7/19/2019 How to Write a Business Plan for Your Startup

(https://www.quicksprout.com/)

How to Write a Business Plan for

Your Startup
Last Updated on April 4, 2019

Anyone can have a great idea. But turning an idea into a viable business is a di erent
ballgame.

You may think you’re ready to launch a startup company

(https://www.quicksprout.com/plan-new-website/). That’s great news, and you should be
excited about it.

Take it from me: as someone who has founded several startup companies, I know what it
takes to be successful in this space.

Before you start seeking legal advice, renting o ce space, or forming an LLC, you need to
put your thoughts on paper. This will help you stay organized and focused.

You’ll also be able to share this plan with others to help you get valuable feedback. I don’t
recommend starting a company without consulting people rst.

A typical business plan consists of the following elements:

executive summary
company description
market research
description of products and/or services
management and operational structure
marketing and sales strategy
nancials
https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 1/16
7/19/2019 How to Write a Business Plan for Your Startup

Thoroughly writing out your plan accomplishes several things.

Save your business plan progress (https://usefyi.com/app/#/onboarding) in one place

across all the document apps you use.

First, it gives you a much better understanding of your business. You may think  you know
what you’re talking about, but putting it on paper will truly make you an expert.

Writing a formal plan increases your chances of success (https://hbr.org/2017/07/research-

writing-a-business-plan-makes-your-startup-more-likely-to-succeed) by 16%.

Having a business plan also gives you a better chance of raising capital for your startup
(https://www.quicksprout.com/how-to-get-your-startup-funded/) company. No banks or
investors will give you a dollar if you don’t have a solid business plan.

Plus, companies with business plans also see higher growth rates
(https://businessgrowthsimpli ed.com/high-impact-business-planning-2/) than those
without a plan.

If you have an idea for a startup company but not sure how to get started with a business
plan, I’ll help you out.

I’ll show you how to write di erent elements of your business plan and provide some
helpful tips along the way. Here’s what you need to know to get started.

https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 2/16
7/19/2019 How to Write a Business Plan for Your Startup

Make sure your company has a clear objective

When writing a company description, make sure it’s not ambiguous.

“ “We’re going to sell stu ”

isn’t going to cut it.

Instead, identify who you are and when you plan on going into business. State what kinds
of products or services you’ll be o ering and in what industry.

Where will this business operate? Be clear whether you’ll have a physical store, operate
online, or both. Is your company local, regional, national, or international?

Your company description can also incorporate your mission statement.

This is an opportunity for you to gain a better understanding of your startup. The
company summary forces you to set clear objectives. The type of company you have and
how you will operate should be obvious to anyone who reads it.

Include the reasons for going into business. For example, let’s say you’re opening a
restaurant. A reason for opening could be that you identi ed that no other restaurants in
the area serve the cuisine you specialize in.

You can brie y discuss the vision and future of your startup company, but you don’t need
to go into too much detail. You’ll cover that in greater depth as you write the rest of your
business plan.

Keep in mind, this description is a summary, so there’s no reason for you to write a ton.
This section should be pretty concise and no more than three or four paragraphs.

https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 3/16
7/19/2019 How to Write a Business Plan for Your Startup

Identify your target market

Your business isn’t for everyone. Although you may think everyone will love your idea,
that’s not a viable business strategy.

One of the rst steps to launching a successful business is clearly identifying the target
market of your startup (https://www.quicksprout.com/how-to-identify-the-target-market-
of-your-startup/).

But to nd out whom you’ll target, you need to conduct market research
(http://library.cscc.edu/c.php?g=155257&p=1491300).

https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 4/16
7/19/2019 How to Write a Business Plan for Your Startup

This is arguably the most important part of launching a startup company. If there’s no
market for your business, the company will fail. It’s as simple as that.

All too o en I see entrepreneurs rush into a decision because they fall in love with an idea.
Due to this tunnel vision, they don’t take the necessary steps to conduct the proper
research.

Sadly, those businesses don’t last.

But if you take the time to write a business plan, you may discover there’s not a viable
market for your startup before it’s too late. It’s much better to learn this information in
these preliminary stages than a er you’ve dumped a ton of money into your venture.

To gure out your target market, start with broad assumptions and slowly narrow it down.
Typically, the best way to segment your audience is using these four categories:

geographic
demographic
psychographic
behavioral

Start with things like:

age
gender
income level
ethnicity
location

As I said earlier, start broadly. For example, you may start by saying your target market
lives in North America, and then narrow it down to the United States.

