In this business planning guide:
1. Tools for writing a business plan
Online business plan software
Using business plan software is a very efficient way to make a high-quality business plan without breaking the bank.
Using online business plan software is the ideal compromise between making a business plan with Excel and Word (which requires a strong accounting background to avoid calculation errors), and enlisting the help of a business plan writer (which calls for a substantial budget).
The software will guide you through the creation of your financial forecast and take care of crunching the numbers to produce the income statement, cash flow statement and projected balance sheet.
Answer simple questions, enter your data, and let the software generate complete financial statements!
In addition to the financial forecast, the software assists you on the editorial part with a detailed outline, instructions for each section of the plan, and examples to guide you.
The Business Plan Shop's solution
If you are interested in this type of solution, The Business Plan Shop has created simple and efficient online business plan software that you can try for free by signing up here.
Specially designed to be used by entrepreneurs with limited knowledge of accounting, our software enables you to easily write a business plan that meets the criteria of banks and investors.
There are several advantages to using our business plan software:
You are guided through the writing process by detailed instructions and examples for each part of the plan
You can be inspired by already-written business plan templates and examples
You can easily make your financial forecast by letting the software take care of the financial calculations for you
You get a professional document, formatted and ready to be sent to your bank or investors
You can easily compare your forecast against your accounting data to make sure you are on track to deliver your plan, or make adjustments if needed
Free 7-day trial.
Business plan templates to get inspiration from
Even if you have to write your business plan on your own, it doesn't mean you need to start from scratch.
To help you write your business plan, The Business Plan Shop provides a free business plan template for you to download in order to get an idea of what a real one looks like.
Click on this link to download our free business plan template in MS Word or PowerPoint format.
But that's not all! We also have a variety of themed business plan templates available in our application so you can pick one that matches your business.
Unlike the blank free template, our themed business plan templates contain a complete business plan sample with the written presentation of the business, the team and the market, and, of course, a complete financial forecast with all the projected financial statements that banks and investors want to see.
Why not use Excel or Word to create a business plan?
Whilst Word or Excel may be viable options for writing a business plan for some entrepreneurs, it is by far not the best or most efficient solution because:
- It's risky: you need to be an expert in financial modeling and accounting if you want to avoid calculation errors
- It's long and your time is better spent elsewhere: using Excel and Word is much slower than using software that does the calculations and formatting for you
- It's hard to maintain: a business plan created with Excel and Word is difficult to update and there's no easy way to compare your actuals against your forecast
- It's tedious: Excel and Word contain no instructions or examples to help you write the actual plan
2. The definition of a business plan
What is a business plan and what is it used for?
A business plan is a document that will enable you to obtain a clear vision of your venture, evaluate its expected profitability, and support your applications for funding from banks or investors.
It is important to understand the essential nature of the business plan - without one, you can wave goodbye to your dreams of securing financing.
The first part of our guide focuses on the definition of the business plan and what it's used for.
So without further ado, here's a list of articles that will be useful to understand what you'll need to write your business plan:
- What is a business plan? - complete definition and how to create one
- Do I need a business plan? - why writing a business plan is essential for your project
Don't confuse business plan with similar terms...
Is the difference between a business plan and a business case confusing you?
These two concepts can be tricky to distinguish, which is why we're here to give you a clear definition of both in our guides below:
- Business model vs. Business plan - difference between the business model and business plan concepts
- Business plan and business case, what makes them different? - how to differentiate a business plan and a business case
- Business plan or budget? - budget and business plan are not the same thing at all. This guide looks at what sets them apart.
- Business plan vs. business proposal - confused between the two? Get clarity by reading our guide.
- Business plan vs. pitch deck - these two documents are different both in their role and format. Our guide looks at what sets them apart.
- Business plan or Strategic plan? - learn the difference between these two documents by reading our guide.
3. The financial forecast of a business plan
The financial forecast of a business plan is extremely important as it lets you:
- Assess how much financing your business requires (for startup, growth, etc.)
- Assess the expected growth and profitability for the next three or five years
- Keep an eye on your future cash flows (both short-term and long-term)
Your forecast will be your reference point for the next three or five years to ensure that growth is achieved, but it is also an element that investors and banks will scrutinise very closely.
In your business plan, your forecast is presented using 4 financial tables: a profit and loss statement (or P&L), a balance sheet, a cash flow statement, and a sources and uses table.
Below we explore each of these tables in a bit more detail.
