anatomy of a business plan

Anatomy of a Business Plan

Business plans are critical in the early stages of the life of a business, providing guidance to both internal and external stakeholders. In this guide, we will walk you through the process of writing a business plan, including the sections to cover and the necessary considerations to take into account.

By Toptal Research

As a founder, one of the first tasks that you need to tackle is the writing of a comprehensive business plan. In the initial stages, you will be asked repeatedly for your business plan: when attempting to raise money, when hiring a star team member, or when ensuring that your cash reserves will last. It seems that you do not have a proper business until you have written and refined a business plan that predicts your growth 5 years into the future.

Given the importance of business plans, founders need to understand how to best write one and how to use them to their maximum advantage to increase the chances of success. This post will attempt to lay out a guide on how to best answer these questions, helping founders understand if they can complete the task themselves or if they require some additional guidance from expert consultants .

What Is a Business Plan?

Let’s first define what we are doing. A business plan is a document that lays out:

• What your business does
• The short- and long-term goals of the business
• The action plan to achieve these goals

There are two main formats that you can use to write a business plan: a PowerPoint deck or a Word document. Both work well, but make sure that if you use a PowerPoint format, you also have a separate (and shorter) pitch deck. Initially you will share only the pitch deck with potential investors. The full business plan is reserved for those investors that have shown keen interest in your business and with whom you are moving along within the investment process.

Why Is It Important to Write a Business Plan?

There are some influential people in the startup industry that do not attach much value to overt reliance on business plans, vouching for the superiority of the “learning by doing” approach advocated by the Lean Startup method . Even though the lean approach does have significant merits in letting you test out a product’s market viability (through continuous iteration to ensure a better market fit), it does not provide answers to key questions of your business, such as where the business currently stands and where you want to take it.

A business plan will help you with the following aspects of your business:

• It will force you to state in writing what you want your business to be . This is also very useful so you can see what your business is currently NOT and better analyze the current gaps between reality and your goals.
• It will demand that you specifically write how you plan to accomplish your goals in practical terms , such as what competitive advantages the company has, what opportunities you see, and what threats exist.
• It will give your co-founders and team a common compass to guide the ship during the initial uncertain months.
• You will better understand the resources that you require in order to accomplish your goals.
• It will help with your fundraising efforts , through demonstrating to potential investors that you have thought through important aspects of the business. This will provide a concrete document to start fundraising discussions.

Although it is difficult to quantify how important writing a business plan is, a recent study showed that companies with formal business plans increase their chances of reaching positive cash flow by 16%, showing that it does pay to plan.

What Should Be Included in a Business Plan?

Once you are convinced that having a business plan is a must, the question arises of what content to include in the plan.

A cursory Google search will return an array of different “Business Plan Templates,” several of which will already be completed with generic content and where a founder just needs to substitute X for Y to make the business plan “acceptable.” It goes without saying that this shortcut should not be attempted. In many cases, it can even deviate the entrepreneur and their startup from what they actually wanted to achieve.

Founders should make the effort to write their own, original content. However, there are some uniform aspects that almost every business plan should contain:

1. Executive Summary

This is the section where you will probably spend most of your time during meetings with investors, team members, co-founders and other related stakeholders. In this section, you should summarize and recount the complete story of your business plan. If done properly, it will ensure that during meetings you will only need to refer to the different subsections if it is necessary to zero in on a specific section. Although, in later or more intensive meetings, it may be required that the whole document is scrutinized in its entirety.

For this reason, the executive summary should be the first section to be outlined when starting to write a business plan, because it will help you to structure the proceeding sections of the plan. In turn, it will be the last section to be completed, as following several edits fleshing out the main document, you can return to the executive summary to finalize it.

All of the critical subsections in the document should be touched upon in the executive summary, and you need to ensure that the content is ambitious, but grounded in reality. Back up any claims made with specific data—for example, “ My Company will provide the best in-market customer experience, as our NPS Score of above 80 already indicates.” Also, make sure that the tone is upbeat. If you do not believe in the positive future of your project yourself, then you will not convince anyone else either!

2. Company Overview

The main goal of this section is to make sure that the reader understands what the company does. It is surprising how many companies have a difficult time explaining what they do. You can find many tips online that you can use to help you to convey what your company does, but as a rule of thumb, try to keep it simple, identify the problem that is being addressed, and present your company’s solution.

After making sure that anyone can understand what your business does, include other relevant information about the company. Such details include: the formal corporate structure, when it was founded, and what milestones you have already achieved. Any examples of traction are great to establish a basis that the company and its founders are able to execute.

3. Market Analysis

In this section, there are two key pieces of information you need to communicate: the main characteristics and trends in your market, and a rough approximation of the market’s size.

When defining and explaining the market, lay out general figures like:

• What is the generally accepted market size (more on this below)?
• What is its annual historic and projected growth rate?
• An interesting data point (for example, “x% of American households have this product” )
• An overview of competitor and customer dynamics

After having defined the market trends, you must then explain your market size in greater detail. Let’s use an example of a hypothetical company selling premium baby products online. Some key questions to answer here would be:

• What is the total annual spending in the US for babies?
• What is the split of sales between online and offline?
• In the market sizing, do you include only premium products sold by specialty stores, or the whole range of products including those products only sold in supermarket retailers that you do not initially plan to sell?

As you see, there are multiple answers to this question. Thankfully, to better understand this issue and how to apply it, you can find a great post by Toptal Finance Expert Alex Graham regarding Total Addressable Market Sizing and how it is applied to WeWork’s specific case.

