There are many reasons why every company should have a business plan, but not every business needs a formal plan to show to outsiders. If your plan is just for yourself and your team, then you may be fine with just the lean business plan.
However, if you do need to develop a plan to show to investors, banks, lawyers, and so forth, you can follow this simple business plan outline and decide on how in-depth or concise your business plan needs to be.
If you’re ready to get started, just download our free business plan template and fill it out as you read through the following guide.
What needs to go into a business plan?
No matter the type of business plan you create, these are the six basic sections you should include. These sections are necessary when working with an outside party or potential investor, to give them a quick look into each aspect of your business.
For those looking for a deeper definition of how to fill out each section, skip to the detailed outline below. Or, check out our comprehensive How to Write a Business Plan guide, for a thorough rundown and additional resources.
1. Executive summary
Write your executive summary last. It’s just a page or two that highlights the points you’ve made elsewhere in your business plan.
It’s also the doorway to your plan—after looking over your executive summary, your target reader is either going to throw your business plan away or keep reading, so you’d better get it just right.
Summarize the problem you are solving for customers, your solution, the target market, the founding team, and financial forecast highlights. Keep things as brief as possible and entice your audience to learn more about your company.
In the opportunity section of your business plan, describe the problem that you solve for your customers and the solution that you are selling.
It is always a good idea to think in terms of customer needs and customer benefits as you define your product offerings, rather than thinking of your side of the equation (how much the product or service costs, and how you deliver it to the customer).
Sometimes this part of the plan will include tables that provide more details, such as a bill of materials or detailed price lists, but more often than not this section just describes what you are selling and how your products and services fill a need for your customers.
3. Market analysis summary
You need to know your target market—the types of customers you are looking for—and how it’s changing, and your market analysis summary will help you get clear on it.
Use this business plan component to discuss your customers’ needs, where your customers are, how to reach them and how to deliver your product to them.
You’ll also need to know who your competitors are and how you stack up against them—why are you sure there’s room for you in this market?
Use this business plan section to outline your marketing plan, your sales plan, and the other logistics involved in actually running your business.
You’ll want to cover the technology you plan on using, your business location and other facilities, special equipment you might need, and your roadmap for getting your business up and running. Finally, you’ll want to outline the key metrics you’ll be tracking to make sure your business is headed in the right direction.
5. Company and management summary
The company and management section is an overview of who you are.
It should describe the organization of your business, and the key members of the management team, but it should also ground the reader with the nuts and bolts: when your company was founded, who is/are the owner(s), what state your company is registered in and where you do business, and when/if your company was incorporated.
Be sure to include summaries of your managers’ backgrounds and experience—these should act like brief resumes—and describe their functions with the company. Full-length resumes should be appended to the plan.
6. Financial plan
At the very least this section should include your projected sales forecast, profit and loss and cash flow statement, and balance sheet, along with a brief description of the assumptions you’re making with your projections.
Finally, if you are raising money or taking out loans, you should highlight the money you need to launch the business.
Common questions when writing a business plan
What type of business plan do you need?
The level of detail required in your business plan fully depends on what you intend to use it for.
If you don’t have an immediate need to show a formal comprehensive business plan to a banker or investor, then you are probably better off doing just a lean business plan. A lean plan is useful as an internal tool for you to reference and update as you develop your business strategy.
The benefit is that it’s not a single business document, but an ongoing process of planning, testing, and refining. Perfect for those that aren’t seeking investment and instead need to track financial statements, optimize their sales strategy, or any other aspects of their business.
On the other hand, if you’re planning to seek funding, you’ll want to create a fully realized business plan. To make the best impression on banks and investors, your business plan should be presented in the standard business plan format and contain all necessary elements.
Your business plan should present what a banker or venture capitalist expects to see, in the order, they expect to see it in. Following a standard business plan outline will keep you on track, and save you from botching your best chance at getting your business funded.
How do you build a business plan?
While investors may expect a business plan presented in a specific order, that doesn’t mean you have to write it that way. In fact, I don’t recommend writing the plan in the same order that you present it as a finished document.
For example, although the executive summary comes as the first business plan section, I recommend writing it after everything else is done, so you know exactly what appears in the rest of your business plan.
Likewise, although the management summary is usually presented toward the end of a finished business plan, it might be an easy place to start writing. And some people prefer to start with a mission statement or strategy summary. Others like to focus on the numbers first, so they start with a sales forecast or spending budget.
Start where you like, and get going. A healthy business planning process will always involve circling back often to check results and revise as necessary.
Is the order of your business plan important?
There’s no real established order to business plans, aside from keeping the Executive Summary at the top. As long as you have all of the main business plan components, then the order should reflect your goals.
If this is meant solely for your personal use, lay it out as a roadmap with similar sections grouped together for easy reference. If you’re pitching this to potential investors, lead with the stronger sections to emphasize the pitch. Or if you’re unsure of the order altogether, what’s presented in this article is the sequence of business plan elements that I suggest for a standard business plan.
Should you include tables and charts in your business plan?
I believe that every business plan should include bar charts and pie charts to illustrate the numbers. It’s a simple way for you, your team, and investors to visualize and digest complex financial information.
Cash flow is the single most important numerical analysis in a business plan, and a standard cash flow statement or table should never be missing. Most standard business plans also include a sales forecast and income statement (also called profit and loss), and a balance sheet.
Listen to Tim Berry discuss lean business planning:
Detailed Business Plan Outline
If you’re looking for greater insight into what goes into specific planning sections, check out the following outline. It can help you develop a detailed business plan or provide guidance as to what may be missing in your lean plan or pitch deck.
