How To Write A Business Plan For A Small Business

Every successful business begins with a plan. A well-crafted business plan can help you structure a startup and serve as a strategic roadmap to guide decisions, measure progress and attract funding. Whether you’re seeking investors, lenders or direction for your team, a solid business plan can make all the difference. Here’s how to write one.

Types of business plans

The right type of business plan depends on your goals, audience and stage of growth. Most entrepreneurs choose between a traditional business plan and a lean startup business plan.

Traditional business plan

A traditional business plan is the most common type of business plan lenders and investors want to see. A traditional plan is comprehensive and detailed, and can take a long time and dozens of pages to complete.

That said, keeping it short, sweet, and to the point, with numbers you can easily back up, is key to getting more lenders and investors willing to read your plan and fund your business growth.

Lean startup business plan

A lean startup business plan is ideal if you want to launch quickly, have a fairly simple business model or expect to make frequent updates. This one-page format focuses on the essentials, like your value proposition, target customers, revenue streams and key operations, making it flexible and easy to revise.

It’s a great choice for entrepreneurs and small business owners who prefer a high-level overview and want to leave room to adapt as they grow.

Steps to write a business plan

To write a business plan, you’ll want to write each section.

Executive summary

The executive summary provides readers with a snapshot of your business and its potential for success. This section should include:

• An overview of your company, including the leadership team and headquarters location
• Your company’s mission statement
• What problem your business solves and your business goals
• A brief description of your products and services
• Who your target audience is and how you will reach them

If you’re seeking funding, include high-level financial details, your growth plans and how you plan to use the money.

Since this section condenses the information in your business plan, it’s a good idea to write this section last and make it no more than one to two pages.

Company description

Use this section to explain what your business does and who it serves. Assume the reader has never heard of your company. Describe the problem you’re solving, your target customers, and the market need your business addresses.

Highlight your competitive advantages, such as an experienced team, a strong business model, or a strategic location, to demonstrate why your business is well-positioned for success.

Market research and target customer

Demonstrate your knowledge of your industry and your target market in this section. Define your ideal customer in detail, including their demographics, habits and buying behaviors.

Look for market trends and customer behavior patterns to shape your business positioning and strategy. Conduct competitive research to identify your direct and indirect competitors, analyze their strengths and weaknesses and determine what you can do better.

Research methods can include:

• Online research
• Focus groups
• Surveys and questionnaires
• One-on-one customer interviews
• Monitor trends and conversations on social media
• Analyze current customer data and feedback

Organization and management

Outline your business’s legal structure — whether it’s an LLC, sole proprietorship, partnership or corporation — and explain how your company will be managed. Include an organizational chart to show each team member’s roles and responsibilities. Emphasize the experience and qualifications of your leadership team. Consider attaching their bios or resumes to provide more details about their expertise.

Service or product line

Describe your products or services in detail, including their benefits, lifecycle and how they meet customer needs. If applicable, explain any research and development efforts and your plans for protecting intellectual property, such as patents or trademarks.

Marketing and sales

This section details how you plan to attract and retain customers. Also, explain your sales process, from lead generation to closing a sale, and how you’ll build customer relationships. Your marketing strategy should align with your target audience and may include:

• Advertising
• Social media
• Email marketing
• In-person outreach

Funding request

If you’re seeking funding or investors, clearly state how much capital you need, the type of funding and how you intend to use the funds over the next five years. Break down spending, such as equipment purchases, payroll or working capital, and include your desired terms and any strategic financial plans, like repaying debt or scaling operations.

Financial projections

Use this section to detail your financial forecasts and back up your funding request. If you’re already in business, include the last three to five years of balance sheets, cash flow reports and income statements. If you’re a startup, provide projected financial statements with quarterly breakdowns for the first year.

Including charts and graphs can provide visual support for your financial outlook. Make sure your numbers are realistic and easily explainable, in case a lender or investor asks for clarification or presses you on a projection.

Bottom line

A business plan is a strategic tool that requires research and planning, but helps you stay focused, make smart decisions and attract the right funding opportunities. Whether you choose a detailed traditional business plan or a streamlined lean startup format, the goal is the same: to clearly define your vision, understand your market and set a path for growth.