4. Competitor Analysis

In this section, you must lay out the current competitor landscape. Make sure that it is as comprehensive as possible, taking into account not only current competitors but also potential future competitors. For example, is a foreign company likely to enter your market? Or, is a company in another market close to expanding into your turf? A good example of this was Netflix’s expansion from being only a distributor to entering the business of content generation: Did Disney and HBO prepare for this external threat?

Also, in this analysis, pay attention to and map out indirect competitors and their market dynamics. In the example of the baby eCommerce idea laid out above, the spend in grocery stores and the indirect competitors (like nurseries) in that market would be important to include.

5. Customer Analysis

In the customer analysis section, you need to prove that there are actually real customers that will pay/use/download your service. Use this space to drill down into the psychographics of the customer. Where are they, what real problem do they have that needs to be addressed, and what is their profile? It is very useful to define some specific characteristics, such as gender, age, geographical location, marital status, family, and main consumption patterns.

Even though most of the time entrepreneurs gather this kind of information from secondary sources such as research reports, a strong recommendation is to also go out and conduct primary interviews with potential customers. Prepare a questionnaire, speak to potential customers, and analyze the intelligence gathered. It is surprising how many important perspectives can be obtained from primary research.

6. Go-to-Market Strategy

Up to this point, you will have identified what your company does, its market, the customers, and the competition. Now, you will need to detail how you plan to actually get your product or service to market. This will include, but not be limited to:

• Do you have several products/services to address the market?
• What will your marketing strategy be?
• What marketing channels do you plan to use? Direct sales, online marketing, or below the line?
• What will your pricing be, and why?

Make sure that you show your knowledge of all of the intricacies of your marketing initiatives. In this section, it is very useful to detail any marketing initiatives you have already executed and their results. For example, if one of your marketing channels is going to be online marketing, do a small test beforehand in the channels chosen (Google, Facebook, etc.) and show the initial results.

7. Operations/Technology Strategy

Does your company have any operational or technological advantages relative to competitors? This relates to exploiting your key competencies over your competitors for commercial gain, such as a superior logistics platform.

In this section, it is important to also list and define the main operational areas within your company, even if some of those functions have not yet been developed. This can lay out a roadmap for the future, such as a plan to introduce a dedicated customer service team.

8. Management Team

There are some investors who say they invest “ in the team, not the product ;” this is founded upon the thesis of the key role that a strong and well-rounded team has in making a company become successful.

There are two main aspects to be covered in this section: the actual executive management team and the investor team. In the executive management team, make sure to detail why the team is a great fit for the business in terms of experience and capabilities. It is also important to state what their specific roles are and if they have stock or stock options and under what conditions. Also, any information on their synergies of working together as a team will be very useful for potential investors, as it de-risks future management team dysfunctions.

Finally, if you already have business angels, VC funds, or advisors, list their experience, the relationship they have had with your company, and how they add value beyond the size of their pockets.

9. Financial Plan

In parallel to your business plan, you should also build a detailed financial business plan that shows all the assumptions, drivers, and financial statements of your business for the next 3 to 5 years. This financial business plan should have several scenarios (conservative, base, aggressive) and allow for the quick tweaking of assumptions. The financial statements developed should at a minimum include cash flow, balance sheet, and profit and loss statements, although more ad-hoc analysis such as unit economics P&L can add value.

Both documents, the written business plan and the financial business plan model, will feed into each other and help with different parts of their respective content.

In this section, you need to include the main financial projections that resulted from your financial business plan in a summarized and graphic manner. A good rule of thumb is to include at least the yearly P&L and cash flow statements of the main scenarios expected, but you can go into as much detail as you see fit.

Without a doubt, this section is one of the most technical and knowledge-specific parts of the document. Not many people know how to build detailed financial statements. Therefore, it is useful to consider hiring finance experts with significant know-how to ensure that you build the most suitable financial statements possible for the launch of your business.

10. Financing Requirements/The Ask

After having explained in detail your company, its plans, and the financial projections, now comes a critical part: asking for funding and detailing how much. There are two choices to make in how much information is shown here:

• Limited information: Detail that you are seeking funding, but leave out actual funding amounts, or any kind of valuation markers. The idea is to open up the conversation regarding this topic and then follow up with specifics in person with appropriate counterparts. The benefit of choosing this option is that it allows you to tailor your negotiations towards the appetite of any potential investor that you come across.
• Full disclosure: list the actual amount and the pre-money that you are seeking. The benefits of this is that it shows confidence in that you know exactly what you are looking for, but the downside is that you could either sell yourself short or scare away potential investors.

Although there are different opinions regarding the best approach, the idea is that during the development of the business plan, you will gain an idea of how much funding you need. In turn, with looking at the competition, you will also see comparable valuations, allowing you to triangulate towards a cash amount needed and a targeted valuation. Therefore, in case of doubt, it is preferable to go with full disclosure and accelerate any discussions, avoiding the loss of time (and face) that could occur if you and your potential investor are on completely different pages regarding ticket size and valuation.

Another topic usually included is the use of funds. If you are looking for funding from investors, they will want to know what you will be doing with their money.

Finally, a key component in the fundraising section is the exit strategy. Remember that investors are looking for financial returns, so any information that can be gathered regarding potential exits and valuations is a plus.

How Should a Business Plan Evolve as the Company Matures?

An aspect that is often ignored regarding business plans is what happens once it is written and the founders move on to executing it. As time goes by and a company matures, it is inevitable that some aspects of the business plan will change or develop as new market realities set in. When that happens, what do you do with your original business plan?

