How to Write a Business Plan: A Beginner's Guide

Business woman doing presentation at office
••• andresr/Getty Images

If you are thinking about starting a small business, you most likely already know what a business plan is and have heard that you need one. But do you truly understand the purpose of a business plan? Does it really matter if you have one for your small business? And how can you create a small business plan that is actually useful? The introduction and tips below will lay the groundwork for creating an effective small business plan for your new business.

Small Business Plans Explained

In it's simplest form, a business plan is a document that outlines the basics about your business, products, and services; the market you are targeting; the goals you have for your business; and how you will achieve those goals.

A business plan is one of several important plans you should have when you are starting a business, the others being a marketing plan and a financial plan. Your business plan should pull all three of these plans together, incorporating elements of your marketing plan and your financial plan into a comprehensive document. Think of your business plan as a map or blueprint that will guide your business from the start-up phase through establishment and eventually business growth.

Why You Really Do Need a Business Plan

There are many reasons why you need a business plan, although these reasons vary by the type of business you are starting and how you intend to use your business plan. But the common thread for all businesses is that a business plan is necessary.

After all, how can you get your business launched and thriving without any type of written plan to help you?

Some of the reasons you need a small business plan that may apply to you include:

  • A business plan is required if you are going to apply for a bank loan, pitch your business to investors, or bring in a business partner.
  • You won't truly be able to qualify your business idea without understanding your target market, researching the competition, and conducting a feasibility analysis — all parts of a business plan.
  • A good small business plan not only outlines where you are and where you want to be, but also helps you identify the specific actions you need to take to get there.
  • A business plan can provide essential background information on your business, strategy, and culture to employees, including managers and staff, as your business grows.
  • The financial section of your business plan can be the basis of your business budget and a useful tool for managing cash flow on a monthly basis.

So, you know you need a business plan. The next question to consider is what type of plan is the best fit for your small business.

Traditional Business Plans vs. One-Page Business Plans

There are actually many types of business plans, including start-up plans, internal planning documents, strategic plans, operations plans, and business plans created to focus on growth. Each of these types of business plans have different objectives, but all of these versions generally fall into one of two primary formats — a traditional business plan (also called formal or structured) or a simplified business plan (often called a lean or one-page business plan).

A traditional business plan is what most small business owners think about (and often fear) when they hear the term "business plan." It is usually a long and very formal document that has a vast amount of information and is pretty overwhelming for many new business owners.

A traditional business plan typically includes the following sections:

  • Executive Summary: A highlight of the most important information in your document (in case this is the only section read before a decision is made).
  • Company Description: Where you are located, how large the company is, your vision and mission, what you do and what you hope to accomplish.
  • Products or Services: What you are selling with emphasis on the value you intend to provide your customers or clients.
  • Market Analysis: A detailed overview of the industry you intend to sell your product or service in, and a summary of your target market and competition.
  • Marketing Strategy: An outline of where your business fits into the market and how you will price, promote, and sell your product or service.
  • Management Summary: How your business is structured, who is involved, and how the business is managed.
  • Financial Analysis: Details for financing your business now, what will be needed for future growth, as well as an estimate of your ongoing operating expenses.

    The not-so-great news is that a traditional business plan takes a long time and an immense amount of research to complete. The good news is that not every business needs a traditional business plan. That brings us to the second business plan format — the simple or one-page business plan.

    A one-page business plan is a streamlined and brief business plan that you can use as-is or as a starting point for a traditional business plan. While this is a leaner version of the traditional business plan, you will still need to gather information that is specific to your business in order to create a plan that is truly useful for you. Be prepared to answer the following questions as you create your simplified business plan:

    • Vision: What are you creating? What will your business look like in one year, three years, and five years?
    • Mission: What is your mission? Why are you starting this business, and what is the purpose?
    • Objectives: Are your business goals considered SMART goals? How will you measure success in achieving your goals?
    • Strategies: How are you going to build your business? What will you sell? What is your unique selling proposition (i.e., what makes your business different from the competition)?
    • Start-up Capital: What is the total amount of start-up capital you will need to launch your business?
    • Anticipated Expenses: What do you estimate your business's ongoing monthly expenses will be immediately after launch, in three months, in six months, and in one year?
    • Desired Income: What do you anticipate your business's ongoing monthly income will be immediately after launch, in three months, in six months, and in one year?
    • Action Plan: What are the specific action items and tasks you need to complete now? What are your future milestones? What will need to be accomplished by those milestones in order to meet your objectives?

