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How to Write a Business Plan

Writing a business plan should not be difficult. In this step-by-step guide, I will show you how to quickly and easily write a business plan that will get the results you want. Don't worry, you don't have to have a business or accounting degree to cover a large business plan. This guide will show you how to get your system done step by step without any hassle or frustration.

You can also book a free consultation to get a quick assessment of your business plan by our team.

Also, you can download this guide as a free e-book that you can use while writing your business plan.

Six Business Plan Items

Whether you are developing a business plan to raise money and grow your business or you just need to find out if your idea will work, every business plan needs to cover 6 key topics. Here's a quick overview of each topic. There are more details and instructions for each step later in this guide.

1. Top Summary

A management summary looks at everything from your business and your plans. It comes first in your plan and should be only one to two pages long. Most people write it in the end, however. Learn more.

2. Opportunity

The Opportunity section answers the questions: What do you actually sell and how do you solve the problem (or “need”) of your market? What is your target market and competition? Learn more.

3. Execution

In the executing chapter of your business plan, you will answer this question: how will you use your opportunity to turn it into a business? This section will include your marketing and sales plan, performance, and your key steps and success metrics. Learn more.

4. Summary of company and management

Investors tend to focus on proficient teams rather than on the 'next-big' idea. Use the company and management chapter to describe your current team and who you need to hire. You will also provide a quick overview of your legal framework, location, and history if you are already working. Learn more.

5. Financial plan

Your business plan is incomplete without a financial forecast. We'll tell you what to include in your financial plan, but you'll definitely want to start with a sales forecast, cash flow statement, income statement (also called profit and loss) and your balance. Learn more.

6. Appendix

If you need more space for product images or additional information, use the appendix for that information. Learn more.

In future sections of this article, I will go into detail on each section of your business plan and focus on creating one that your investors and lenders will want to read.

Three rules that make business planning easier:

Before we start with your business plan, let's talk about some of the "rules" that will make the whole business planning process easier. The goal is to make your business plan work so you can focus on building your business.

1. Keep it short

Business plans should be short and concise. Thinking about that twice:

First, you want your business plan to be read (and no one will read a 100-page or even 40-page business plan).

Second, your business plan should be the tool you use to run and grow your business, something you continue to use and refine over time. An extremely long business plan is a major problem that you need to review - you are almost guaranteed that your plan will be downloaded to the desk drawer, never to be seen again.

2. Know your audience

Write your program using language that your audience will understand.

For example, if your company is developing a complex scientific process, but your potential investors are not scientists, avoid jargon, or unusual acronyms.


“Our patent technology is an addition to one of the existing bCPAP settings. When attached to a bCPAP setup, our product provides a dual power supply. ”

Write this:

"Our patent-pending product is powerless, an easy-to-use tool that replaces traditional respirators used in hospitals at a cost of 1/100 at a cost."

Involve your investors, and keep your product descriptions simple and straightforward, using words that everyone can understand. You can always use the appendix of your program to provide complete details if needed.

3. Do not be afraid

Did you know that most business owners and entrepreneurs are not business professionals? They do not have MBAs or accounting degrees. They learn as they go and find tools and resources to help them.

Writing a business plan may seem like a daunting task, but it doesn't have to be this way. You know your business - you are an expert in it. For that reason alone, writing a business plan and using your growth plan will not be as challenging as you think.

And you do not have to start with a complete, detailed business plan that I will explain here. In fact, it may be easier to start with a simple one-page business plan - what we call the Lean Plan - and then return to build a long, detailed business plan over time.

This whole article will go into the details of what to include in your business plan, what to skip, critical financial speculations, and additional resources links that can help start your plan.

Executive Summary

The top summary of your business plan introduces your company, explains what you do, and sets out what you need for your readers. By design, the first chapter of your business plan. And while it is the first thing people will read, I advise you to write it down at the end.