Periodically rewriting the business plan from scratch is not the best approach to take, as by doing so, you cannot see what areas have changed and use them as a learning opportunity. However, it does make sense to set up a yearly review of the business plan, which can usually be tied to your annual budget review. Another good practice would be to tie the review to a yearly management offsite where the company plans its next year in terms of goals.

Conclusions

Without a doubt, it is very important to write a well-structured and thought-out business plan. There is no need to add superfluous bells and whistles to it, but it is essential that it covers the core aspects of your business.

Use the plan as your benchmark—as your north star—and, when appropriate, check to see if changing course makes sense. Use the business plan to spark opening conversations and to initiate strong business relationships, whether with team members or potential investors. Finally, use your business plan to bring order to the early life of your company and to allow for structured growth going forward.

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Anatomy of a Business Plan is included FREE with Automate Your Business Plan software Book: $28.95       eBook: $20.00 Software bundles also available: Click here for Order Menu

____________________________________________________

Also Included are Five Complete Business Plans:   Start-up and Existing Growth-Oriented Companies, Varying Legal Structures, Products and/or Service Industries, plus one Plan for a Dot.com Company and one for a nonprofit organization.

What's New in the 8th Edition?

Our new edition of Anatomy of a Business Plan has been revised to reflect the latest online and printed financial and marketing resources and current business plan practices. This business plan book is loaded with ready-to-use-forms and worksheets and five complete real-world business plans.

Items related to Anatomy of a Business Plan: The Step-by-Step Guide...

Anatomy of a business plan: the step-by-step guide to building a business and securing your company's future - softcover, pinson, linda.

• 3.72 87 ratings by Goodreads

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• About this title
• About this edition

From envisioning the organizational structure to creating the marketing plan that powers growth to building for the future with airtight financial documents, this guide provides the tools to create well-constructed business plans. Beginning with the initial considerations, this handbook offers proven, step-by-step advice for developing and packaging the components of a business plan—cover sheet, table of contents, executive summary, description of the business, organizational and marketing plans, and financial and supporting documents—and for keeping the plan up-to-date. Four real-life business plans and blank forms and worksheets provide readers with additional user-friendly guidelines for the creation of the plans. This updated seventh edition features new chapters on financing resources and business planning for nonprofits as well as a sample restaurant business plan.

"synopsis" may belong to another edition of this title.

It has often been said that, "You can run your business by the seat of your pants--but you will probably end up with torn pants." One of the principal reasons for business failure is the lack of an adequate business plan. In today's world, both small and large businesses have come to understand that they need to take the time to evaluate their business potential and map a plan for the future. It is also understood that lenders and investors no longer risk their money on a business unless they have good reason to think that it will be successful (i.e., profitable).

It is the goal of this book to give you a clear, concise, and easy-to-understand process to follow as you develop your business plan. I have been working with business owners for many years and most of them have the same problem--they are experts in their industries, but are novices when it comes to business planning. In fact, many times, the prospect of writing a business plan is so formidable that business owners avoid it until it becomes a requirement for one reason or another.

I, on the other hand, am not an expert in your industry. My job is to guide you step-by-step through the business planning process. If I am successful, you can follow that process, apply your industry expertise, and write a winning business plan for your company.

Who is this book for? I frequently get asked if Anatomy of a Business Plan is appropriate for a big business or a tiny business--a start-up business or an existing business--high tech or low tech--a business seeking funding or a business looking for an internal planning tool--a product business or a service business--a restaurant or a technology business--a sole proprietorship or a corporation--or a division within a company. The answer is that it is the right book for all of the above. No matter who you are, the business planning process is the same.

It is your focus that differs. If you are a smaller business and your business plan is intended only for internal use, your plan may be shorter and you may choose to address only certain issues. On the other hand, if your business is larger and more complex, you will probably need to put key people to work on the development of a more critical business plan that will be in keeping with your company vision.

If you need funding, you will have to consider the goals of the lender or investor and address those issues. If you are a new business, you will only have projections. If you are an existing business, you will also have historical information. If you are a pure service business, you have no cost of goods. If you are a product business, you do. If you are high tech or low tech, the process is still the same. The variable is how you focus on your specific industry.

The simplification of your business planning task has always been the primary goal of Anatomy of a Business Plan . In order to get the most out of the book and to make your job easier, I would suggest that the first thing you do is read the book to give you a general overview of the format and content. After reading, you will be ready to begin working your way through the actual business planning process.

Example Business Plans

In the back of the book (Appendix I, II, III, and IV) you will find four full-length business plan examples that are for four different kinds of business. All four were written by the business owners and/or consultants they worked with. The common tools that they used were Anatomy of a Business Plan and its companion software, Automate Your Business Plan .

* Marine Art of California is a start-up product business. The plan is for a sole proprietorship dealing in fine art pieces. The owner is seeking short-time limited partners and plans to recapture 100% ownership within about four years. We have added a possible one-year history for this business to show what might have happened during its first year. * Dayne Landscaping, Inc. is a one-year-old landscaping and snow removal (service) business. It is a small corporation, seeking to expand into new territories. Dayne Landscaping, Inc. is planning to seek funding from a traditional lending institution (bank). * Wholesale Mobile Homes.com, Inc. is a dot.com bricks and clicks start-up corporation planning to go after $10 million in venture capital. Because the business is more complex and is seeking venture capital, the executive summary, and the organizational and marketing plans are researched more heavily and written in more detail. * Karma Jazz Caf� is an upscale restaurant that is scheduled to open in early 2008 in Fort Worth, Texas. This is the owner's second location of the same restaurant. The first Karma Jazz Caf� is in Atlanta, GA and is successfully up and running. The newest restaurant is considered to be a start-up business, but is patterned on and utilizes projected and historical financial information and other knowledge gained from the Atlanta location.