    Once you have answered each of these questions, you will have a working business plan that you can use immediately to start taking action in your business.

    Tools to Help You Create a Better Small Business Plan

    Creating a business plan will take you undivided time and attention, but there are business planning tools available to help streamline the process, many of them available for free. There are templates available, including a simple business plan template and a traditional business plan template. There are also many business plan tutorials available, including video business planning tutorials.

    And let's not forget about all-in-one online tools like the SBA Business Plan Tool and services like RocketLawyer that take away a lot of the time required to format and organize your business plan. As you get started with your small business plan, explore these additional business planning tools to see how you can streamline the process even further.

    One mistake many small business owners make is creating a business plan because they are told they need one, and then completely forgetting about it. Once you have business plan created, consider it an internal tool you use on an ongoing basis in your business, updating it as necessary so it remains current. Remember that the most effective small business plans are those that are used as a living document in the business to help guide decisions and keep your business on track.

    Learn More About Small Business


    1 year treasury bill rate will i get my tax refund average salary for dental assistant what is the maximum unemployment benefit in ma salary jobs without college degree how much tax will be taken from my paycheck how to season cast iron grill pan how many weeks in amonth professional hair styles for long hair taxes out of paycheck calculator how long does it take to amend a tax return create free printable word search what games to play at home what does a pre employment background check show harley davidson credit card review hollywood 20 pasadena texas movie times 2014 social security and medicare tax nike outlet in lake elsinore how many years does it take to become a pharmacist poverty level in new york city phone number for internal revenue services how can you buy a house with bad credit how much is the child tax credit for 2014 credit card approval with bad credit s-corp vs llc tax calculator how to build a fruit fly trap salary of an internal medicine doctor how to get rid of fruit flyes get rid of fruit flies naturally how much is concrete a square foot us government definition of poverty why get a tax id number what is corporate tax rate in us how many oz in a pint of strawberries job openings for college students easy way to clean stainless steel bank of america visa platinum audio books for free online cash homes for sale by owner home for sale signs by owner free email cards to send audio books for free online what do i enjoy doing quiz how long for tax refund direct deposit free online games for toddlers sesame street security software for windows xp what movies are available on redbox instant how much is concrete a yard get rid of roaches for good file federal tax return online cinemark west plano movies 10 how to get rid of fleas inside the house bow tie cinemas hartford palace 17 what is my capital gains tax rate how much does concrete cost a yard how long are us postal money orders good for free email cards to send h&m folsom hours weight of a pint of blueberries free birthday cards on line how many pay weeks in a year how to amend federal tax return used cell phones for cash how much is unemployment in north carolina how to start a facebook page for business jobs without degrees high salaries abercrombie and fitch thanksgiving sale baby shower thank you card ideas how much do anesthesiologist make a month how to ammend a tax return calculating rate of return on investment google pdf to word converter how to use paypal account writing bridal shower thank you cards irs phone number california live person free latin music download sites fun paper games for adults compare living expenses between cities how to determine rate of return best way to cook a ham secured credit card how it works free credit report no card required how many years to become a doctor in usa income limits for child tax credit pink and teal baby shower decorations china gross domestic product per capita how much is 1 yard of concrete