Why? Because once you know the details of your business inside and out, you will be better prepared to write your management summary. After all, this section is a summary of everything else you will write about.

Ideally, a high-level summary can serve as a stand-alone text that integrates the highlights of your detailed program. In fact, it is more common for investors to ask for a higher summary only when evaluating your business. If they like what they see in the management summary, they usually follow the application for a complete plan, pitch presentation, and deep finance.

Because your management summary is the most important part of your business plan, you will want to make sure it is as clear and concise as possible. Close the key features of your business, but don’t limit yourself to too many details. Ideally, your management summary will be two to two pages, designed for quick reading that arouses interest and makes your investors feel eager to hear more.

Critical parts of the winner's summary:

Overview of the sentence business

At the top of the page, under your business name, enter an overview of one of your business sentences that summarizes the context.

This can be a tag line, but it usually works best if the sentence describes what your company actually does. This is also known as your value proposition.

The problem

In a sentence or two, summarize the problem you are solving in the market. Every business solves a problem for its customers and fills a need in the market.


This is your product or service. How do you handle a problem you find in the market?

Target market

Who is your target market, or your best customer? How many are there? It is important here to clarify.

If you are a shoe company, you are not referring to "everyone" because everyone has feet. You may be referring to a particular market segment such as "men know style" or "runners." This will make it much easier for you to target your marketing and sales efforts and attract the types of customers who can buy the most from you.


How does your target market solve their problem today? Are there alternatives or alternatives to market?

Every business has some form of competition and it is important that you give an overview of your management summary.

Company and Team Overview

Give a brief overview of your team and a brief overview of why you and your team are the right people to take your idea and sell it.

Investors put a lot of weight on the team - even beyond the concept - because a good idea needs to be done a lot to be real.

Financial summary

Highlight the key features of your financial plan, appropriately with a chart that shows your planned sales, cost, and profit.

If your business model (that is, how you make money) needs more explanation, then you can do it.

Financial needs

If you are writing a business plan to get a bank loan or because you are asking angelic investors or affiliate capitalists for funding, you should enter the details of what you need in the top summary.

Do not worry about installing potential investment options, as these will be discussed further. Instead, make a brief statement showing how much money you need.

Large steps and drag

The last important aspect is a summary of the investment managers who will want to see the progress you have made so far and the future steps you intend to take. If you can show that your potential customers are already interested in - or perhaps are already buying - your product or service, this is good to highlight.

You can skip the management summary (or significantly reduce it on the scale) when writing an internal business plan that is a strategic guide for your company. In that case, you can extract information about the management team, funding requirements, and deductions, and instead treat the management summary as a general overview of the company's management, ensuring that all team members are on the same page.


There are four main chapters in the business plan — opportunity, performance, overall overview of the company, and financial plan. The chapter on the opportunity of your business plan is where the meat of your plan lies - including information on the problem you are solving, your solution, who you plan to sell it to, and how your product or service fits into the competitive landscape.

You will use this section of your business plan to show you what sets your solution apart from others, and how you plan to maximize what you offer in the future.

People who read your business plan will already know a little bit about your business because they are reading your top summary. But this chapter is still very important because it is where you expand on your first look, provide more details and answer additional questions that you will not include in a management summary.

Problem and solution

Start the opportunity chapter by explaining the problem you are solving for your customers. What is the main point of pain for them? How do they solve their problems today? Perhaps existing solutions to your customer's problem are too expensive or difficult. For a business with a virtual location, there are probably no solutions within the right driving range.

Defining the problem you are solving for your customers is far and far from the most important thing in your business plan and is critical to the success of your business. If you can't pinpoint the problem your customers may be having, you may not have a valid business idea.

To ensure that you solve a real problem for your potential customers, a big step in the business planning process is to get out of that computer and go out and talk to potential customers. Make sure they have a problem that you think they have, then take the next step and put your potential solution to their problem. Is it good for them?

