Writing a Business Plan - Ultimate Guide [2022]

Business plan is one of the most fundamental and strategic documents when starting or running your business. In the nutshell it is the brief strategic document about your business, plans and know-how at one place.

What will you learn in this article (guide)?

You will get detailed guide on how to write an outstanding business plan to impress investors, funds, banks, strategic partners or any other important stakeholder.

After short intro of the business plan we will get into deeper detail of :

• Executive summary
• Business idea presentation
• Market characteristics
• Go to market strategy
• Marketing Plan
• Team overiew (Personnel capacities)
• Financials

You can download essential templates here:?Excel and PPT business plan templates. On top of that I will uncover important hints what to focus on to take most of your business plan when presented to the target audience.

Some essential hints before writing a business plan

When to write a business plan?

It depends on the situation, most business plans are written before any business starts but it is quite standard to write it also during your running business.

It is important to have detailed overview about your market and industry, to understand your opportunities and threats (SWOT analysis).

So when is the right time to do it?

• Planning expansion of your business.
• Need financing of your innovation and technology.
• Need investor to enter your company or financing your business.
• In case of a strategic partner to improve your business.
• Long term decision making and strategy documentation.

For who to write a business plan?

• Investors
• Strategic partners
• Banks
• Funds (European or development)
• Business owners
• Key employees (C+)

Making a business plan

After short intro and important information when and for who to write a business plan let’s dive into its creation.

Hint:?In the very beginning I recommend to use graphic designer service after the business plan is created. The reason is that your business plan is also a presentation document to be checked by important people for your business.?First impression is very important here.?

Executive summary

Most significant part of the whole business plan. It is written at the end of the whole summary.

Please notice that executive summary is the overview of the business plan. It is checked first by the readers and?must be very compelling?as here you can grab attention of the reader or you can lose it.

At this part the reader decides whether he/ she wants to continue in reading your business plan and whether the business is worth of his/ her time.

Executive summary is a business plan outline. You describe here all important parts of the business plan in short paragraphs. As I talk about short paragraphs here is one question in place.?

How long should be the executive summary?

Well, I advise to have the length of?5% to 8% (sometimes 10%)?of total business plan length. Therefore, when business plan is about 30-40 pages long, you should possibly have 2-3 pages of executive summary. I advise to not exceed more than 1.5 – 2 pages.

Business plan should not be longer than 30-40 pages.

What are the elements of the executive summary?

Problem/ Solution

Describe the problem in the market and what are most common pains/ difficulties that customers have. Then describe the way how to solve them in solution.

Please ensure that solution will contain:

• Viability of the product/ service.
• Fulfillment of customer needs and outstanding solution.

Keep in mind that executive summary is short and you will describe more in detail in chapters to follow.

Intro of the product/ service

Describe briefly your product/ service. Highlight the innovative idea and?point of difference.?Describe why it is so unique and if possible its game changing features.

Business model

Describe your business model and sources of income. Show the viability and potential of your business and pinpoint its scalability.

Operations, milestones & risks

In the operations describe the process of value creation. How many employees and other inputs are necessary. What kind of resources to you need. In this section it is good to underpin your competitive advantage in terms of resource or capability advantage.

Milestones

Very important part of executive summary. It sets the plan of practical and specific steps to take in time to reach the goals. You describe your deadlines and targets to accomplish for each deadline. I recommend to use a picture of simple timeline.

Risks & opportunities

Investors invest their money into the company for its maximum valuation. Risk assessment is important to show them what potentially they might expect and how are you ready to face such issues that may rise.

Same case are opportunities that life and business bring to you. It is important just very briefly to describe how you can cope with any great opportunity coming to your business. Are you ready enough to extend your production capacities when demand will jump higher? Are you ready to buy competitor business and share once it decides to exit the business?

Financials and marketing plan

For the needs of the executive summary you briefly describe your financial appetite. What, when and how much money will you need. What and how are your plans to spend money.

• What is the sum of funds you require?
• How the money will be used and for what? (Working capital, development, patents)
• What forecasts did you prepare? (Scenario: pessimist, optimist, realist)
• What do you offer in return for the money? Company share? Convertible loan?

Target market and competition

Target audience

• Description of your target audience/ buyer personas that are willing to buy your product/ service. I recommend just few sentences. Briefly describe your buyer personas (up to 3) and define them by few sentences.

Competition

• I suggest to mention several competitors that are very important in your industry and define their strength and size.

Diving Deeper into Business Plan Making

Great after the executive summary part and business overview let’s talk about details of your business.

Product/ Service Description

In this section of the business plan we describe our product/ service in detail. I would recommend to not use such high technical details but customer point of view description. For deeper technical details you can use technical documentation in appendix.

