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How to Write a Business Plan: The Executive Summary

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How to Write a Business Plan, Step by Step

A well-written business plan should include a mission statement, business and management structure, a marketing plan and financial projections.

July 19, 2017

Small Business , Starting a Business

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A business plan can make or break a small business. A strong, detailed plan provides a clear road map for the future, forces you to think through the validity of a business idea, and can give you much greater understanding of your business’s financials and the competition.

A business plan typically looks out over three to five years, detailing all of your goals and how you plan to achieve them. If you’re applying for a loan or looking for investors, a business plan shows you’re prepared and have fully vetted your business idea, says Craig Allen, a financial advisor who teaches business plan writing classes at Southern New Hampshire University.

“If you have no financial forecast, which is part of the business plan, it’s very difficult to show the bank how you are going to repay the loan,” Allen says.

Here is a step-by-step guide to writing a business plan:

  • Executive summary
  • Company description
  • Objective statement
  • Business and management structure
  • Products and services
  • Marketing and sales plan
  • Business financial analysis
  • Financial projections
  • Appendix

PLUS:  Business plan tips and resources


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Executive summary

This is the first page of your business plan. It should include a mission statement, which explains the main focus of your business, as well as a brief description of the products or services offered, basic information such as ownership structure, and a summary of your plans.

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Company description

This section provides a snapshot of your small business. It contains important information including its registered name, address of any physical locations, names of key people in the business, history of the company, nature of the business and more details about products or services that it offers or will offer.

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Objective statement or business goals

An objective statement should clearly define your company’s goals and contain a business strategy that details how you plan to achieve them. It spells out exactly what you’d like to accomplish, both in the near term and over the long term.

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It spells out exactly what you’d like to accomplish, both in the near term and over the long term.

If you’re looking for outside funding, you can use this section to explain why you have a clear need for the funds, how the financing will help your business grow, and how you plan to achieve your growth targets. The key is to provide a clear explanation of the opportunity presented and how the loan or investment will grow your company.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch the new product and increase its sales by 50% over the next three years.

» MORE: Best loans for working capital

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Business and management structure

Here, you’ll list your business’s legal structure — such as a sole proprietorship, partnership or corporation — as well as key employees, managers or other owners of the business. It should also include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

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Products and services

In this section, you can detail the products or services you offer or plan to offer. It should include the following:

  • An explanation of how your product or service works
  • The pricing model for your product or service
  • The typical customers you serve
  • Your sales and distribution strategy
  • Why your product or service is better than what the competition is offering
  • How you plan to fill orders

You can also discuss current or pending trademarks and patents associated with your product or service.

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Marketing and sales plan

This is simply an explanation of what your marketing strategy is and how you will execute it. Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business. This section can also highlight the strengths of your business and focus on what sets your business apart from your competition.  

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Business financial analysis

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business seeking financing, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

You may also include ratios that highlight the financial health of your business, such as:

  • Net profit margin: the percentage of revenue you keep as net income
  • Current ratio: the measurement of your liquidity and ability to repay debts
  • Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year

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Financial projections

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

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Your goals may be aggressive, but they should also be realistic.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan. Accuracy is key, so carefully analyze your past financial statements before giving projections.

Your goals may be aggressive, but they should also be realistic. “It’s OK to be optimistic if you can justify it,” Allen says. “In general, you don’t want to stand out in a negative way by being too optimistic.”

You want to show that your business can generate strong enough cash flow to cover the regular debt payments on a loan. But you should also address the various risk factors of the business, Allen says.

“The loan officer is definitely going to want to know that you’ve thought through all of the potential risks and that you’ve mitigated those risks in some way,” he says.

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List any supporting information or other additional information that you couldn’t fit in elsewhere, such as resumes of key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts, and personal and business credit history. If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

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Business plan tips and resources

Now that you’ve written your business plan, here are some tips to help your hard work stand out:

Avoid over-optimism: If you’re applying for a business loan at a local bank, the loan officer likely knows your market pretty well. Providing unreasonable sales estimates can hurt your chances of loan approval.

“They know what you can expect sales to be for that type of business in that market,” Allen says. “If you walk in with a sales forecast 50% higher than other businesses, they are going to know that you are not being realistic, and that’s going to work against you.”

Keep it concise: All you need is 15 to 25 pages for a good business plan, as long as the plan is clear, concise and contains all of the relevant information, Allen says.

