Inspiration has struck—and you’re ready to start a business! Before the excitement wears off, you think to yourself, “Where do I start?”
Write a business plan.
A business plan is your road map for success, a valuable tool that will help you secure funding, pitch to investors, share your vision with potential customers, and keep you on track with your goals. But it can also feel overwhelming trying to figure out what should be included, and how detailed the business plan should be.
How to write a business plan: a step-by-step guide
This series is a step-by-step guide for how to write a business plan, a framework that will develop as your business model evolves. Once you have completed each step, you will have a strategic plan that helps you:
- Define measurable goals for the next three to five years.
Answering: What does success look like for your business?
- Demonstrate what makes your business unique.
Answering: What is your competitive edge in the marketplace?
- Determine the legal entity of your business.
Answering: Which structure aligns with your business goals?
- Develop the ideal management structure.
Answering: What does your current or future team bring to the table? Are there gaps that need to be filled?
Step 1: Write it all down.
Start with an outline or bulleted list and write down every thought that comes to mind about your new business. What inspired your business idea? What product or service do you want to provide? How will your business help people?
This is a brainstorming session so get creative and think big! If you had unlimited resources, what would you implement? How would you measure success? What does the world look like today and what will it look like after you start your business? This unstructured exercise will help organize your thoughts and encourage you to answer the tactical questions with definition.
Pro tip: If you are having a hard time putting your ideas in writing, try using a mind map to help organize your thoughts.
Step 2: Outline the executive summary.
The executive summary is the first page of your business plan and the reader’s first impression of your business. It should be concise, to the point, and a high-level snapshot of your business plan that quickly engages the audience. The length should be limited to one page.
A good executive summary section should include:
- A company description in two sentences or less.
- The products and/or services that your business will offer.
- A brief description of your target customer.
- The level of competition in the marketplace.
- Your business’ unique value proposition.
- The names of key people in your organization.
- Short-term and long-term goals.
- Projected revenue stream(s).
Pro tip: Start with a quick, expanded list of points that you want to make in the executive summary. You could draft this first, but then revisit and edit this section after you have completed the rest of your business plan. By doing this, you will be able to summarize the most critical points into one succinct page.
Step 3: Tell your company’s story.
The next part of the business plan is the company description. This section is a short overview of the company, and will help the reader understand why you are in business.
The company description section should include:
- A company history: What inspired you to start your business?
- A mission statement: Why does your company exist?
- A brief overview of your target customer base: What benefits do your customers receive? What problems do you help them solve?
- How your business will impact the market: How will the world look tomorrow with your company’s offerings available, versus today?
- Your value proposition: What is your company’s competitive advantage?
- An explanation of the user experience in six steps or less.
Pro tip: Use this market positioning template created by Susan Silver:
To [target audience] that has [unmet need], [company name] is the [competitive set] that [unique point of difference] because it [reason to believe 1], [reason to believe 2], [reason to believe 3].
Step 4: Operations and management structure.
The operations and management section offers critical insight to any party that considers working with you. Your stakeholders will evaluate this information to determine whether they should invest their time and resources in your new business. What they’ll glean from this is, will their experience with you be smooth and successful—or rocky and uncertain? Internally, this exercise presents a solid operational plan that will increase overall efficiency and profitability.
We recommend dividing this section into two segments, operational to outline your business structure decisions, and organizational to introduce your management team. If this is a brand new venture and you are planning to start a business, outline the ideal setup should you receive funding.
How will your new business operate?
When starting a business, the first essential decision is to establish the legal structure of your company. Once you have established the legal structure of your business, you will want to describe the structure’s impact on the organization.
The basic legal structures include the following:
- Sole Proprietorship
- Limited Liability Company (LLC)
Each business structure has its advantages and disadvantages. Choose a structure that aligns with your business goals, and consider any related tax and liability concerns. Presenting a properly structured business entity in your business plan reflects your commitment to doing business the right way, to the highest professional standards.
Pro tip: Operating a business as a sole proprietorship means your personal and business assets are essentially one in the same. Changing the format of a business to a properly structured Corporation or LLC legally sets boundaries between your personal and business life. The primary reason most people form a legal business entity is to protect their personal property as a business owner. In addition to personal asset protection, the main reasons entrepreneurs incorporate their business are to extend the longevity of the company, take advantage of tax benefits, and gain investor attraction. Not sure which business structure is best for your business? Our business entity wizard can help you determine if an LLC or Corporation is best for your business goals.
What do you and your team each bring to the table?
The second part of the operations and management section introduces you and your team. Be certain to introduce the following items.
- The people involved in your business.
- Their roles and responsibilities.
- How their prior experience relates to the new business venture.
- How their prior experience relates to the new business venture.
- Vendors, partnerships, and third parties that help manage efficiency and increase productivity.
Pro tip: Fill in the expertise gaps through outsourcing, vendors, and partnerships. Could your team use accounting, compliance, legal, or administrative help? Outsourcing specific tasks can help your team stay agile and focused on your business goals.
We can help: At incorporate.com, we help companies stay compliant and on track with time-sensitive business filings throughout the life cycle of their business. From launch to new partners, hiring employees, expansion, and even in dissolution, incorporate.com is a lot like having a full-time, reliable employee dedicated to keeping your business in good standing.
Turn your business idea into a business plan
You now know the first four essential steps to write a business plan. After writing up these four points, you should have a better understanding of the product or service that you will offer, which business structure is best for your business, and how your team will operate efficiently.
Writing a business plan is a dynamic process and will evolve as your business goals expand, markets shift, and revenue streams change. Part two of this series outlines the marketing and financial sections you’ll want to build out in your business plan.
We can help you build your business: As a business owner, you’re always working even when you’re not. Our team of specialists are well versed in the needs of business owners at every stage of the business cycle, and we can help you stay on track with time-sensitive business filings as your business reaches new milestones.