cost bow tie movie theatre richmond va getting a house with bad credit s-corp vs llc tax calculator how to calculate gross profit rate do you need physics for nursing what is the poverty line what are good sites to download music harkins theater tucson movie times pumpkin eating another pumpkin carving homes for sell by owner what do i enjoy doing quiz how much is 15 oz in cups borax and sugar ant killer recipe how to become a successful doctor what games to play at home bank of america rewards credit card review how to figure out what to do for a living how to become a citizen of the us irs federal income tax withholding tables 2014 how do you find free music on itunes how to carve a scary pumpkin faces using borax to kill ants how to read lottery ticket red lobster free birthday dinner restaurants that give you free stuff on your birthday free crossword puzzle maker for kids how to find internal rate of return what is the powerplay option in powerball free all occasion greeting cards free printable banner templates for word good song for father daughter dance pound equals how many cups your first year in real estate checklist for buying a house without a realtor career aptitude test free online for adults how to get rid of fruit flyes harkins theatres in moreno valley mall showtimes where can i get a free credit score without paying how much taxes are taken out of paycheck how do i start a new facebook account what is gold worth today how to figure out what to do for a living credit cards to help build bad credit 24 hour walmart rhode island harkins arrowhead 18 movie times best streaming tv app for android irs tax number to check status getting a house with bad credit what is the capital gain tax rate for 2014 all time high gold price pdf to docx converter free irs federal income tax withholding tables 2014 part time jobs that pay steps to become a physician best free tv apps for iphone pink elephant baby shower ideas how much to save in 401k what movies are available on redbox instant best stainless steel cleaner for appliances salary for doctors in usa how long does it take to become a pharmacists how long for tax refund direct deposit how much is concrete a yard how to make a crossword puzzle in word how long to cook a 8lb ham average commission on home sales what jobs pay good without a college degree approved credit cards for bad credit best night jobs for students Top Job Boards for Job Seekers Malco Theatres Summer Movies Program for Kids Personal Insurance Resources and Advice Job Candidate Evaluation Sample Form Performance Review - How To Get the Most From Yours KidsPark, Inc.
    Close up of womans hands writing on paper.Stay Clear of These Two Import Landmines What Are Refractory Metals? - Definition Pros of Tenant Renewing Rental Lease Sample Cover Letter - Human Resources Generalist Job Minor Platinum Group Metals- Very Rare With Huge Applications Empowerment in Action - How to Empower Your Employees U.S. Military - ASVAB Sample Questions How to Use Nonverbal Communication in Hiring Restaurant Catering Do You Have What It Takes to Be a Good Editor? An Overview of Greenwashing 6 Age-Appropriate Summer Jobs for Younger Teens Tutorial for Using Trailing Stops with Oanda What is PETA and How Do They Target A Global Audience Air Force Basic Training Chain of Command Ford - Built Ford Tough Behind the Ride Sweepstakes (Expired) Accounts Receivable Turnover Ratio and How to Calculate It Are Expenses When Selling a House Tax-Deductible? Things Every New Investor Should Know A QLAC Can Offer Some Tax Relief and Income Advantages Highest and Lowest Property Taxes by County How To Properly Take Measurements For Accurate Modeling Stats 5 Tips to Make Money for Your Music Business Speech Problem of Buzzwords and Slang Speech New Year’s Resolutions for 2016 Business Accounting How to Use Target's Price Match Policy Stagflation: Definition, Causes, Can It Happen Now? MOS 7236 Tactical Air Defense Controller TRIN - The Stock Market Indicator You Never Heard Of 13D Field Artillery Automated Tactical Data Systems How To Save For A College Education Tips for Successful Business Networking Art Petty - The Balance Tax-Related Financial Technologies Presented at Finovate Spring 2015 What Are the Top Paying Media Jobs? The Best Time to Buy a Discounted Air Conditioner How to Lead an Event Planning Department How to Stop Receiving Credit Card Offers in the Mail Business Ideas Sales and Marketing History