• Types of Business Plans

• Building Your Business Plan by Section

• Business Plan FAQs

WHAT’S INSIDE:

Building a Business Plan

Why You Need a Business PlanA carefully developed business plan can provide a blueprint for developing a growing business. Putting in the effort to create a business plan helps you find potential barriers to your success and address them. With a well-articulated plan, you will have a powerful tool to attract investors and partners.

Use this guide to create a compelling business plan that helps you achieve your unique goals. Whether you’re just starting out or trying to take an established business to new places, you can outline a roadmap to wherever you want to go next.

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Types of Business Plans

Business plans can take many forms depending upon your business’s goal and stage of development. Here are 3 basic types of business plans that you can consider.

Early-Stage Framework Plan

Who It’s For

Entrepreneurs ready to move from an idea or concept stage to business launch

What It Does

• Articulates who your target customer is and what you will offer them

• Lays out how you will reach potential buyers and attract them

• Provides a forecast of both revenue and cash flow

• Prompts you to consider potential pitfalls and payoffs

• Identifies potential funding sources

Types of Business Plans 2

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Expansion Roadmap Plan

Who It’s For

Business owners with up-and-running companies ready to reach next-level goals

What It Does

• Helps you plan to expand, improve or refine your business

• Helps you plan investments to optimize your operations

• Documents a path forward for business projects and initiatives

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Pitch Plan

Who It’s For

Business owners seeking external support through funding, partnerships or other types of financial transactions

What It Does

• Highlights growth potential and payback for a specific funding source

• Explains how you will achieve goals within a specific timeframe

• Projects finances for potential lenders such as banks and credit unions or individual investors

• Clearly emphasizes the unique benefit/value the business provides and your competitive advantage

Types of Business Plans 3

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Build Your Business Plan By Section

Your business plan can be short or long, high-level or detailed, financially focused or steeped in marketing specifics—it all depends on your objectives and your intended audience. Based on the specific type of plan you’re developing, you can use this chart as a guide to build your business plan by section.

Build Your Business Plan By Section 4

Business Description

This sums up the “who, what, when, where and why” of your business. Here’s what you’ll include:

• Your Mission Statement: a concise summary of your company’s purpose.

• Company Overview: a high-level description of your business and the benefits it offers.

• Company History: the story of how and when the company (or your idea for one) was founded and why.

• Leadership: concise profiles of your team that emphasize expertise.

• Product/Service Descriptions: an overview of your offerings and how they are superior to competitive options.

• Target Audiences: profiles of your ideal customers, why they’ll find your company appealing, and how you will reach them.

• Location and Facilities: a snapshot of where the company is located and whether it rents or owns its facilities, noting any expansion plans.

Mission and vision statements

Competitor overviews

Related Documents:

Build Your Business Plan By Section 5

Executive Summary

This short section presents a high-level overview of your entire plan. You may wish to write it last. It helps readers quickly understand your business model and potential. It offers a preview and invites your reader inside to learn more.

Consider highlighting:

• Business opportunity

• Target customer and marketplace

• Company leadership

• Marketing, distribution and sales strategies

• High-level financial projections

Market research results

Leadership résumés

Market Analysis

This section positions the opportunities you’ve identified in the market in which you will compete, as well as the challenges you’re up against. The content can be drawn from conversations with potential customers and your own research into industry trends, the marketplace and your competitors.

• Target Market: a profile of your customer base, including details such as their age and income level, attitudes, needs or wants, and buying habits.

• Product/Service Applications: a description of how your offering will help your customer base address a need, solve a problem or take advantage of an opportunity.

• Industry Overview: an assessment of your industry’s size, life stage and projected growth. An evaluation of industry technology and untapped and emerging opportunities.

• Market Factors and Trends: a summary of influences outside of your business that could help it succeed or present barriers to overcome, such as upcoming regulations or new technology.

• Market Share: an assessment of the size of the overall market for your goods and services, and the portion you expect to capture.

• Competitive Analysis: an evaluation of your competitors and the unique value your company will offer. A list and description of businesses that address the same need you do, in a different way.

