A good business plan is like a compass: You can use it to navigate your way through starting or growing a business!
Creating a business plan is a time-tested strategy. You’ll find almost all businesses – regardless of scale – have one.
At its simplest, a good plan is designed to help ensure you’ve considered all of the elements of your business that you need to.
It will take time and energy to form a business plan, but it’s not necessary for you to begin from square one.
We’re here to help you construct a plan that is simple, effective – and, most importantly – works for you.
Below we’ll cover:
- What a business plan is (and why you need one)
- What goes into a business plan
- An example of a highly effective business plan
- And tips and tricks for customizing one to your needs.
Let’s get into it!
Do You Really Need A Business Plan?
Yes. We can’t stress this enough: every business should have a business plan!
Why? Because it will give you insight and guidance when you need it most – at the beginning of your journey and when the going gets tough. It can also help you to win investors if you need them.
Simply, a business plan helps you with:
1. A Strategic Roadmap
A plan outlines your business goals and what actions you need to take to achieve them.
Having this means that even when you get stuck in the weeds, you have a concrete set of goals and priorities to look at.
2. Investment Attraction
Making yourself attractive to investors can be tricky, particularly when you’re new to the game.
The beauty of a business plan is that it demonstrates to any potential funders that you have a framework for decision-making and a strategy for success.
3. Resource Allocation
One of the trickiest parts of business – whether you have a lot of funds or hardly any – is planning where your money can do its best work.
A business plan is a key element in helping you to prioritize. This way, you can rest easy knowing you have considered this before you spend.
4. Risk Management
It also gives you insight into where challenges may lie, and what to do if you come across unforeseen circumstances.
By doing research and understanding what you may stumble across, you’ll be able to mitigate any risks as much as possible.
The Components of a Business Plan
This is a list of the most common elements typically found within a business plan. Each one can be tailored to suit your own circumstances and vision (which we’ll discuss below!).
As you’ll soon realize, you’ll learn a lot about your business and the market while developing a plan. This is perfect for making sure you’re starting with the right foot forward.
Executive Summary
The executive summary is like an introduction. It gives the reader a clear and concise summary of the entire business plan, right from the get-go.
Business or Company Description
In this section, you’ll describe your business. This can be a detailed section and is likely to include elements such as:
- Your business ethos or mission
- Your target market
- The company structure, and location
- Your history or backstory
- And any other information you think is important to describe your company.
Questions you can ask yourself include:
- What is your business’ story?
- Why are you the right person or business to achieve success here?
Market Analysis
In this analysis, you provide the research you have undertaken in terms of your intended market.
Within this section, you are likely to include information such as:
- Market and industry trends
- Your target market
- Any competitors you may have
- How your competitors operate
- Any areas of potential growth in the market.
Organization and Management Structure
This section is related to your company description and may touch on similar points. It should outline your company structure (or intended structure for the future).
It provides guidelines and description of key personnel, their roles, and how they interact with each other.
Product Line or Services Offered
This is the area where you go into depth about what you offer. It should provide an overview of your product or services, how they are created, and where they sit in the market. It may also include information on future products.
Marketing and Sales Strategies
This section details your approach to marketing. It should reflect the research you have undertaken into your target market, and develop that information into concrete plans on how your advertising (or other marketing strategies) and pricing will work to sell your product.
Financial Projections
This is the section where you bring it all together and show your future forecasts. This may be based on previous years or hypothetical if you are new to the game. This section typically includes a break-even analysis.
Supporting Documents or Appendix
It’s also important to add any additional documents you might have – particularly if you are looking for investors.
These might include prototypes for products, certificates, financial statements, or reference letters. Really, it could be anything that will help you make your case!
An Example of an Effective Business Plan for 2023
Below is an explanation of everything that goes into a standard business plan as well as business plan examples.
Each section starts with a brief description, and ends with an example, using the fictional company RawBar, an e-commerce store that sells its own line of skincare products.
By the end of the post, you’ll have a better idea of what a completed business plan looks like. (You can also check out Bplans or Liveplan for more samples and help afterward.)
Executive Summary
An executive summary is a short overview about your company, its objectives and mission, and its path to successfully achieving those goals. Essentially, it’s a condensed version of what can be found in the business plan.
The primary purpose of the executive summary is to get readers — typically financiers, investors, or potential partners — interested enough to read the rest of the plan and ultimately, support the business with its needed investment.
