If you have a business plan, it will not guarantee your success. But, if you don’t create a business plan, it will guarantee failure.

Your business plan is your roadmap to what you want to achieve. It is much better if you know all of those curves on your entrepreneurial journey. You can expect everything and react in a way that will enable you to continue on the same road.

When discussing the business plan and how to write one, I want to mention one thing. The form of your business plan is not essential. The content of your business plan and how you will use it to achieve your small business goals are much more critical. So, your business plan needs to be actionable, which will motivate you to take action and bring results in the future.

In this post, I want to present a list of 36 steps you must take to create a business plan for your small business. It is not any plan but one that will encourage you to see more of the various aspects of your business.

Why do You Need a Business Plan?

The three main purposes of a business plan

Before we proceed to respond to the question of how to write a business plan, let’s first discuss the question of why.

A business plan is an important document, not because it is a document, but because it will help you better manage your small business and make strategic decisions for the future.

The first purpose of the business plan is to clarify your business strategy and identify potential roadblocks or challenges. By taking the time to think through your goals and objectives, you can identify any possible gaps in your plan and make all necessary adjustments before you start investing time, money, and other resources in your business.

The second purpose is to define all the necessary resources and evaluate the viability of your business idea and growth plan. While you write your business plan, you will analyze financial projections, conduct market research, and any potential risks or obstacles that may arise. In such a way, you will be able to avoid costly mistakes and ensure the success of your business.

And the last third purpose is to secure funding from investors or lenders. A well-written business plan can demonstrate to potential investors or lenders that you clearly understand your business and its potential for success.

How a business plan helps to grow your business

A business plan can help you grow by adjusting your product or services, target audience, and sales plan, identifying opportunities, securing funding, and building new partnerships.

By analyzing market trends, competition, and customers, you can identify opportunities for your product or service to fill a gap or meet a customer’s need.

On the other side, as your business starts to grow, it’s natural for your products or services to evolve as well. A business plan will force you to evaluate your current offerings and determine if they meet customer needs and expectations.

What is a Business Plan?

A business plan is a written document outlining your goals, strategies, and actions to succeed in your business. It serves as a roadmap for your company, providing direction and focus for growth and expansion. Simply said, it is a strategic document that outlines your company’s goals, strategies for achieving them, and the time frame for their achievement..

Your business plan will cover market analysis, financial projections, marketing strategy, and organizational structure. It will serve as a roadmap for business growth and a tool to secure funding.

Types of Business Plans

Traditional business plan

Traditional business plans are comprehensive documents that outline all aspects of an established business or startup. They are typically used to secure funding from investors or financial institutions. The most common type of business plan is the traditional one, which takes longer to write and has more pages.

Lean startup plan

Lean business plan is based on lean startup, a relatively new approach focused on startups that use lean management principles but for startup companies.

On the other hand, a lean startup business plan is a shorter version of traditional business plans. It follows a similar format but only includes the most critical information. So, a lean business plan focuses on the key elements required to launch and grow your startup business quickly using lean principles. It is a more concise and flexible version of the traditional business plan.

Usually, lean business plans are used to start a new business, which involves experimenting with products and services, onboarding new hires, or modifying existing plans for a specific target market.

You can also use a lean business plan to help you launch new products. So, it will be helpful for a lean startup or a new business and as part of your business growth.

One-page business plan (pitch)

As the name suggests, this single-page document will summarize your idea as a business concept and define the target market, revenue model, and key metrics if you start a new business. It is often used to introduce the new business you want to start to potential investors or partners.

Venture capital firms and lenders ask for business plans to provide a quick overview of your business and its growth potential. It is important to make it concise, informative, and compelling enough to capture their attention.

Nonprofit business plan

Nonprofit organizations also benefit from having a business plan. It can help them define their mission and goals, identify potential funding sources, and track their progress toward achieving them.

Since nonprofits often rely on grants and donations, having a well-defined plan can make it easier to attract donors and showcase the impact of their contributions. Additionally, a lean business plan allows flexibility and adaptability as the organization grows and evolves.

Business Plan Structure

There is no unique or standardized approach to what business plans must include. In the last ten years, I have written about many elements in addition to traditional business plan elements because I had a really bad experience with such a business plan when I started my first business. And it is normal because everything evolves around us, so the business world and traditional business plans must also evolve.

Let’s look at the key elements in a thorough business plan structure:

1. Executive summary. This is a high-level overview of your business, typically one page or less, that will summarize the most important information from the other sections of your plan.
2. Company description. A company description should contain three elements: company history, mission statement, and company goals that provide context and help investors understand your company’s purpose.
3. Market research and potential. This section outlines your ideal customer, your market’s actual and potential size, and demographic information.
4. Competitive analysis. Competitive analysis identifies companies currently in the market you’re entering.
5. Product or service description. In this section, you must describe products and services, the benefits and features, the production process, and the life cycle of your offering.
6. Marketing and sales strategy. Here, it would be best to outline your marketing plan, including target customers, marketing mix, and sales strategy.
7. Business financials. This section is reserved for a budget and financial plan, including financial statements and reporting.
8. Organization and management. Here, you must identify your team members and explain why they can make your business idea a reality, highlighting expertise and qualifications.
9. Funding request. This section will outline how much money your business needs, including a best-case scenario and a worst-case scenario. In such a way, you will be ready if there is a need for a funding request.
10. Appendix. This section is reserved for any additional information readers may need.

