Table of Contents
- 1. Before You Write Your Business Plan
- 2. The ThinkLions Business Plan Format
- 2.1. Executive Summary
- 2.2. Company Details
- 2.3. Industry and Customer Analysis
- 2.4. Marketing Strategy
- 2.5. Competitive Analysis
- 2.6. Operational Strategy
- 2.7. Management Team
- 2.8. Financial Projections
- 2.9. Funding Requirement
- 2.10. Exit Strategy
- 3. Using Our Business Plan Format
Let’s face it, writing a business plan isn’t as easy as it looks. Sure, you know your business – but putting it in a business plan format that investors can easily digest can be tricky. Developing an investor-ready business plan can be a major undertaking – especially if you’ve never written one – but if you are seeking funding for your business, you will likely need one.
Sometimes, your business plan will need to do all the speaking for you. In some occasions, potential investors may ask to see your business plan before they agree to listen to your pitch. The unfortunate part is, an investor’s attention span may be extremely limited to businesses they aren’t already familiar with. If your information isn’t structured into the right business plan format, you may lose their attention quickly.
At ThinkLions, we have worked with hundreds of businesses; helping them create winning business plans and raise funding for their app startups. After years of developing our process, we have put together a tried-and-proven simple business plan format that has worked for many of our clients. In this article, we’ll discuss the business planning process, examine what you need to do before writing your business plan, explain how to develop the best business plan model, and introduce our business proposal outline.
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Before You Write Your Business Plan
Writing a business plan isn’t the first step you should take in bringing your idea to life. Every day that you actively advance your business, you will uncover new information that will be important to add to your plan. By nature, basic business plans are full of projections. However, if you haven’t done the necessary work beforehand, you won’t have the data needed to make an honest assessment of your business. Knowing how to format a business plan is part of the formula, but the preparation is key to success.
Your business plan format is important, but it’s more important to make sure that you have met the milestones required to prove the potential of your idea. Before you write your business plan, put the necessary time and effort into accomplishing the following:
- Know Your Market: Having a fantastic idea means very little if it doesn’t solve a real problem for a real market. The majority of your business plan will center around proving that a market and market demand actually exists. Before writing your business plan, identify your initial market of focus. Learn everything there is to know about your customer. Go out and talk to real consumers. Join forums and online communities where your consumers hang out. Find their pain points. Listen to what they say about competitors. Get to know them intimately. The more you know about your audience, the better you will understand their needs and desires.
- Validate Your Idea: Once you know who your market is, you should test your idea with them and validate your assumptions. Before you write a business plan and ask an investor to invest in your idea, make sure your idea is worth investing in. Build a minimal viable product (MVP) and launch it to a limited audience. Adapt your product until you’ve truly created something that effectively solves a problem and is in demand by your market.
- Gather Data: Google is a great source of information, but if you are going to impress investors, you need real primary data from real customers of your business. As you validate your MVP, monitor important metrics such as cost per acquisition, conversion rate, and etc. This data will be used to show traction, forecast trends, and will act as a foundation for your financial projections.
The ThinkLions Business Plan Format
There’s nothing fancy about the business plan format we use at ThinkLions, but it’s a business plan layout that has worked for us over and over again. Furthermore, we’ll give you a few tips for each section – tips that we’ve gathered over years and years of developing startup business plans. Click below to download our business plan format doc.
Although the executive summary should be written last, it appears first in the business plan outline. In the executive summary, you will give a quick overview of the most notable details. This section should touch on all aspects of your business including the problem, solution, competition, marketing strategy, founding team and financial projections – but in a condensed manner. Although the executive summary is a component of the business plan, it should be strong enough to stand alone as its own document.
Here are a few tips to make sure your executive summary is as strong as possible:
- Write it last – Think of your executive summary like the back of a novel. The book itself shouldn’t be built off the summary, but the other way around. Write the rest of the business plan first, and then use the executive summary to summarize the most important points.
