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htm 30/7/2014
Business Planning Papers:
How to Write a Business
Plan
Page Contents
1. Why Write a Business Plan?
2. Start with a Business Strategy
3. Before Writing the Business Plan
4. Planning the Business Plan
5. Outline the Business Plan
6. Business Plan Outline
7. Writing the Business Plan
8. Introducing PlanWare
9. Copyright & Legal Stuff

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1. Why Write a Business Plan?
The preparation of a written business plan is not the end-result of
the planning process. The realization of that plan is the ultimate
goal. However, the writing of the plan is an important
intermediate stage - fail to plan can mean plan to fail. For an
established business it demonstrates that careful consideration
has been given to the business's development, and for a startup it
shows that the entrepreneur has done his or her homework.
Purpose of the Business Plan
A formal business plan is just as important for an established
business, irrespective of its size, as it is for a startup. It serves

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four critical functions as follows:
Helps management or an entrepreneur to clarify, focus and
research their business's or project's development and
prospects.
Provides a considered and logical framework within which a
business can develop and pursue business strategies over
the next three to five years.
Serves as a basis for discussion with third parties such as
shareholders, agencies, banks, investors etc.
Offers a benchmark against which actual performance can
be measured and reviewed.
Just as no two businesses are alike, so also with business
plans. As some issues in a plan will be more relevant to some
businesses than to others, it is important to tailor a plan's
contents to suit individual circumstances. Nonetheless, most
plans follow a well-tried and tested structure and general
advice on preparing a plan is universally applicable.
A business plan should be a realistic view of the expectations
and long-term objectives for an established business or new
venture. It provides the framework within which it must
operate and, ultimately, succeed or fail. For management or
entrepreneurs seeking external support, the plan is the most
important sales document that they are ever likely to produce
as it could be the key to raising finance etc. Preparation of a
comprehensive plan will not guarantee success in raising
funds or mobilizing support, but lack of a sound plan will,
almost certainly, ensure failure.
Importance of the Business Planning Process
Preparing a satisfactory business plan is a painful but
essential exercise. The planning process forces managers or
entrepreneurs to understand more clearly what they want to
achieve, and how and when they can do it. Even if no
external support is needed, a business plan can play a vital
role in helping to avoid mistakes or recognize hidden
opportunities. It is much easier to fold a sheet of paper than
a business.
For many, many entrepreneurs and planners, the process of
planning (thinking, discussing, researching and analyzing) is
just as, or even more, useful than the final plan. So, even if
you don't need a formal plan, think carefully about going
through the planning process. It could be enormously
beneficial to your business.
Anticipate many weeks of hard work and several drafts of the
emerging plan to get the job right. A clearly written and
attractively packaged business plan will make it easier to
interest possible supporters, investors etc. A well-prepared
business plan will demonstrate that the managers or
entrepreneurs know the business and that they have thought
through its development in terms of products, management,

finances, and most importantly, markets and competition.
For more guidance on these matters, check the white
paper offering Insights into Business Planning, the Checklist
for Preparing a Business Plan, Free-Plan (free 150-
pageBusiness Plan Guide and Template in Word format)
and the comprehensive Business Plan Guide.
If you are developing, or have invented, a new product or
service, it may be beneficial to start the business planning
process by reviewing the sections of Getting New Business
Ideas covering Assessing Ideas and Next Steps. This will
guide you on groundwork to be done before starting to write
a comprehensive plan.
In the following sections, we discuss the preparation of a
strategic plan and present ideas for preparing the outline of a
business plan and writing up the detail.
Need More Business Planning Help? Have a look at:
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2. Start with a Business Strategy
A short strategic plan (2-3 pages) can provide a very useful
foundation on which to base a much more detailed and
comprehensive business plan. If you don't have a sensible
strategic plan, how can you realistically write a sensible
business plan? Use a short strategic plan as the foundation
for a more comprehensive business plan.
As the prelude to developing a strategic plan, it is desirable
to clearly identify the current status, objectives and
strategies of an existing business or the latest thinking in
respect of a new venture. Correctly defined, these can be
used as the basis for a critical examination to probe existing
or
perceived strengths, weaknesses, threatsand opportunit
ies. This then leads to strategy development covering the
following issues which are discussed in more detail
immediately below:
Vision
Mission
Objectives
Values
Strategies

