How to Write a Business Plan

2 MIN READ 

Why write a business plan?  

Writing a business plan makes you think about your whole business and encourages dialog amongst your colleagues as to your best strategy for growth.  Yes, investors want to read the business plan because it indicates you have thought through your strategies but really a business plan is your tool to help you effectively manage your company growth. 

Today, business plans are getting shorter and some might even argue they can raise funds without a business plan, a PowerPoint might just do it.  We believe that business plans are an important tool for the entrepreneur and should be done. They don’t have to be seventy pages, but they do need to cover the basic business elements and include a thoughtful section on growth. 

The Business Plan Outline

Business plans vary depending on type of business and personal style but in general, we recommend the following outline.  Your sections should include an executive summary, company description, market overview and competition, leadership team, go-to-market approach, financials, use of proceeds, risks, and appendices. 

The most important section of your business plan is the executive summary because it will be read frequently.  Focus on the details. Make the content compelling, the grammar correct, and the formatting colorful.   

The executive summary should include a company overview, investment highlights (why invest in this company?), and a short discussion about the market opportunity, technology and products, and business model (how are you going to make money?). It should discuss the competitive landscape and highlight your customer value proposition. Include a brief management description (talk about accomplishments, not where you last worked) and a high-level summary of the financials. We recommend this section be between two to five pages in length depending on your audience. 

The next most important sections are the go-to-market (GTM) strategy and the financials.   The GTM strategy is important because it is your fundamental approach to how you are going to penetrate your market.  What customers are your targeting and why? What specific sales and marketing programs will you implement? How will you extend your product line over time? These are just a few questions you should answer in this section.  Your GTM strategy will evolve as you learn more about your customers so keep it updated. 

Along with the typical profit & loss and balance sheet statements, a cash flow statement should be included in the financial section.  The cash flow statement is important because it lets your prospective investors know when you need cash! Document your assumptions and include headcount numbers and relevant business ratios. You will need to track and validate your assumptions as you grow your business. 

As a quick summary, here are the sections that must be included in your business plan.

Executive Summary  

Our style is to include a company description, investment highlights, business model, market size and overview, technology and products, business model, competition, management team and financials.  The trick is writing this section concisely with compelling information.   

Company Description

The Company description section should describe the company products, target customers, and the value proposition. Discuss intellectual property protection and the status of product development. Explain product pricing, promotion plans, distribution channels, and sales cycle times.

Market Overview and Competition

This section should describe the overall market (size, growth rate, trends), customer segments and competition. Include relevant data and quote your sources. Discuss customer buying habits, market sales cycle and channel structure.  Include a discussion about the major competitors and their current growth strategies. At the end of this section, we encourage you to discuss your company value proposition and why you will succeed in the market. It’s a great way to remind investors of your capability to win in the market. 

Leadership Team & Organization

Discuss the legal business structure, board memberships, and capitalization table. Document key leadership bios and headcount requirements as the business expands. 

Go-To-Market Strategy

Describe your growth action plan per year for the next three to five years and include major milestones.   

Financials 

This section is the narrative of your historical and planned financial performance. A summary table of your important financial metrics should be included. Place the detail data in the appendices. 

Capital Requirements & Use of Proceeds  

Quantify the amount of money you are looking for, how you will spend it and the milestones accomplished after the funds are used. 

Risks & Disclosures  

Discuss technical, market and business risks and actions you are taking to minimize those risks. 

Appendices 

Include product data sheets, relevant test reports, price data, product roadmaps, case studies, literature, recent press, etc. 

Conclusion 

If you cover these sections, you have the basics to a great business plan.  If you need help with your strategic planning process, give us a call. We would be delighted to help you get started and see your business grow!