2. How to Make a Business Plan
How many times in your life have you had an idea that you thought would make for a great business? It happens a lot.
Maybe you recognize a consumer need that is going unfulfilled, or you think there’s a niche within an industry that
hasn’t been fully developed. This is how every great business has started out: as an idea. The difference is that most
people are hesitant to explore their business ideas further.
The process of turning an idea into a business is daunting and off-putting. Most people have no idea where to get started
and that tends to deter them from taking the first steps. A lot of good businesses never come to fruition or launch
because people think it’s too hard to do. That’s where a good business plan can come into play.
2 | How to Make a Business Plan
3. 3 | How to Make a Business Plan
People tend to think that a business plan is about
getting other people to support your idea, and
while that’s certainly true, it’s much more than
that. A business plan is your roadmap for turning
your idea into a reality, a tool for monitoring
your business’s progress and a means of holding
yourself accountable. The process of researching
and writing a business plan is all about fleshing
out your idea and giving a vivid picture of
something that doesn’t exist yet and how you’re
going to go about making it a reality. It’s a tool to
help you as much as to entice others.
That’s why composing a strong, well researched
and detailed business plan is essential to any
business undertaking, and it’s not as intimidating
a process as you might think. It just takes effort
and the will to go for it.
How To Make a Business Plan
4. 4 | How to Make a Business Plan
At its most basic level, a business plan is a description of your
proposed business or of changes to your current business.
It details the what, the why and the how of your business:
what it is, why it should exist and how you’re going to go about
making it a reality.
Your business plan should make the case for how you intend to
create a new market or establish yourself in an existing market.
Apple didn’t invent the smartphone, but the iPhone established
smartphones as a common consumer item. Is that what you’re
aiming to do with your business, create a new need? Or do you
see market inefficiencies in an already robust industry? That’s
what recent successes Warby Parker and Caspar accomplished.
These companies are famous for eliminating the middleman in the
glasses and mattress industries. Their business plans required their
founders to show how they could change industries that outwardly
appeared entirely dominated and unchangeable. The strength of
their business plans is what allowed them to succeed.
What is a Business Plan?
5. 5 | How to Make a Business Plan
Sometimes the most difficult part of a
business plan, is taking the first steps.
So start small by brainstorming your idea and
then begin to answer the difficult questions
about whether or not your concept is viable.
The first thing you want to do is simply jotting
down your business concept and the ideas
you have. Don’t self-edit at this stage. You just
want to get everything down on paper. This will
help you as you start to formulate the details of
your plan.
Many entrepreneurs fail to ask themselves the
tough questions about their business early on;
they only realize the shortcomings of their idea
when it’s already far along in development.
How to Start
6. 6 | How to Make a Business Plan
Avoid this from the start by thinking about the
feasibility of your idea and assessing whether
or not there is a market for what you intend to
offer. Are there other businesses doing what
you are proposing to do? If there are, do you see
a space for your business to succeed and thrive?
Who is the target audience for your business?
How do you intend to reach them? Just try
brainstorming and asking yourself the hard
questions that are important to think about.
From here, go ahead and begin to formulate
your plan. A business plan is a living, breathing
document: you should constantly be revising it.
So go ahead and start to flesh out your plan and
continue to add to it and revise it as you do more
research and progress through the stages of
development.
How to Start
7. 7 | How to Make a Business Plan
Every strong business plan should have a few basic sections,
the first of which should be an executive summary
An executive summary gives a snapshot of your entire
business plan and briefly outlines your goals. This is where
you can include a mission statement explaining what your
business is about and give basic information on the state
of your business’s development. You can also include what
your financial position is and give a brief statement about
your future plans. In other words, the executive statement
summarizes what you’ll be providing in more detail in the rest
of the business plan.
Since you’re most likely just starting your business, you can use
this section to focus on your own experience and background
and why you are pursuing this particular endeavor.
Section 1:
The Executive Summary
8. 8 | How to Make a Business Plan
The business description is the “what” section.
It’s here that you provide a description of the
different elements of your business and what
you envision it to be. This is the section where
you want your passion for your business to
come through. It’s where you pitch your idea
and where you want to attempt to inspire
others with your vision.
This section should contain a very basic
description of the market that you are targeting
and what needs your business will satisfy.
You should list who you’ll be serving with your
business and detail what you view to be your
business’s competitive advantage (i.e. cost
savings, location etc.).