Executive Summary Example
Raw Bar is an e-commerce company carving its niche in all-natural, handcrafted skincare that blends the best of Eastern and Western ingredients.
Our office is based in Los Angeles, California, where we are able to observe and address the growing market demand for natural yet effective products.
Our current line includes soaps, oils, lotions, and scents, which are sold online and through consigning stores.
This business plan is written as an internal guide for the company, as it continues to drive its early growth with increased production and sales efforts.
Every quarter, the team will meet to assess our performance in comparison to the plan, and make any adjustments based on new developments and findings.
While Raw Bar has enjoyed early market success and has earned a profit since its sixth month of operation, it has set new goals for the coming years — which is to expand into wholesale and private label production (manufactured by our company for other brands).
Within the next year, Raw Bar intends to secure larger consignment opportunities and offer skincare production services to other brands. It also plans to continue the growth of its e-commerce store by hiring a dedicated online marketing and support team.
Objectives
Raw Bar’s objectives for the next year is:
- To increase brand awareness and presence of the Raw Bar brand
- To develop an effective sales outreach strategy that gets our products into at least 20 large retail stores
- To increase in-house operations and develop a robust product catalog to offer to other retailers for private label production
- To continue growth of online sales and increase follower numbers and engagement levels
Mission
Raw Bar’s mission is to provide the best all-natural, handcrafted skincare products that blend both Eastern and Western ingredients for as many people as possible.
Keys to Success
Raw Bar’s keys to success are:
- Low overhead costs
- Design and development expertise
- Good brand awareness and recall
- Strong support network
- Small and nimble team
Company Summary
Now, it’s time to focus on the company description itself. Share something about the founders and key team members, why the company was founded, and what problems it hopes to solve.
You can also use this section to highlight any notable accomplishments or assets that give the company a competitive advantage. (e.g., ideal location, modern technology, team expertise).
Company Summary Example
Raw Bar, LLC is a relatively new start-up, founded and based in Los Angeles, California, since last March 2018. The company’s main office is 1,000 square feet, where it handles all its production and operations.
Raw Bar was founded by dermatologist Reena Lee and editor Ana Roley, who both bring their expertise in providing all-natural, handcrafted skincare products at an affordable price.
The company currently has four product lines — soaps, oils, lotions, and fragrances — all of which are developed using the best blend of ingredients from around the globe.
Since launch, Raw Bar has been featured in several notable publications, including Allure, Bazaar, and Into The Gloss.
Start-up Summary
Raw Bar’s start-up costs amounted to $35,000, most of which went to product sourcing and development, legal fees (for business incorporation), web development, and office rent and equipment. These costs were financed by the two founders, as well as a $10,000 line of credit from Bank of America.
[Note: This would be a good place to insert any financial documents, such as balance sheets and income statements that show your financial history, yearly growth, and overall performance.]
Products and Services
Most businesses make their money through products or services. This section is used to explain what you sell and how you plan to make money.
Aside from describing the actual product or service, explain how it benefits your customers and stands out from your competitors. Include any “tricks of the trade,” such as your research and development strategy or any plans for intellectual properties, trademarks, or patents.
Products and Services Example
Raw Bar produces, markets, and sells its own brand of all-natural, handmade skincare products to individual consumers through its e-commerce store.
Every single one of its products are specially made without any animal products, artificial coloring, parabens, petroleum, synthetic preservatives, or filler ingredients.
Instead, they include natural elements such as activated charcoal, natural clays (bentonite and dead sea), and an array of essential oils (amyris, clove, cedarwood, palmarosa, pine, etc.) and herbs (arnica flowers, calendula flowers, gotu kola, lotus root, etc.).
Its product variants are all special to Raw Bar and produced completely in-house, with some taking months to formulate. Product prices retail anywhere from $10–$30 each.
Raw Bar is committed to producing affordable products, with all products priced below $75 (except those produced for private labels).
The company also accommodates bespoke orders upon request for a minimum batch of 20 pieces.
We believe that all-natural is really what’s best for humans and the earth, and we aim to produce products that do well for everybody.
Market and Industry Analysis
To succeed in the industry, it helps to have a good grasp of your target market, product category, and other companies that are competing within the same space.
- Who are your top competitors?
- What are your strengths and weaknesses, in comparison to them?
