How to write a business plan

Entrepreneurs are jugglers — handling everything from winning over investors to paying employees and refilling the soap dispensers. A business plan can help you maintain focus on the big picture while keeping all those balls in the air.

Sharing your vision

Think of your business plan as a road map for growth. Your business plan:

• Defines your company’s offerings

• Outlines goals and strategies to achieve them

• Details financial projections and marketing plans

• Prioritizes growth activities

You’ll also find a business plan useful when you meet with potential partners, investors, and lenders. Some may want to see your plan before they even agree to meet with you.

Investors and lenders will be evaluating whether your business goals are achievable, specific, and measurable — and they always look for convincing, concrete data in your business plan.

Getting started

Tailor your plan to your company’s business type and industry. For example, Karakoram, which makes and sells splitboard bindings directly to customers, would probably include information about consumer behavior, trends, and demographics in a business plan.

A company like Botanical Colors — which sells its natural textile dyes to artisans and textile-based businesses — may include details on business decision-makers and the stakeholders involved in a sales cycle.

No matter your business type, there are some essentials to include in your plan.

Analyze your market

Research your customers, competitors, and the overall market environment. Some questions to consider:

• Who are your ideal customers?

• What do they care about?

• How does your business help or serve them?

• Who are your competitors?

• What are your advantages vs. your competitors?

• What does the market environment look like? (e.g., growing, shifting, etc.)

Conducting market research through surveys, focus groups, and brand research, and product research can help you learn more about your target customers. Including these findings in your plan can help demonstrate:

• Your understanding of your industry and customers

• The value your company brings to the market

• The growth opportunities in your market

Define business goals

Growing into a new market? Launching a new product? Expanding your market share? Set business goals that are achievable, specific, and measurable.

Some examples of business goals:

• Grow quarterly sales by 10% during the first year

• Maintain an average customer service rating of four to five stars

• Hire two new designers and a social media expert by year-end

• Open five new retail outlets within three years
• Decrease shopping cart abandonment by 20% over the next 12 months

• Add a buy now, pay later option by Q3 to increase holiday revenue

Include all of your business goals in your business plan so you can refer to them frequently and track your progress.

Develop financial projections

In this section of your business plan, you will show that you can keep your business viable and sustainable. You will also detail your projected sales and costs.

To get started, try answering some of these questions:

• What are your one-time start-up costs vs. your on-going operational costs?

• How will you manage your cash flow, especially when you first open your doors?

• What are the assumptions underlying your sales forecast? For example, a restaurant in an office park likely expects a big business lunch crowd.

• What are the biggest variables and risks? For instance, if you sell your product at farmer’s markets, weather could affect sales.

• What are the key milestones and check points? It’s important to evaluate progress regularly, as market shifts and strategy pivots may be warranted.

Regularly updating cost and revenue projections — along with identifying and adjusting assumptions, variables, and risks — helps keep growing businesses on track through market changes.

Create a marketing and sales plan

Potential partners, investors, and lenders will refer to your business plan to see how you will attract and retain customers.

The findings from your market analysis can help support the marketing strategy portion of your business plan.

Here you will explain:

• Where and how you’ll reach potential customers. This may include social media, advertising, and promotions like referrals and new customer discounts.

• Where you’ll sell, including online channels, retail stores, pop-ups, and/or third-party sellers.

• How you’ll manage customer service, such as monitoring customer reviews on Yelp or other online forums and responding to customer feedback.

• How you’ll build customer loyalty to encourage repeat business.

Tell a compelling story

Once you’ve done all your research, projected the financials, and thought about how to approach the market, you have all the pieces to write your business story.

Introduce your business at the beginning of the plan with the following:

• Executive summary: This is your elevator pitch

• Company description: Include who owns the company here

• Product or service description: Highlight what makes your business unique from competitors, and any relevant market dynamics

Each time you share your business plan you can tailor the structure to the intended audience. For example, a potential investor will probably find your financial projections most relevant, so you might place this information first.

Implement and update your business plan

Your business is a living thing. It will evolve and change as it faces new challenges and opportunities.

Clearly, even the best-laid plans will change as we grow and our business environment changes.

As you move forward as a founder, revising your business plan often will help you continue to juggle the demands (and rewards!) of running your business.

To bring your business plan to life, you need the right tools. Learn more about PayPal’s payment solutions.