But as you continue going through your market research, you can get even more speci c.
You can target customers living in New England, for example.

https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 5/16
7/19/2019 How to Write a Business Plan for Your Startup

By the time you’re nished, the target market could look something like this:

males
ages 26 to 40
living in the Boston area
with an annual income of $55,000-$70,000
who are into recycling

This pro le encompasses all four demographic segments I mentioned earlier. Plus, it’s
very speci c.

Your business plan should talk about the research you conducted to identify this market.
Talk about the data you collected from surveys and interviews
(https://www.quicksprout.com/customer-satisfaction-survey/).

You’ll use this target market in other sections of the business plan as well when you discuss
future projections and your marketing strategy. We’ll cover both of those topics shortly.

Analyze your competition

In addition to researching your target market, you need to conduct a competitive analysis
as well. You’ll use this information to create your brand di erentiation strategy
(https://www.conceptdraw.com/How-To-Guide/competition-analysis).

https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 6/16
7/19/2019 How to Write a Business Plan for Your Startup

When you’re writing a business plan, your startup doesn’t exist yet. Nobody knows about
you. Don’t expect to be successful if you’re planning to launch a competitor’s carbon copy.

Customers won’t have a reason to switch to your brand if it’s the same as the company
they already know and trust.

How will you separate yourself from the crowd?

Your di erentiation strategy could involve your price and quality. If your prices are
signi cantly lower, that can be your niche in the industry. If you have superior quality,
there is a market for that as well.

Competitive analysis should be conducted simultaneously with identifying your target

audience. Both of these fall under the market research category of your business plan.

https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 7/16
7/19/2019 How to Write a Business Plan for Your Startup

Once you gure out who your competitors are, it will be easier to determine how your
company will be di erent from them. But this information will be based on your target
market.

For example, let’s say you’re in the clothing industry. Your competitors will depend on
your target market. If you’re planning to sell jeans for $50, you won’t be competing with
designer brands selling jeans for $750.

Or you can base your price di erentiation on what you learned about your target market.
From there, you’ll be able to identify your competitors.

As you can see, the two go hand in hand.

Budget accordingly
You need to have all your numbers in order when you’re writing a business plan,
especially if you’re planning on securing investment funding.

Figure out exactly how much money (https://www.entrepreneur.com/article/307724) you

need to start the business and stay operational; otherwise, you’ll run out of money.

https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 8/16
7/19/2019 How to Write a Business Plan for Your Startup

Running out of cash is one of the most common reasons why startup companies fail.
Taking the time to sort your budget out before you launch will minimize that risk.

Consider everything. Start with the basics like:

equipment costs
property (buying or leasing)
legal fees
payroll
insurance
inventory

https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 9/16
7/19/2019 How to Write a Business Plan for Your Startup

Here’s an example
(https://www.bplans.com/art_supply_store_and_gallery_business_plan/company_summ
ary_fc.php) of what this will look like in your business plan:

These numbers need to be accurate. When in doubt, estimate higher. Things don’t always
go according to plan.

In the example above, although the total startup expenses are less than $28k, it may not be
a bad idea to raise $40k or even $50k. That way, you’d have some extra cash in the bank in
case something comes up.

You don’t want poor budgeting to be the reason for your startup’s failure.

https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 10/16
7/19/2019 How to Write a Business Plan for Your Startup

Identify your goals and financial projections

Let’s continue talking about your nancials. Obviously, you won’t have any income
statements, balance sheets, cash ow reports, or other accounting documents if you’re not
fully operational.

However, you can still make projections. You can base these projections on the total
population of the target market in your area and what percentage of that market you think
you can penetrate.

If you have an expansion strategy in mind, this would also be outlined in your nancial
projections.

These projections should cover the rst three to ve years of your startup. Make sure they
are reasonable. Don’t just say you’ll make $10 million in your rst year. In fact, your
company may not be even pro table for the rst couple of years.

That’s OK.

As long as you’re being honest with yourself and potential investors, your nancial plan
will cover your break-even analysis
(http://www.thebusinessplanstore.com/business_plan_break_even_analysis.htm).

https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 11/16
7/19/2019 How to Write a Business Plan for Your Startup

While it’s reasonable to expect your sales revenue to increase each year, you still need to
take all factors into consideration.