Product description and history

Lets start briefly with short product/ service history. What was the reason to do it. Then we can simply describe how product/ service works, what problems it solves, what variations it can have etc.

Certainly describe your?innovative idea?and uniqueness of your product/ service. Uniqueness from point of customer view such as ease of use, cost & time savings, customization or technology level.

Describe more in detail?game changing attribute?if any.?

Next you can describe the product lifecycle (but this can be also described in market chapter).It is important to mention point of difference, current and desired state of development.

Development timeline graph is also wort to mention.

Activities undertaken after the project – Facultative section

Here you can describe all activities after you reach the desired state of your product. What will be the next steps? This part of the business plan strongly shows the viability of the business idea.

What can be the activities taken after the project?

• Best of breed:?Reaching high level of innovation and overtaking technology leadership in the market segment.
• Sustainable development:?Securing the company development in long term. Succession planning and know-how transfer.
• Organization growth:?New markets and expansion will force to enlargement of the company therefore you have to prepare your processes and structure to become a corporate.

Opportunity in the market

Well now the time has come to describe situation in the market. In this section you should aim for the following:

• Market knowledge, its size and growth.
• Demand in the market and its details.
• Competitiveness of your company.

Target market

Introduce market and its specialties. You can take external and internal approach to describe the market environment.

External (General approach)

• Market ecosystem
• Market characteristics
• PEST analysis. (Political, economic, socio-demographic and technological analysis of the market environment.)
• Trends, threats and drivers in the market

Internal (Detailed approach)

• Market size and growth (CAGR)
• Market forecast (3 - 5 years)
• Market conditions
• Porter analysis also called 5 P analysis. This is the detailed analysis of market elements such as rivalry, negotiation power of buyers and suppliers, threat of substitutes and new market entrants).

Definition of willingness to pay for the product/ service

Describe why the customers would be willing to pay for your product/ service. As mentioned hereinbefore I recommend to describe the USP (Unique Selling Proposition), thus benefits of the product/ service for the customer.

For example:

• Ease of use
• Cost and time savings
• High level of inovativeness
• Brand or any other attributes perceived positively by the customer

Target audience

Chapter about your target audience is just simple description of your buyer personas. Do not overload this chapter with information as keep in mind that appendix serves as link to all details.

Try to be certain that each buyer persona is able to answer the following questions:

• Who are your buyer personas?
• Where are they located?
• Why and when they need your product/ service?
• What types of problems, spending and lives do they have?
• What they expect of your product/ service? (Will it be helpful and solving their concerns?

Example of B2B buyer persona for SaaS product.

Competition in the market and their products/ services

Now it is time to describe your competitors more in detail. I would recommend to prepare a descriptive table where you define your competitors and their offers.

Depending on the geo-location of the product/ service, you can mention national, international (European) and global level of the competition.

Several attributes for your table of competition:

• Competitor bio (Description)
• Financial info
• Business model
• Point of difference and USP
• Pricing model
• Operating segment

Business Scalability

This is the section that is very important for all your stakeholders. Scalability section shows the strength, viability and great idea of your business. More scalable, better for investor.

Scalability is an ability to easily expand and set the product/ service to new market conditions. It makes product more versatile for given market with minimum need for its adjustments. (SaaS products are highly scalable).

Some of the scalability benefits.

• Growth of the revenue with minimal growth of expenses.
• Lower costs for new customer acquisitions.
• Easy and fast deployment.

Market Entry Strategy (Go To Market Strategy)

As we mentioned scalability in previous chapter, it is worth to continue with Go To market strategy.?

What components should be in a quality market entry strategy?

• Market specifics –?Brief description and differences for the given market.
• Drivers and issues –?Description what drives the market segment and what issues we expect.
• Market data –?Detailed numeric data about the market. I strongly recommend to buy data from marketing or business agency as it will be very granular and updated. This is not a moment to rely on desktop research and googling.
• Market scenario –?Description of the market situation, points to penetrate the market, key messages and mapped buyer personas.
• Short competition description –?Very short description of the competition, their strategies and market shares.
• Timeline –?Expected dates with entry activities.
• Contacts –?Evidence of distributors, resellers, freelancers or our employees responsible for the given market.

Sales Concept and Distribution

There is a great number of ways how to penetrate the market. It is up to each business responsible to choose most suitable way of market entry.

You have to envisage company size, budget, local knowledge and market dynamics, competition and costs of entry.

Most common market entries:

• Distributor, resellers and their networks
• Freelancers
• Direct entry with subsidiary (Expensive way)
• Licenses
• Strategic partnership
• Merger or acquisition (Also very expensive way)

Product/ Service Promotion and Marketing Plan

These topics are narrowly bound together therefore I describe them in one section.