Goals
Programs
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Vision
The first step is to develop a realistic Vision for the business.
This should be presented as a pen picture of the business in
three or more years time in terms of its likely physical
appearance, size, activities etc. Answer the question: "if
someone from Mars visited the business, what would they
see or sense?"
Mission
The nature of a business is often expressed in terms of
its Mission which indicates the purposes of the business, for
example, "to design, develop, manufacture and market
specific product lines for sale on the basis of certain features
to meet the identified needs of specified customer groups via
certain distribution channels in particular geographic areas".
A statement along these lines indicates what the business is
about and is infinitely clearer than saying, for instance,
"we're in electronics" or worse still, "we are in business to
make money" (assuming that the business is not a mint !).
Also, some people confuse mission statements with value
statements (see below) - the former should be very hard-
nosed while the latter can deal with 'softer' issues
surrounding the business.
Objectives
The third key element is to explicitly state the
business's Objectives in terms of the results it needs/wants
to achieve in the medium/long term. Aside from presumably
indicating a necessity to achieve regular profits (expressed as
return on shareholders' funds), objectives should relate to
the expectations and requirements of all the major
stakeholders, including employees, and should reflect the
underlying reasons for running the business.
Values
The next element is to address the Values governing the
operation of the business and its conduct or relationships
with society, customers, employees etc.
Strategies
Next are the Strategies - the rules and guidelines by which
the mission, objectives etc. may be achieved. They can cover
the business as a whole including such matters as
diversification, organic growth, or acquisition plans, or they
can relate to primary matters in key functional areas, for
example:
o The company's internal cash flow will fund all
future growth.
o New products will progressively replace
existing ones over the next 3 years.
o All assembly work will be contracted out to
lower the company's break-even point.
Goals
Next are Goals. These are specific interim or ultimate time-
based measurements to be achieved by implementing
strategies in pursuit of the company's objectives, for
example, to achieve sales of $3m in three years time.
Programs
The final elements are the Programs which set out the
implementation plans for the key strategies.
It goes without saying that the mission, objectives, values,
strategies and goals must be inter-linked and consistent with
each other. This is much easier said than done because many
businesses which are set up with the clear objective of
making their owners wealthy often lack strategies, realistic
goals or concise missions.
For more information on strategic planning, refer to other
papers in this series entitled Developing a Strategic Business
Plan (and its accompanying worksheet) andDevising Business
Strategies, and consider utilizing the free Online Strategic
Planner. See also a sample strategic plan - you may wish to
print it for reference purposes.
Need More Assistance?
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Exl-Plan Financial Projections
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3. Before Writing the Business Plan
This section deals with preparatory issues, structure &
content, and length & time scale for the preparation of a
detailed plan.
Preparatory Business Planning Issues
Before any detailed work commences on writing a
comprehensive business plan, you should:
Clearly define the target audience
Determine its requirements in relation to the contents
and levels of detail
Map out the plan's structure (contents page)
Decide on the likely length of the plan
Identify all the main issues to be addressed.
Shortcomings in the concept and gaps in supporting evidence
and proposals need to be clearly identified. This will facilitate
an assessment of research to be undertakenbefore any
drafting commences. Bear in mind that a business plan
should be the end result of a careful and extensive research
and development project which must be completed before
any serious writing of a plan should be started. Under no
circumstances should you start writing a plan before all the
key issues have been crystallized and addressed.
To get started, use the outline below to prepare the basis for
your plan. Bear in mind that if a credible and acceptable
outline plan cannot be compiled then it is highly improbable
that a more comprehensive plan can be prepared.
Take a moment to complete or view the
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For further practical guidance on these matters, review the
following:
1. White paper offering Insights into
Business Planning.
2. Checklist for Preparing a Business Plan.
3. Free-Plan - business plan template &
guidelines (Word format).
4. Comprehensive Business Plan Guide.
Structure & Content of a Business Plan
A typical business plan comprises the following main
elements:
1. Brief Introduction setting out the background and
structure of the plan.
2. Summary of a few pages which highlights the main
issues and proposals.
3. Main Body containing chapters broken into numbered
sections and subsections.
4. Appendices containing tables, detailed information,
exhibits, etc. referred to in the text.
The outline presented below in conjunction with the
comprehensive Business Plan Guide could serve as the basis
for a detailed business plan.
Length & Time-scale for Business Planning
Whilst the sheer length of a business plan may bear no
relation to the underlying prospects of a business, it is likely
that a well-developed plan would be at least twenty pages
long plus appendices.
The elapsed time needed to produce a detailed plan might be
between twenty and one hundred days. This would be
determined not only by the complexity and scale of the
venture, but also by the scale and maturity of the business
and relevant experience and skills of the management team.
Whilst the task of writing the plan itself may only take a
relatively short time, be sure to allocate enough time to the
research, preparatory work and the underlying thinking and
discussion.
For more guidance on the length of a plan and the time-scale
involved, have a look at Insights into Business Planning.
Top of Page