Once you have identified the problem of your target market, the next section of your business plan should describe your solution. Your solution is a product or service that you plan to offer to your customers. What is it and how is it offered? How do you best solve a problem your customers have?

For some products and services, you may want to explain usage cases or tell a story about a real user who will benefit (and be willing to pay) for your solution.

Target market

Now that you have explained your problem and solution to your business plan, it is time to change your focus on your target market: Who are you selling to?

Depending on the type of business you are starting and the type of plan you are writing, you may not need to go into too much detail here. No matter what, you need to know who your customer is and you have a bad idea of ​​how many there are. If there are not enough customers for your product or service, that could be a warning sign.

Market analysis and market research

If you are going to do market analysis, start with some research. First, identify your market segments and determine how big each segment is. The market share is the group of people (or other businesses) you can sell to.

Don't fall into the trap, however, of describing the market as "everyone." An old example is the shoe company. While it may entice a shoe company to claim that their market is targeted at all pedestrians, they actually need to identify a specific market segment in order to be successful. Maybe they need to identify athletes or entrepreneurs who need formal work shoes, or maybe they point to children and their families. Learn more about targeted advertising in this article.


A good business plan will identify target market segments and provide specific information to show how fast each segment is growing. When targeting target markets, the traditional method is to use the TAM, SAM, and SOM fluctuations to look at market sizes from top to bottom and the way down.

Here are some quick explanations:

  • TAM: Total available or spoken market (everyone you wish to find with your product)

  • SAM: Your Selected Divided Market or Series Available Server (part of TAM you will identify)

  • SOM: Your Market Share (a subset of your SAM that you will truly achieve - especially in the first few years of your business)

Once you have identified your key market components, you should discuss the trends of these markets. Are they growing or shrinking? Talk about changing market needs, tastes, or other upcoming market changes.

Your ideal customer

Once your target market segments have been defined, it’s time to define your relevant customer for each category.

Another way to talk about your best customer in your system is to use your “buyer persona” or your “user persona”. A consumer persona is a fictional idea of ​​your market - they get a name, gender, income level, likes, dislikes, and so on.

While this may seem like an additional task beyond the market segment you have already undertaken, having a strong buyer will be a very useful tool to help you identify the marketing and sales strategies you will need to use to attract these customers.

Customers are important

The last section of your target market chapter should discuss key customers.

This category is only required for (large) business companies with very few customers. Most small businesses and common startups can skip this and move on.

But if you sell to other businesses (B2B), you may have a few key customers in the success of your business, or a handful of key clients who are the practice leaders in your space. If so, use this last portion of your target market chapter to provide details about those customers and how they are critical to the success of your business.


The sooner you follow your target market segment, the longer you should describe your competition. Who else offers solutions for trying to solve your clients' pain points? What are your competitive advantages over the competition?

Many business plans use the "competitor matrix" to easily compare their features with their competition. The most important thing to show at this stage of your business plan is how your solution is different or better than other potential customer considerations. Investors will want to know what benefits you have in this competition and how you plan to differentiate yourself.

One of the biggest mistakes entrepreneurs make in their business plans is to say they are not competitive.

The simple fact is that all businesses are competitive. Competitors may not always come in the form of “direct competition,” which is when a competitor offers the same solution to your offer. Most of the time, you may be facing an “indirect competition,” where consumers are solving their problem with a completely different solution.

For example, when Henry Ford started marketing his cars, there was very little direct competition from other car manufacturers — there were no other cars. Instead, Ford competed with other modes of transportation - horses, bicycles, trains, and pedestrians. At the top, none of these things look like direct competition, but it was the way people were solving their travel problems at the time.

Future products and services

All entrepreneurs have an idea of ​​where they want to take their business next time they are successful.

While it is tempting to spend more time looking for future opportunities for new products and services, you should not expand on these ideas in your business plan. It really helps to include a section or two about potential future plans, to show investors where you are headed in the long run, but you don't want your plan to be dominated by long-term plans that may or may not work. The focus should be on bringing your first products and services to market.