For the purposes of the business plan, marketing plan is simpler than the one used for marketing strategy (again detailed version can be attached in appendix).

Below are examples of marketing pillars and channels used for buyer personas in different stages of decision making.

What are the main elements of the marketing plan to be pointed out?

Know your business?this is the right time to present SWOT analysis and the exact aspects of your business and position in terms of competition and market situation.

Target market?was described in the chapter of the target audience.

Competition?this was also described in the chapter hereinbefore. I suggest to insert also a comparison of your product/ service with the most competitive ones.

Brand, Positioning and Message House?this section is important as you describe here the brand vision and mission.

Positioning?should be described according to point of difference and I suggest to not exceed more than 2-3 main difference points.

Message house?is the process of the key message delivery to each buyer persona group.

Marketing Strategy & Tactics

Definition of the marketing strategy and tactics (channels) to be used to reach the potential. This part should be supported by the detailed plan for each channel to be implemented throughout the year.

Goal setting and KPIs

This is not as easy as it may seem. Goal setting & KPIs is very important mainly for the readers as they can measure the performance of your business.

Best practice is to?set 3-5 goals?per organization (organization level) then you can define goals for the departments that will support the main goals.?

Most common goals:

• Market share in %
• Turnover
• EBITDA
• Customer acquisition costs
• Number of new customers
• NPS (Net Promoted Score)

Budget setup

Marketing budget to be set according to the activities and tactics defined in marketing strategy.

Each activity should by defined as % of the budget.

Please control the marketing budget having the same amount as marketing budget defined in financials. All amounts in the business plan must fit the financials when doing cross-checking.

Intellectual Property Rights (IPR)

All spiritual property owned by the company. IPR comprise licenses, patents, know-how, brands and other intellectual objects.

IPR section gives higher value to your business plan as having patents and licenses show secure business and potential of success.

What elements include into IPR section?

• IPR strategy and management
• List of all IPR assets
• IPR security
• Knowledge management strategy

Company and Personnel Overview

When creating your business plan please consider the structure of the organization. Describe departments and occupations of your organization in simple organigram.

• Make clear for everybody inside and outside of your organization about your personnel structure.
• Identify most valuable persons for your business.

Team Overview

Your stakeholders would like to know about your company staff and it is right in place to show them the value of your team.

At the beginning of the team overview chapter define most valuable employees and describe them shortly. Most valuable employees are usually C+ levels and professionals responsible directly for the product/ service creation.

Introduce these key position more in detail and highlight these elements:

• First/ Last name
• Position
• Years of experience
• Achievements in his/ her professional life
• Relevant industry bio
• Unique skillset why is he/ she important for your business

Team Overview II.

After introducing your key employees you can introduce other members as well. This introduction do not have to be in high detail. As a best practice it is used a table with following elements:

Plan to acquire missing competences

Important part is also the plan to acquire missing competences. Once you are running the business and growing you are going to miss some competences and will have need to find new talents.

Beside the new talents you have to secure the knowledge transfer within your company.

Internal solutions

• Transfer of the knowledge?– Training of internal employees to raise the experts. Sooner or later your key employee may leave and you will have to fill the gap with the new expert. Best way is to raise one.
• Succession planning?– Once you identified your key employees, now you may define potential talents that could replace them when key employees will evolve or leave the company.

Key roles identification

o??Necessary skillset identification

o??Staff capacity envisaged

Training process

External solutions

• Standard search for employees
• Job portals
• Networking within the industry
• Staff agencies and ATS

Financials and Project Plan

Financial plan and project plan is the?key part of your business plan.?All decisions and calculations are made based on the financial plan. Thus as mentioned before all expenses or revenues must fit the assumptions in the business plan.

All stakeholders will be interested in your financial plan. They need to know how much funds and money will you need. What expenses will rise and how you will repay invested money.

You can breakdown financial chapter into several sections.

• Business model description
• Financial statements
• Forecast and break even point
• Project timeline
• Risks and opportunities
• KPIs

Business model description

Describe your business model and revenue streams.

What is your source of income and from how many streams?

For instance SaaS product can have multiple income streams. Primary stream from regular service payments. Secondary stream from setup fees. Tertiary streams from different add-ons and additional modules and quaternary stream from module customizations.

Explain your pricing model and its setup. As mentioned in scalability, pricing model is a good example of business being scalable. Best practice is to create price-service bundles that a customer can choose from.

Financial statements

Financial statements are presented to all stakeholders. You usually present current year and three previous years then you project next 3-5 years of financial statements to show the potential and envisaged growth of the business.