These are the basic elements, but you can also include a business model, risk management section, action plan with key performance indicators, etc. It is up to you, but if you look at your business from more perspectives, you will manage it more successfully.

How to Write a Business Plan – Step-by-Step Guide

Prepare Yourself

First, you must do your preparatory work before writing a business plan.

1. Before everything else, observe your idea and its environment. You need to know the environment in which your company will operate if you want to succeed. Many of these observations will become a part of the process when you start working to write a business plan for your company.

2. Write your goals on paper. Don’t think about personal or business’s goals; write them on paper. Later, you will divide them into business and personal goals.

3. Think again, but now focus on your business goals that you put on paper. Now is a time to re-read and clean up your goals. So, you will have only a few of the most important goals you want to focus on as a starting point for your planning process.

4. Separate your personal goals from business goals. In this step, you must separate your business and personal goals. So, now you will have two lists with a few of the most important goals you want to achieve on a personal and business plan.

5. Think again about your personal and business’s goals. This is the last step you need to take to clarify your goals. Think again because the results from this step will be the basis for writing a business plan.

Executive Summary and Company Description

A good executive summary is one of the most crucial sections of business plans and the last section you should write.

The executive summary clarifies everything that follows and gives time-crunched reviewers (e.g., potential investors and lenders) a high-level overview of your business that persuades them to read further.

6. Describe your business in one simple sentence. Can you describe your small business in one simple sentence? If you can’t, how can you expect your customers to understand what your company offers them? So, write what your small business can do for your customers in one simple sentence.

7. Provide a detailed company description. This section of your business plan should answer two fundamental questions: who you are and what you plan to do. Answering these questions with a company description introduces your business, uniqueness, strengths, and potential as a good investment.

So, in this section, you should include your company’s purpose, goals, strengths, and brand values. To view your business comprehensively, articulate your mission, uniqueness, strengths, and cultural philosophies.

Products and Services

8. List your products and services. Your products or services will feature prominently in most areas of your business plan, but it’s important to provide a section outlining key details for interested readers.

Customers

You must conduct market analysis no matter what type of business you start. This will help you choose the right market for your products—one with plenty of customers who understand and need your product—and give you a head start on success.

9. Conduct a market analysis to forecast and predict the future of your small business. Now, think about forecasting and predictions for the future. Suppose you want to overcome uncertainty, research, and analyze the data you already have. First, learn about the basic forecasting principles. Then, create the demand forecasting based on the market and customers you identified.

You can follow these guides to market research and information sources to conduct it.

10. Describe the value proposition and competitive advantage your business offers or will offer in the future. Try using the customer’s perspective when describing your value proposition and the competitive advantage you offer your potential customers.

11. Describe your target market. What is the portion of the market you want to target with your business? Answer this question in several bullet points. Try to be as descriptive and specific as possible for each bullet point you write.

12. Describe your ideal customers. Who are your ideal customers? Your ideal customers will get the biggest value for your products and services. They are the people who will benefit the most from your company. So, they are the customers most likely to buy your products and services. Again, use bullet points to describe your ideal customers and be as specific as possible.

Here is how you can identify the customers with the right purchase intent.

Remember that your ideal customer is the foundation of your marketing plan, which you must write in the next step.

13. Define a marketing plan. Your ideal customer directly impacts your marketing efforts. Your marketing plan should outline your current decisions and your future strategy, with a focus on how your business concept fits that ideal customer and what type of customer relationships you want to achieve.

Management team and organization

14. Outline management and organization. The management and organization section of your business plan should inform readers about your management team, who is running your company, and how it is organized.

15. Detail the legal structure of your business. In this section, you must decide whether to incorporate your business as an S corporation or create a limited partnership or sole proprietorship. You can read more about legal structures and how to select the right structure for you.

16. Develop a logistics and operations plan. To ensure that your processes and workflows will make your business idea a reality, you must develop a logistics and operations plan. This plan must cover all elements of your planned business operations, including production, distribution, and supply chain management.

17. Key resources required. When you know the management and organization, legal structure, and logistics and operation plans and already have logistics and operation plans, you can define the key resources you will need to achieve business success. Your most important resources will include staff members, capital, and intellectual property.

Intellectual property is often overlooked, but protecting your business ideas and products from being stolen or copied by competitors is crucial.