For example, if you’re planning to expand to a new location in year four, your nancial
projections need to be adjusted accordingly.

You may not be pro table until your third year of operation, but if you’re opening a new
facility in year four, that year may have a net loss as well. Again, this is completely ne as
long as you’re planning and budgeting accordingly.

Another example of a goal could be launching an ecommerce store in addition to your

brick-and-mortar locations. Just don’t try to bite o more than you can chew. Keep
everything within reason.

Clearly define the power structure

Your business plan should also cover the organizational structure of your startup. If it’s a
small company with just you and maybe one or two business partners, this should be easy.

https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 12/16
7/19/2019 How to Write a Business Plan for Your Startup

But depending on how you’re planning to scale the company, it’s best to get this sorted out
sooner rather than later. Here’s an example of what your organizational chart
(https://2012books.lardbucket.org/books/an-introduction-to-business-v1.0/s10-03-
organizing.html) may look like:

It’s really important to have this hierarchy in place before you get started. That way,
there’s no debate over who reports to which position. It’s clear who is in charge of speci c
people and departments.

Don’t get too complex with this.

If you put too many layers of managers, directors, and supervisors between the top of the
chart and the bottom of the chart, things can get confusing.

You don’t want any instructions or assignments to get lost in translation between levels.
You also don’t want anyone to be confused about who is in charge.

This is an opportunity for you to outline how your company will operate in terms of
board members and investors. Who has the nal say in decisions?

While I understand you may need to give up some equity in your startup to get o the
ground, I recommend keeping the power in your hands.

https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 13/16
7/19/2019 How to Write a Business Plan for Your Startup

Discuss your marketing plan

Your marketing plan relies on everything else I’ve talked about so far.

How will you acquire customers based on the market research of your target audience and
competitive analysis?

This strategy needs to be aligned with your budget and nancial projections as well.

I could sit here and talk about di erent marketing strategies all day. But there’s no right or
wrong way to approach this for your startup company.

My recommendation would be to stay as cost-e ective as possible. Be versatile and well-

balanced too.

Acquiring customers is expensive. You don’t want to dump your entire marketing budget
into one strategy. If it doesn’t work, you’ve got nothing to fall back on.

Take these categories into consideration when you’re coming up with a marketing plan:
(https://www.siriusdecisions.com/blog/cmosdontletmarketingplanningdevouryourandyou
rteamstimeandenergy)

Before you try anything too crazy, get the basics sorted out rst:

launch a website
stay active on social media platforms

https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 14/16
7/19/2019 How to Write a Business Plan for Your Startup

start building an email subscriber list

focus on customer retention
come up with customer loyalty programs.

Don’t ease into this one step at a time. Come out fast. Even before your company o cially
launches, you can start building your website and social media pro les.

The last thing you want is for consumers to nd out about your brand but then be unable
to nd your website or contact information. Or worse, get directed to a website that’s
broken or un nished.

Keep it short and professional

I’ve talked about many di erent components of your business plan. It may sound
overwhelming, but don’t be alarmed.

This shouldn’t be a 100-page dissertation.

You de nitely want it to be detailed and thorough, but don’t go overboard. There’s no
exact number of pages it should be, but have at least one page per section.

It should also be written cleanly and professionally. Don’t use slang terminology.

Proofread it for grammatical and spelling errors.

Remember, you may need to use this to raise capital. People may be hesitant to give you
money if you overlook the small stu like proper grammar.

Conclusion
Launching a startup company is exciting. It’s easy to get so caught up in the moment that
you rush into things.

If you want to set yourself up for success, you need to take a step back and plan things out.
https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 15/16
7/19/2019 How to Write a Business Plan for Your Startup

Going through the process of writing a formal business plan will increase your chances of
securing an investment and also improve your potential growth rate.

The market research you’ll need to conduct in order to write this plan will also help you
determine whether this is a viable business venture to proceed with.

If you’ve never written a business plan, use this post as a guide for what you should
include. Follow my tips for best practices.

Writing a business plan may seem like a tedious task right now, but I promise it will keep
you organized and save you lots of headaches down the road.

Good luck!

COPYRIGHT © 2019 · QUICKSPROUT

https://www.quicksprout.com/how-to-write-a-business-plan-for-your-startup/ 16/16