- Make it persuasive – Your executive summary should display the highlights of your business and build curiosity within the reader. It should make readers want to read the rest of your plan to find out more. Fail to gain their attention with the executive summary and they may not even read the rest of the plan.
- Get to the point – The executive summary should be brief – about one to two pages is ideal. Be brief, but powerful. Make sure every word counts. Don’t dive too deep though, you’ll have the rest of the business plan to get into the intimate details.
After the executive summary, we officially start our business plans with details about the business itself. This includes a company summary with milestones and history; short-term and long-term objectives; and the mission and vision statement.
Start off this section with a quick description of your company. Provide a great elevator pitch and talk about the milestones that you’ve accomplished to date.
Here are a few tips to make sure you nail this part of the business plan:
- Show progress: As mentioned previously, before you write your business plan (and definitely before you start approaching investors); validate your assumptions by launching a minimal viable product. Show your progress to date. Explain how your progress proves that a demand truly exists for your product or service.
- Tell the company story: Don’t get too lengthy here, but give readers an idea of how you started your business. Provide context to how the founders realized that a real customer problem existed. This section gives you the opportunity to really connect with readers and to get them excited about your business.
- Provide metrics: Even if you have fantastic writing skills, it’s the numbers, stats, and metrics that investors really pay attention to. Show your most outstanding metrics here. If you have 1,000 customers already using your solution, explain it in detail. Or, if you have already started earning revenue, showcase how much revenue you’ve earned so far. Likewise, if you have generated fantastic marketing metrics, tell readers about it and explain why it matters!
Before you start talking about the strategy to meet your goals, you need to make those goals known. Think about your financial goals, your user objectives, the goals you have for the development of your product, your team ambitions and more. In some way or another, every section in our business plan format will be used to describe the steps you will take to meet these goals and objectives.
Construct a great mission and vision statement and include it here. Think deeply about what your company really is, who you serve, and what you stand for. The best mission statements are short and to the point, but powerful enough that readers can easily comprehend why the company needs to exist.
Products and Services
You’ve already given a summarized version of what your business is, but now you will get into the real detail of your actual product or service. In this section, describe the product’s features and abilities. Consider the features that set your products apart from competitors. If you’re in the ideation stage, your product may not physically exist yet; but this section should be written so well that readers can easily visualize it. If you have a physical product, add images or 3D product blueprints. If you are an app startup, show screenshots of the app or wireframe images.
Industry and Customer Analysis
Every business plan format will include some type of industry and customer analysis. These are the sections where you will include research to prove that a market and demand actually exists for your product or service.
Don’t assume that you will be successful just because you have a cool product. Successful businesses are those that solve a problem for a specific market (or multiple markets). Furthermore, even if you can prove a market exists – you still need to prove that the market is actually in demand for the product or service your offer.
Select the market that is best served by your product or service. Research it deeply. Find the data and statistics that support your case and explain why those stats are important. Look at how the market has grown historically, and identify trends that show where it will grow in the future.
Once you’ve identified the markets you will serve, it’s important to also explain exactly who your customer is. How old are they? What do they do for a living? Are there specific challenges do they face? Which publications do they read? What podcasts do they listen to? Who are the influencers that they follow online? Where do they live? What are their interests? The more you know about who your customer is, the more effectively you will be able to reach and serve them.
Detail your ideal customer as if they were a real person. Give them a name and write this section in a way where a reader can immediately understand who your customer is. After giving life to your customer persona, answer this question – how does your business solve their specific problem?
The marketing strategy will explain specifically how you will reach the market and convert them into buyers of your product or service.
Pricing & Positioning
In this section, you will explain your pricing strategy and showcase how your business will bring in revenue. Will you succeed by being cheaper than competitors? Will you provide a ‘luxury’ service or product and charge more than less-luxurious competitors? Consider how your product will be positioned in comparison to competitors and display the prices you have selected for each product or service you offer.
