SBA Action Center


Write Your Business Plan



Having a business plan will never guarantee success but it can be a critical step is laying the foundation of a successful business. There are several companies that have started with an idea on a napkin. We'll guess what? That's a business plan. Your plan doesn't have to be a 120-page binded document with analysis and forecasts for the next 50 years. But a well thought out plan, even if it's on a napkin, will bring your vision to life and help you see your next tasks at hand.

A clear and compelling business plan provides you with a guide for building a business focused on achieving your personal and financial goals. It can also be essential if you are looking for others, including banks, to invest in what you are creating.

Here's an overview of the sections a "bankable" business plan should contain:

Business Plan Overview

  1. Executive Summary
  2. Company Overview
  3. Products and Services
  4. Market Analysis
  5. Marketing and Sales Plan
  6. Management Team
  7. Financial Plan
  8. Appendix

Key components of a great executive summary

Brief business overview
At the top of the page, include a brief overview of your business that sums up the nature of what you are doing. This is your first opportunity to grab a potential investor's interest so be sure to clearly explain how your company is different from any other competitors on the market.

Problem
Describe the problem that currently exists in the market that you will be solving. Every business is providing a solution to a problem for its customers and filling a need in the marketplace.

Solution
This is your product or service. Explain how you are addressing the problem you have identified in the market.

Target market
Identify your potential customers and how large that opportunity may be. It's important to be specific. If you're a glove company, you aren't targeting "everyone" just because everyone has hands. You're most likely targeting a specific market segment such as "fashionable men" or "mechanics."

Competition
Explain how your target market is solving their problem today. Are there alternatives or inferior products in the market? Every business has some form of competition and it's important to mention this in your executive summary.

Ownership & Management
Provide a brief overview of your team and a short explanation of why you're the right people to take your idea to market. Investors place an enormous amount of weight on the team, even more than on the idea, because even a great idea still needs execution to become a reality.

Financial summary
Highlight the key aspects of your financial plan. It's a good idea to include charts or graphs that show your projected sales, expenses, and profitability. Having a good financial summary proves that you've done your homework and shows lenders less risk.

Funding requirements
If you are raising money, you need to include the details of what you need and why you need it in this section. There's no need to include terms of a potential investment since that will always be negotiated later. Instead, just include a short statement indicating how much money you need to borrow or raise to get your business off the ground.

Milestones
The last key component of an executive summary that investors will want to see is the progress that you've made so far and future milestones that you intend to achieve. If you can show that your potential customers are already interested in, or perhaps already buying your product or service, this is great to highlight.

If you are writing an internal business plan that's purely a strategic guide for your company, you can greatly reduce the scope of the executive summary. In that case, treat the executive summary as an overview of the strategic direction of the company, to ensure that all team members are on the same page.


Company Overview

This section should include your mission statement, a review of your company legal structure and ownership, a brief history of the company if it's an existing company, and a summary of the business location.

Mission statement
Don't fall into the trap of spending too much time on your mission statement. You'll end up with a long, generic statement about how your company is serving its customers, employees, etc. Your company mission should be short-one or two sentences at most-and it should encompass, at a very high level, what you are trying to do. Frankly, your mission statement and your overall value proposition might even be the same thing.

Here at Small Business Association, our mission statement is "to help people learn about what it takes to start a business and provide a guided action plan for making it a reality." It's simple and encompasses everything we do from our online education to our popular SBA Guide.

Legal structure and ownership
Your company overview should also include a summary of your company's current legal structure. Are you an LLC? A C-corp? An S-corp? A sole proprietor? In a partnership? Be sure to provide a review of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? Potential investors will want to know the structure of the business before they will consider an investment.

Company history
If you are writing a business plan for an existing company, it's appropriate to include a brief history of the company and highlight major historical achievements. Again, keep this section short-no more than a few paragraphs at most.

This section is especially useful to give context to the rest of your plan, and can also be very useful for internal plans. The company history section can provide new employees with background on the company so that they have better context for the work that they are doing and where the company has come from over the years.

Location
Finally, the company overview section of your business plan should describe your current location and any facilities that the company owns. For businesses that serve consumers from a storefront, this information is critical. Also, for businesses that require large facilities for manufacturing, warehousing, etc., this information is an important part of your plan.


Products and Services

The Products and Services section of your business plan is where the real meat of your plan lives. This is where you will describe in detail the problem that you're solving, your solution, and how your product or service fits into the existing competitive landscape. You'll also use this section of your business plan to demonstrate what sets your solution apart from others, and how you plan to expand your offerings in the future.

You will have already summarized much of what's in this chapter in your executive summary, but this chapter is still hugely important because it is where you expand on your initial overview, providing more details and answering additional questions that you didn't cover in the executive summary.

The problem and solution
Start this chapter by describing the problem that you are solving for your customers. What is the primary pain point for them? How are they solving their problems today? Maybe the existing solutions to your customer's problem are very expensive, or perhaps they are cumbersome. For a business with a physical location, perhaps there aren't any existing solutions within reasonable driving distance.

"If you can't pinpoint a problem that your potential customers have, then you might not have a viable business concept."

Defining the problem you are solving for your customers is far and away the most critical element of your business plan and crucial for your business success. If you can't pinpoint a problem that your potential customers have, then you might not have a viable business concept.

To ensure that you are solving a real problem for your potential customers, a great step in the business planning process is to get away from your computer and actually go out and talk to potential customers. Validate that they have the problem you assume they have, and then take the next step and pitch your potential solution to their problem. Is your solution a good fit for them?

Once you have described the problem that your target market has, the next section of your business plan should describe your solution. Your solution is the product or service that you plan on offering to your customers. In this section, you should describe your solution in detail. What is it and how is it offered? How does your solution solve the problem that your customers have?

For some products and services, you might want to describe use cases. These use cases describe how a customer will interact with your solution and how your solution makes the customer's life better.

Competition
Immediately following your problem and solution description, you should describe your competition. Who else is providing solutions to try and solve your customers' pain points? What are your competitive advantages over the competition?

Most business plans use a "competitor matrix" to list out competitors and then show how they compare to your business's solution. You can build a simple competitor matrix by listing your competitors down the left side of a grid and then adding columns for each feature. Then use checkmarks to indicate if competitors have a particular feature or not.

The most important thing to illustrate in this section of your business plan is how your solution is different or better than other offerings that a potential customer might consider. Investors will want to know what advantages you have over the competition and how you plan on differentiating yourself.

One of the biggest mistakes entrepreneurs make in their business plans is stating that they don't have any competition. The simple fact is that all businesses have competition. Competitors may not always come in the form of "direct competition", which is when you have a competitor offering a similar solution to your offering. Often times, you may be dealing with "indirect competition", which is when consumers solve their problem with an entirely different kind of solution. For example, when Henry Ford was first marketing his cars, there was very little direct competition from other car manufacturers. Instead, Ford was competing with other forms of transportation, including horses, bikes, trains, and walking. On the surface, none of these things look like real competition, but these alternative solutions where what people would use to solve their transportation problems at the time.

...............................


If you are looking to write a business plan worthy of bank financing, we'll help you focus on the essentials of each section. This is where quality is critical and the goal is to communicate your vision with solid support in as few words as possible. The "Write Your Business Plan" section of the SBA Guide can pay dividends if you're looking to secure bank financing, attract qualified business partners, or just conduct proper due diligence before going all in.

The SBA Guide includes all sections of the Business Plan Overview and will help you every step of the way. Request your complimentary copy now.