Now that you have completed the opportunity chapter, you will move on to the execution chapter, which includes everything about how you will make your business work. It will cover your marketing and sales plans, performance, how to measure success, and the key steps you expect to achieve.

Marketing and sales plan

The marketing and sales plan section of your business plan describes how you plan to reach your target market segments (also called targeted marketing), how you plan to sell to those targeted markets, what your pricing plan is, and what types of services and partnerships you need to make your business successful.

Before you even consider writing your marketing plan, you should have your target market clearly defined and complete with your customer details. Without a true understanding of who the marketer is, the marketing plan will have little value.

Your position statement

The first part of your marketing and sales plan is your position statement. Standing in the position of how you will try to present your company to your customers. Are you a low price solution, or are you a premium, kind of luxury in your market? Do you offer something that your competitors do not offer?

Before you start working on your stop statement, you should take a moment to explore the current market and answer the following questions:

  • What features or benefits do you offer that your competitors can make?

  • What are the main needs and requirements of your customers?

  • How do competitors position themselves?

  • How do you plan to stand out from the competition? In other words, why should a customer choose you over someone else?

  • Where do you see your company in other solutions?

Once you have answered these questions, you can then work out your strategy and explain it in your business plan.

Don't worry about making your placement statement too long or too deep. You just have to be more discriminating with the help you render toward other people and the more important things in your life.

You can use this simple method to create a stand statement:

For [specific market definition] who [target market needs], [this product] [how it meets demand]. Unlike [key competition], it is [the most important factor that sets us apart]


Once you know what your general positioning strategy is, you can move on to prices.

Your frequency setting will be a major driver of how you call your donations. Price sends a very powerful message to consumers and can be an important tool to convey your position to consumers. If you offer a premium product, the premium price will instantly convey that message to consumers.

Determining your price may sound more like a science than a science, but there are some basic rules to follow:

  • Cover your expenses. There are exceptions to this rule, but for the most part, you have to charge your customers more than the cost of delivering your product or service.

  • Low and secondary prices. Your initial price may not be your main profit center. For example, you can sell your product at a price, or even less, but you need a more profitable maintenance or sponsorship contract to match the purchase.

  • Matches market level. Your prices need to match customer requirements and expectations. The price is too high and you may not have customers. The price is very low and people may value your contribution.

You can approach your pricing strategy in a variety of ways. Here are a few ways you can think about your price and come up with the right strategy for your business:

  • Combining costs. You can set your price according to certain factors. You can look at your expenses and mark your donation from there. This is often referred to as “cost-integration costs” and can apply to producers where covering initial costs is critical.

  • Prices are based on markets. One way is to look at the current situation of competitors and then the price is based on what the market expects. You can charge higher or lower prices in the market to establish your position.

  • Value values. Another way is to look at the “pricing” model where you determine the price based on the price you offer your customer. For example, if you market the lawn care of busy professionals, you may save your customers for one hour / week. If their hourly rate is Rs 1000 / hour, your service may charge Rs 600 / hour.


With prices and well-maintained placements, it’s time to look at your promotion strategy. The promotional plan explains how you plan to communicate your prospects with customers. Remember, it's important that you want to measure how much your promotion costs and how much it sells. Nonprofit promotional programs are difficult to maintain in the long run.


When you sell a product, the inclusion of that product is important. If you have pictures of your pack, including those in your business it is always a good idea.

Make sure the packaging section of your program answers the following questions:

  • Does your installation match your stand plan?

  • How does your packing relate to your key value proposition?

  • How does your pack compare to your competition?


Your business plan should include an overview of the types of advertising you plan to spend. Then you will be advertising online Or maybe in traditional, offline media? An important part of your marketing plan is your plan to measure the success of your advertising.

Public relations

Getting the media covered with PR can be a great way to reach your customers. Receiving outstanding reviews of your product or service can give you the exposure you need to grow your business. If public relations is part of your promotion plan, details of your plans here.