The interesting thing about the four plans is that they were researched and written by different people. As you read them, you will find that each of the writers brings something new and different into the planning process that will prove valuable to you in your own efforts.

Thank you again for choosing Anatomy of a Business Plan to help you accomplish your goal. I appreciate your confidence in Anatomy of a Business Plan and wish you success in the writing of your business plan!

Linda Pinson

Award-winning author and consultant Linda Pinson has empowered more than a million businesses with her book, Anatomy of a Business Plan . New entrepreneurs use this book to kick-start their companies. Established businesses access it to expand their operations and move into new markets. Business units within major corporations use it for strategic planning. All business owners, managers, intrapreneurs, entrepreneurs, and executives can use these proven business planning techniques to put their businesses on the road to greater profitability.

Anatomy of a Business Plan , Ben Franklin Award winner, "Best Business Book of the Year," is the road-tested guide that enables owners and managers to develop polished, professional, and results-oriented plans that will enable their companies to gain that all important competitive edge and secure funding from banks, venture capitalists, angel investors, and corporations.

* Develop a plan that will guide you during the lifetime of your business. * Write a business plan that excites lenders or investors...and puts money in your pockets. * Research and reach your customers with a winning targeted marketing strategy. * Build a credible financial plan. Learn how to make projections and plan cash flow. * Use financial statement analysis to measure progress and make profitability decisions. * Evaluate the potential of your business in the global marketplace.

New in the 7th Edition

This new edition of Anatomy of a Business Plan has been revised to reflect the latest online and printed financial and marketing resources and current business plan practices and is loaded with ready-to-use forms and worksheets and complete real-world business plans.

* Business Planning for Nonprofits. There is a brand new chapter devoted to business planning specific to nonprofit organizations. With guidance from the chapter and reference icons at various points in the planning process, you will be neatly guided through the development of a plan that is appropriate for your nonprofit. * Financing Your Business. You will be happy to see our new chapter on financing. Learn about debt and equity financing, types of loans, and sources of financing. * Karma Jazz Caf� Business Plan. There are now four complete business plans included in Anatomy of a Business Plan. Over the years, several of our readers have asked for a business plan for a restaurant. We now have one and we hope you like it.

"About this title" may belong to another edition of this title.

• Publisher Out Of Your Mind . . . And Into The Mark
• Publication date 2008
• ISBN 10  0944205372
• ISBN 13  9780944205372
• Binding Paperback
• Number of pages 352

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Anatomy of a Business Plan

Ready to make your creative business dream a reality? It all starts with a business plan. 

Even just as a thought exercise, a business plan is a great start towards defining what your business is about, who you need to reach, and what you need to do to make money.

But eventually, if you want to get serious about your business, you’ll need a formal business plan to show potential investors, partners and clients that your business is feasible and worth investing in. And ultimately, your business plan will serve as your roadmap as you  make future decisions about your business. 

Whipsmart’s been out in the trenches talking to business owners, so we know building a business plan can feel intimidating. But we've given you a guide with tons of info, terms and insights to help you jump start your journey.

When and why do I need a business plan? 

All the creative business owners we spoke to said they knew they needed a business plan when they started thinking about scaling up.

“I think in order to create on the scale that we wanted to be able to create on, we realized we needed to become more formalized, more organized, get really clear on what our priorities were, and start to build a roadmap about how to get there,” says Sherri Urann, co-owner of Fat Gratitude Productions in Spokane.

Winfield Ezell started his Tacoma-based creative production company, Obsidian Creative Studios in 2005. Once he started getting offers for bigger jobs, he knew he knew he and his small team could take them on—but he had to prove it.

“Out of necessity I had to create a business process in which I can compete with the larger companies that had, quote unquote, more resources than I did,” says Ezell. “And that's when I knew I needed a business plan. When I knew I was going to scale.”

Anytime you’re starting to scale your business idea up—when hiring, when looking for investors or collaborators, when pricing your time and product or service—is when you need a business plan.

OK, So I DO Need a Business Plan. What’s Next? ‍

In this Whipsmart How-To guide, we’ve dissected all the ‘parts’ of a formal business plan—from the Executive Summary, to the market analysis, to revenue and cash flow, and figuring out operations. 

Along the way we’ve spoken to Washington State creative business owners who have gone through the whole painful yet illuminating and incredibly useful process of defining what their business is (and is not) and how it can be successful. 

Let’s get started!

PART 1: ANATOMY 

A business plan has a lot of moving parts. The jury is still out on exactly what comprises a full business plan: anywhere from 4-10 main components can make up your plan, and it can be anywhere from one page to a hundred.

But no matter how long or short it is, in its most basic shape, the plan is meant to present a holistic picture of what your business is, what it does, and how it does it.  At the very least, the business plan tells this story through a business description, market analysis, financial information and an operations plan.

As a creative person, it may seem like a challenge to fit all your wildest dreams and ideas into a formulaic business plan, says Sherri Urann of Fat Gratitude Productions. 

“You know, creativity is so intuitive. And a lot of times a business plan is made from a very outcome-oriented perspective. And so then to try and put that into this rigid business structure, can seem like clashing paradigms.”

“And so I think allowing what you're most passionate about to stay at the forefront and to find a way to build your business around that, instead of adapting it into what you think is the needed structure to be successful, is key.”

Parts of a Business Plan:

• Executive Summary — Consider your executive summary, usually the first thing people see when they read your business plan, your first impression. It usually includes a business description, and the company’s vision, mission and value statements. Most executive summaries are about a page so it’s important to make every word count!

