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What is a business plan?

A business plan is a comprehensive roadmap for your small business growth
and development. It communicates who you are, what you plan to do, and
how you plan to do it. It also helps you attract talent and investors, and to
secure a loan.
But, bear in mind, a business idea or business concept is not a plan.
Templated business plans give investors a blueprint of what to expect from
your company and tell them about you as an entrepreneur. The majority of
venture capitalists (VCs) and all banking institutions will not invest in a start-up
or small business without a solid, written plan.
Investors want to know you have product-market fit, a solid team in place, and
scalability—which is the ability to grow sales volume without proportional
growth in headcount and fixed costs.
When do you need a business plan?
Before you leave a nine-to-five income, your business plan can tell you if
you’re ready. Over the long term, it’ll keep you focused on what needs to be
accomplished.
It’s also smart to write a business plan when you’re:
Seeking funding, investments, or loans
Searching for a new partner or co-founder
Attracting, hiring, and retaining top talent
Experiencing slow growth and need a change
Business plan template
Start with a clear picture of the audience your plan will address. Is it a room full
of angel investors? Your local bank’s venture funding department? Or, an
internal document to guide you, your leaders, and your employees?
Defining your audience helps you determine the language you’ll need to
propose your ideas as well as the depth to which you need to go to help
readers conduct due diligence.
Now, let’s dive into the ten key elements of your business plan.

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1. Create an executive summary
Even though it appears first in the plan, write your executive summary last so
you can condense essential ideas from the other nine sections. For now, leave
it as a placeholder.
What is an executive summary?
The executive summary lays out all the vital information about your business
within a relatively short space; typically, one page or less. It’s a high-level look
at everything and summarizes the other sections of your plan. In short, it’s an
overview of your business.
How do I write an executive summary?
Below, you’ll find an example from a fictional business, Landscapers Inc. (We’ll
use that same company through this guide and within the downloadable
template to make each step practical and easy to replicate.)
Its executive summary majors on what’s often called the value proposition or
unique selling point: essentially, an extended motto aimed at customers,
investors, and employees.
You can follow a straightforward “problem, solution” format, or a fill-in-the-
blanks framework:
For [target customers]
Who are dissatisfied with [current solutions]
Our [product or service] solves [key customer problems]
Unlike [competing product], we have [differentiating key features]
That framework isn’t meant to be rigid, but instead to serve as a jumping-off
point.
Example of an executive summary
Market research indicates an increasing number of wealthy consumers in
Cleveland are interested in landscape architecture based on sustainable
design. However, high-end firms in the area are scarce. Currently, only two
exist—neither of which focuses on eco-friendly planning nor are certified by
green organizations.

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Landscapers Inc. provides a premium, sustainable service for customers with
disposable incomes, large yards, and a love of nature.
2. Compose your company description
Within a business plan, your company description contains three elements: (1)
mission statement, (2) history, and (3) objectives.
What is a mission statement?
A mission statement is your business’ reason for existing. It’s more than what
you do or what you sell, it’s about why. Mission statements should be
inspirational and emotional. They should be rallying cries around which the
heart and soul of your business turn.
Throughout every part of your plan, less is more. Nowhere is that truer than
your mission statement. Think about what motivates you, what causes, and
experiences led you to start the business, the problems you solve, the wider
social issues you care about, and more.
How do you describe a company’s history?
Don’t worry about making your company history a dense narrative. Instead,
write it like you would a profile:
Founding date
Major milestones
Location or locations
Number of employees
Executive leadership roles
Flagship products or services
Then, translate that list into one or two paragraphs (see below).
Why do business objectives matter?
Business objectives give you a north star. These goals must be SMART: specific,
measurable, achievable, realistic and time-bound. Or, they must be tied to key
results. When your objectives aren’t clearly defined, it’s hard for employees
and team members to work towards a common purpose. Worse, fuzzy goals

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won’t inspire confidence from investors. Nor will they have a profitable impact
on your business.
Example of a company description
Landscape Inc.’s mission is to change the face of our city through sustainable
landscaping and help you create the outdoor living space of your dreams.
Founded in 2019 by sisters Sherry and Shelly Smith, we have over 25 years of
combined landscape-architecture experience. Our four employees work in
teams of two and have already completed ten projects for some of Cleveland’s
most influential business and community leaders.
Our objectives over the next three years are to:
Solidify a glowing reputation as a service-based business that always exceeds
customer’s expectations and honors the environment
Complete at least 18 projects during year one, 24 in year two, and 36 in year
three generated through word-of-mouth, referrals, and home shows
Increase revenue from R360,000 in FY2019 to R972,000 in FY2021 based upon
ten completed projects in the last nine months
Note: Review your mission statement often to make sure it matches your
company’s purpose as it evolves. A statement that doesn’t fit your core values
or what you actually do can undermine your marketing efforts and credibility.
3. Summarize market research and potential
The next step is to outline your ideal potential customer as well as the actual
and potential size of your market. Target markets—also known as personas—
identify demographic information like:
Location
Income
Age
Gender
Education
Profession
Hobbies

