You have this fantastic idea that connects a personal passion with a means of making a living. All it takes is a solid business plan to turn that inspiring idea into your new way of life.
What a Business Plan is and Why it Matters
A business plan is more than a document you write once and file away. It’s a living roadmap that guides every major entrepreneurial decision from securing financing to scaling operations. Whether launching a startup, buying a franchise, or seeking a bank loan, understanding how to create a business plan is the difference between getting your idea off the ground and keeping it solely in your head.
The business plan is a comprehensive document that formalizes your plan to achieve success. At its core, your business plan should answer three fundamental questions:
- What problem does your business solve?
- How will you solve it?
- Why will customers choose you over competitors?
Business plans matter to different stakeholders for disparate purposes. Entrepreneurs use them as strategic roadmaps to guide decision-making and measure progress. Investors and lenders use them to assess risk and determine whether to finance new ventures. Even established companies revisit their business plans during periods of rampant growth or strategic pivots.
Creating a business plan that sells your vision to all stakeholders is a challenging task that requires discipline and critical thinking.
How to Create a Business Plan Step by Step
As a concept, building a business plan seems pretty daunting. It helps to break a business plan down into more manageable, methodical steps and sequences.
Building a basic business plan
There are degrees of business plans that range in complexity. The most straightforward is a basic business plan, which typically includes:
- An executive summary
- Company description
- Market analysis
- Organizational structure
- Product or service descriptions
- Marketing and sales strategies
- Business finance projections.
Use your company description to establish your mission, vision, and what makes your business unique. The market analysis should demonstrate that you understand your industry, target customers, and competitive landscape. The organizational section outlines your team and management structure, and so forth.
Key elements of a successful business plan
Beyond the basic structure, successful business plans share common characteristics that make them compelling.
- Every section should be clearly written. Use plain language that any reader can understand without relying on internal jargon.
- Show there’s a viable market for your business. Prove to lenders or investors that you’ve done your homework; that you understand the market size, customer needs, and competitive positioning.
- Be realistic with your financial projections. Show that you understand the economics of your business, including startup costs, operating expenses, and revenue potential.
- Illustrate your execution plan. A strong management team section shows your skills and experience to execute the plan. This will help assuage underlying risks investors will feel about backing your venture.
- Tell a winning inspirational story. Finally, successful business plans tell a story that connects all the pieces. Show how your vision, strategy, and execution align to create a long-term, forward-thinking business model.
How Long Does it Take to Create a Business Plan?
For a straightforward small business, expect to spend anywhere from three to six weeks developing a solid plan. More complex businesses requiring extensive market research, detailed financial modeling, or specialized industry analysis can take months to complete.
In rarer cases, a basic business plan with less supporting documentation can suffice. These documents summarize the main points of your business in a one-page overview. There are tools you can use to assemble these simple plans in only one hour.
Working with a team helps accelerate the process by establishing clear divisions of labor. Entrepreneurs tackling the plan solo should expect to work longer, though they develop a greater understanding of their full business—knowledge that helps win over potential investors. Remember that your business plan is an evolving document, one that should be revisited and updated as your company evolves.
How Much Does it Cost to Create a Business Plan?
Writing your own business plan is the most budget-friendly option. Your only guaranteed cost is your time, though you may buy business plan software or templates to help guide the process.
You can hire professional services to build a standard business plan that’s suitable for bank loans or small business funding. Additionally, you can contract freelance business plan writers, who typically offer more competitive rates than larger professional agencies.
The cost to create your business plan is less important than the startup expenses to consider before you launch your new venture. Most businesses fall into three primary categories:
- Brick and mortar establishments
- Digital business models
- Mobile contract services
Expect to incur common startup costs like licenses, permits, utilities, and communication channels. Include your anticipated startup expenses in your business plan to show lenders or investors that you’ve built an accurate startup plan.
Creating a Business Plan by Business Type
Fundamentally, the structure of your business plan should be fairly consistent whether you’re launching a new startup, or expanding an established brand into a global franchise. However, there are distinguishing nuances for each business type that bring unique challenges and opportunities when creating your business plan.
Creating a business plan for a small business
Naturally, a new startup or small business experiences limited cash flow in its early days. As a result, small business plans emphasize local market dynamics, operational efficiencies, and methods of conserving cash rather than forecasting explosive growth.
The focus here is on visualizing a path to steady profitability, amplified by building a strong community of organic, engaged connections. Your market analysis should dive deep into local demographics, local competitive analyses, and realistic customer acquisition strategies.