We’ve broken down all the parts of an executive summary that you’ll need to know: ‍

Business Description (the “what”): What is your business? What does it do? This section outlines the scope and overview of what the business is about—and what makes it unique.

Marika Thomas, owner of Skybox Skincare Bar, was selling her hand-made original soaps and lotions at fairs and to friends long before she had a business plan. But she says, once you take that idea you scrawled on a napkin to paper, it becomes the real deal...and a chance to tell your story.

“You get to write that down and take people with you. And it kind of builds that buy-in, when people read it.” ‍

Mission Statement (the “why”): The mission statement describes your purpose in the world, your motivation for why you started this enterprise in the first place. It’s only a few sentences that answer the “why” of your business’s existence, but they need to be meaningful.

Sherri Urann says one of the most challenging parts of making a business plan as a creative is staying focused on how to do the things you’re most passionate about.

“Once you step into your business pants, it's really easy to forget what motivated you to formalize your creative enterprise in the first place.” 

Your business’s mission statement helps you stay focused on the things most important to you, says Urann. “Figuring out what we wanted to guide us also helped us narrow down who we want to serve.” ‍

Vision Statement : The vision statement includes your business’s future goals, and your hopes of what you’d like your business to achieve. 

“Having a business plan made me able to truly articulate what the vision was like,” says Winfield Ezell.  “The business plan is more a blueprint of your vision, right? Because when that dream becomes ready to be implemented it turns into your vision, and then you start to break that vision down, and turn it into an executable plan.” 

This is the fun part, where you can ‘dream big’ and think beyond the scope of what you can do now into the future, and where you can get people on board to go along with you.

“I mean, sometimes in our world, especially creatives, we're selling the dream and the vision,” he says. “But as soon as they want to buy into that dream, guess what the next question is gonna be? What are your overhead costs?” 

(We’ll get to that later!) ‍

Value Statement : Think of this part as the heart and soul of your business—the values and ideals you’d like your business to represent and uphold. 

Sherri Urann thought the value statement was going to be a piece of cake.

“I always thought values were the most obvious part of the business plan, just be a good person, and what else is there to figure out?”

“But actually, it's really complicated to choose your values, because you have to decide what is most important in the way that you move in the world as an entity.”

But once Fat Gratitude had their values in place (artistic excellence, collaboration and inclusivity through diversity and accessibility) they were able to refocus the scope and scale of what they wanted to offer.

“Honing in on those values actually helps you choose the projects and collaborators you want to work with,” says Urann.

“And instead of feeling overwhelming, it started to feel really genuine to the kind role we wanted to play in the community. And we've gotten the opportunity to work with such amazing people because we've been so clear on who we want to be working with.”

• Marketing & Branding— Your brand encompasses more than just a logo—it’s your forward-facing visual look, yes, but also a personality, an origin story, and an identity. Here’s three basic elements of any brand. To create a memorable and trusted brand, it’s important to establish consistency through all these elements. 

Brand Identity : A brand’s identity includes all visual elements like logo, typography, colors and messaging. What’s your business’s name? How does your brand’s name and overall ‘look’ communicate to others what your business does?

‘Brand Story’: Your brand story is a narrative that tells people who you are and where you came from. It can communicate values, an origin story, a mission and purpose, the behind-the-scenes story of how services came to be or products are made. 

For filmmaker Winfield Ezell, getting your story right is just as important as choosing which lens to use. 

He recommends following the classic three act story structure and applying it to the origin story of your business idea: “Do I have my beginning, middle, and end? Is there an inciting incident? A resolution?”

There’s another reason to get your story down—what Marika Thomas calls “the encouragement factor.” 

“Creating your story builds that self confidence, like oh, I can do this! Why don't I just show them what else I can do? And I think that build up benefited me greatly.”

Personality: While brand identity is a collection of actual assets and copy, brand personality is a bit more intangible. It has to do with values, emotional connection, what you stand for and voice. If your brand was a person, what would they be like? What are the top five words you want people to use when describing your brand or business?

Don’t be afraid to put your own personality in there, after all, your business is an extension of yourself! Marika Thomas found that trying to keep her personality out of her work stifled her creativity.

“And I think that was the biggest misconception I ever had. I found that the more I gave of myself, the more people wanted it!” ‍

Market analysis— Market analysis uses a combination of demographic data, target audiences information, market growth potential and global trends. The market analysis will identify not only your ideal customers or clients, but also your competition.

A lot of people find this part the most challenging, including the creatives we spoke to.

Sherri Urann felt overwhelmed by all the other success stories out there. “When it comes to the market analysis piece, I think, just as humans, we're so accustomed to comparing ourselves to others and becoming discouraged.” 

And Marika Thomas struggled with figuring out who her competitors were.

“Market analysis definitely got me stuck, because you think you know who your local competitors are? But I promise you—you don't,” says Marika Thomas.

For Thomas, it was worth hiring a marketing consultant to do this work. “I would say if you had to invest money in your business plan at any point, invest in the market research portion.”

Whether you pay someone else or take it on yourself, here are some basic questions to consider for each part of your market analysis: differentiation, ideal customers and target audience, and the overall marketing strategy. ‍

Differentiation : How is what you’re offering different? How do you distinguish your brand from others selling similar products or doing similar kinds of work?

Don’t get caught up in comparing yourself to the big players—for now. 

“I think it was really easy to see all of these huge production companies and feel like somehow we have to try and match this or compete out there,” says Sherri Urann. “I think we were feeling like, oh, do we have the energy that we need to be able to compete in this market? And is that what we want?” 

That’s because your biggest competition is more likely to be from similar businesses that are either local to you or fill the same specific niche your business is trying to fill.

