Business Plan Format Guide
If you follow me here in my blog or my Build a Business podcast you know by now that a long business plan format, sometimes called a “standard business plan” written in Microsoft Word or Google Docs is mainly a thing of the past.
The way business plans are done today are in a simply formatted and easy to follow slide deck that spans anywhere from ten to fifteen slides. Most call it a simple business plan format and I explain how to build that in this blog post.
However, there may be times when a standard business plan format is needed because it is what stands between you and an investor, a loan or partnership. The most likely place you are going to encounter someone asking for this type of plan in todays day of age is when going to a traditional bank for a loan.
If you already have your simple business plan you can build this longer plan off it when needed. If you don’t have the simple version, I highly recommend you start there. The process is easier and gives you a solid foundation.
If time is of essence I’ve laid out the standard business plan format in a step by step guide for you below.
Standard Business Plan Format
If you’re tasked with formatting a standard business plan it’s in your best interest to take time to put together what is considered the generally accepted “standard business plan format”. You only get one shot at making an impression with people that can make or break the future trajectory of your company. You want to wow them with professionalism that comes from a properly formatted and perfectly put together plan.
Humans prefer predictability, structure, and organization. We don’t like the unknown, having to burn a ton of brain power to figure something out and we don’t like to be surprised. Therefore, surprising your potential investors with a “creative take” on the standard business plan format is not recommended.
In this article are we’re going to:
- define a standard business plan format
- talk more about why you might need it
- breakdown a recommended standard business plan structure
- provide some formatting tips
Nine sections in this format
This format is organized into nine (9) major aspects related to your company. The sections spans from strategy and marketing, to an overview of the industry, financials and your ideal buyer persona.
The entire plan in written out using Microsoft Word or Google Documents and Microsoft Excel or Google Sheets. It’s a neatly compiled summary of everything that relates to your business, and more importantly, how the business predicts it will generate sustainable revenue and profits.
Your business plan should present to your audience (a venture capitalist, banker, or investor) exactly what they expect to see in this business format. They are not looking for your creativity. Rather, they are looking for the substance of your business and if it’s a good investment or not. Now is not the time to deviate from the predicted structure. Substance over sizzle is the key to success.
Following a standard business plan outline will keep you organized, on track, and presentable to everyone reading it.
If you want to learn more about my take on why making things simple is the key to success for all things, check out my approach.
Take Your Time Compiling Information
As outlined below, there is a specific format and numbering sequence that is expected in a “standard business plan format”. However, I do not recommend that you follow this format in the actual creation of the document.
The executive summary and overview, which comes first, should be drafted towards the end of the process. Why? By the time you’re done compiling all of the data, stats, and information for the rest of the plan, you’ll have the most comprehensive viewpoint of the business for the drafting of the overview.
Remember: every business is different, which means we can’t necessarily say where you should begin in the drafting of its structure.
What I do know is that it’s in your best interest to follow the predictable outline detailed below.
Sections in a Standard Business Plan Format
Business plans are used as an internal roadmap for the overall management of the company, regardless of the type.
A simple business plan or pitch deck, has become the integral part of fundraising in the business world and the order of topics differ slightly. Although there are certainly different versions you can consider, here is the outline I recommend when writing a standard business plan:
- Executive Summary
- Company Overview
- The Opportunity (Problem and Solution)
- Your Products or Services
- Marketing Plan
- Operational Plan
- Management & Organization
- Financial Plan
Let’s look at each one of the nine sections.
1. Executive Summary
The majority of people agree that the executive summary is the most important part of the entire business plan. It’s in the beginning and most likely to get read. When I was a venture capitalist it was the very first thing I wanted from a company.
The executive summary is the introduction to your company, and much like the introductory paragraph to a book, will either entice investors to keep reading, or encourage them put it down.
As we mentioned above, this section should be written at the end once you have compiled all of the necessary information in the rest of your plan. Once you have that you can create an easy to read and brief executive summary that touches on the most important information pieces in the least amount of words.
In your executive summary concisely highlight the following topics:
- Business concept: A brief description of the business, the products, and the market it will be selling in. Also mention the competitive advantage.