of Fast Food Breakfast Second Interview Invitation and What to Expect 10 Things People Don’t Know About Their IRAs Why is Pret A Manger so successful in fast casual fodo? HGTV Dream Home 2017 Sneak Peek: Prepare to Fall in Love How to Use LinkedIn to Job Search Book Review: How Rich People Think The Ultimate Productivity Tip for Entrepreneurs: Focus Keyboard Shortcuts for Microsoft Money The Art of Launching a Media Publication with Elizabeth Spiers Jobs You Can Get with a Communications Degree Uses for Leftover Sweetened Condensed Milk Interest Rate: Definition, Meaning and Examples The Pros and Cons of Careers in the Media Industry 5 Great Construction Accounting/Management Software Insurance Fraud - Costs of Insurance Hard and Soft Insurance Fraud Beware of Mortgage Fraud Scams How to Turn Freelancing Into a Career Free Nightstand Plans for Your Bedroom 13F - Fire Support Specialist in the US Military How to Pay for Assisted Living Costs Justin Kuepper What Every Manager Must Know About Marketing Let the Hunt for College Scholarships Begin retail industry trends Why Might an Employer Pay a Signing Bonus? 8 Free DIY Router Table Plans You Can Use Right Now What You Need to Know About Cull Lumber Not Safe for Work Websites for Criminal Justice Professionals landlord-tenant law. Buffet vs. Plated Meals: What You Need to Know What Is the Average Motorcycle Insurance Cost? Gen Y/Millennial Lawyers in the Legal Workplace Undergraduate Internship Opportunity in Public Health Salvage Grocery Stores - Your Guide to Big Savings Benefits of Drones (UAV) With Smart Sensors Best December 26th Sales, Store Hours, and Deals mechanics Receptionist Resume Example Create a Startup Business Plan in Easy Steps The Top Reasons to Become a Vet Job Search From Work Do's and Don'ts free household samples Buttermilk Substitute - How to Make Buttermilk Do I Really Need a Down Payment When I Purchase a Home? Millennials and Money: How Acorns Makes Shopping Investing 5 Easy Ways to Find Answers for Trivia Contests Teaching Kids How to Budget Money Effectively The Skills You Need to be a Backend Developer Careers with Animcals: Dog Walker Inbound and Outbound Deliveries in SAP Convertible Preferred Stock for Beginners The Sales Budget is Central to Effective Business Planning Domenick Celentano - The Balance The Best Time to Buy Linens How to Set Business Goals with Just One Word Why Signs Sell Forum Marketing: Steps to Getting Free Traffic Research Commodities What's the Smartest Way to Give to Charity? Win Jewelry and Clothing Overview of Seymour Johnson Air Force Base The Sterile Cockpit Rule: What is It and Who Has to Use It? The Reality of Life During a Chapter 13 Case, Part 1 5 Best Practices for Online Networking Air Force Basic Training Drug Testing Guilt by Association – Being Blacklisted Forensic Ballistics Expert Job Information Sample Move Out Checklist for Landlords and Tenants Supply Admin and Operations Specialist (MOS 3043) How to Get a Job as a Computer Programmer Existing Home Sales Data Comes in Short to Start 2015 This Cashew Nut Company Defines Good Food The Marketing Strategy of Your Retail Business Plan
    Investing Money in a TrustMethods to Tracking Your Marketing Campaign Will the Apple Watch Revolutionize Wearable Technology? Consumer Protection Laws That Will Protect You And Your Wallet Horse Farm Manager Job Description What is an Applicant Tracking Systems (ATS)? 10 Tips for Choosing the Best Job Sell More Books by Engaging Book Clubs Conduct a Business Valuation Before Selling a Company Installation Overview - Naval Air Station Sigonella Best Summer Business Ideas for Students Iowa Car Insurance Requirements Your Biggest Advertising Gripes A Stop Loss Order Won't Always Protect Your Portfolio Free Spring Clip Art for All Your Projects Stop Debt Collectors From Calling You At Work Bass Pro Shops - Countdown to Christmas Sweepstakes Download Free Christmas Songs at ChristmasGifts.com How Soon Can a New Nonprofit Start Fundraising? EGTRRA: Summary, Pros, Cons, Impact Suggestions for Funding Biotech Startups Air Force Enlisted Services Career Path 3M0X1 How to Find an Affordable First Apartment Want to Know the 5 Causes of Employee Negativity? Sample Resume for Experienced Network Engineer Tips for Buying Land to Build a New Home Optometrists Jobs You Can Get with a Communications Degree DEA Agent Career - Salary, Requirements & Job Functions Signing Bonuses for Physicians, Non-physician Providers