Section 2:
The Business Description
9. 9 | How to Make a Business Plan
This section is where you provide analysis of your
industry, your market and your competition. This is
the “why” section in which you lay out the rationale for
your business and detail how you will succeed based on
the conditions of your industry. Use research, data and
statistics to provide a compelling case about your target
market and your competition.
You want to establish the size of your target market, detail
what its characteristics are and analyze the competition.
Some of the most important questions to answer in this
section are: what are the needs of your market and
why aren’t they being met? How reliable a market is it?
Will it fluctuate based on different conditions or
circumstances? How much market share will you be able
to gain? What is the state of your competition and how
will they impact you?
Remain focused and making a convincing case for the
viability of your business. Any information that is only
semi-relevant or that distracts from your focus can be
put at the end in appendices.
Section 3:
Market Analysis
10. 10 | How to Make a Business Plan
This is the “how” section of your plan where you outline the
organization and management of your company, the nature
and appeal of your products or services and your approach to
marketing and sales.
Provide an organizational chart and description that gives
a concrete, step-by-step outline of how your business will
be structured and who will be doing what. This will appeal to
investors, for whom efficiency is naturally quite important, and
it will also benefit you as you go about hiring and delegating
responsibilities.
Also include a breakdown of the ownership structure in this
section and the profiles and qualifications of anyone already
on your management team. You should stress how the skills of
those already on board compliment your own and vice versa.
Section 4:
Action Plan
11. 11 | How to Make a Business Plan
In describing your product or service, make sure and
include how it benefits consumers and any competitive
advantages your offering has over that of your competitors.
Include details on your plan for production and pricing.
You don’t necessarily have to show how your business will
have immediate financial success; rather, make a convincing
case for your business’s long-term viability.
It’s here that you can show your outside-of-the-box
thinking. Remember, Facebook intentionally waited years
before monetizing their platform because they recognized
that they could convert cultural capital into economic
capital once they had come to dominate the social
networking industry.
Lastly, outline how you intend to make your business
known. You should detail your strategy for penetrating
your market, a growth strategy and a marketing strategy.
Section 4: Action Plan
12. 12 | How to Make a Business Plan
One of the main uses of a business plan is for
getting funding for your venture. It’s a document
you can hand to potential investors or that you
can submit with business loan applications. Your
request should include how much funding you
have and your current funding requirement.
A funding request needs to be precise. Investors
want to know exactly how their money will be used.
So break it down for them. What is the funding
request for? How much working capital do you
need? How much funding do you currently require?
How much will you need in the future and what
Section 5:
Funding Request and
Financial Projections
13. 13 | How to Make a Business Plan
length of time will be covered by the
current request? These are some of the
basic questions you want to answer.
In your financial projections, you want to
present what your prospective costs and
earnings will be for the next five years.
You want to forecast all your financial data
as best you can based on market analysis
and research. You want to give your
projected income statements, balance
sheets, projected expenditures and cash
flow statements. It will appear sloppy
to investors if you are requesting more
or less funding than what your financial
projections show to be your need, so make
sure your request lines up exactly with your
financial projections.
Section 5: Funding Request and Financial Projections
14. 14 | How to Make a Business Plan
Your business plan is not a doctoral thesis,
nor a novel. Keep your prose simple and
easy to read. You don’t want to get bogged
down in adjectives and long, complicated
sentences. Many of those you give your
plan to will end up merely skimming it, so
it’s important that the salient points do not
become lost in convoluted language. Avoid
acronyms and trendy terms and don’t add
additional clauses when a single word will
suffice.
Lists with well-articulated bullet points
can be a good way to present important
information in an easily digestible manner.
Lists also break up your text so that it’s
presented in more manageable chunks for
your reader.
Style Points for Your Plan
15. 15 | How to Make a Business Plan
Use charts to back up the numbers that
you list in your text. They are another
effective way to communicate important
statistics and facts in a clear and easy-
to-find manner. While 3D graphs look
snazzy, simple bar charts and pie charts
are often the best option.
A good business plan takes time and
work. The key is to constantly revise,
rework and improve your plan so that
every time you submit it to investors
or creditors, it gets better and better.
This will not only make your plan
stronger and more impressive, it will
help you continually refine your business
roadmap, ensuring that your business
will succeed and thrive.
Style Points for Your Plan
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