The SWOT Analysis will allow you to describe your business’ strengths and weaknesses; the opportunities that you will capitalize on; and the threats the business will face. Typically, a SWOT Analysis is presented in a matrix with bulleted points, but we advise adding a section under the matrix that explains each point in more detail.
Marketing & Promotional Techniques
Since you’ve already launched a minimal viable product to the market, you should have an idea of what techniques you need to capitalize on to reach your audience. There are many different marketing strategies you can implement from SEO to influencer marketing to ads and beyond, but you should only focus on the most effective strategies that will allow you to quickly acquire new customers with a low CPA.
Furthermore, explain the expenses involved with implementing each strategy and the return on investment that you expect. If you mention Facebook marketing, explain how much you will put towards marketing each month, how much you will spend per click, and what percentage will convert into paying customers.
The competitive analysis should thoroughly detail how your solution compares to your competitors’ solutions. To make it easily digestible, consider adding a table that shows each feature of your business and product; and show how it compares to the features that your competitors offer.
Also, tell about your competitive advantages. What makes you special? Why should consumers choose your solution over the competition? Even if your business is closely similar to the competition, there should be something that makes it unique. Explain your unique selling points and what makes your business stand out amongst others.
There is much more to operating a business than just having a good idea. Bad operations can quickly derail a business, while a strong operational strategy can help catapult a startup to success. In our business plan format, we focus on several main areas of operation – Location, Quality Control, Customer Service, Staffing & Training, and Organizational Structure.
No matter if you are offering a physical product, a service, or a software – quality is key. Maintaining quality though can be harder than it seems.
- When dealing with physical products, it’s important to figure out how your product will be manufactured and how you will ensure that the manufacturers are maintaining a high-quality standard. Explain how quality will be assessed at each stage from manufacturing to final delivery.
- Those offering services will often need to depend upon their employees and staff to deliver the best level of service to customers. Employees that deliver underwhelming services can cause customers to perceive the entire brand negatively. In this section, describe the processes you will put in place to help employees deliver the best services, and how these services will be assessed for quality.
- Software products can be extremely fickle. One line of bad code could potentially crash an entire system. In this section of the business plan format, consider how you will deal with bugs and software updates. Describe your relationship with your developers – will they be in-house or third party? If a third party will be used, how will you ensure that they will be available to quickly address bugs found in the product?
Let’s face it, even the strongest brands are faced with dissatisfied customers every now and then. The way in which you deal with these dissatisfied customers will be critical to your success as a business. A single detractor can potentially turn away dozens of potential customers with one bad online review. In fact, consumer reviews are trusted up to 12 times more than a manufacturer’s description. The way in which you serve your customers, and not just the happy ones, will play heavily on how much consumers trust your brand.
In this section, address exactly how you will deal with customer dissatisfaction. Will you have a no-questions-asked return policy or will you only allow returns after 7 days? If a customer is dissatisfied by the service your employees provided, will you send someone else out to fix it? The steps you take to remedy your customer situations may have immediate implications on your financials – for example, a recall could cost a business millions of dollars. However, the impact of a dissatisfied customer (or several) will cost much more in lost business and diminished brand trust.
Staffing & Training
Unfortunately, your personal capacity is limited – there are only so many hours in the day and so much energy you can exert before you become overwhelmed. For any successful B-quadrant business, having the right staff in place at the right time is critical.
For this section, thoroughly assess what your staffing needs will need to be over the next 3-5 years to meet the goals that you outlined in the “Objectives” section. If your objective is to scale 10x over the next year, you will also need to scale your team so that there is enough capacity to meet that goal. If your goal is to expand internationally within 3 years, you may need to hire international staff to manage things on-the-ground in these regions. Each position should be reflected in your business plan, along with their expected date of hire and salaries.
Unfortunately, employees don’t come already trained. Even if they are highly experienced in their specific area, they will likely need some guidance. How will you train them for success? Will you have a specific training program that each employee must attend? If so, this is the section to talk about it!
Now that you know what employees you will need to hire, you can create a simple hierarchy structure that shows who will manage each department and which positions will fall within those departments.
