Learning how to write a sound business plan is an essential first step toward creating a successful business. Your business plan will not only shape your strategy, but will serve as a powerful communication tool to potential investors and lenders.

In addition, a business plan can help you clarify what you want to achieve and evaluate how, exactly, you will reach those goals. While no two business plans are identical, every plan should address the following aspects:

Define your business

Your plan's executive summary is your chance to introduce the business to others — so it needs to be concise and compelling. The summary should give a brief recap of the history and background of your business in a manner that will make the reader want to learn about the nuts and bolts of your plan. Sometimes it's helpful to write this last — after you've spent some time contemplating and articulating all the details of your business.

Delve into the details of your product or service

Explain exactly what your product or service is and why people or businesses will want to purchase it. Be sure to highlight areas where your product or service has a clear advantage over the competition. Also, include details about pending or established copyrights or trademarks, and present or future plans for research and development (R&D).

Outline your strategy

A market analysis centers on the marketability of your business, who your competitors are and how you fit into the competitive landscape. In the analysis, identify and describe your industry, your target market and how you'll reach those customers. Include information on any market tests you have conducted and identify your direct and indirect competition. Also delve into your marketing plan and sales strategy.

Introduce your leaders

It's also important to describe how your business will be organized in terms of structure and leadership. Let your reader know who does what in your company and what qualifications they have by providing relevant resumes. This will supplement the sales and growth strategies you describe by highlighting your human capital.

Develop your financial plan

Funding and financial analysis, generally in the latter half of your plan, are the most important areas to dissect. Explain the amount of funding your business needs and provide supporting financial data on your past and projected financial activity in the form of income statements, budgets and cash flow statements, among other documents.

Differentiate yourself

Do your research and find a business plan format that works for your business. There can be different types of plans for different types of readers, i.e. investors vs. employees, so you can modify your plan depending on your audience.

Here's a sample outline:

  • Cover page and table of contents
  • Executive summary: a high-level overview of your business
  • Business background: company-specific information and detailed information about the product or service
  • Marketing plan: competitive analysis, marketing and sales support, distribution and pricing information.
  • Action plans: operational and management issues, legal, compliance, regulations, etc.
  • Financial plan: financial summary and forecast for how the business can be expected to manage cash flow and generate a profit, and if necessary, service debts
  • Appendix: supporting financial documents, statistical analysis, product-marketing materials, resumes of key employees/managers, detailed supporting research, etc.

Your business plan should reflect changes in your business, the industry or the market. Make changes as necessary to incorporate the changing needs of customers or changing economic conditions in order to keep your plan current.

Who can help?

There are several resources available to get you started with your business and business plan. Here are a few:

Resources for Small Business

Use this interactive tool to develop your business plan today.

Business Plan Tool