- Financial details: Communicate sales, profits, and returns on investments. Also clearly outline the capital needed as part of this investment.
- Current state: Cover the present overview of the company, the key players, the standing, and current revenue and profits.
- Achievements: Talk about your traction. Discuss success, like patents and prototypes, that prove the company is already a winning investment.
I recommend keeping the executive summary to one page, or even less if possible. If you can communicate this information in just two to three paragraphs, you are more likely to keep investors hooked.
2. Company Overview
The general company overview customarily follows the executive summary when presenting in the standard business plan format. This overview is your chance to give a description of the company and the business it’s conducting. Essentially, this is your elevator pitch expanded to a long version. If you do not have your elevator pitch, you’ll want to assure you have this by the end of your plan.
This portion of the business plan should cover your company:
- name, company entity, assets
- mission statement
- industry details
You have dedicated sections that cover strategy, marketing, operations, and people in the latter part of the business plan. This is not the time to try and cram every little detail into the first few pages.
For example, instead of detailing the industry and everything that goes on, cut right to the point and classify the business, e.g. e-commerce business, wholesale, business retail, manufacturing…
Next, provide some quick numbers indicating the part of the market you are targeting, how big the industry is and why it’s interesting. Use this opportunity to bring up different trends that are indicating the industry is going to grow in size and popularity. This is a great place to throw in a few statistics to back up your claims.
Your Target Market
Next, cover the target market, and how you plan to distribute the product or service to the people in this target market. Briefly touch on the support systems, like advertising and customer service strategies, that are going to enhance your ability to reach into this target market.
Lastly, explain how the business is going to make a profit. Or if you are applying for funding, how that money is going to make the business grow and lead to profitability.
Length will depend upon the proposition, but I recommend describing the industry in one paragraph, the product in one paragraph, and the business in three paragraphs.
3. The Opportunity
It’s time to be a salesperson and detail the opportunity for your business. This is where some serious research can uncover winning ideas, stats, and numbers that you can share to impress your audience with the potential.
First, describe the problem that exists in the market right now, and why it exists.
Second, describe the solution leading into why your company has it.
Look at the industry as a whole, and cover the forces that are affecting the entire industry:
- Barriers to entry
- Are there high capital costs?
- High production costs?
- How will you overcome the obstacles?
- Provide answers to these questions
Thirdly, cover your customer:
- Who are your customers?
- Do they have a say in prices?
- Do they have a lot of competitors to consider when purchasing?
- Are their substitute products or services comparable to yours?
- Do you have formidable competitors?
- How will you stack up against the competition?
Lastly, cover the market and address the:
- part of the market you are targeting
- size of the market as a whole
- pace at which the market is growing
- major trends in the industry that support your value proposition
Overall, in this section you are covering the opportunity, the industry, and the market, which should be done in about two to three pages. Use this as a chance to showcase your research and unique attributes that make you and your company the answer to all of the above questions.
4. Products & Services
Now it’s time to look at the actual product or service your company is creating and distributing into its market. Explain how you’re solving the problems you outlined above above with your product or service. Define the core product or service and outline, clearly, what it is that you are creating.
Questions you should answer:
- Is your product or service at a development stage?
- Does it need funding to reach a further stage?
- What is the current price of the product?
- Do you anticipate the price is going to change overtime?
- How does this price relate to the greater market?
Provide screenshots or diagrams of the product or service as it is now and where you it will be in the future.
You want to provide as much proof as possible that investment funds will help you complete the picture. Cover past testing results and information or statistics that prove the likely success of the product or service. If you do not have sales now, proof can be in the form of testimonials of people who say when you make your product they will buy it. Also, you can increase the power of testimonials by getting down-payments. Leveraging crowdfunding sites like Kickstarter and Indiegogo are also great ideas.
Lastly, showing investors your vision and ambitions is never a bad idea. Discuss the future products and services you are going to create once you get the proper funding. This communicates that you are already thinking ahead and confident that your company is ready to dominate its niche.
You can safely cover this section in one to two pages, depending upon how many images you include. This is an easy way to throw in some imagery and break up all of the heavy text from the first few sections. You should always look to avoid a wall of words.