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Etc.
By getting specific, you’ll illustrate expertise and generate confidence. If your
target market is too broad, it can be a red light for investors. For example, if
your product is perfect for people with money to hire landscape architects,
listing “anyone with a garden” as your target market might not go over so well.
The same is true with your market analysis when you estimate its size and
monetary value. In addition to big numbers that encompass the total market,
drill down into your business’ addressable market; meaning, local numbers or
numbers that apply the grand total to your specific segments.
Example of market research and potential
Landscapers Inc.’s ideal customer is a wealthy baby boomer or a member of
Gen X between the ages of 35 and 65 with a high disposable income. He or she
—though primarily, she—is a homeowner. They’re a working professional or
recently retired. In love with the outdoors, they want to enjoy the beauty and
serenity of nature in their own backyard—but don’t have the time or skill to do
it for themselves.
Market research shows the opportunity for Landscape Inc. has never been
better:
Among landscaping contractors, designing and building is the second-fastest-
growing service offering.
What’s more, landscape design and construction is the number one “new
service” existing companies plan to add over the next year.
In Cleveland, leading indicators for interest in green, eco-friendly, and
sustainable landscaping have all increased exponentially over the last five
years.
4. Conduct competitive analysis
Competitive research begins with identifying other companies that currently
sell in the market you’re looking to enter. The idea of carving out enough time
to learn about every potential competitor you have may sound overwhelming,
but it can be extremely useful.
Answer these additional questions after you’ve identified your most significant
competitors:

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Where do they invest in advertising?
What kind of press coverage do they get?
How good is their customer service?
What are their sales and pricing strategies?
How do they rank on third-party rating platforms?
When visiting your competitor’s websites, take a look at their “About Us” page,
or their mission and values statement. If you’re presenting to a panel of
investors, distinguishing yourself from competitors is one of the most critical
pieces of your business plan. If you haven’t done your homework, those
investors will see right through you.
Spend some time thinking about what sets you apart. If your idea is truly novel,
be prepared to explain the customer pain points you see your business solving.
If your business doesn’t have any direct competition, research other
companies that provide a similar product or service.
Next, create a table or spreadsheet listing your competitors to include in your
plan. Your business should be listed last, on the right which is standard
practice. This is often referred to as a competitor analysis table.
Example of competitive analysis
Within Cleveland’s residential landscaping market, there are only two high-end
architectural competitors: (1) Yard Makers and (2) Design Your Landscape. All
other businesses focus solely on either industrial projects or residential
maintenance.
Yard Makers
Average cost per project: R12,000
Ongoing maintenance fee: R200 per month
Google My Business: 3.1 stars from 163 reviews
Environmental certifications: None
Primary marketing channels: Google Ads
Design Your Landscape
Average cost per project: R35,000

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Ongoing maintenance fee: R500 per month
Google My Business: 3.7 stars from 57 reviews
Environmental certifications: None
Primary marketing channels: Home shows
5. Describe your product or service
This section distils the benefits, production process, and lifecycle of your
products or services. And what your business offers is better than your
competitors.
When describing benefits, focus on:
Unique features
Translating features into benefits
Emotional and practical payoffs to your customers
Intellectual property rights or any patents that protect differentiation
For the production process, answer how you:
Create existing and new products or services
Source raw materials or components
Assemble them through manufacturing
Maintain quality control and quality assurance
Receive and deliver them (supply-chain logistics)
Manage your daily operations: bookkeeping and inventory
Within the product life cycle portion, map elements like:
Time between purchases
Upsells, cross-sells, and down-sells
Future plans for research and development
Example of product or service description
Landscaping Inc.’s service—our competitive advantage—is differentiated by
three core features.

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First, throughout their careers, Sherry and Shelly Smith have worked at and
with Cleveland’s three leading industrial-landscaping firms. This gives us
unique access to the residents who are most likely to use our service.
Second, we’re the only firm certified-green by the Cleveland Homeowners
Association, the National Preservation Society, and Business Leaders for
Greener Cleveland.
Third, of our ten completed projects—from 2018 and 2019—seven have rated
us a 5 out of 5 on Google My Business and our price-points for those projects
place us within a healthy middle ground between our two other competitors.
Average cost per project: R20,000
Ongoing maintenance fee: R250 per month
Google My Business: 5 stars from 7 reviews
Environmental certifications: Three (see Appendix)
Primary marketing channels: Word of mouth, referrals, and home shows
6. Develop a marketing and sales strategy
Your marketing strategy or marketing plan can be the difference between
selling so much that growth explodes or getting no business at all. Growth
strategies here are a critical part of your business plan.
You should briefly reiterate topics such as your:
Value proposition
Ideal target markets
Existing customer segments
Then, add your:
Launch plan to attract new business
Growth tactics for established businesses to expand
Retention strategies like customer loyalty or referral programs
Advertising and promotion channels: i.e., search engines, social media, print,
television, YouTube, word of mouth, etc.