The projected profit and loss statement
The profit and loss forecast enables you to assess your businesses' expected turnover and growth over the next 3 to 5 years.
It also allows you to view the expected profitability of the company both at the operational level (EBITDA or Earnings Before Interest Tax Depreciations & Amortization, which measures the company's cashable profits from operations) and at the global level (net profit).
Finally, the P&L enables you to compare how revenues and costs are expected to evolve in order to ensure the company's margins are maintained or improved during the plan.
The projected balance sheet
A projected balance sheet includes three key elements:
- Assets, i.e. what the company owns (stocks, equipment, etc.)
- Liabilities, what the company owes (to suppliers, loans, etc.)
- Equity (money invested by the shareholders)
The balance sheet makes it possible to observe the financial structure of the business (weight of debt in relation to equity), as well as the working capital requirement (WCR - i.e. money immobilised by the business activity: inventory, invoices pending payment, etc.), and the evolution of the value of the productive assets (vehicles, buildings, equipment, etc.).
By cross-referencing the balance sheet and the income statement, we can analyse the company's:
- Liquidity (ability to repay its short-term debts) and solvency (ability to repay its medium- to long-term debts)
- Procurement policy (number of days of sales in stock) and the commercial policy (payment terms to customers and suppliers)
- Investment policy (increase or decrease in the value of productive assets, rate of depreciation, etc.)
The cash flow forecast
The cash flow forecast provides a complete view of how much cash is generated or consumed by the company when you write your business plan.
By looking at this table, you can check that the business is generating enough cash to meet your loan repayments, renew your equipment, and also invest to grow.
The sources and uses table
Through the initial financing plan, you will be able to understand how the financing is distributed at the start of the project, and how the risks are distributed between the project owners and the external capital providers.
4. The written presentation of a business plan
What should the written presentation of your business plan contain?
Now that we seen what the financial forecast entails, it's time to take a closer look at what the written part of a business plan consists of.
Here's an overview of the content included in each key section of a business plan:
- Executive summary: The executive summary should grab the attention of the reader and make them want to continue reading your business plan. It presents the key elements of your business: the owners, market, key figures and financing requirement.
- Company: This part will explain the legal structure and shareholding, and introduce the management team and location of the company.
- Products and services: You'll describe here what products and/or services you intend to market to your customers.
- Market analysis: Here, you'll present the results of your market analysis to demonstrate to the reader that there is an an attractive opportunity to be seized in the market.
- Strategy: In this section, you'll detail your strategy and the main risks associated with your business and how you intend to mitigate them.
- Operations: Your operational plan should explain how your company will operate on a day-to-day basis, and highlight your recruitment plan, key company resources, and suppliers.
- Financial plan: This is where you will present the financial forecast we mentioned earlier in this guide.
- Appendices: The appendices include supporting materials such as a debt schedule, monthly financial statements, etc.
Our guides to help you write each part of the business plan
You can find more info on how to write your business plan by having a look at the following resources:
- Business plan steps - everything you need to know about the 7 key steps to write a business plan
- Business plan outline example - This article contains a summary, a detailed business plan and a complete section-by-section guide on how to write a business plan.
- How to design your business plan cover page? - our tips to make your cover page attractive
- Executive summary - our advice on how to write your business plan's executive summary
- How to write the structure and ownership section of your business plan? - our tips to present your company legal form and who controls your business
- How to write the location section of your business plan? - our tips to present your business location
- How to present your management team in your business plan? - our tips to present your leadership team
- How to write the products and services section of your business plan? - our advice on showcasing what your business sells
- How to do market research for a business plan - this section is sometimes the scariest of all, which is why we've compiled all of our advice on how to put together the market research for your business plan
- How to present your sales and marketing strategy in your business plan? - a quick guide on how to explain your go-to-market strategy
- How to set efficient milestones in your business plan? - our tips and tricks for setting smart goals
- How to disclose and mitigate key risks in your business plan? - transparency is key when it comes to disclosing risks
- What and how to write about your suppliers in your business plan? - we provide best practices for talking about your supply chain
- What goes in your business plan appendices? - our advice on how to decide what goes in the main body and what goes at the back of your document
- Where to write the conclusion of your business plan? - we provide our top tips on the writing a compelling conclusion to attract investors
- How to write a five-year business plan? - our guide dedicated to BPs with longer horizons
- How to format your business plan? - our tips to make your business plan look professional
5. Tips for writing a successful business plan
Mistakes to avoid in your business plan
It's easy to find lists with common mistakes to avoid on the Internet, but most of them only provide vague indications like “don’t overestimate sales or costs”.