Keep in mind that each business plan will look different depending on numerous factors, including the type of business and what you will be using the plan for. Consider the following outline to be a master version to reference and consider, but be sure to focus on the plan type and sections that are most beneficial to your business, pitch or overall strategic planning.
A summary of the problem you are solving and an identifiable need in the market you are filling.
A description of the product or service you will provide to solve the problem.
1.3 Target Market
A defined customer base who will most likely purchase the product or service. For info on how to define your target market, check out our guide on the subject.
The current alternatives or substitutes in the market that you and your business will be competing against.
1.5 Financial Summary
Key highlights of your financial plan that covers costs, sales, and profitability.
1.6 Funding Requirements
A brief outline of the amount of money you will need to start your business. Include this if you plan on pitching to investors.
1.7 Milestones and Traction
A roadmap of where you currently are and specific milestones you plan to hit.
2.1 Problem Worth Solving
A thorough description of the problem or pain point you intend to solve for your customer base.
2.2 Our Solution
A thorough description of your proposed product or service that alleviates the problem of your customer base.
2.3 Validation of Problem and Solution
Any data or relative information that supports your solution. If you’ve already run tests that verify your idea, this is the place to include your results.
2.4 Roadmap/Future Plans
A list of steps taken so far, along with an outline of steps you plan to take in establishing or growing your business.
3.1 Market Segmentation
Potential groups of customers separated by specific characteristics.
3.2 Target Market Segment Strategy
Your ideal customer group that would be most likely to benefit from your business.
3.2.1 Market Needs
A description of how your target market is not effectively served and how your business fulfills a need.
3.2.2 Market Trends
How consumers in your target market tend to act including purchasing habits, financial trends, and any other relevant factors.
3.2.3 Market Growth
The perceived potential increase or decrease in the size of your target market.
3.3 Key Customers
Your ideal customer archetype that will be the main advocate for your business.
3.4 Future Markets
A snapshot of the potential market based on the last few sections and how your business strategy works within it.
A list of potential competitors. Identifying the competition isn’t always obvious and it may take some digging on your part.
3.5.1 Competitors and Alternatives
A list of potential indirect competitors that provide products or services that are alternatives to your business.
3.5.2 Our Advantages (see an example)
The strategic advantage(s) that makes your target market more likely to choose you over the competition.
4.1 Marketing Plan
An outline of your marketing and advertising strategy including costs, advertising channels and goals.
4.2 Sales Plan
An estimate of the number of sales you anticipate based on market conditions, capacity, pricing strategy, and other factors.
4.3 Location and Facilities
Details of your physical business location (if necessary) including location and costs of operation.
An explanation of any new technology that defines your business.
4.5 Equipment and Tools
Any required production equipment or tools and the cost associated with purchasing or renting them.
A detailed roadmap of specific goals and objectives you plan to achieve that will help you manage and steer your business.
4.7 Key Metrics
Performance measurements that help you gauge the overall performance and health of your business.
5.0 Company and Management Summary
5.1 Organizational Structure
An overview of the structure of your business including roles and responsibilities of specific employees and the flow of information between levels of the organization.
5.2 Management Team
A list of potential candidates you anticipate taking on high-level management roles within your company.
5.3 Management Team Gaps
Any positions or areas of expertise that you currently do not have candidates ready to fill those roles.
5.4 Personnel Plan
A list of potential positions that you expect to require in order to run your business effectively.
A summary of your company’s history and how it relates to planning your business.
6.0 Financial Plan
6.1 Revenue/Sales Forecast
Expected revenue and sales for the next 1-3 years, broken down into month-by-month increments for at least the first year.
6.3 Projected Profit and Loss
6.5 Projected Balance Sheet
6.7 Business Ratios
Standard statistical indicators that showcase the current and projected health of your business.
A repository for any additional information, including charts and graphs, to support your business plan.
More business planning advice:
Size your business plan to fit your business. Remember that your business plan should be only as big as what you need to run your business.
While every business owner should have an ongoing planning process to help them run their business, not every business owner needs a complete, formal business plan suitable for submitting to a potential investor, or bank, or venture capital contest. So don’t include outline points just because they are on a big list somewhere, or on this list unless you’re developing a standard business plan that you’ll be showing to someone who expects to see a standard business plan, like a lender or investor.
Consider lean business planning—writing a business plan doesn’t have to be a long, painful process. Instead, you can use the Lean Planning method to get started easier and finish faster. Lean Planning will help you start your business in a way that improves your chances of success. This methodology is baked into LivePlan.
Don’t make common mistakes. I’ve seen thousands of business plans, good and bad, and I can tell you that avoiding these common business planning errors will put you far ahead of the curve.
More business planning resources:
This article is part of our “Business Planning Guide”—a curated list of articles that will help you with the planning process!
- Sample business plans: Over 500 free sample business plans from various industries.
- Business plan template: This fill-in-the-blank business plan template is in the format preferred by banks and the U.S. Small Business Administration (SBA).
- Lean business plan: Replace the lengthy business plan with a simpler and faster planning process that encourages regular testing and revisions. Perfect for businesses that are just starting out that need a more fluid planning process.
- Lean plan template: Download this template to quickly make a one-page lean business planning document.
- How to start a business: An easy-to-follow six-step process for starting a new business.
- LivePlan: Easy cloud-based business planning software for everyone. This online software includes expert advice, built-in help, and more than 500 complete sample business plans.
- Paid vs. free business plan software: You know that you need a business plan but aren’t sure if a free template or guided software is best for your needs. Read on for a direct comparison to help you make a decision.
- Business plan consulting: We’re here to give you the tools to write your business plan on your own. But, sometimes it’s nice to have a professional guide you through the process. Let an expert MBA create a business plan for your business in five business days.
Editor’s note: We’ve updated this article for 2020.