Financial projections for small businesses anticipate break-even points and monthly cash flow management. Small business plans benefit from straightforward language and practical details about day-to-day operations, staffing needs, and supplier relationships. If you’re seeking a small business administration (SBA) loan or traditional bank financing, outline the collateral, personal investment, and other methods for how you’ll repay the loan.
Business planning for startups, specifically, requires one additional detail. For example, startups in the tech industry often have stated mission goals of disrupting markets and offering new innovative solutions poised to capture market share. In these instances, investors want to see paths to scalability and significant returns on investment.
The business plan should articulate the problem you’re solving, why existing solutions fall short, and how your product changes the game. Most importantly, you must demonstrate, through research, the size of your untapped market. Financial projections should extend at least five years ahead, forecasting multiple scenarios that illustrate the best-case, expected, and conservative outcomes on the path to profitability.
How to create a franchise business plan
Franchise business plans operate within a franchisor’s established business framework. As an aspiring franchisee, you must demonstrate in your business plan how you intend to execute the established model successfully within your community.
Your plan should acknowledge the franchise system’s proven model while highlighting your qualifications to operate within it. Use the franchise disclosure document (FDD) as your foundation, incorporating the franchisor’s documented financial performance as your benchmark. The market analysis section should focus on your specific territory, showing demand for the franchise concept in your location and how local demographics align with the brand’s target customer.
Since franchise operations follow established procedures, emphasize your management capabilities, relevant experience, and commitment to the franchisor’s standards. Include detailed breakdowns of franchise fees, royalty payments, marketing contributions, and any territory-specific costs. If you’re planning to open multiple locations, include a phased expansion timeline showing how you’ll scale responsibly.
Creating a business plan for a loan
Creating a business plan for funding, lenders, and investors requires another set of priorities. Lenders evaluate business plans through the lens of risk mitigation and repayment certainty.
Banks and traditional lenders want to see that you have sufficient collateral, a solid credit history, and cash flow projections demonstrating how you’ll service your debt.
Open with a clear statement of how much funding you need, how you’ll use the capital, and your proposed repayment terms. When creating a business plan for a loan, the financial section is understandably the most critical component. You must present detailed cash flow projections, balance sheets, and income statements covering at least three years.
Specify your plans for using the funds—whether for equipment, inventory, working capital, or other specific needs. You may be required to supply personal financial statements, as well as the assets you can leverage to secure the loan. Credit analysis should acknowledge any past challenges while demonstrating current financial stability.
Beyond Launch: Planning for Long-Term Growth and Business Continuity
Most business plans reflect startup and early growth phases of a business. Forward-thinking entrepreneurs expand the scope of business planning, outlining continuity plans and exploring paths to more long-term resilience and success, including a closer look at how to create a business continuity plan.
In many ways, a business continuity plan is an effort to future-proof and establish a business legacy. A business continuity plan outlines a proactive approach to adapt, pivot, or recover from unexpected disruptions, such as natural disasters, cyberattacks, economic downturns, or other crises. Integrating a continuity plan into your business model will impress shareholders. You proactively demonstrate maturity and acknowledge risk awareness that could disrupt well-intentioned forecasts.
Business continuity planning begins with risk assessment, identifying potential threats specific to your industry, location, and operations. Develop response protocols for various scenarios, including data backup and recovery procedures, alternative supplier arrangements, and communication plans for employees and customers during emergencies.
Regularly testing and updating your business continuity plan keeps it relevant as your business evolves. Investors and traditional lenders value businesses that have thought beyond immediate growth and acknowledge plans for long-term sustainability and resilience.
Beyond continuity planning, creating a business plan is an investment in your venture’s future that pays dividends far beyond securing initial funding. The process forces you to think critically about your market, competition, operations, and financial sustainability before committing significant resources.
Whether you’re building a basic plan for a local small business, crafting a comprehensive document for venture capital investment, or developing a specialized plan for franchise ownership, the fundamental principles of a solid business plan are consistent. Provide clarity, show your research, project realistic targets, and tell a compelling story about why you’ll succeed.
As your business grows and market conditions evolve, revisit and revise your plan regularly. Treat it as a living document rather than a one-time exercise. The discipline of foundational business planning, combined with an adaptable mindset, lays the groundwork for sustainable entrepreneurial success.
This content is provided for informational purposes only and does not constitute legal, tax, financial, or professional advice. Laws and regulations vary by state and individual circumstances and may change over time. Readers should consult a qualified attorney, tax professional, or other licensed professional regarding their specific situation. Nothing herein creates an attorney-client relationship.