- How do they affect you now and in the long run?
This section should cover all the players and factors that play a significant role in how you do business. Knowing about the space around you will help you plan your products accordingly, and your strategy more effectively.
Market and Industry Analysis Example
The market for natural skincare has experienced rapid growth, with projections to become a $54 billion industry worldwide by 2027.
This market is characterized by young individuals who are looking for good brands and businesses, prefer to read about a product before making a purchase, and are willing to try new brands (instead of sticking with ones their parents used).
There has also been a shift in the perception of all-natural products. No longer regarded as off the beaten path or too expensive, natural products are now the norm. They are not only an option, they are a preference.
Market Segmentation
For the next year, Raw Bar plans to focus its marketing efforts towards the U.S. market. Based on our research, our average customer is predominantly female, lives in an urban environment (in or near a major city), is well-educated, tech-savvy, and comes from many different income levels.
[Note: This is where you would insert a marketing analysis chart or other diagrams based on your customer surveys or market research.]
Industry Analysis
Around the world, people are becoming more proactive with their purchases. Specifically in the skincare market, they are no longer just looking for aesthetic benefits — they are looking for products that are all-natural, good for the body, and safe for the environment.
Furthermore, due to the younger market’s concern for self-care and self-love, there is a movement towards more authenticity in both brands and what brands offer.
In the past, the skincare industry has largely favored large houses with large advertising and marketing budgets. Today, however, quicker and smarter marketing efforts can be just as — or even more — effective in gaining market share.
With a good business idea and proper execution, online and social media efforts can be all a company needs to grow its brand.
Currently, the natural skincare market leaders are:
- Kiehl’s
- Aveda
- Clinique
- Drunk Elephant
- Weleda
- Herbivore
- Juice Beauty
- True Botanicals
Another global market trend that has been an advantage for Raw Bar is the rise of e-commerce. Brands have started focusing on online retail as a way to lower overhead costs and provide better products, easy-to-access information, and customer service.
As seen by the recent success of companies both big (Amazon and Ikea) and small (Warby Parker and Glossier), people are now comfortable doing the majority of their shopping online and paying for convenience.
Strategy and Implementation
So far, the business plan has covered the past and present state of the company.
This is where you begin to share your plans for the future, namely your company’s marketing, pricing, and sales strategies.
Introduce the section with a high-level look at your strategy and implementation efforts.
This should be done using a clear list of objectives and action steps, and strong descriptions on how you and your team plan to see the strategy through.
By the end, the reader should be confident that the company has what it takes to grow.
Strategy and Implementation Example
Raw Bar’s strategy is to grow its market share of the all-natural skincare industry through online sales and increase its revenue by offering wholesale and private label production.
The steps outlined below are intended to help build Raw Bar as a brand that represents high-quality, specialty skincare at a good value, and as a company that other brands and retailers trust.
Marketing Strategy
- Hire a dedicated online and social media marketing team to generate awareness among our target market (using data, audience targeting, and direct outreach to those who are already online)
- Engage in partnerships and collaborations to help expand our community and network
- Build long-term relationships with clients (other brands and retailers), in addition to our relationships with individual customers
- Spread awareness of the different purposes of our product lines and why people should choose all-natural products in general
Pricing Strategy
Raw Bar’s pricing strategy is to position itself as a high-quality, handcrafted product sold at a good price. It’s current product line retails anywhere from $10–30 a piece, with the company committed to producing affordable products below $75 (except those produced for private labels).
- Focus on online efforts, such as advertisements and e-newsletters, in order to keep overhead low while still sharing information about our brand and products to our target market
- Partner with like-minded brands as a way to grow our market and network
- Introduce our wholesale and private label lines, and target larger retail stores and outlets for consignment, which will help lower overall costs and generate more revenue streams
- Introduce a subscription model that can guarantee continued sales and a dedicated customer base
Sales Strategy
Raw Bar’s strategy is focused on acquiring its first wholesale and private label clients, while continuing to grow its base of customers online. This year, it also plans to target larger stores and outlets for consignment, which will help increase overall product sales and growth.
- Prioritize the growth of the brand, not just the products, by partnering with like-minded companies and expanding presence in bigger retail stores and locations
- Launch more informative marketing campaigns and e-newsletters to promote the benefits of the brand and its products
- Contract a dedicated online marketing and support team to focus on online efforts and help engage our target market more effectively.
