How to Write a Business Plan in 2022: a Roadmap You’ll Actually Use

There are many reasons to research how to write a business plan before you sit down to do it—it’s not solely the domain of entrepreneurs who want to secure funding to start or grow their business.

A good business plan can help you clarify your strategy, identify potential roadblocks, decide what you’ll need in the way of resources, and evaluate the viability of your idea before you learn how to start a business.

Whatever your reason for learning how to make a business plan, the task will probably still feel like a homework assignment. When you’re starting a new business, your to-do list is a mile long and filled with more immediately rewarding tasks, like taking product photos, creating ad campaigns, and opening social media accounts.

Not every successful business launches with a formal business plan, but many founders find value in taking time to step back, research their idea and the market they’re looking to enter and understand the scope and the strategy behind their tactics. That’s where this guide to how to make a business plan comes in.

How to create a business plan, step by step 

Few things are more intimidating than a blank page. Learning how to make a business plan starts with a structured outline and key details about what you’ll include in each section is the best first step you can take.

Since an outline is such an important step in the process of how to create a business plan, we’ve put together a high-level overview you can copy into your blank document to get you started (and avoid the terror of facing a blank page).

Executive summary

A good executive summary is one of the most crucial sections of your plan—it’s also the last section you should write.

The executive summary’s purpose is to distill everything that follows and give time-crunched reviewers (e.g., potential investors and lenders) a high-level overview of your business that persuades them to read further. 

Again, it’s a summary, so highlight the key points you’ve uncovered while writing your plan. If you’re writing for your own planning purposes, you can skip the summary altogether—although you might want to give it a try anyway, just for practice.

An executive summary shouldn’t exceed one page. Admittedly, that space constraint can make squeezing in all of the salient information a bit stressful—but it’s not impossible. Here’s what your business plan’s executive summary should include:

  • Business concept. What does your business do?
  • Business goals and vision. What does your business want to do?
  • Product description and differentiation. What do you sell, and why is it different?
  • Target market. Who do you sell to?
  • Marketing strategy. How do you plan on reaching your customers?
  • Current financial state. What do you currently earn in revenue?
  • Projected financial state. What do you foresee earning in revenue?
  • The ask. How much money are you asking for?
  • The team. Who’s involved in the business?

Company description

This section of your business plan should answer two fundamental questions: who are you, and what do you plan to do? Answering these questions provides an introduction to why you’re in business, why you’re different, what you have going for you, and why you’re a good investment bet.

Clarifying these details is still a useful exercise, even if you’re the only person who’s going to see them. It’s an opportunity to put to paper some of the more intangible facets of your business, like your principles, ideals, and cultural philosophies. 

Here are some of the components you should include in your company overview:

  • Your business structure (are you a sole proprietorship, general partnership, limited partnership, or incorporated company?)
  • Your business model
  • Your industry
  • Your business’s vision and mission statement and value proposition 
  • Background information on your business or its history
  • Business objectives, both short and long term
  • Your team, including key personnel and their salaries

Some of these points are statements of fact, but others will require a bit more thought to define, especially when it comes to your business’s vision, mission, and values. This is where you start getting to the core of why your business exists, what you hope to accomplish, and what you stand for.

To define your values, think about all the people your company is accountable to, including owners, employees, suppliers, customers, and investors. Now consider how you’d like to conduct business with each of them. As you make a list, your core values should start to emerge.

Once you know your values, you can pen a mission statement. Your statement should explain, in a convincing manner, why your business exists, and should be no longer than a single sentence.

As an example, Shopify’s mission statement is “Make commerce better for everyone.” It’s the “why” behind everything we do and clear enough that it needs no further explanation.

Next, craft your vision statement: what impact do you envision your business having on the world once you’ve achieved your vision? Phrase this impact as an assertion—begin the statement with “We will” and you’ll be off to a great start. Your vision statement, unlike your mission statement, can be longer than a single sentence, but try to keep it to three at most. The best vision statements are concise.

Finally, your company overview should include both short- and long-term goals. Short-term goals, generally, should be achievable within the next year, while one to five years is a good window for long-term goals. Make sure all your goals are S.M.A.R.T.: specific, measurable, attainable, realistic, and time-bound.

Products and services

Your products or services will feature prominently in most areas of your business plan, but it’s important to provide a section that outlines key details about them for interested readers. 

If you sell many items, you can include more general information on each of your product lines; if you only sell a few, provide additional information on each. Describe new products you’ll launch in the near future and any intellectual property you own. Express how they’ll improve profitability. 

It’s also important to note where products are coming from—handmade crafts are sourced differently than trending products for a dropshipping business, for instance.

Market analysis

No matter what type of business you start, it’s no exaggeration to say your market can make or break it. Choose the right market for your products—one with plenty of customers who understand and need your product—and you’ll have a head start on success. If you choose the wrong market or the right market at the wrong time, you may find yourself struggling for each sale.

This is why market research and analysis is a key section of your business plan, whether or not you ever intend for anyone else to read it. It should include an overview of how big you estimate the market is for your products, an analysis of your business’s position in the market, and an overview of the competitive landscape. Thorough research supporting your conclusions is important both to persuade investors and to validate your own assumptions as you work through your plan.

How big is your potential market?

The potential market is an estimate of how many people need your product. While it’s exciting to imagine sky-high sales figures, you’ll want to use as much relevant independent data as possible to validate your estimated potential market. 

Since this can be a daunting process, here are some general tips to help you begin your research in this step of how to make a business plan:

  • Understand your ideal customer profile, especially as it relates to demographics. If you’re targeting millennial consumers in the US, you first can look for government data about the size of that group. You also could look at projected changes to the number of people in your target age range over the next few years.
  • Research relevant industry trends and trajectory. If your product serves retirees, try to find data about how many people will be retiring in the next five years, as well as any information you can find about consumption patterns among that group. If you’re selling fitness equipment, you could look at trends in gym memberships and overall health and fitness among your target audience or the population at large. Finally, look for information on whether your general industry is projected to grow or decline over the next few years.
  • Make informed guesses. You’ll never have perfect, complete information about the size of your total addressable market. Your goal is to base your estimates on as many verifiable data points as necessary for a confident guess.

Some sources to consult for market data include government statistics offices, industry associations, academic research, and respected news outlets covering your industry.

Wrapping up

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