“There's no amount of Googling that's going to tell you who your local competitor is,” says Marika Thomas. “And when you start, everybody thinks of the big ones, we never think of the person that lives four blocks from us, that's doing the same exact thing.”  ‍

Ideal customers & Target Audience : Identifying ideal customers and target audience isn’t as hard as you think.  Take some time and think through these questions:  Is there a need for what you’re offering? And who needs it? Who is your target audience? Ideal customers? And most importantly, what are their consumer behaviors?

Marika Thomas recommends brainstorming a list of who you believe your target market is, or what you’re selling to them.

“List them all. Then go ahead and break down those price points of what you're selling. That kind of thing I feel is invaluable because it determines what you produce, what colors you use, what fragrances you may use, where you may sell to.” ‍

Marketing & Communications plan : This is your strategy for all your outward facing communications to the world—and it should be inspired by your mission, vision and values and match the objectives of your business plan. This is where you’ll be planning social media content, email newsletters, and advertising. Present a solid plan of how you’re going to reach out to your target audience, and based on the work you did from your market analysis, what you want to tell them.

• Financial— Time for the dollars and cents part—but no need to sweat it. The financial part of your business plan includes your budget, a financial statement, and future profit projections.   ‍

If  you've been living as an artist or creative, says Sherri Urann, chances are you’re actually really good at balancing your budget. 

“Many of us creative entrepreneurs don't give ourselves enough credit. Because many of us need to keep track of every dollar that comes in, or that goes out into supplies.

“So I was already doing business, but I had a strong aversion to calling it business.”

Still, it’s important, Winfield Ezell says, to level up the terminology.

“Like, we kept saying, ‘we got to get the money.’ I would tell my team: ‘no, no, no.’ We need to evolve that. Are we saying we need revenue? Are we saying we need capital? Are we saying we need a budget? Are we saying we need to get financially healthy?”

Here are all the important terms to know when it comes to presenting a balanced budget and healthy cash flow.

• Revenue - What’s coming in

Estimated Revenue is an estimate of how much you’re going to make from whatever product or service your business offers. If you’re just starting out, you can base this number on industry standards. 

Marika Thomas uses the estimated revenue from her business plan to monitor her sales.

“And it's just mainly like trying to go through every day and check off: Am I doing what I'm supposed to do? Did I hit the price points for all the products that I'm selling? What does success look like in dollars and cents for me?”

In general, when estimating revenue, think about what role you want your business to play in your financial life: is it a primary source of income? A side-hustle? And plan accordingly.  ‍

Actual Revenue is how much money you’ve received for selling your product or service. Usually you look back at actual revenue and compare it to your original estimated revenue to see if it matches, and where the discrepancies are. 

• Costs - What’s Going Out

Fixed Costs are things that always stay the same like rent, insurance, equipment, payroll and accounting services, and host and server space for your website.  ‍

Variable Costs are any costs that go into your business that change—like inventory, packaging, or raw materials. For service-related fields, it could be distribution costs, transaction fees, or any labor or hourly wages for contractors. ‍

One-off Costs are things you’ll pay for once, or just once in a while—moving expenses, furniture, software, and other launch-related costs.

Remember to account for the most precious cost of all—your time and the effort that you put into your projects. Give yourself an hourly, daily or project rate (or a salary if you can afford it!) and work that into your budgeting.  

• Profit & Cash Flow - This section is crucial because it will prove to money people that your business will work. You will share the profit and cash flow overview to people when you are seeking credit, loans, or investors for your new business. ‍

Profit - Profit is the amount of money left after deducting all the expenses from your revenue. That difference is known as your ‘profit margin’. Of course—you want your profit margin to be positive! So, if you are ‘in the red’ that means you aren’t bringing in enough money to cover your expenses and so you either have to cut expenses, or find ways to increase revenue.

‍ Assets - Assets are things of monetary value that you own that can be exchanged for cash. While most personal assets are things like houses or boats, a business’s assets are categorized as things that sustain growth and continued production. Assets include cold hard cash but also your investment portfolio, accounts receivable, inventories, and prepaid expenses.  ‍

Cash flow - You could be awash in assets on paper (an asset is anything of value that can be converted into cash), but short of cash to actually pay people. Which is why it’s important to track your cash flow—all the money coming in and going out of a business on a daily, weekly, or monthly basis. 

What you want to do is find a fixed set of time (like a payment cycle, perhaps) and subtract the money available at the beginning of that time from the end. Then you can get an idea of your average cash flow and be ready for any bumps in the road. 

• Operations— The logistics portion of your business plan, the operations section has information about how you’re going to run your business.  Potential investors will be looking for information in your business plan about hiring procedures, production and service processes, locations, and daily operations. 

Here are some things to consider as you figure out how you’re going to pull this whole thing together! ‍

Supplies / Equipment / Location :  What supplies and equipment do you need to be able to run your business? Where will you run your business from (home office, storefront)?  ‍

Employees / Payroll / Hiring : Do you have a team? An accountant? Or are you contracting with others (vendors, freelancers) who will provide goods or services for your business? ‍

Legal and Licensing : What kinds of licenses do you need to do your work / sell your products or services? What are the regulations in your industry? As a creative, are there Intellectual Property (IP) or copyright laws that apply? Do you have a lawyer or an association you can use as a resource for contracts, etc? Do you need to register with the Department of Revenue to do business in the state? ‍

PART 2: TIPS & TOOLS

You’re creative—show it.

You don’t have to confine your business plan to a Word document. Lots of businesses use infographics, charts and tables, photos, graphic design, and other visual elements in their business plans.