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You can also use this section of your business plan to reinforce your strengths
and what differentiates you from the competition. Be sure to show what
you’ve already done, what you plan to do given your existing resources, and
what results you expect from your efforts.
Example of marketing and sales strategy
Landscapers Inc.’s marketing and sales strategy will leverage—in order of
importance:
Word of mouth
Referrals
Reviews and ratings
Local Google Ads
Social media
Home shows
Direct mail
Reputation is the number one purchase influencer in high-end landscape
design. As such, channels 1-4 will continue to be our top priority. Our social
media strategy will surround YouTube videos of the design process as well as
multiple Instagram accounts and Pinterest boards showcasing professional
photography. Lastly, our direct mail campaigns will send carbon-neutral, glossy
brochures to houses in wealthy neighborhoods.
7. Compile your business financials
If you’re just starting out, your business may not yet have financial data,
financial statements, or comprehensive reporting. However, you’ll still need to
prepare a budget and a financial plan.
If your company has been around for a while and you’re seeking investors, be
sure to include:
Income statements
Profit and loss statements
Cash flow statements
Balance sheets

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Other figures that can be included are:
How much of your revenue you retain as your net income
Your ratio of liquidity to debt repayment ability
How often you collect on your invoices
Ideally, provide at least three years’ worth of reporting. Make sure your figures
are accurate and don’t provide any profit or loss projections before carefully
going over your past statements for justification.
Costs, profit margins, and sale prices are closely linked, and many business
owners set sale prices without accounting for all costs. New business owners
are particularly at risk for this mistake. The cost of your product or service
must include all of your costs, including overhead. If not, you can’t determine a
sale price to generate the profit level you desire.
Underestimating costs can catch you off-guard and eat away at your business
over time. Insurance premiums tend to go up annually for most forms of
coverage, and that’s especially true with business insurance. If an employee
gets injured, Landscapers Inc.’s workmen’s compensation insurance to cover
this risk will increase.
Example of business financials
Given the high degree of specificity required to accurately represent your
business’ financials, rather than create a fictional line-item example for
Landscaping Inc., we suggest using one of our free Excel templates and
entering your own data:
For new businesses: Start up budget template
For existing businesses: Income statement template
Once you’ve completed either one, only then create a big-picture
representation to include here as well as in your objectives in step two.
In the case of Landscape Inc., this big-picture would involve steadily increasing
the number of annual projects and cost per project to offset lower margins …
Current revenue for FY2019: R200,000
10 completed projects
R20,000 per project

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15% profit margins
R30,000 net
FY2019 projections: R360,000
18 completed projects
R20,000 per project
15% profit margins
R54,000 net
FY2020 projections: R552,000
24 completed projects
R23,000 per project
12% profit margins
R66,240 net
FY2021: R972,000
36 completed projects
R27,000 per project
10% profit margins
R97,200 net
8. Describe your organization and management
Your business is only as good as the team that runs it. Identify your team
members and explain why they can either turn your business idea into a reality
or continue to grow it. This section of your business plan should show off your
management team superstars. Highlight expertise and qualifications
throughout.
Also, mention the roles you still need to hire to grow your company and the
cost of hiring experts. To make informed business decisions, you may need to
budget for a CPA and an attorney. CPAs can help you review your monthly
accounting transactions and prepare your annual tax return. An attorney can
help with client agreements, investor contracts (like shareholder agreements)
and with any legal disputes that may arise.

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Ask your business contacts for referrals (and their fees), and include those
costs in your business plan.
Example of organization and management
Sherry Smith, Co-founder and CEO
Education
Professional background
Awards and honors
Notable clients
Shelly Smith, Co-founder and Chief design officer
Education
Professional background
Awards and honors
Notable clients
Landscape Inc.’s creative crews
Number of employees
Cumulative years of experience
Awards and honors
Notable clients
9. Explain your funding request
It’s important to outline how much money your small business needs, so you
can make an accurate funding request. Try to be as realistic as possible. You
can create a range of numbers if you don’t want to pinpoint an exact number.
However, include a best-case scenario and a worst-case scenario.
Since a new business doesn’t have a track record of generating profits, it’s
likely that you’ll sell equity to raise capital in the early years of operation.
Equity means ownership: when you sell equity to raise capital you are selling a
portion of your company. Keep in mind, an equity owner may expect to have a
voice in company decisions, even if they do not own a majority interest in the
business.