Content marketing

A popular promotion strategy applies to so-called content marketing. This is where you publish useful information, tips, and advice - often made available for free - so that your target market knows your company with the technology it delivers. Content marketing is about educating and educating your hopes on topics they are interested in, not just on the features and benefits you offer.

Social media

These days, the presence of social media is actually a necessity for many businesses.

You do not need to be on all social media channels, but you do need to be on one of your customers. Increasingly, prospects are using social media to learn about companies and to find out how they respond.

Strategic co-operatives

As part of your marketing plan, you may rely on working closely with another company in a collaborative way.

This partnership can help provide access to your company's target market segment while allowing your partner to offer a new product or service to their customers.

Once the relationship has been established, it is important to clarify the details of that partnership in your business plan.


The performance phase is how your business works. Performance, technology, and other nuts and bolts. Depending on the type of business you are starting, you may not need the following categories. Only enter what you need and delete everything else.

Screening and fulfillment

When your company buys products that it sells to other vendors, it's important to include details of where your products come from, how they are shipped to you, and how you ultimately deliver those products to the customer - that's what you get and achieve.

If you receive products from overseas manufacturers, investors will want to know about your progress working with these suppliers. If your business is going to send products to your customers, you should explain your plans to ship your products.


If you are a technology company, it is important that your business plan describes your expertise and what your “private sauce” is.

You do not have to provide trading secrets for your business plan, but you do need to explain how your technology is different and how it is better than the other solutions out there. At the highest level, you will want to explain how your technology works. You do not need to go into details here, or if the investor is interested in more information, and you can provide that information in your appendix.

Remember, your goal is to keep your business plan as short as possible, too much detail here can make your plan too long.


For product companies, the distribution system is an integral part of a complete business plan. For the most part, service companies can skip this episode and move on.

Distribution is the way you get your product in the hands of your customers. Every industry has different distribution channels and a great way to make your distribution plan is to ask others in your industry to find out what their distribution model is.

Here are a few common distribution models that you can consider for your business:

Direct distribution

Direct sales to consumers are the easiest and most lucrative way.

You could consider transferring your savings directly to your customers or you could simply increase your profit marks. You will still need to cover the manufacturing process of how to get your products to your customers from your warehouse, but a direct delivery model is usually simple.

Sales distribution

Many major retailers do not like the problem of dealing with thousands of individual suppliers.

Instead, they prefer to buy through large distribution companies that combine products from multiple suppliers and make that available to retailers for purchase. After all, these distributors take a percentage of sales beyond their warehouses.

Producers' representatives

These are sales people who work for a "repurchase" agency. They often have relationships with vendors and distributors and work to sell your products on the right channel. They usually work on a post and it is not uncommon for a rep to find a new company to reach out to a distributor or vendor.


This means "first machine maker." If your product is sold to another company that puts your product in their finished product, you are using an OEM channel.

A good example of this is car parts suppliers. While major car manufacturers are building large parts of their cars, they are also buying standard parts from third-party dealers and installing those parts on a finished car.

Many companies use a combination of distribution channels as part of their plans, so you may feel that you need to limit one channel. For example, it is very common for both to sell directly and in distributors - you can buy an iPhone directly from Apple, or go to the Target store and get it there.

Major steps and metrics

A business plan is only documents on paper without a real way of getting the job done, complete with schedule, defined roles, and important obligations.

While the category of priorities and metrics for your business plan may not be long, it is important to take the time to look ahead and evaluate the next critical steps for your business. Investors will want to see that you understand what needs to be done to make your plans work and that you are working on a real plan.

Start with a quick review of your milestones. The causes are set by larger goals. For example, if you are developing a medical device, you will have important steps to take in clinical testing and government accreditation procedures. If you are producing a consumer product, you may have major steps associated with prototypes, finding manufacturers, and a first order receipt.