“A lot of people say, I'm going to write a business plan, and the first thing they do is go get somebody else's business plan. And then they start trying to copy and paste,” says Winfield Ezell. He knew his business plan was unique enough to not fit into any pre-made molds. “Well, that wouldn't work for me. So I had to improvise.”

“There's no wrong way to do it,” agrees Marika Thomas. 

“I think that if you're like making a business plan for I don't know, a furniture business, like they're gonna be like, I could go without that. I know what a table looks like, thank you.” 

But if you're in the creative biz, she says, you can show them “all the pops of color, add pictures, even a silly rhyme, because of the fact that I'm a creative, and I just do what creatives do, right?”  ‍

Tools and Templates ‍

Technically, you don’t need anything more than something to type on to create a business plan. But it’s always helpful to have tools if you have the bandwidth to learn and budget to buy. 

Here’s a couple tools recommended by the creative business owners we spoke to: ‍

LivePlan : LivePlan is software that helps you create your business plan step by step through templates, examples, profit and loss visualizations and forecasts. Marika Thomas calls LivePlan “the holy grail” of business planning platforms. 

“It basically takes you step by step through every piece of your business plan, every single piece, so it never felt huge.” 

LivePlan costs $10 a month, but once you’ve made your business plan you can download it and update it yourself as time passes.

A Business Canvas is a tool that helps you visualize your company’s partners, activities, customer relationships, value proposition, cost structure, and revenue streams, all condensed into a one-page chart. There’s tons of different kinds of business canvas models out there, many for free, and some tailored to specific industry niches.

Winfield Ezell says using the Business Canvas model helped him see all his ideas as one cohesive business plan. 

“The model really sets everything up, and you can take this model and scale it or use it to hit whatever milestones you have for your business.” ‍

PART 3: Using Your Business Plan

Ultimately, your business plan will serve as your roadmap and help you make decisions about your business now and in the future.  How you use your business plan is totally up to you.

Your business plan is “a living document to say the least,” says Winfield Ezell. “It’s a growing, living document, and the evolution means it's ever-changing.” 

Ezell revisits his business plan every 12-18 months, to see what he needs to change as his business grows.

“The things that seem disjointed now will be connecting as you go. You will know when they're going to connect, and when they connect then the plan is enhanced again.”

Marika Thomas goes back to her business plan once a week,  it helps her stay focused on her goals and her price points as supply chains and industry trends change.

“I think one thing that you have to remember about business plans is that they're ever evolving. It's never one hit or quit. You can't build it five years ago, and still stay relevant now. It doesn't happen. As what you want to create changes, you have to be flexible.” 

When it comes to bank loans, wooing investors, and formal presentations about your business, a business plan will prove invaluable over time. People want to see tangible proof of your goals.

“If you're looking to get any sort of investment, if you're looking to get any sort of support, if it's resources, a partner coming in, you're going to get asked for that.”

Sherri Urann says their business plan provides building blocks for the future.

“It helps us identify our capacity and goals for the next year. And it also puts meaning into the projects that are happening now."

‍ Conclusion ‍

All the creatives we spoke to said their business plan not only provided a path forward into growth, but helped them manifest what seemed like a collection of random ideas into a cohesive idea that laid the foundation for them to make it happen.

“Your business plan is your guide, your blueprint. And it's your model for what you see coming,” says Winfield Ezell.

“It's your place to put the future on paper, the one place you can manifest it. There's no other place other than your mind that you can manifest it and you can only do pieces of parts. But that's the one place you should and could put it all.”

So get out there and start planning! 

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Anatomy of a business plan : the step-by-step guide to building your business and securing your company's future

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Business Plan

Who should write a business plan, pros and cons of a business plan, the anatomy of a business plan, .css-uphcpb{position:absolute;left:0;top:-87px;} what is a business plan, definition of a business plan.

A business plan is a strategic document which details the strategic objectives for a growing business or startup, and how it plans to achieve them.

In a nutshell, a business plan is a written expression of a business idea and will describe your business model, your product or service, how it will be priced, who will be your target market, and which tactics you plan to use to reach commercial success.

Whilst every enterprise should have a plan of some sort, a business plan is of particular importance during the investment process. Banks, venture capitalists, and angel investors alike will need to see a detailed plan in order to make sound investment decisions — think of your plan as a way of convincing them your idea is worth their resources.

Roadmapping From A to Z

Business plans can also be useful as a guide to keeping a new business on track, especially in the first few months or years when the road ahead isn’t too clear.

Starting a business isn’t an exact science. Some companies organically develop out of trial and error, while others are plotted out from start to finish.

So if you’re asking whether your company needs a lengthy business plan, the answer would be ‘no’. That said, there are definitely a few situations in which writing a plan makes sense and can help increase the chances of a business becoming successful:

In situations when the market is new and untested — or simply volatile — it can be very helpful to have a business plan to refer back to when the road ahead isn’t clear.

For those who have an exciting business idea but haven’t necessarily distilled it down into black-and-white. Writing a business plan is a great way to look at a concept from all angles and spot any potential pitfalls.

How to write a business plan?

The most important step in writing a business plan is to identify its purpose.

Who are you trying to attract with it, and why?

Here are a few key pointers for writing a business plan:

Are you looking to secure a bank loan, get funding from private investors, or to lure skilled professionals to join you?

Include a brief history of your business, the concept, and the products or services. Keep it professional and transparent.

Don’t exaggerate your experience or skills, and definitely don’t leave out information investors need to know. They’ll find out at some point, and if they discover you lied, they could break off their involvement. Trust is crucial.

Explain what the product or service your business offers in simplistic terms.