Projected statements:

• Balance sheet
• Income statement
• Cash Flow statement

Forecast and Break even point (BEP)

Forecast is also one of the essential parts in the business plan. You can find forecast template in the files to download.

?Best practice for forecasting

1. Make at least 2-3 versions of your forecast.?These versions are commonly know as realistic, pessimistic and optimistic case scenario. Sometimes if you plan different variations of cooperation or market entries (support of strategic partner, investor) you can have even more versions.
2. Depending on the situation what will happen. This is the reasoning part to show investor what will happen in case of his participation at your business.
3. Check your assumptions.?Your base data are very essential therefore check twice your inputs before presenting it.
4. Use of historic data.?For higher level of granularity it is best practice to evolve your forecasting according to data of previous years, at least 3 last years.
5. Forecast up to 3-5 years.?

Break even point (BEP)

Point that seeks every investor. In this point total cost are equal to total revenue (TC = TR). In this situation a firm has no loss neither the profit.

There are several ways to calculate it. You can even find it in my MS Excel business plan templates.

Two way of BEP calculation

Simple calculation

Unnnm nits based calculation:

Unit = Fixed costs / (Revenue – Variable costs)

Sales based calculation:

Contribution margin = Price of product – Variable costs

FCEE approach calculation

EBITDA + Income tax + Change in working capital + CAPEX = Free cash flow to firm (FCFF)

FCFF + interest costs + Repayment (Principal) = Free cash flow to equity (FCEE)

At the point/ year where FCEE is a positive number thus higher than 0, you have your BEP.

Project Timeline

Now it is time to describe all your project bundles and development in single activities. Most suitable chart for the description of such activities is the Gantt chart.

Milestones

For detailed description of the Gantt chart you can use milestones that will precise the dates, responsible persons and budgets.

Example of a milestone of a SaaS product. Each activity from Gantt chart is defined by a milestone that has its responsible, budget and dates.

Work-packages

Work-packages are deep details of the milestones. You describe shortly the activity in the work-package. It is more granular description of the milestone and activity from Gantt chart.

Work-package is usually defined by these elements:

• Task number
• Title of the work-package
• Start & end date
• Number of person working on a specific task
• Budget requested for work-package finalization
• Work-package description
• Deliverables

Risk assessment and opportunities

As we mentioned in previous chapters, part of the business plan is built on assumptions and future predictions. According to these facts, stakeholders are interested in possible risks that may occur in your business.

Risk assessment shows them how well you are prepared for unexpected events and when it comes to it, you will be able to manage the situation.

Your risk table should include:

• Name of the risk
• Impact whether it will be low, medium or high
• Probability of occurrence
• Type of the risk
• Mitigation

Opportunities

Similar to risk assessment it is also important to be prepared for opportunities that may rise during the business.

Opportunities can be similar to risks as stakeholders will see that you are ready to grab the opportunity once it occurs.

Opportunities can be various, for instance:

Your rival?may decide to leave the industry and to sell his assets and goodwill. What will you do in such a scenario? Will you have enough finance to takeover his business? Will you be able to higher additional employees to manage new demand in the market?

Below is an example of an opportunity table.

KPIs

At the end of the business plan it is necessary to set your KPIs to measure your business performance.

As mentioned in the chapter of the marketing plan.

We can divide KPIs into two categories of high level and low level KPIs.

High level KPIs

Standard KPIs at the corporate level. (Revenue, EBITDA, market share).

Low level KPIs

There are many of them. These KPIs support primary high level KPIs. We can divide them into groups such as technical, marketing, customer or commercial ones.

Appendix

Into appendix we can include all detailed information which support the main business plan. Detailed feasibility studies or technical documentation that is referred from the main content.

Content of the appendix.

Feasibility studies, detailed technical documentation, credit reports, charts and graphs.

List of licenses, permits, trademarks or patents. Pictures and illustrations of your product, spreadsheet, detailed financial model, pending contracts and etc.

Conclusion

Glad you made it here?????. Business plan is brief strategic document that describes your next steps, visions and needs.

The reader must get a clear message what you do, need, why and how.

The key takeaways are financial parts that must be aligned with single chapters (development, marketing plans, promo plan).

Most important chapters are

• Executive summary
• Product/ solution description (Innovation, uniqueness, point of difference)
• Go to market strategy (Growth strategy)
• IPR (if any)
• Financial information and forecasts

After reading this article and its extensive versions in the blog or ebook, you should be able to create a stunning business plan that attracts your readers and help you in your business.

If you have any hard times with your business plan or struggling topics, let me know in comments or write me a message.