We decided to go much deeper and to provide something that is both comprehensive and actionable. Check out our guide of the 69 mistakes to avoid in your business plan.
How investors and banks assess business plans
You now know why and how to write a business plan. But do you know exactly how a bank or investor will evaluate it?
Learn more about their expectations so that you can kickstart your search for funding with a foolproof business plan:
- What are the risks banks face when lending money to an entrepreneur?
- How do they differ from the risks faced by equity investors?
- How do bankers and investors make their decision?
Find your answers here: How investors analyse business plans? - this article explains how the risks and opportunities for gains faced by debt and equity investors influence their investment process.
Business plan myths debunked
Creating a business plan often seems difficult to entrepreneurs, and the business plan myths that are floating around further add to the problem. .
In this guide, we’ll clear the fog around popular business plan myths in order to help you better understand what a business plan is all about (and what it is not): 13 business plan myths debunked.
How much does a business plan cost?
You need a business plan and are wondering how much creating one costs?
In this guide, we’ll look at the factors that influence the cost of a business plan: How much does a business plan cost?.
Should I hire a professional business plan writer?
It can be tempting to entrust your business plan to a professional business plan writer.
However, this service is usually quite expensive, so is it worth it?
Well, it depends.
To find more about the advantages and disadvantages of using a business plan writer and decide if that's the right solution for you, read our guide: Should I hire a professional business plan writer?
6. Business plan types
Business plans come in all forms and shapes depending on their objective and audience. You will find below our guides dedicated to the most common business plan types:
Frequently Asked Questions About Business Planning
A business plan is a written document that sets out the commercial, operational and financial objectives of the company over the next 3 to 5 years.
It consists of two main parts:
- A written part that presents, in detail, your business, the team, your strategy, and your medium-term objectives.
- A financial forecast that highlights the expected profitability of the business and the initial funding requirements.
The lack of business planning is one of the main reasons why more than 50% of startups fail within 5 years. If you're starting a business, writing a business plan is a must-have in order to reduce the risk of failure of your project.
Business plans are also required by most lenders and investors in order to secure financing, therefore a business plan is also highly recommended if you're seeking a loan or equity investment for your business.
Writing a business plan without The Business Plan Shop can be both error-prone and time-consuming - whether you're new to entrepreneurship or experienced:
- You'll need to research the structure of a business plan, what to include in each section, and what key elements investors and lenders expect to see
- You may encounter writer's block (especially if it's your first time)
- You'll need to create a financial forecast on a spreadsheet which requires a solid understanding of accounting and financial modelling in order to be done without error
- You'll need to spend hours formatting financial data on Excel or Google Sheets before it's ready to integrate into your business plan
- Any updates to your business plan or financial forecast will need to be done manually
Luckily for you, The Business Plan Shop's online software guides you through every stage of writing a business plan, so that you can spend more time managing your business instead.
Our editor follows a best in class structure for professional business plans. Each section and sub-section includes examples and instructions to help you, while our business plan templates provide further inspiration if you're stuck.
Our financial forecasting software helps you create a forecast and integrate it into your business plan with ease. Anytime you update your data, your business plan automatically updates.
And with our best in class forecasting software all the calculations are done for you, without errors.
But you shouldn't take our word for it: try our solution for free and make your own opinion as to whether or not we are truly the best business plan software for you!
The short answer is: how long as it needs to convince the reader without boring them. A good rule of thumb is to keep it to between 20 and 30 pages maximum (excluding the appendices), but it really depends on:
- The complexity of your business idea and whether or not the reader is familiar with your market (they need to understand what you do)
- How much financing you're trying to secure with your business plan (the more you're trying to raise the more convincing it takes)
- Your track record as a team (are you new to the sector and entrepreneurship, or industry veterans with multiple successful businesses under your belt?).
The Business Plan Shop's online business plan software can help you write your own business plan with ease. It's a very efficient way to write a high-quality plan without breaking the bank.
Creating a business plan with The Business Plan Shop is not expensive, please visit our pricing page to learn about this in more detail.
If you go through a consultant or business plan writer, you should generally expect to pay a minimum of €$2,000 (or £1,500) excluding tax for a complete business plan (written part and financial forecast).
Try The Business Plan Shop for free!
Our online software and templates guide you through each step of writing your business plan, making it quick and easy to produce a professional document to present to your financial partners.
Free 7-day trial. No credit card required.