• Market Risks: an outline of marketplace characteristics that could influence your success along with contingency plans to address these situations.

Competitor marketing materials

Target customer and industry data from sources such as the U.S. Census Bureau, Small Business Administration and industry associations

Related Documents:

Market research results

Academic research related to your industry

Available data on market growth rates or related economic factors

Build Your Business Plan By Section 6

Organization and Management

This section details your company’s structure and leadership. It should describe each department and its function, even if the leadership group is starting out small. You may wish to include:

• Organizational Chart: your anticipated reporting structure, including future positions.

• Ownership: names of the owners and their percentage of ownership, as well as an overview of their day-to-day involvement in the company. An outline of outstanding equity investments.

• Board of Directors/Advisory Board: the qualifications of existing board members, if any, and an overview of plans to develop your board.

• Legal Structure: details about your business structure (sole proprietorship, LLC, partnership or corporation), officers, necessary licenses and registrations.

• Compensation Plan: the salary, incentives and benefits available to employees, as well as your plan for staff retention and promotions. Intentions for owner and partner compensation.

Organizational chart

Legal documents

Related Documents:

Build Your Business Plan By Section 7

Leadership and board member résumés

License and permit paperwork

Products and Services

This section describes your products or services, highlights the unique benefits they’ll deliver to customers, and how you envision your offering changing over time.

• Product/Service Descriptions: An overview of the features that set your offerings apart from competitors’. Your current development stage (idea, prototype, existing offering).

• Development Process: A summary of the steps and costs involved in producing your goods and services, including equipment, technology and facilities.

• Suppliers: A summary of the partnerships and vendor relationships that your company will rely on.

• Intellectual Property: A list of any innovative aspects of your offering and the steps you’re taking to protect them, including the status of any existing or potential copyright or patent filings.

• Product/Service Evolution: An outline of how your products and services will expand over time, including ongoing plans for research and development.

Product descriptions

Supplier overviews

Related Documents:

Build Your Business Plan By Section 8

Schematic drawings of products

Copyright and patent paperwork and/or special features

Marketing and Sales

This section summarizes how you will bring your products or services to market, including how you will price, distribute and promote them. Consider:

• Marketing Strategy: a description of how you plan to reach your customers and what messages you think will influence them. The approaches you will take to evaluate and refine your marketing efforts.

• Pricing Strategy: a plan for how your products and services will be packaged for purchase. An outline of your services, including à la carte, bundled, one-time, subscription, and/or retainer purchases. A reflection on how your pricing compares to competitive alternatives.

• Marketing Materials: an explanation and examples of the collateral your company will need to support its marketing efforts, including items such as websites, brochures, videos, product samples, news releases and trade show exhibits.

• Marketing and Distribution Partnerships: your plans for working with retailers, distributors, resellers and influencers to promote your offerings.

• Sales Cycle: an explanation of your expectations for how long it will take to close a sale.

• Customer Service: a proposal for how you will answer prospects’ questions and provide ongoing support and troubleshooting.

Build Your Business Plan By Section 9

Partner profiles

Samples of existing marketing services, retailers, etc.

Competitor pricing sheets

Related Documents:

Projected Financials

This section outlines your current financial needs, sales projections and future growth potential. It is a good practice to come up with 3 financial forecasts to cover best-case, reasonable and worst-case scenarios. This shows you are being realistic and helps you plan for a range of outcomes.

If you don’t have a financial background, you might want to bring in a qualified expert to help with this section, which should include:

• Financial Projections: income, cash flow, and balance sheet projections for one or more sales scenarios.

• Assumptions: a summary of the expectations that are driving your analysis, from startup costs to sales projections.

• Current Funding: an explanation of where the money to operate the business is coming from now (e.g., self-funding, bank loans, etc.) and how you are spending it.

• Future Financing Needs: a plan for how you will fund growth over the next 5 years, including plans for reinvesting company profits.

• Planned Expenditures: an overview of the large costs your business will need to handle, such as equipment investments, working capital and debt repayment.