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Most small business equity sales are private transactions. The investor may
also expect to be paid a dividend, which is a share of company profits, and
they’ll want to know how they can sell their ownership interest. Additionally,
you can raise capital by borrowing money, and you’ll have to repay creditors
both the principal amount borrowed and the interest on the debt.
If you look at the capital structure of any large company, you’ll see that most
firms issue both equity and debt. When drafting your business plan, decide if
you’re willing to accept the trade-off of giving up total control and profits
before you sell equity in your business.
You should also put together a timeline, so your potential investors have an
idea of what to expect. Some customers may not pay for 30 days or longer,
which means the business needs a cash balance to operate.
The founder can access cash by contributing his own money into the business,
by securing a line of credit (LOC) at a bank or applying for QuickBooks Capital.
If they raise cash through a LOC or some other type of loan, it needs to be paid
off ASAP to reduce the interest cost on debt.
Example of a funding request
Landscape Inc. has already purchased all necessary permits, software, and
equipment to serve our existing customers. Once scaled to R972,000 in annual
revenue—over the next three years and at a 10% profit margin—our primary
ongoing annual expenses (not including taxes) will total:
While already profitable, we are requesting R100,000 in the form of either a
business loan or in exchange for equity to purchase equipment necessary to
outfit two additional creative crews.
10. Compile an appendix for official documents
Finally, assemble a well-organized appendix for anything and everything (1)
investors will need to conduct due diligence and (2) you or your employees will
need easy access to moving forward. This includes:
Deeds, local permits, and legal documents
Business registries and professional licenses pertaining to your legal structure
or type of business
Patents and intellectual properties

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Industry associations and memberships
State and federal identification numbers or codes
Key customer contracts and purchase orders
As you include documents in the appendix, create a miniature table of
contents and footnotes throughout the rest of the plan linking to or calling
attention to them.
Business plan bonus tips to stand out
Investors have little patience for badly written documents. You want your
business plan to be as attractive and readable as possible.
Keep it brief. A typical business plan can range from 10 to 20 pages. As long as
you cover the essentials: less is more.
Make it easy to read. Divide your document into distinct sections, so that
investors can quickly flip between key pieces of information.
Proofread. Double-check for typos and grammatical errors. Then, triple check.
Otherwise, you might come off as an amateur.
Invest in quality design and printing. Proper layout, branding, and decent
printing or bookbinding give your business plan a professional feel.
Know your margins. List every cost your business incurs, and make sure that
you’re assigning those costs to each product or service that you sell.
Revisiting and revising your business plan?
It’s good to periodically revisit your business plan, especially if you are looking
to expand. Conducting new research and updating your plan could also provide
answers when you hit difficult questions.
Mid-year is a good time to refocus and revise your original plans. Why not have
the best second half you possibly can, right? Below are three ways to reignite
your plan.
Refocus
When you wrote your original business plan, you likely identified your specific
business and personal goals. Take some time now to assess if you’ve hit your
targets.

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For example, if you planned to launch a new tips and trends video series and it
hasn’t happened yet, what’s stopping you? Put a timeline together and set a
launch date. This can be hard to do, though, if you’re working 18-hour days.
If you only want to work a set number of hours per week, you must identify
the products and services that deliver the returns you need to make that a
reality. Doing so helps you refocus your productivity on the most lucrative
profit streams.
Also, use what you’ve achieved and the hard lessons you’ve learned to help
you re-evaluate what is and isn’t working.
Realign
Do a gut check to determine whether all of your hard work is still aligned with
your original goals and your mission statement. Are they still relevant? Have
you lost sight of the big picture?
Ask yourself where you want to be a year from now and can you get there with
your existing plan? Try to get offline for a while to think through these
questions and realign your values. In the end, both you and your clients will
reap the rewards.
Repurpose
If your time has become more focused on small projects rather than tangible
growth and building a valuable client list, consider packaging your existing
products or services differently. For example, can you bundle a few things
together?
In the case of Landscapers Inc., perhaps they can offer a special pool and patio
package. Doing so might help them bring in fewer, yet more higher-paying
projects. Perhaps they can offer a maintenance package as well, to keep that
customer long-term.
You must deliberately manage your revenue streams, and that might require
shuffling things around a little to focus on what is working for you.
Business plan template: More than a cliche
Even if you don’t plan on seeking investments early on, there are other
important reasons to use a business plan template to write a great business
plan:

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Writing out your goals and actions plan helps clarify what you’re trying to
accomplish
It’s a chance to better understand your market (e.g., demographics, behaviors)
You can establish the roles of each team member and set benchmarks for
accountability
Team members can also refer to the document to stay on track
Catching errors helps you make sure financial projections are accurate
You’ll see the holes and blind spots that could cause future issues
The old cliche is still true today: “A failure to plan is a plan to fail.” Only more
so.

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