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Focus on the key elements of your business plan and avoid getting too bogged down by the technical aspects of your business…

Focus on the key elements of your business plan and avoid getting too bogged down by the technical aspects of your business or using too much industry jargon. You can always put supporting information or other important details in the appendix.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors, taking their mind off your business and putting it on the mistakes you made. If writing and editing aren’t your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

“I always feel like if the person can’t even bother to proofread something that they wrote, how detail-oriented is this person in running their business?” Allen says.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. You can search for a mentor or find a local SCORE chapter for more guidance.

The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

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What’s next?

  • Want to take action?

    Find and compare startup business financing

  • Want to dive deeper?

    See how to get a business license

  • Want to explore related?

    Use our guide to start a business

Steve Nicastro is a staff writer at NerdWallet, a personal finance website. Email: [email protected] . Twitter: @StevenNicastro .

Updated July 26, 2017.


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Writing a business plan

Writing a good business plan

If you’re starting a business, or if you’re looking to expand your current one, you’re going to need a solid, written business plan.

A good business plan provides structure and guidance for every aspect of your venture, and can help save you time and avoid financial mistakes. It can also be instrumental in helping you lock in funding for your venture while providing milestones and goals to measure your progress. 

While writing a business plan can be time consuming, it doesn’t have to be overly complicated. There are many resources and templates online that allow you to develop a good business plan. 

You’ll have to provide the financial numbers, goals, marketing strategies and other elements, but once you’ve gathered that information, writing your business plan is likely going to be easier than you think. 

This is one of the most critical tasks you can do to ensure your small business has a solid map to where you want to go. 

How to write a business plan

The customary business plan has 10 key components that should always be included:

  • Cover letter: As with any proposal, your business plan should include your firm’s name and address as well as contact information for owners and executives.
  • Table of contents: Break out the sections of the plan. Include page numbers.
  • Executive summary: This is a key part of the plan that summarizes your plan’s main points. It should briefly highlight each section listed in your table of contents. Also, include your mission statement, which explains your business’ goals and values, in a short, formal summary. Write the executive summary after you’ve completed the rest of the plan.
  • Company description: Your business plan isn’t just about where you want to go; it should explain where you’ve been. Include the history of your company – when you formed it, the number of employees, etc. – and identify your customers. You can also include your competitive edge and unique selling proposition (USP) here.
  • Product and/or service description: Briefly outline what product or service your business provides. How does a product work? What does a service look like from beginning to end for consumers? What makes it different? Keep the language simple here; avoid highly technical descriptions and industry buzzwords to give the clearest picture possible to the widest variety of readers. Explain how your products differ from the competition – or if there currently is any competition.
  • Market analysis: Understanding the market and industry you’re entering helps you identify your competition, risks, customers and advantages. An overview of your industry’s history, as well as current and projected trends, helps create a clearer picture of what your business should accomplish.
  • Management team: Having the right team members in the right positions is vital, and this section explains who fills each role. The length of the section will vary greatly depending upon the size of your business. It should provide a clear picture of how (and by whom) the company is being led.
  • Operations: This part of the plan is closely related to the management team section. It looks at how the daily operations will be completed and includes each person’s tasks. You may want to include an organizational chart. This is also an ideal place to include goals and projections, quality-control and risk-management measures, and information on suppliers.
  • Financial analysis: While this is one of the most important components of any business plan, it’s particularly important for businesses or startups looking for funding . If your business is already operating, provide as much financial data as possible for up to the past five years, including balance sheets and cash flow statements. Then, create a financial forecast that includes income projections and expenditures. It’s important to show how and when your business will become profitable.
  • Implementation plan: Now that you’ve outlined the essential components of your plan, explain how you’ll combine them to launch or grow your business. Provide a timeline, but be realistic with your expectations. List key target dates and objectives. 

Benefits of a good business plan

Knowing how to write a good business plan will pay off in many different ways. Even if you aren’t seeking funding, it serves as an internal guide to what you want to accomplish and how you’re going to do it.

The more detailed the plan, the better understanding you’ll have of what needs to be done, what can be eliminated and where you need to improve or gather more resources. As employees or other partners come aboard, it helps ensure that all workers share the same vision and that you’re all following the same path. 

Editing your business plan template

If you find yourself struggling with developing your plan or have difficulty with certain aspects, such as financial projections, look for free resources to help simplify the process. Your bank may offer an interactive template, or you can use the Business Plan Tool provided online by the Small Business Administration to help break it down. 

When you’ve completed your business plan, review it several times, looking for any typographical or grammatical errors or for areas that aren’t explained as thoroughly as they could be. Invite friends and family members to review it and offer constructive feedback. Remember, this plan represents your business to investors, employees and managers; ensure it reflects you and your planned organization.

Creating a good business plan can increase the likelihood not only of a successful launch but also of longer-range success. To help further secure your small business, learn more about Nationwide’s small business insurance policies.

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