your business. Most traditional business plans will typically include a combination of the following sections:

  • Executive Summary
  • Company Description
  • Products and Services
  • Market Analysis
  • Marketing and Sales Plan
  • Logistics and Operations Plan
  • Requesting Funding
  • Financial Plan

Next, we will provide a brief description of what each section of your business plan should generally consist of.

  • Executive Summary

    This section acts as a summary of your entire business plan. This should be a succinct overview of your entire plan, typically one page long. It can be helpful to write your Executive Summary after you have completed the other sections of your plan so that you can effectively summarize each section. In this section, you will Describe your company's overall purpose, what products and services it provides, the reasons why you believe it will be successful and profitable, your target audience, and a summary of your marketing plan. Also include a description of any relevant business partners, management team, employees, location, the type of business structure it will operate under, and the basics of how your business will operate. Additionally, include any information regarding financing. Inform your readers of your current and projected financial and funding situations, how you plan to grow your business and your overall pitch to investors and lenders.

  1. Comprehensive Description of Business Idea and Purpose
  2. Products and Services Provided
  3. Reasons Why Your Company Will Succeed
  4. Your Target Audience and Ideal Customer
  5. Brief Summary of Marketing Plan
  6. Business Partners, Management Team, and Employees
  7. Location
  8. Type of Business Structure
  9. Basics of Your Company's Operations
  10. Current and Protected Financial Situation
  11. Pitch to Investors and Lenders
  • Company Description

    Your next section in your business plan will be your company description. It should go into detail about how your company can positively impact the marketplace. For example, describe the niche or need you will fill or the innovations your business brings to the table that can change the landscape of your industry. Inform the reader about your target audience and why they will respond positively to your products or services. Show how your company differentiates itself from the competition, including any advantages you think you may have, including good physical location, access to cutting-edge technologies and software, and the talent, expertise, and experience of you and your staff. You can also include a description of what your company stands for, including your company philosophy and values, quality standards, commitment to environmental sustainability, giving back to the community, and so on.

  • Products and Services

    The next area of your business plan will describe the products and services you will provide. Go into detail about how your products and services will benefit consumers or your industry. If you plan to register for any intellectual property rights, such as patents, trademarks, or copyrights, you can discuss this in this section. Additionally, if you have done any market research or research and development concerning your particular service or product, you can describe your findings here.

  • Market Analysis

    Conducting a thorough analysis of your industry's marketplace can give you a better general understanding of the circumstances and surroundings of the industry you will be operating in. This will include doing a competitive analysis to see how others in your industry are running their businesses, what their products are like, how many sales they make a year, what their profit margins are, etc. By examining these sorts of factors, you will get a better sense of what works, what doesn't work, and ways that you can do things differently that could work for you, detailing these factors in this part of your business plan.

  • Marketing and Sales Plan

    Now that you've laid out a deep analysis and understanding of your market and how your business can make an impact in it, you can now describe what your marketing and sales plans will consist of and how they reflect your market research and analysis. You can implement many marketing strategies (insert link Low-Cost Business Marketing Ideas Pt. 1), and you can describe in this section how you plan on reaching and resonating with your target audience and how you plan on converting sales. What sets your business apart in your marketing strategy that will convince customers to purchase your products or services? You can also discuss your branding here and how and why it will appeal to your customers. Also, you can describe where you will set your price points and how and why this is also connected to your target audience's demographics and needs in the market. Additionally, you can detail how your marketing plan can influence how many sales you expect to reach by a certain point and how this can affect the success of your business.

  • Logistics and Operations Plan

    This section will detail all of your practical logistics and operations matters. How you will source, manufacture, or ship your materials or products and utilize technology and communications networks in your business are some examples of what can be discussed here.

  • Requesting Funding

    If you are seeking funding to help finance your business, either through an investor or a lender, you will want to create a section in your business plan where you make your request to the other party and ask them to help finance your business. In this section, you can describe what type of funding you are specifically looking and asking for and any further requirements that need to be met to fulfill your business needs. You should use clear and concise language that describes your request's specific details. For example, specify if you are looking for a business loan or if you are looking to find an investor to whom you will offer shares in your company. Lay out the terms and agreements you would like to use as well as a detailed description of how you will use the funds in your company and how these applied funds will impact the success and trajectory of your business. For example, will the funds be used to build or purchase a building, buy equipment or inventory, or pay employees? Also, discuss how you plan to position yourself financially in the near future, such as paying off a debt or planning to invest in certain aspects of your company continually over time.

  • Financial Plan

    Here you will detail all of the financial aspects of your business, including your current and projected financial standing. This section should show that you can succeed financially as a business. If you are requesting funding, you can show how this financing will change your financial projections, making your business more profitable. How detailed you write this section of your business plan depends on who you will be presenting it to and if you are requesting funding from an investor or a lender. If you are creating a business plan for a company that is already up and running, you can include some documents that help demonstrate your financial stability. For example, income statements, balance sheets, and cash-flow statements from the past few years included in your business plan can show that you are a financially stable business that is worthy of any business loans or investments you may be requesting.

Final Considerations:

While not every business writes out a traditional business plan, doing so can make a huge difference in your business and increase your chances of success. Even if you are not looking to convince lenders or investors to fund your company, your company can benefit from the strategic planning, market research, and financial projections that will be included in a good business plan.

Once you have created a compelling draft of your business plan that you feel confident about, you can take the next steps to legally form the business entity you have designated in your plan that you will operate under. Whether this is an LLC or a corporation, officially establishing your business will lend credibility and legitimacy to your company that will look good to lenders and investors. InCorp can assist in this area with business entity formation and incorporation services. By working with InCorp to form your new business entity, you can be certain that the entire process will be completed in a timely and professional manner, ensuring that your new business entity is meeting all legal requirements. InCorp can also provide registered agent services which are required for legally recognized business entities such as LLCs or corporations. Newly formed companies can also keep track of important business matters, such as documents, reports, and due dates, through our entity management system and our iOS app.

Stay in the know!

Join our newsletter for special offers.