While historians look forward, you will also want to look back on the great things you have done. Investors like to call this "traction." This means that your company has shown evidence of previous success.

The draw can be a first sale, a successful pilot program, or an important partnership. Sharing this evidence that your company is more than just an idea - that it has real proof that it will succeed - can be very important in getting the money you need to grow your business.


In addition to landmarks and trips, your business plan should provide details of key metrics to watch as your business starts over. Metrics are the numbers you look at regularly to judge the life of your business. They are the drivers of the growth of your business model and your financial plan.

For example, a restaurant may pay special attention to the number of tables they turn in overnight and the rate of beverage sales and food sales. An online software company may look at churn prices (percentage of customer cancellations) and new registrations. All businesses will have key metrics that they look at to monitor growth and detect problems early, and your business plan should provide details of key metrics to follow in your business.

Primary thinking and risks

Finally, your business plan should provide details of the key ideas you have developed that are critical to the success of your business.

One way to think about basic ideas is to think about risk. What risks do you take with your business? For example, if you don’t have a guaranteed need for a new product, you create the impression that people will want this constructive. If you rely on online advertising as a major promotional channel, you are thinking about the cost of that advertising and the percentage of ad viewers that you will actually buy.

Knowing what you think as you start a business can make the difference between business success and business failure. When you see your thinking, you can set to prove that your thinking is right. The more you reduce your thinking, the more likely it is that your business will succeed.

Company and Team Overview

In this chapter, you will review your company’s structure and who the key team members are. This information is very important for investors because they will want to know who is behind the company and whether they can turn a good idea into a big business.

The team

An old saying is that investors do not invest in ideas, they invest in people. Some investors even go so far as to say that they can simply invest in the idea of ​​confusing the big team behind them with the idea of ​​a blockbuster and a middle class.

What this really means is that running a successful business all comes down to making a job low. Can you really achieve what you set out to do? Do you have the right team to turn a good idea into a good business that will have customers knocking on your doors?

The overall look of the company and the chapter of your business plan team is where you make your best case of having the right team to do with your vision. It should show that you have thought about the important roles and responsibilities your business needs in order to grow and prosper.

Enter short bios highlighting what happened to each important group member. It is important here to make a case of why the party is the right party to turn an idea into a reality. Do they have natural experience with the right industry? Have team members been successful in business before?

The common mistake that emerging entrepreneurs make by defining a management team gives everyone in the team a C-level title (CEO, CMO, COO, etc.). While this may be good for egos, the frequency is not realistic. As the company grows, you may need a variety of experience and knowledge. It is often better to allow for future growth of degrees than to start everyone at the top with no room for growth or future change.

Your management team does not have to be perfect to have a complete business plan. If you know you have the management team positions, that’s OK In fact, investors see the fact that you know you’re missing out on some important people as a sign of maturity and information about that your business needs to be successful. If you have vacancies in your team, simply present them and indicate that you are looking for the right people to fill certain roles.

Finally, you can choose to incorporate the proposed organization chart into your business plan. This is not trivial and can certainly live in the appendix of your business plan. Sometimes, as you explore financial options, you may be asked for an “org chart,” so it’s a good idea to have one. Aside from saving money, the org chart is also a useful planning tool to help you think about your company and how it will grow over time. What are the key roles you will look to fill in the future and how will you prepare your teams to benefit the most from them? An org chart can help you think about these questions.

Company overview

The overall view of the company may be the shortest phase of your business plan. In a program you intend to simply interact with your business partners and team members, skip this section and move on.

In a plan to interact with people outside your company, this category should include:

  • Job statement

  • Intellectual property

  • Review of your company's framework and ownership

  • Business location

  • A brief history of the company if it is an existing company

Job statement

Do not fall into the trap of spending a day or more in your equipment statement. An hour or two should be plenty of time.