5. Marketing Plan
The marketing section, following your executive summary in this business plan format, is the second most important section of your standard business plan. This section holds the key information that potential investors as well as your own team, are going to want to know. Make sure you cover the cold hard numbers that bring everything together.
When writing your marketing plan, it’s recommend that you cover the following:
- Marketing decisions regarding the product or service
- A detailed description of the target market and how you plan to reach them through marketing
- How your company or product perceived by customers
- Pricing strategy
- Overall sales and distribution channels you are going to leverage and why
- Overall promotion strategy and a breakdown of advertising, public relations, and social media marketing
- Target metrics such as: customer acquisition costs, average revenue per user, churn rates (if applicable), website conversation rates
This is where you outline the product pricing and costs. Also, go in-depth explaining how you can lower costs over time as volume increases.
Additionally, as it relates to distribution channel decisions; spend time researching the competition and see how they are reaching into your target market. Channels depend upon the size of the market and the industry.
The promotion strategy should detail an:
- Advertising budget
- Organization of the media schedule in the coming quarter, six and twelve months
- Examples of the creative ideas that makes it all real
This section will take you some time, but it’s worth the effort. As a critically important section, it’s understandable to take up two to four pages. If you include some graphics and charts it might include more.
6. Operational Plan
This explains how you run business operations. In this section of your standard business plan format you cover:
- daily schedule of the business
- processes required to make it run
Look at the capital expenses required to help the business run on a daily basis, as well as the necessary skills and materials needed to make the product or service.
Additionally, consider touching on a description of the operating cycle, materials that are outsourced, and the cash payment cycle.
This is a great place to include financial tables to back up your information. These will compliment what you outline in your upcoming financial section. Also, cover outside factors like economic growth or stagnation, local markets, and regulations that can help, as well as, hurt the operation.
This section of your plan can span 2-4 pages.
This is also known as your Team section. In this section of a standard business plan, you communicate the people behind the company making it run every day. You should, at the very least cover:
- list of the founders and their relevant experience
- description of who is managing the operation on a day to day basis
- organization chart that breaks down the employees (if you have more than 8-10 with the operation)
- breakdown of the logistics.
In the logistics section, provide an overview of who is responsible for what, under which department, and management coordinating the department.
Aside from the managers, you want to mention the type of support staff that is needed to ensure the business runs smoothly every day.
Lastly, touch on your hiring plan for your business expansion. Spell out the positions and the triggers you will use for hiring those people.
You can keep this section brief, one or two pages of text. Pictures of people bring it to life.
8. Financial Plan
The financial plan is the key to understanding your business. It’s the blueprint of how cash flows in and out of your business and reveals your cash needs. This section does not change drastically whether you are presenting in a simple or standard business plan format.
For investors or money lenders, it’s a must have. They understand that they might not be absolutely accurate, but they demonstrate that you have thought things through.
This is the portion of the business plan outline where you want to be optimistic and also realistic. Seasoned investors know when companies are skewing the numbers and showing wild projections.
At the very least you should include:
- Income statement
- Cash flow statement
- Balance sheet
- Track record from the past two-three years if you have it.
- Break even analysis
- Projections through the first thru third years moving forward.
Length of Financial Projections
Some business people will say you want to have five year projections. Truth is most businesses that are starting out or growing quickly barely know the next twelve to eighteen months. There to many things that are simply not in a business control, like political climates etc… that can have effects,
It’s a good exercise to go through to project the out years to understand your business potential, but the idea that you can predict out more than three years with good accurately is not realistic.
If you are a start up or starting up a new project in an existing business, you want to include startup costs and capital requirements. Also, include where you intend to get the money. Throughly break down all your start-up costs. Cover things such as development development costs, intellectual property protection or any other substantial start up costs.
If you plan to raise money for your company, include:
- proposed repayment schedule for any loans that are required
- the use of the funds
- milestones you expect to achieve along the way
Use neatly drafted graphs and images to project much of this information, making it easy for investors to digest. Keep this one to three pages.
