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Whether you're just starting out or running a mature business, it pays to have an up-to-date business plan to help you navigate its future. A playbook for your goals, priorities and growth opportunities, your business plan will help you chart a successful path forward.

Creating a business plan is a crucial task for any business, and one which requires you to be thoughtful about the direction of your business, consider the goals most important to you, and how you will go about achieving them.

A solid business plan will give you the confidence that you will find success, and may even reveal some gaps and risks. In fact, studies show entrepreneurs who start with a written business plan are more successful than those who don’t.

Whether you’re creating a roadmap to follow as a new business owner, need a pitch to attract investors or a document to engage stakeholders, a business plan is a living document you’ll want to update regularly as your business, goals and circumstances evolve.

While some business owners consider writing a business plan an overwhelming step, it doesn’t have to be. Creating the best business plan ever is a matter of breaking it down into individual steps — and then taking them one at a time.

7 steps to building a business plan.

1. Introduction

The substance of your introductory section (beyond your cover page and table of contents) is the Executive Summary. The Executive Summary should identify what your business does, covering:

  • Your industry and target market(s)
  • Your company’s goals
  • How you stand out from your competition
  • Whether your business is a sole proprietorship, partnership or incorporated business
  • The stage of your business — whether it is a start-up or already in operation
  • Your team’s experience and credentials
  • Your projected financial performance

While your Executive Summary has to work hard, it should be clear and to the point, grabbing the reader’s attention and compelling them to read more — a good rule of thumb is to keep this section to one page. While the Executive Summary is structurally the first section of your plan, many owners will write it last, since it’s a summary of everything else you’ve written about.

Important things to consider as a new business owner
  • Because you’re a new business owner, your bank and potential investors don’t have historical data to review. Your plan therefore must clearly convey your strategy, competencies and the reasons your venture will be successful.
  • Detailed, well-thought-out financial projections are an important component of your business plan. You’ll want to show how your business could service debt, how you’ll drive revenue and detail both fixed and variable costs.
  • As you write your plan, focus on your competitive advantage — what separates you from other businesses, your key success factors, your team and areas of opportunity and focus over the next six to 18 months.

2. The Business Environment

This Business Environment section sets out the history and summary of your business in detail, identifying what you’re selling and how you’re solving a problem or need in the market. If your business is already established, you’ll want to cover its path to this point — where you started and how you got here. If you’re starting a new business, be sure to include any pre-market research or testing you’ve conducted that speaks to the viability of your idea.

You will also want to highlight the industry trends and growth prospects, as well as how your business fits into the current environment. Identifying your competition and how you stand apart from them will also help you determine your position within the industry.

Considerations for seasoned business owners
  • Your business plan should identify what differentiates your business from others, what’s working (and what’s not) and outline costs, efficiencies, competitors and objectives.
  • As an important vehicle to help you secure funding, your business plan should include cash flow projections and the objectives for the management team – including expansion opportunities, asset accumulation and projected financing needs.
  • As you’re writing or revising your plan, identify the teams who support you, your talent pipeline, your succession plan and your plan to remain competitive in an increasingly competitive environment.

3. The Marketing Plan — Where you want to go and how you will get there

Your Marketing Plan explains how you’re going to get your customers to buy your products or services. Part of this exercise involves defining your target market — the group of customers you want to sell to. Your Marketing Plan should also include:

  • Your products, service and unique selling proposition (USP). What are the features of your product or service and what makes it unique? How is it different from what your competitors offer?
  • Your pricing strategy. Determining the price to charge can seem tricky – you want it to be competitive but still make a reasonable profit. Calculating your costs, estimating the benefits to customers and comparing your offering to others can help you come up with the price
  • Your sales and delivery strategy. How will your product or service get to your customers? And how much will it cost? How will you manage your inventory and transaction processing?
  • Your advertising and promotion strategy. Here you’ll want to describe how you’re going to deliver your unique selling proposition to your prospective customers. Start by thinking about the message you want to deliver and the advertising and promotional tactics you’ll use (e.g., company website, social media, emails, radio, etc.) to reach your audience most effectively and efficiently. Be sure to prioritize your activities and budget for them accordingly.

4. Operations

The Operations section of your business plan describes what’s physically necessary for your business.

This section contains two main categories:

  1. Your stage of development: This should highlight what you’ve done to date to get your business operational, then an explanation of what still needs to be done.
  2. The production process: This lays out the details of your business’s day-to-day operations, including your hours of operation, and manufacturing details such as facility, equipment and material requirements, inventory, costs and more.

5. Financing and Cash Flow Planning

The Financing and Cash Flow Planning section is your opportunity to determine how strong the financials are for your business. Be realistic about your expenses and projected income so you can properly assess your business’ financial health as early as possible.

If you’re running an existing business, your goal for the Financing and Cash Flow Planning section is to address three main financial areas:

  1. Your cash flow statement: how much money your business has at a particular point in time
  2. Your income statement: your profit and loss for a period of time
  3. Your balance sheet: a financial snapshot of your business

In order to do that you’ll need to calculate your income and your expenses — both your one-time and ongoing operating costs.

If you haven’t started your business yet, you will only be able to populate your expenses, which are important to calculate ahead of time as they will reveal how much start-up financing you may need to get your business up and running.

6. The Team

Great ideas need great teams behind them, so this section should describe your current team as well as anyone you might need to hire for your company. Be sure to address your own background, skills and strengths. Include detailed management team profiles, credentials of your Board of Advisors (if you have one), and the professional partners you have relationships with, such as lawyers, accountants, bankers and any consultants.

An overview of your Human Resources processes, which will address labour, compensation, training and other operational aspects of managing your people, can round out this section.

7. Risks and Conclusions

Every business comes with some risk — so it’s better to be prepared for risks now rather than be surprised by them later. In this section, include all the possible risks your business could face. This may include the economy, your competition, potential supply chain disruptions, losing key team members or security issues. You’ll then want to detail how you plan to address these risks if they occur.

In the Conclusions section, restate your goals and objectives. If the purpose of your business plan is to get financing, you will want to clearly state the amount required and what it will be used for. As with your Executive Summary, your conclusion should be succinct, clear and leave a positive impression on the reader.

Keep in mind, your business plan is a living, breathing document that should be regularly revisited — regardless of whether you are a new owner or run an established business.

You’ll want to review your plan to understand how your goals, priorities, competitive environment and operating model are coming together to deliver on your ambitions. And, as the more business planning and sales forecasting become part of your routine, the more prepared you will be to make strategic decisions to drive the business outcomes you’re striving for. The result is greater confidence and agility to take on new challenges and opportunities as they appear.

Diane Amato is a freelance writer who loves to talk about finances, travel and technology.