How to Create a Business Plan from Scratch

Draft Your Executive Summary

An executive summary is a brief overview of your business plan that is typically found at the beginning of the document. It should highlight the most important information about your business, including its products or services, target market, and unique selling points. A well-written executive summary should be clear, concise, and engaging, and should leave the reader with a strong impression of your business. Find some examples of strong executive summaries here!

To draft an effective executive summary, start by identifying the key points you want to convey, and organizing them in a logical and compelling order. Keep in mind that this is your chance to grab the reader's attention and make a strong first impression, so be sure to highlight the most important aspects of your business. Avoid using technical jargon or overly complex language, and instead focus on communicating your ideas in a clear and easy-to-understand way. Finally, take the time to revise and edit your executive summary to ensure that it is polished and error-free, as it will be one of the most important parts of your business plan. 

Create Your Business Description

When drafting the business description section of your business plan, you want to provide a comprehensive and accurate picture of your business to potential investors, partners, or lenders. Start by introducing your business with a brief overview of what it does and what sets it apart from competitors. This introduction should grab the reader's attention and pique their interest in your business.

Next, provide a history of your business, including when it was founded, by whom, and why. This can give readers an idea of the values and motivations behind your business. Include any significant milestones or achievements that your business has reached, as well as any challenges or obstacles that you've overcome.

Describe the location of your business, whether it's a physical storefront or an online business. Detail the factors that led you to choose this location, such as proximity to suppliers, customers, or transportation hubs. If you have multiple locations, provide information about each one. Explain your business's legal structure, such as whether it is a sole proprietorship, partnership, limited liability company (LLC), or corporation. Describe any licenses or permits that are required for your business to operate, as well as any legal or regulatory considerations.

Finally, provide a detailed description of the products or services that your business offers, including their features and benefits. Explain how your products or services meet the needs of your target market, and why they are unique or superior to those of competitors. Detail your pricing strategy, as well as any plans for future product or service offerings.

Overall, the business description section of your business plan should give readers a clear and compelling picture of your business and its mission. By providing detailed and accurate information, you can help build credibility and trust with potential investors, partners, or lenders.

Conduct a Market Analysis

The market analysis section of your business plan is where you'll conduct research on your industry and target market. This research is critical because it provides a foundation for your business strategy and helps you make informed decisions. To conduct an effective market analysis, you'll need to gather and analyze data from a variety of sources.

Start by researching your industry and identifying trends, such as changes in consumer preferences, new technology, or emerging markets. This information can help you stay ahead of the curve and identify opportunities for growth. It can also help you anticipate challenges and develop strategies to overcome them.

Next, research your target market. Identify your ideal customer profile, including demographics, psychographics, and behavior patterns. This information will help you tailor your marketing efforts to your target audience and create messaging that resonates with them.

As part of your market analysis, you'll also need to identify your competitors. Research their products or services, pricing, marketing strategies, and market share. This information will help you identify areas where you can differentiate yourself from competitors and develop a unique value proposition.

Finally, use the information you've gathered to develop a marketing strategy. This strategy should include a mix of tactics that are tailored to your target audience and designed to achieve your business goals. It should also take into account your budget and resources, and be flexible enough to adapt to changing market conditions. By gathering and analyzing data, you'll be able to develop a marketing strategy that helps you stand out from the competition and connect with your target audience.

Organization and Management

 In this section, you'll describe your organizational structure, including the roles and responsibilities of your management team and employees. This section is particularly important if you plan to seek funding or investors, as it shows that you have a clear plan for how your business will be managed.

When describing your organizational structure in the business plan, it's important to provide as much detail as possible. This will help potential investors or partners understand how your business is structured, and how it will function on a day-to-day basis. Start by outlining the roles and responsibilities of your management team, including the CEO, CFO, and any other key executives. Be sure to explain why each role is important to your business, and how these individuals will work together to achieve your goals.

You should also provide information on your employees, including their job titles, responsibilities, and any necessary qualifications or skills. This will help demonstrate to potential investors or partners that you have the right team in place to successfully execute your business plan. Additionally, consider including an organizational chart to help visualize your structure and show how different roles fit together.

Products and Services

In the products and services section of your business plan, you'll describe what your business offers and how it meets the needs of your target market. It's important to be clear and detailed in this section, as it will help potential investors, partners, or customers understand what you do and why they should choose your business. Start by providing a clear description of your products or services, including any unique features or benefits they offer. This could include information on product design, functionality, materials used, or any other key selling points that differentiate your offerings from competitors.

Next, outline your pricing strategy. This should include information on the cost of producing your products or delivering your services, as well as the price you plan to charge customers. Consider the pricing strategies of your competitors and make sure your pricing is competitive. You may also want to consider offering promotions or discounts to help attract customers. It's also important to describe how your products or services meet the needs of your target market. This could include information on the specific problems your offerings solve, the benefits they provide, and any research or customer feedback you have that supports your claims.

Finally, be sure to include information on how you plan to generate revenue. This could include details on your sales channels (such as online, retail, or wholesale), your target sales goals, and any strategies you have for increasing revenue over time. The products and services section of your business plan should provide a clear and detailed description of what your business offers, how it meets the needs of your target market, and how you plan to generate revenue. By providing this information, you'll be able to demonstrate the value of your offerings and show potential investors or customers why they should choose your business.

Marketing and Sales

Your marketing and sales plan outlines how you plan to promote your products or services and generate sales. It should include advertising and promotional tactics, sales channels, and target sales goals. It's important to be specific and realistic in this section, as it will help potential investors or partners understand how you plan to grow your business.

Start by outlining your advertising and promotional tactics. This could include strategies for social media, email marketing, paid advertising, or other methods of reaching potential customers. Be sure to consider the needs and preferences of your target market, and choose tactics that are likely to be effective for reaching them. You can learn more about different marketing strategies here.

Then, outline your sales channels. This could include information on how you plan to sell your products or services, such as through an online store, retail locations, or wholesale partnerships. Be sure to consider the costs and logistics of each sales channel, as well as the potential revenue they could generate.

After you've defined your advertising and promotional plan, and outlined your sales channels, it's time to set target sales goals. These goals should be specific, measurable, and achievable within a set timeframe. Be sure to consider the size of your target market, the price of your products or services, and any other factors that could impact your sales. By setting realistic goals, you'll be able to track your progress and adjust your marketing and sales strategies as needed.

Financial Projections

This section projects your financials for the next 3-5 years, including revenue, expenses, profits, and cash flow. It should include startup costs, funding sources, and any existing financial resources. Financial projections help you understand the potential profitability of your business and are essential if you plan to seek funding.

When projecting your financials, it's important to be as realistic as possible. Use your market analysis and other research to make informed assumptions about your revenue and expenses, taking into account factors such as seasonality and competition. Additionally, consider different scenarios and contingencies, such as changes in the market or unexpected expenses, to ensure that you have a realistic understanding of your financial situation.

Financial projections can be intimidating, especially if you're not familiar with accounting or finance. However, there are many tools and resources available to help simplify the process. For example, you may want to use financial projection software or templates to help guide you through the process. You can also consult with an accountant or financial advisor to ensure that your projections are accurate and realistic.

Appendix

Finally, include any supporting documents, such as resumes of key personnel, market research data, and legal or regulatory documents.

Remember, your business plan is a living document that should be regularly updated and revised as your business grows and changes. While creating a business plan may seem like a lot of work, it's an essential step in the process of starting and running a successful small business. Hungry for more business plan tips? Check out NerdWallet's article here!

As always, if you want some support from a fellow small business owner with experience creating business plans, Diffusion is available as a resource! Click the button below to reach out.