[Note: This is where you can place sales forecasts and milestones, based on any past data and future projections.]
Financial Projections
Finally, financial projections will help support any funding requests (if you’re business plan is intended for investment purposes). The goal is to prove that your business will be financially successful and something worth investing in.
Aside from any assumptions that you used to base your projections, the bulk of this section is comprised of charts and graphical data, such as break-even analysis, projected profit and loss, projected cash flows, projected balance sheets, and the like.
If you’re already in operations, include any past data you have (3–5 years should be enough) and any collateral you could possibly put up against the loan or investment.
Financial Projections Example
Raw Bar has been profitable since its sixth month of business, thanks to keeping a low overhead, maintaining in-house operations, and growing organically. The company was initially funded by its two founders, with a credit line from the bank supported by company assets.
Important Assumptions
Our financial plan rests on key underlying assumptions, which are as follows:
- We assume a continued growth in the demand for natural products, especially in the skincare industry
- We assume manageable costs for our e-commerce efforts, as online tools are quite affordable and readily available
Tips for Customizing a Business Plan
While a business plan is a fairly standard document, it’s still not a one-size-fits-all solution.
If a plan isn’t customized to your business, it won’t be valuable to you or any potential investors. Here are some elements to take into consideration.
1. Tailor the plan to your industry
Investors are likely to be careful about where they put their money.
If someone is considering investing in your business, they likely know the industry quite well. You need to show that you do, too!
It’s also vital to your success that you understand the landscape you’re in. Each industry has its own unique set of characteristics, including advertisements, manufacture, and (most importantly) regulations.
In order to tailor your plan as well as you can, make sure you dive into:
- Manufacturing standards and regulations
- Any marketing or advertisement regulations
- A strong level of market research
- Industry-specific risk analysis
- An evaluation of your competitors!
2. Make sure it reflects your business’s unique value proposition
While entirely unique ideas are uncommon, you should have a unique edge that you bring to the table. This will help you to stand out from the crowd and find your own success.
This business plan should reinforce your own business’s unique value throughout.
3. Be realistic with financial projections
A business plan is not a work of fiction. Always be sure to be realistic with your forecasts, even if it is tough.
This isn’t just for the sake of your investors, either (although it’s always important to be upfront and maintain any good relationships to the best of your ability). It’s also important to maintain a realistic outlook for your own sake.
Setting yourself up for success means being realistic with yourself. There is no point in aiming too high and being disappointed. Always set achievable goals, and you will be much happier and mentally healthier in the long run.
Remember: hardly any businesses turn much profit straight away. For many, it takes years! It’s okay for this to be reflected in your projections.
4. Get feedback from trusted sources
As with any project, perspective is key. When you are too close, it’s hard to see clearly.
If you have someone you can ask to give you feedback, you should definitely go for it.
They might point out something big, such as a missed area of research. Or, perhaps they’ll just find a few spelling mistakes.
Any feedback you can gain is a valuable resource and a fantastic opportunity to learn and grow your confidence.
5. Review and revise regularly
No plan is perfect, no matter how much you research! Life and business are messy and unpredictable.
While your plan provides you with a roadmap (and you should stick to it as much as possible), it’s important that it’s flexible enough to change if it really needs to.
This element of flexibility allows you to take on new opportunities if they arise. However, your plan should ensure that this always fits in with your overarching goal.
The key to a great business plan is regularly going back to adjust it. Revisions may come after a new revelation from your research, a new business idea, or even an event like a change in circumstances.
Once your plan is finished, it’s important that you revise it on a regular basis. This could take the form of an annual revision (or more often if it suits).
Often, a revision will include:
- Refreshed market research
- Changes to competitors
- Any changes within your team
- Identification of any new risks
- Any changes to your strategy (and why)
- Updated financial predictions.
Wrapping Up
A well-considered business plan provides you with a road map to success – whatever that might look like for you!
Your plan will give you insight into both the small goals and the larger picture for your business. It will also be a valuable asset if you want to convince investors to take a chance on you.
Always remember that a solid business plan is dynamic. While it provides you and your investors with a path to success, it should also be adaptable enough to allow you to take advantage of new opportunities.
A great business plan should be revised often to keep you on track and up to date with (and hopefully ahead of) the ever-changing market.