Great businesses don’t build themselves. Instead, they are built by fantastic teams who have the right skills and backgrounds. An amazing business idea without a great founding team is like a racehorse without a jockey – it may have potential, but it’s the rider that pushes it to success. In this section of the business plan format, show that you have the right team and right advisors to launch, grow, and scale a profitable business.
The most effective teams have several motivated members who each have skill sets that complement one another and contribute to the overall progress of the business. When writing the bio for each member, consider the following:
- Background: Take a look at the background of each team member. Do they have past experiences that will help move the business forward?
- Skills: What skills are necessary to successfully implement the steps described in the business plan? Are all of these skills present in your current team?
- Contribution & Responsibility: What tasks are each individual responsible for? What have they contributed to the business thus far?
Great founding teams also have extensive networks with advisors that they can turn to for advice and insight. Businesses often face challenges, but by relying on the experiences of others, teams can often avoid certain obstacles or solve them quickly.
In this section of the business plan format, provide a short bio for the advisors that have committed to working with you. Detail who they are, what achievements they have made, and the highlights of their backgrounds.
When writing your own business plan, the financial model is likely where you will find the most difficulty. If you are a startup, your financial model will include future projections with a 3-5 year window. If you are writing a plan for an existing business, the model will include financials from the previous several years, along with future projections. In most cases, a proper financial model will include:
- Profit and Loss Statement: Summarizes projected revenue, costs and expenses.
- Balance Sheet: Displays the company’s assets, liabilities and equity at a specific point in time, showing a balance between outgoing and income funds.
- Cash Flow Statement: Shows how the cash balance is affected by changes in balance sheet accounts. Also shows the impact of investing and financing activities.
Here’s the major tip for developing the financial model for your business plan – minimize assumptions. While there will be certain things that you will need to assume it’s best when your model uses real numbers.
- The best financial model uses past financial history to forecast future revenues, expenses, and profits. For startups, this may mean launching a minimal viable product, getting it in the hands of real users, and generating real stats.
- An average financial model uses secondary data from highly reliable sources, studies, and surveys. However, secondary research only relates to the overall industry – while using real numbers from your business relates directly to how your business performs within the overall industry. Secondary research is good, but statistics may vary from one study to another. Make sure you only use data from high-quality and reputable sources.
- The least effective financial models are full of assumptions. In these plans, entrepreneurs guess what their expenses will be, what portion of the market they can reach, and how much revenue they can generate; instead of backing it up with real data and research.
Finally, reveal your financial ask and explain exactly why you need that amount. Itemize where each dollar will be spent to give readers a clear understanding of your financial requirements. Lastly, state the amount of equity will be given in exchange for the investment – based upon the current value of your startup.
Some business plan writers choose to include an exit strategy, while some do not. Some investors will require it so that they can get an idea of when they will receive their investment back along with a major payoff. Others, however, know that the future of a startup is totally uncertain, and therefore, they don’t really pay much attention to this section.
Whether you decide to include the exit strategy in your business plan format is up to you – but if you do, here are a few tips:
- Research similar businesses that had a successful and profitable exit. Were they acquired? Did they merge with another business? Did they go public? Explain how other similar businesses were able to exit and why you believe your business will be able to exit in a similar fashion.
- Tie your exit into your financial projections and show a projected valuation. Furthermore, show how an XX% ownership in the company (whatever percentage an investor would receive for matching your financial ask) will multiply in returns at exit based upon that valuation.
Using Our Business Plan Format
Unfortunately, just having a great business plan format isn’t enough – now you have to actually write your plan. When creating your business plan, stick to the facts. Investors have short attention spans when it comes to even a simple business plan, and too much fluff will quickly diminish their interest.
Furthermore, some investors (and banks) may have specific business plan formats that they prefer. Make sure to do your research on their specific requirements before writing and submitting your business plan.
Need help getting your business plan together? Contact us today and schedule a consultation with one of our business plan experts!