Avoid compiling a long, general statement about how your company works for its customers, its employees, and so on. Your corporate job should be short - one or two sentences too long and you should cover, at the highest level, what you are trying to do. To be honest, your equipment statement and your total value proposition could be the same.

Here at Palo Alto Software (makers of Bplans), our mission statement is: "Helping people succeed in business." It's simple and inclusive of everything we do from the types of products we create to the type of marketing we do.

Intellectual property

This is very effective in technology and science, so just skip this if you don't need to discuss your copyright and other intellectual property.

However, if you have intellectual property related to your business and are helping your business to protect itself from its competitors, you should provide details of that information here. If you have patents or are in the process of applying for a patent, this is a place to highlight those patents. Equally important is to discuss technical licenses - if you provide basic technology from someone else, you need to disclose that to your business plan and make sure you include details of the financial relationship.

Business structure and ownership

Your corporate overview should include a summary of your company's current business structure. Are you an LLC? C-corp? S-corp? One owner? Together?

Be sure to state that you are providing an update on how the business is managed with it. Does each business partner have an equal share of the business? How is ownership distinguished? Potential lenders and potential investors will want to know the structure of the business before considering a loan or investment.

Company history

When writing a business plan for an existing company, it is appropriate to include a brief history of the company and highlight the great historical success. Again, keep this section short - no more than a few paragraphs.

This section is especially useful to provide context for your entire program, and can be very helpful for internal programs. The company's history section can provide new employees with the company's background so that they have a better context for the work they do and where the company comes from over the years.


Finally, the company overview section of your business plan should define your current location and any facilities that the company owns.

For businesses that serve consumers from a storefront, this information is critical. Also, for businesses that require large facilities for manufacturing, warehousing, and so on, this information is an important part of your plan.

Financial System

Last but not least, the chapter on your financial plan. This is often what entrepreneurs find very difficult, but it doesn't have to be as scary as it seems. Business start-up capital is not much harder than you think, and business qualifications certainly do not need to build a solid financial forecast. That means, if you need more help, there are plenty of tools and resources out there that can help you build a strong financial plan.

The general financial plan will consist of monthly purchases of funds for the first 12 months, followed by an annual estimate of the remaining three to five years. Three-year predictions are common, but some investors will ask for a five-year forecast.

The following are the details of the financial statements that you should include in your business plan, as well as a brief overview of what should be in each category.

Sales forecast

Your sales forecast is just right - your estimates of how much you will sell over the next few years.

A sales forecast is usually divided into multiple lines, with each basic product line or service you provide. Don't make the mistake of breaking your sales forecast into great detail. Just focus on the highest level at this point.

For example, if you predict a restaurant sale, you might disperse your forecast into these groups: lunch, dinner and drinks. If you are a product company, you can downgrade your prediction on segments of the target market or by major product categories.

Your sales forecast will include a corresponding line for each sales line to cover the Cost of the Sold Assets, also known as COGS (also called direct costs). These lines show the costs associated with making your product or delivering your service. COGS should only include those costs that are directly related to the production of your products, not the normal business expenses such as rent, insurance, salaries, etc. Restaurants, can be the cost of ingredients. For a product company, it can cost the cost of raw materials. For a consulting business, it may be paper costs and other presentation materials.

Staff program

Your employee plan explains how much you plan to pay your employees. In a small company, you can list all the positions in the staff plan and how much will be paid each month in each area. In a larger company, the workforce is divided into functional groups such as "marketing" and "sales."

The employee plan will include what is commonly referred to as “employee liability,” which is an employee's expense in excess of salary. This includes the income tax, insurance, and other necessary expenses that you will receive each month for having an employee in your payment.

Income statement or profit and loss statement

Also known as a statement of income, profit and loss (or P&L) is where your numbers come together and show that you are making a profit or losing something. P&L draws data from your sales forecast and your staff plan and includes a list of all your other ongoing costs associated with running your business. You can download a free example of the income statement here.

P&L also contains a very important "bottom line" where your expenses are deducted from your salary to show whether your business is making a profit every month or could lead to some losses as you grow.

