How to Write a Business Plan

This advice from the pros will make the process of writing a business plan easier and less stressful.

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Sandra Beckwith has been writing for traditional and online publications since she sold her first magazine article while still a journalism student. Her articles in business, consumer, trade, and custom magazines; in corporate, alumni, and nonprofit organization publications; and on websites and blogs help readers learn more about successful initiatives and interesting people, or about how to do something better, faster, or smarter.The author of three traditionally published nonfiction books and a past contributing editor of three trade journals, Beckwith writes frequently on small business, logistics, supply chain, and work-life balance topics.She is also a national and regional award-winning former publicist who teaches authors how to market their books. Her book marketing website, BuildBookBuzz.com, has been recognized for excellence by four organizations and is ranked in the top 10 globally for book marketing blogs. She has served on the board of directors of the American Society of Journalists and Authors, where she remains an active volunteer and member. She is also a member of the Association of Ghostwriters. Beckwith is a graduate of Utica College of Syracuse University, a past member of its Raymond Simon Institute board, and a recipient of its Outstanding Public Relations/Journalism Alumna Award. A resident of a sweet little Erie Canal village in Western New York, Beckwith listens to audiobooks every evening while walking along the canal's original towpath for exercise. Her hobbies include eating, sleeping, and spending time with friends and family—but not necessarily in that order.

1. Begin with the easy sections

The typical business plan includes these elements:

Executive summary
Company description with the mission statement
Products and services
Target audience
Market analysis
Competitive analysis
Operations and management
Sales and marketing strategy
Financial plan

You probably know some of this off the top of your head, so warm up by starting with those pieces.

2. Create a target audience persona

Also known as an "avatar," the process of creating a target audience persona helps give you clarity about who will buy your product or service. It starts with research. This is important because target audience specifics will influence and guide your sales and marketing strategy.

Dave Lavinsky, president of Growthink, recommends getting demographic information about potential customers by generating reports for competitor website URLs at SimilarWeb and Alexa.

"If you operate a brick-and-mortar business serving local customers, go to the U.S. Census Quick Facts page and enter your ZIP code to find the demographic profiles of the areas you are serving," he adds.

Audience Insights data from your Facebook business page will provide valuable intelligence, as will customer insights tools SparkToro and Audiense.

Use the demographic information you find about potential customers at these sites, along with other research such as surveys, one-on-one conversations, and focus groups, to create that single person—your customer persona—that best represents your target customer.

3. Get smart about your industry and market

"What's the market value, how does it operate, what are the needs, and who are your direct and indirect competitors? You need to understand the ins and outs of how the market works, and how the profit is made," says Zohar Gilad, CEO and co-founder of InstantSearch+.

Start with the local library reference desk, advises Linda Murray Bullard, chief business strategist at LSMB Business Solutions. "The local Small Business Administration office or small business development center has a wealth of information that can help, too, and some will even do the market analysis for you," she says.

Lavinsky also recommends looking for market information on industry association websites and in research reports available online. In addition, check trade journals as well as the Bureau of Labor Statistics and the Census Bureau.

4. Know, understand, and analyze your competition

Your research into competitive products or services and pricing, combined with knowledge of how customers perceive them, will help shape your product and positioning.

Reuben Yonatan, founder and CEO of GetVoIP, recommends categorizing competitors as primary and secondary. Learn as much as you can about your primary competitors because they often represent your end goal, but don't overlook the others. "With secondary competitors, extract as much insight as possible. For example, try to determine why they are not at the top of the food chain. Could it be their pricing?" he says.

Talk to their vendors and customers, and study their website, marketing materials, and press releases. How are their offerings different from yours? How are they the same? This information will help you explain your differentiation in the business plan.

5. Dig into the numbers

The primary purpose of the financial plan, says Phil Santoro, co-founder of startup studio Wilbur Labs, is to document how much money you need to start the business, and how or when the business will generate revenue and profit.

When creating the financial plan, he determines where the company wants to be in three to five years, then builds a roadmap to get there. "Working backwards like this allows you to look at the different workstreams required for each phase of the business," he says. "Most importantly, working backwards lets you create projections based on achievable assumptions. A plan is only as good as the assumptions that go into it."

This is not a situation where you want to guess. In addition to working with an accountant, base your financial projections on verified data from Dun & Bradstreet Business Ratios reports, says marketing consultant Marsha Kelly of Best4Businesses.com. "This verifiable information is dependable to make business projections and to assure banker investors of the trustworthiness of the business plan," she says.

Other resources include LivePlan and Bizminer.

Additionally, consider getting help from professionals, especially regarding regulatory or legal issues and financial planning. You want to get it right, especially if you will use your business plan to secure bank or investor funding.

After you've written the plan, don't tuck it away. Think of it as an organic document that grows with the business. For this reason, you'll want to update and refine it as you learn and succeed.