Watch out for complex language and do whatever you can to prevent readers from becoming confused.

Focus on the benefits the business offers, how it solves the core audience’s problem(s), and what evidence you have to prove that there is a space in the market for your idea. It’s important to touch on the market your business will operate in, and who your main competitors are.

Another essential aspect of writing an effective business plan is to keep it short and sweet. Just focus on delivering the crucial information the reader has to know in order to make a decision. They can always ask you to elaborate on certain points later.

Still, deciding whether or not a business plan will benefit you at this stage of your venture?

Let’s look at a few reasons why you might (or might not) want to write a business plan.

A business plan will help you to secure funding even when you have no trading history. At the seed stage, funding is all-important — especially for tech and SaaS companies. It’s here that a business plan can become an absolute lifesaver.

Your business plan will maintain a strategic focus as time goes on. If you’ve ever heard of “mission creep”, you’ll know how important an agreed can be — and your business plan serves exactly that purpose.

Having a plan down in black and white will help you get other people on board . Again, with no trading history, it can be hard to convince new partners that you know what you’re doing. A business plan elegantly solves this problem.

Your business plan can cause you to stop looking outward. Sometimes, especially in business, you need to be reactive to market conditions. If you focus too much on your original business plan, you might make mistakes that can be costly or miss golden opportunities because they weren’t in the plan.

 A lot of time can be wasted analyzing performance. It’s easy to become too focused on the goals and objectives in your business plan — especially when you’re not achieving them. By spending too much time analyzing past performance and looking back, you may miss out on other ways to push the business forward.

A business plan is out of date as soon as it’s written. We all know how quickly market conditions change. And, unfortunately, certain elements in your business plan may have lost relevance by the time you’re ready to launch. But there is another way — by transferring your strategic plan into an actionable roadmap , you can get the best of both worlds. The business plan contains important detail that is less likely to change, such as your mission statement and target audience, and the roadmap clarifies a flexible, adaptable, route forward.

So, you’ve decided to write a business plan — a great choice! 

But now comes the tricky task of actually writing it. 

This part can be a little frustrating because there is no one-size-fits-all template appropriate for all business plans. The best approach, in fact, is to look at common ingredients of a business plan and pick out the ones that make sense for your venture.

The key elements of a great business plan include:

An overview of the business concept . This is sometimes referred to as an executive summary and it’s essentially the elevator pitch for your business.

A detailed description of the product or service. It’s here that you’ll describe exactly what your core offering will be — what’s your USP , and what value do you deliver?

An explanation of the target audience. You need a good understanding of who you’ll be selling your product or service to, backed up by recent market research.

Your sales and marketing strategy. Now that you know who you’re targeting, how do you plan to reach them? Here you can list primary tactics for finding and maintaining an engaged client base.

Your core team . This section is all about people: do you have a team behind you already? If not, how will you build this team and what will the timeline be? Why are you the right group of people to bring this idea to the market? This section is incredibly important when seeking external investment — in most cases, passion can get you much further than professional experience.

Financial forecasts . Some investors will skim the executive summary and skip straight to the finances — so expect your forecasts to be scrutinized in a lot of detail. Writing a business plan for your eyes only? That’s fine, but you should still take time to map out your financial requirements: how much money do you need to start? How do you plan to keep money coming in? How long will it take to break even ? Remember, cash is king. So you need a cash flow forecast that is realistic, achievable and keeps your business afloat, especially in the tricky first few years.

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Anatomy of a Business Plan 4th Edition

There is a newer edition of this item:.

• ISBN-10 1574101277
• ISBN-13 978-1574101270
• Edition 4th
• Publisher Dearborn
• Publication date January 1, 1999
• Language English
• Dimensions 1 x 9 x 11.25 inches
• Print length 274 pages
• See all details

Product details

• Publisher ‏ : ‎ Dearborn; 4th edition (January 1, 1999)
• Language ‏ : ‎ English
• Paperback ‏ : ‎ 274 pages
• ISBN-10 ‏ : ‎ 1574101277
• ISBN-13 ‏ : ‎ 978-1574101270
• Item Weight ‏ : ‎ 1.45 pounds
• Dimensions ‏ : ‎ 1 x 9 x 11.25 inches

About the author

Linda pinson.

LINDA PINSON is the author of nine business books and the developer/publisher of the business plan software program, AUTOMATE YOUR BUSINESS PLAN. Her book, Anatomy of a Business Plan (winner of the Ben Franklin Award for "Best Business Book of the Year") has been used by over one million business owners. Anatomia de un Plan de Negocio, the Spanish language edition, has been serving the Latino community for since 1998. Linda's publishing company, Out of Your Mind...and Into the MarketplaceTM, was named Small Press Publisher of the Year. Linda was also selected by the U.S. Small Business Administration in Washington D.C. to write its government business plan publication MP-32, How to Write a Business Plan. Her books are in libraries and bookstores throughout the U.S. and have been translated into Italian, Chinese, Spanish and other languages for foreign use. The books and software are used as course material in universities, SBDCs, and technical colleges. Customized versions of the Automate Your Business Plan software have been utilized by Dale Carnegie(R) Training Centers Worldwide and The American Bar Association. Linda is a nationally recognized speaker, educator and business consultant, specializing in business planning and financial management.

Linda's dedication to the small business community led to her being honored as Education Advocate of the Year and SBA Regional Women in Business Advocate of the Year. She was the founding California State President of the National Association of Women Business Owners (NAWBO California). Linda currently serves as an Advisory Board member for the Tri-County Lead SBDC and is Board Secretary for the Small Business Financial Development Corporation OC.

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