Projected income statements, balance sheets and cash flow statements covering 3 to 5 years

Graphic representations of sales and expense forecasts

Related Documents:

Historical financial data, if available

Salary data

A summary of expected capital expenditures and investments

Build Your Business Plan By Section 10

Appendices

You can add and reference appendices to your plan on an as-needed basis, depending on who is reviewing it. For example, a lender might want a lot of financial details that you wouldn’t include in a version going to a potential business partner.

Product photos or illustrations

Legal agreements

Samples of marketing materials

Background research

Leadership résumés

Financial documents

Letters of reference

Relevant articles or book references

Licenses, permits and patents

Trademark documents

Potential documents to include:

Build Your Business Plan By Section 11

How long should my plan be?

The right length for your plan depends on your primary reasons for writing it. If you want to see if your idea has “legs,” for instance, a 3-page plan that’s kept for your internal use may suffice. A comprehensive plan might fall into the 15- to 20-page range, with appendices for supplemental information. As you get ready to share your plan with others, make it as concise as possible without leaving out important information.

TIP: Many lenders and investors glance at your executive summary to decide if they’ll look at the full plan, so polish this section to make your company’s potential crystal clear. For in-person presentations, you may want to transition your plan into a collection of easy-to-digest slides that illustrate your idea in charts and graphics.

Should I focus on each section of my business plan equally?

Not necessarily. Your business plan should reflect your unique strengths, challenges and priorities. For this reason, some sections of your plan may require more detail than others. For example, if you’re building a new manufacturing company, you might devote more space to how you’ll finance equipment and inventory. If you’re opening a new law firm, you might focus on how you will differentiate and win new clients.

What tone should I use when writing my business plan?

Keep your business plan professional and enthusiastic. You want to communicate the exciting potential of your venture, but stay reasonable and accurate at the same time. By presenting a credible assessment of the opportunities and challenges you’re facing, you can convey your professionalism, confidence, competence and realism.

Business Plan FAQs

Business planning is an ongoing journey. Once you’ve prepared one, you’ll have the platform and ability to pitch people and ideas, achieve goals toward business growth, and position your business for success at every stage of development. Here are some common questions from entrepreneurs getting started:

Business Plan FAQs 12

What if I don’t know who my competitors are?

If you can’t locate direct or indirect competitors, you may want to talk to experienced business owners for guidance. It’s possible that others have tried to start a company like yours and had run into unexpected hurdles. This doesn’t mean your idea won’t work; it just means you’ll need to show why you will succeed where others have failed. New technology, advances in manufacturing or the development of new markets might mean the timing is right for your idea.

Tip: Don’t forget about your indirect competitors. These businesses solve the same problem for your customers as you do, but in a different way. For example, a cake decorator may face indirect competition from vendors that offer chocolate fountains.

If I’m looking for loans or investors, should I minimize the business risks I include in my plan?

No. Successful business owners don’t avoid or ignore risks; they identify and manage them. Your business plan should demonstrate that you understand the risks involved in your venture and that you have a plan for mitigating them.

How can I ensure that my financial forecasts are accurate?

Investors and partners don’t expect you to predict the future perfectly. But they will expect you to show that you understand your industry and can make reasonable projections about it. This means being realistic about important details such as when you can expect to make sales, or when you’ll need to hire more employees. By creating more than one financial scenario, you can also show how your projected results will change if your assumptions turn out to be incorrect.

TIP: Your projections should conform to Generally Accepted Accounting Principles (GAAP) and match up with standards in your industry for things like employee pay or how quickly you collect on your invoices.

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Business Plan FAQs

Good Luck!We’ve outlined the best practices for writing a business plan and putting it together one part at a time. But keep in mind that there’s no one-size-fits-all business plan, and you can create one that best suits you. Much like the company you launched, you can make it your own to achieve your goals and continue growing.

Before you sit down to write, reflect on what you want to accomplish and which path will propel you forward – whether the plan is for your own use or you want to pitch potential investors. Your roadmap will increase your likelihood of success by helping you articulate what your business is all about and where you want to go next.

Capital One Spark Business put together this guide for educational purposes only. It is not intended to provide tax, accounting, or legal advice. Please consult an expert for advice related to your specific needs. © 2016 Capital One