Financial Projections

18. Spend some time researching outside your company. Internal financial data aren’t enough to succeed in predicting the future. So, you also need to research outside the data you have in your company. Start with your competitors. Observe your customers in real life, and use today’s technology to see customer satisfaction, customer loyalty, customer happiness, etc.

19. Compare your research findings with your predictions. When you have additional data from outside your company, compare it with your predictions.

20. Write your business’ revenue streams. This is where you outline how your business generates revenue through product sales, services, subscriptions, advertising, etc. Also, you can break down your revenue streams by customer segment or product type. This will help you identify which segments or products are performing well and which may need improvement.

21. Tweak your predictions if you find that tweaking is necessary because of your findings from the research in the 12th and 13th steps.

22. How real are your predictions? Answer the question: Are the predictions something that reflects reality, or will they reflect reality in the future as closely as possible, or are they your wishes? If they reflect reality, you can continue with the next steps. If they are not, you must return to step number 10.

23. Put your sales forecast in the table on the monthly level. You can make a graphical presentation of the table to improve your focus on your predictions. The results of this step will be included when you write your business plan.

24. Include detailed financial projections, such as income statements, balance sheets, and cash flow statements for the next few years. This will provide a comprehensive financial outlook and help persuade investors.

No matter how great your idea is, and regardless of the effort, time, and money you invest, a business lives or dies based on its financial health.

The level of detail required in your financial plan will depend on your target audience and goals. Still, typically, you’ll want to include three major views of your financials: an income statement, a balance sheet, and a cash-flow statement.

25. Check your predictions. Think again. Now, about whether the sales numbers from forecasting will fulfill your goals from step 5.

Based on predictions, decide whether to continue writing a business plan. If the answer to the previous step is yes, you can continue. If the answer is no, then go back to step 9.

Write Action Steps in Your Business Plan

26. Connect the goals with possible action steps. Think again before you continue to write a business plan about the possible action steps. What do you need to do if you want your goals to come true? Answer this question, and you will have many possible action steps for each goal you want to achieve.

27. Write everything you need to do on paper, including your marketing strategy for attracting and retaining customers. Look again at the list of action steps and make some organization and cleaning. After this, you can put them in your business plan.

28. Define the responsibilities. Think again. Now, about who will do what.

29. Near each task, write the responsible persons’ names. When you write a business plan, put the responsible person in each action step you define in the previous step.

Define the Budget – Money Spending

30. What is your business budget? Think again about each of the defined action steps you need to take to implement the business plan you are writing now. But think through the prism of money and the financial statements you need to prepare.

31. Budgeting when you write a business plan. For each task, write how much money each task will require to be completed.

32. Cost calculations. Now calculate your overall costs. When you know how much money you need to spend to implement your business plan, you can collect all items and find your overall costs.

33. Costs vs income. Check whether the sales projections cover your total costs based on the research and forecasting.

If you are an existing business, include financial documentation such as income statements, profit and loss statements, and balance sheets.

34. It’s time for decisions related to taxes. If the income from sales is higher than costs, calculate taxes. If not, you need to go back to step 9.

35. Is your business profitable? Check how much money will remain for you.

36. Are you satisfied with your profitability? If this is not enough for you, go back to point 1.

As you can see, this is a process. It will not end even when you start implementing your plan. You will always need to tweak and improve the process and the plan you are implementing.

What was your experience writing a business plan and the overall business planning process? Also, you can check our basic business plan template.

Common mistakes to avoid when writing a business plan

I have seen many business owners make mistakes when working on their business plans. These mistakes, in large part, can impact the business’s success.

The most common mistakes I have seen are the following:

• The entrepreneur fails to define the right target market; if he identifies it, it is too much of a general audience, not specific with the target audience with the right purchase intent.
• There is a clear definition of competitive advantage, or it is too general, like competing price only.
• Some people do not include financial data regarding revenue streams and financial statements or projections, and as a result, they don’t know how much they can spend on their business.
• Also, some entrepreneurs do not regularly update their plans to reflect changes in their business, which prevents them from building a successful company.

Using a Business Plan Template

Using a business plan template can greatly help you avoid these mistakes and create a solid business plan that will guide you toward success.

A business plan template provides you with a skeleton for writing a plan, guiding you through each section, from financial projections to how to research the market to the development of a strong mission statement.

The business plan template will help you ensure that you take all the important steps and create a comprehensive plan.

You can also search for specific business plan software that already has templates adjusted to specific industries. Liveplan is one solution that I have used with my clients in the past.

You Must Refine Your Business Plan

Developing your business plan doesn’t mean you will not change anything while implementing it.

Let’s say you have a formal business plan and start with the implementation. But your business plan was made last year. If the business environment or internal changes inside your company change, you must adjust your business plan according to the new conditions. For example, if you can incorporate new sales strategies, why don’t you incorporate them into your business plan?

So, you must periodically revisit your business plan, conduct new research, and update it to provide answers to difficult questions, especially if you’re looking to expand.