Standard P&L will be a spreadsheet that includes the following:

  • Sales (either income or income). This number will appear on your sales forecasting worksheet and include all revenue earned by the business.

  • Cost of goods sold (COGS). This number also appears in your sales forecast and is the total cost of selling your product. For service businesses, this can also be called transaction costs or direct costs.

  • Gross margin. Remove your COGS from your sales to get this number. Multiple profit and loss statements also show this number as a percentage of total sales (margin / total sales = percentage of total page)

  • Operating costs. Write down all your expenses associated with running your business, with the exception of the COGS you have already defined. You should also exclude taxes, depreciation, and deductions. However, it includes salaries, research and development (R&D) costs, marketing costs, and other costs here.

  • Total operating costs. This is the sum of your operating expenses.

  • Operating income. This is also known as EBITDA, or pre-interest benefits, taxes, reductions, and reductions. This is a simple calculation where you simply deduct your operating costs and COGS from your sales.

  • Interest, taxes, rebates, and payments If you have any of these expenses streams, you will list them below your income.

  • Total cost. Include your operating costs in interest, taxes, depreciation, and cash payments to get your total cost.

  • Total benefit. This is a very important bottom line that shows whether you made a profit, or lost it, within a given month or year.

Cash flow statement

The cash flow statement is often confused with the profit and loss statement, but it is very different and serves very different purposes. While P&L calculates your profits and losses, the cash flow statement keeps track of how much money you have in the bank at any one time. Find an example of a cash flow statement here.

The key to understanding the difference between the two statements is to understand the difference between money and cash. An easy way to think about when making a sale. If you need to send a bill to your customers and your customer takes 30 or 60 days to pay off the debt, you have no money for immediate sale. However, you will be booking a sale on your P&L and showed a profit on that sale on the day you sold.

A general cash flow statement starts with the amount of money you have, add new income from sales and invoices, and deduct the amount you have paid as you pay off debts, pay off loans, pay taxes, etc. This will leave you with your total cash out (cash withdrawed and withdrawal money) and your end cash start with cash + cash in - cash out = cash out).

Your cash flow statement will show you when you can have less money, and when it might be the best time to buy new equipment. Above all, your cash flow statement will help you determine how much money you may need to grow or borrow to grow your company. Since a viable business can never run out of money without closing its doors, use your cash flow statement to earn your low points and consider options for bringing in extra cash.

Balance Sheet

The final financial statement most businesses will need to create as part of their business plan is a balance. The balance sheet provides an overview of the financial life of your business. It includes assets in your company, liabilities, and your (owner's) money. If you deduct company debts from assets, you can determine the value of the company's profits.

Instead of giving more details to the balance here, I will refer you to this article on building and reading balance sheets. You can also download this example of a balance sheet to help you get started.


When collecting money from investors, you should include a brief section of your business plan that outlines how you plan to spend your investors' money.

This section does not need to go into the details of how the last dollar will be used, but rather, indicate the major areas in which investor funds will be used. This could include marketing, R&D, sales, or perhaps shopping lists.

Exit strategy

The last thing you need to include in your financial plan section is your exit plan.

The strategy is to get out of your plan to eventually sell your business, either to another company or to the public at IPO. If you have investors, they will want to know your thoughts on this. If you run a business that you plan to keep as a permanent owner, and you don’t want angel planting or VC funding, you can skip the exit strategy section. After all, your investors will want to make a profit on their investment, and the only way they will get this if the company is sold to someone else.

Also, you do not need to go into the details here, but you do need to identify other companies that might be interested in buying you if you are successful.


An appendix to your business plan is not a necessary chapter by any means, but it is a useful place to attach any charts, tables, descriptions, official notes, or other sensitive information that may not feel too long or nowhere to fit elsewhere in your business plan. If you have a patent or patent-pending, or images of your product, then you may want to enter details.


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