This is where you can include all other information that didn’t necessarily make it into your standard business plan. Appendices are a great place to attach:
- continued research data or findings
- team member information and resumes
- articles of incorporation
- letter of good standing from the state you incorporated
- trademarks or patent registrations
Since this is the end of a standard business plan, don’t worry about brevity as much. Chances are, investors will simply sift through it until they find exactly what they are looking.
Your appendices can be as long or as short as necessary to provide documentation of items you’ve referenced in the main body of the plan.
Tips for Writing a Business Plan
Now that you have the nuts and bolts down as it relates to the numbering, formatting, and configuration of your standard business plan, here are a few tips for the actual written content you are going to be presenting to investors.
1. Keep It Simple
Many times, potential investors are not going to have the same expertise on the topic as you. For example, if you work in a field like medicine and pharmaceuticals, try and keep the medical talk to a minimum. If you are a tech company, keep the geek talk about the actual code to a minimum. People can ask about that later.
You want to make your business plan easy for people to understand, while still underscoring the most important elements.
2. Leverage Media
Humans are visual creatures. They don’t want to stare at pages and pages of tiny text with no spaces. I call this the wall of words.
Use pictures, infographics, diagrams, and more to really add a three-dimensional aspect to your standard business plan. Bring your services and products to life.
3. Brevity is Key
No one wants to sit through a 3-hour long business plan presentation regardless how good you have done formatting it. Humans are not built with a long attention span and you are not going to get a first meeting that is longer than fifty minutes. Where possible, keep each section brief. That doesn’t mean you need to leave information out; rather, find more creative ways to say what you need to say in a fraction of the words.
4. Don’t Be Shy with Supporting Documents
As part of the appendices, never leave out important supporting documents. Answer the core questions up front, it builds confidence in the person reading your plan.
Even if the investors don’t ask to see that specific document, come prepared with this portion of the business plan.
5. Always Consult Editors
Your eyes can’t possibly catch every discrepancy or typo. I recommend getting help and have two different people edit the plan. Then follow that with two people to read through the plan to check for consistency and clarity.
6. Formatting a Standard Business Plan
Overall, the content of your business plan is more important than the visual presentation of the business plan. I am not saying just throw something together. At the same time paying someone to design a $5,000 graphic is not going to land you an investor.
Spend more time worrying about the actual information that you are communicating to the reader (either an investor or your team members). A clean and professional formatting style combined with a compelling business makes a successful standard business plan.
For general formatting, I recommend using single spacing with an extra space between paragraphs. If you plan to print your plan, use a simple serif font that makes it easy to read.
When projecting your business plan on a screen, consider a sans serif font like Verdana. That kind of font format converts better for visuals. Plus, research backs up these selections.
As for font size, try to keep it to 12 point. 10 point can be strenuous on eyes. If you find yourself using 8 or 10 point to make the plan appear “smaller” in size, take more time to edit the plan. Find ways to say things with fewer words. Margins should be one inch on all sides. This makes the plan readable while also safeguarding for staples.
Like your research papers in high school and college, cover pages are a great way to make the entire booklet appear professional and friendly upon distribution. On the cover page, include your logo, tagline, and contact information.
Assure no paragraphs are broken up between pages. Above all, check if imagery formatting looks incorrect. Sometimes graphics create big empty white spaces on different pages. If that happens and there is no way around it, include a “-this space intentionally left blank. see next page-” This lets the reader know the space is not a mistake.
The Perfect Standard Business Plan
We’ve gone through writing, creating, and formatting a standard business plan. Now it’s time for you to get to work if you are required to build this type of plan.
Get started researching and compiling all the information. Take your time to create graphs and images that can communicate your points in less words. Remember, you want to avoid a wall of words effect.
This is a general blueprint of a standard business plan outline. All situations are different and my guess is that if you are writing in this format it is because someone has required you to do so. As I mentioned in the beginning of this article, this long form business plan format has disappeared from the main stream. A simple business plan presented in ten to fifteen slides is the ticket. I explain this in another blog post and teach it in my Build a Business Success Formula.
If you are required to present your business in this format and that person or entity gives you a format to follow, follow those directions. Use this article as a reference that explains the sections. You do not want to argue with someone, especially if you are looking to raise money from them, about what is the right or wrong standard business plan format.
Wishing you the very best of success in your business!
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