Have you ever had a bright idea in the middle of dinner so you wrote it down on a napkin so you don’t forget it? What happens when the waiter accidentally takes that napkin, it blows away, or you forget it in your pocket and you do the laundry?
Transfer your ideas from the restaurant napkin into a more complete business plan format. This will help you fully envision your business idea, help you secure funding and investors, and set you up on a path for business success.
There are many business plan formats you can use, but here the eight sections every business plan should have to maximize your success.
Part 1: Executive Summary
This is your “make it or break it” section. After reading this a person will decide if it’s worth their time to keep reading or just toss it in the trash. This section is generally 1-2 pages long and summaries the key points from your business plan. It should also clearly state the problem your business is solving, who your key client or customers are, what your solution or product is, and some brief financial projections to entice the reader to keep reading.
In addition to your executive summary, this section of your business plan format should also include your:
- Mission Statement: Write a brief (usually a few sentences) summary of the long term goals for your business. Your mission statement governs all facets of your company and is the main purpose of your business. Be bold and brave here and avoid outrageous claims or missions that are too close to your competitors’ mission statements
- Vision Statement: Write one or two sentences about what the world will be like when your mission is achieved. Think of the bigger impact you seek to have in the world.
Part 2: Company Overview
Even the most innovative products won’t sell themselves. The way you structure your business will contribute to the success of your company. In this section, you will provide an overview of your company structure.
This section will often contain four parts:
- Company Summary: Think of this like an elevator pitch. You could discuss progress on prototypes and your minimal viable products, a brief story of how/why your company was formed, and any other high-level metrics about your progress so far.
- Your Team: Introduce the key players on your team. This should include owners, senior management, and key personnel. It’s also a place to mention any gaps that you are currently seeking to fill. A brief discussion of compensation details is helpful too.
- Milestones: Even if your company is new, you have milestones to note. That may include incorporation details, signing of property leases, ordering prototypes, or bringing in new investors.
- Critical Success Factors: This is where you will set some critical success factors (or goals) for the business. Unlike traditional goals, these do not have to be measurable. They may relate to client satisfaction, customer service standards, number of products sold, number of new hires every quarter, or streamlining fulfillment services.
Part 3: The Business Opportunity
This is the meat and bones of your business. This is where you talk about your specific products and services and the problems they solve for your target market.
This section is often divided into two sections:
- The Problem: The best businesses sell a product people actually need. In 2018 if you launched a business that sold face masks you probably struggled. But if you launched a face mask manufacturing business in 2020, your sales probably skyrocketed, because there was a clear, urgent need for the product. Use this section to talk about the pain points your target market has (as they relate to your offering).
- The Solution: This is where you get to talk about your offer. Talk about the features and benefits of that offer as they relate to meeting the pain points of your target market, and as they differentiate you from similar products on the market already.
Part 4: Industry Analysis
After you’ve looked at the pain points of your target market, it’s time to make sure that you’re targeting the right market and that the market isn’t oversaturated.
When you write your industry analysis section be sure to include:
- Total Available Market: Is your market targeted only at a handful of potential customers in a small geographical area? It’s important to know this because if your market of potential customers is small and there are already several competitors targeting them, you’ll need to find something new you can bring to the table to win these customers or else consider changing your target market.
- Market Trends and Growth Rate: Are people going to get tired of your products like they do with those fad diets? Talk to a market analyst to get insight into the future of the market for your product. Ideally, you’d want to see market trends in your favour.
- Key Competitors: Do some research to uncover who your main competitors are. Look at what they are already doing well and where there is room for you to do better than them. This information can help you while structuring your business, refining your products and services, and creating more effective marketing campaigns and strategies.
Part 5: Your Business Model
Two companies can sell the “same” product, but one can be profitable and the other could fail. Why? The way they structure their business may contribute to their success or failure.
In your business plan, talk about these 3 components of your business model:
- Your Unique Selling Point: What makes your product or how you run your business unique. This will be key to designing your product to be memorable and strategically plan your marketing to stand out in saturated markets.
- Revenue Streams: The COVID-19 pandemic taught businesses the value of multiple revenue streams. For your business plan, consider the different ways you will bring in cash. This could include product or service sales, selling tickets to events and workshops, membership programs, selling online content online, referral programs, or business partnerships that bring in new business.
- Business Pipeline: Most customers are not going to find your company at noon and buy your $997 product by dinner. There is a process to making a sale and it’s often referred to as a business pipeline or a sales funnel. Each step of the pipeline will lead people through various activities to gauge their engagement and potential for a sale. Categorizing and tracking prospects as they go through your pipeline can tell you a lot about the health of your business and the flow of leads for your business.
Part 6: Your Marketing Strategy
Another key component of your business plan format includes outlining your marketing strategy and plans. This could get quite in-depth depending on what marketing and advertising avenues you choose to use.
For the purposes of summarizing your marketing strategy in your business plan, consider including a summary of these key areas:
- SWOT Analysis: Based on your business structure and strategy, conduct a SWOT analysis:
- Strengths – What are you doing better than the competition?
- Weaknesses – Where are your competitors doing better than you?
- Opportunities – What opportunities are open to you, what trends can you take advantage of, and how can you turn your strengths into opportunities.
- Threats – What could harm your business, how could your competition harm you, how could your weaknesses harm you.
- Target Audience: Use this section to go into more detail about your target customers as it relates to your product or service.
- Key Channels: Being on every single social media channel and advertising in every newspaper and magazine probably isn’t the best use of your marketing budget. Focus on channels where your target audience is likely to frequent and list them along with a high-level strategy for each one.
- Sales Plan: How do you plan to sell your product? Are you going to have a sales team, seek referral partners, or sell in other ways? Outline how you will bring in sales in this section.
- Key Performance Indicators (KPIs): To track your progress and success, determine what your KPIs are. These are measurable goals and metrics that could include things like downloads of a free PDF, number of walk-in customers to your store, percentage of repeat customers, number or value of monthly sales.
Part 7: Investment Proposal
If your business plan will be used to secure loan, grant, or investor funding, this section is extremely critical. It’s basically your financial ask.
Be as detailed and specific as you can and include:
- Investment Proposal: Clearly outline your ask of the lender or investor. State if you are offering a stake in the company, are expecting the investor to be a silent partner, and what involvement the investor will plan (if any) in the company. Set clear expectations.
- Capital Allocations: Outline specifically how the funds will be used in the business. This may include allocating funds for R&D, inventory purchases, rent or property acquisitions, staff wages, marketing, investments.
Part 8: Financial Projections
A successful business needs to be profitable. All successful business plan formats include a financial projections section.
This section of your business plan will often include:
- Opening Balance Sheet: A balance sheet is a spreadsheet with 2 columns: Assets (left) and liabilities and owner’s equity (right).
- Income Statement: This summarizes your income for the last 12 months in business or if you are a start-up, as much as you can to-date. Your summary should include gross revenue, gross profits, operating profits, profits before tax, and net profits.
- Business Ratios: These determine the health of your company. You may choose to report debt-to-asset ratios, debt-to-equity ratio, cash ratio, working capital ratio, net profit margin, return on investment, and return on equity.
Customizing your business plan format
A business plan is not a one-size-fits-all report. You will find many sections are similar for nearly every business, but you will likely need to customize the content based on your stage of business and your reason for writing a business plan.
To give you more samples of ideal business plan formats, download our free business plan samples. We look forward to helping you create the best business plan for your business.