4. Planning the Business Plan
Develop an Outline Business Plan
Start by defining an outline (i.e. a table of contents) of your
plan. This will allow you to to concentrate on the essentials of
planning the business rather than becoming too absorbed in
the detailed drafting of your plan. It will allow you to see the
wood from the trees.
Having devised the basic outline for your business plan, the
next task is to expand this to include subheadings and
appendix titles (see the Business Plan Guide for detailed
suggestions). This extended structure should be critically
reviewed to ensure that all the salient elements of the plan
are included and that it has a logical flow. This approach
should also ensure that the plan has an appropriate levels of
detail and is correctly targeted at its audience - investors,
directors/shareholders, financial institutions etc. For example,
a structure which is mainly devoted to detailed technical
descriptions of products would be completely unsuited to a
plan being used to raise bank finance.
Prepare a Business Planning Work Program
Once the plan's structure has been defined, it can be used as
a checklist and basis for a work program and timetable to
complete the plan. This work program will often entail
extensive research and thought prior to the commencement
of writing. For example, formal market research may be
needed before sales volumes and prices can be determined.
Another example: professional advice may be required to
assess capital expenditures in relation to the acquisition of
premises and so on.
The work program could correspond to key sections of the
proposed plan and could include timetables, resource
allocations and cost estimates as indicated in the following
chart:
Sectio
n of
Plan
Researche
d by
Writte
n by
Elapsed
time
(weeks
)
Cos
t
($)
Priorit
y
Key
Action
s






Further Suggestions for Business Planning
Some additional tips and suggestions:
Be absolutely clear about the primary purpose and
audience of the plan from the outset. If the plan has
to serve multiple purposes, consider producing
tailored versions (or tailored summaries).
Allow enough time to produce revised drafts of the
plan - three/five drafts would not be unusual.
Write the Introduction, Summary and Conclusion of
the plan only after the plan's main parts have been
finalized.
At an early stage, make some high-level sales and
financial projections (covering 1-3 years) to explore
the general direction and size of the business, likely
viability and possible funding amounts and mix. For
this purpose, consider using the Quik-Plan facility
within Exl-Plan, our range of financial planners for use
with Excel.
If the elapsed time needed to prepare the plan and
commence its execution is lengthy, set the start date
for financial projection close to the commencement of
execution. For example, if you begin preparing a plan
in January and hope to raise startup finance by
October, the start date for projections might be set to
September. Any expenses incurred before this date
could be rolled up into the opening balance sheet for
the projections.
Seek external assistance sooner rather than later. This
may take the form of software tools, consultancy
assistance in the form of specific assignments, or
mentoring and counseling on an as required basis.
If planning a significant business, ensure that a
management team has been identified (and possibly
in place) before the plan is finalized.
Identify and cultivate possible key recipients of the
plan during the plan's preparation. This will ensure
that when the plan is finally presented, these contacts
will have some prior knowledge of its contents and the
promoters and, where appropriate, the views of
contacts may have been taken into account during the
preparation process.
Start compiling the plan at the sections devoted to
market research/analysis and sales forecasts/plans, or
with details of the proposed product/service offerings.
Leave the detailed financial projections aside until all
details in relation to sales, costs, expenses,
operations, capital investment and possible
sources/types of finance have been resolved
For further help, check out:
The white paper entitled Insights into Business
Planning which has been based on the views of
hundreds of people who have prepared business plans
Free-Plan, our free Business Plan
Guide and Template (for Word)
The 30-point Checklist for Preparing a Business Plan.
The comprehensive Business Plan Guide.
If you have a problem or query relating to the compilation of
a business plan which is not covered in the various white
papers, you may wish to use our free and confidential Online
Business Plan Advice Service.

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5. Outline the Business Plan
The next section presents an outline structure for a business
plan. Feel free to change this outline to suit your project and
its state of development. It can be readily expanded to
become a 'full-blown' business plan by extending the level of
detail as explained in the Business Plan Guide.
Note: A free 150-page Business Plan
Guide and Template (Word format) incorporating a similar
outline structure and additional detail is available for
downloading here.
The suggested page lengths for a comprehensive plan are
given in parenthesis after each section's heading within
the outline. A small, straightforward business should work
within the minimum page lengths whereas a large, complex
business seeking a substantial external investment might hit
the maximum page lengths. Note the importance of
marketing and sales in terms of the suggested number of
pages for these sections. For more guidance on the length of
business plans, have a look atInsights into Business Planning.
Avoid going into too much detail within the plan's body by

placing detailed or supplementary material in accompanying
appendices. Bear in mind that most investors, bankers etc.
dislike having to read overlong business plans just as much
as entrepreneurs and managers dislike writing the plans in
the first instance!
Work on the assumption that whoever reads your plan will be
completely unfamiliar with your business or project and will
be seeking answers to relatively basic questions and key
issues, for example, what will the business do, will it make
money etc.
For further information on business planning issues, refer to
other papers in this series which cover insights into business
planning, financial planning, cashflow forecasting, strategic
planning, devising business strategies and managing working
capital. Finally, you should review the contents of
the Business Plan Guide.
Note that a free Business Plan Template for Word (48
pages) and a complementary Guide (supplied as a 90+ topic
Help file and as a 100+ page PDF file for printing)
incorporating this outline structure and additional detail is
available for downloading here.
Top of Page


6. Business Plan Outline
Use the outline below as the "road map" for your plan and
then write up each section concisely but comprehensively.
Only address matters of real substance and major
significance within the main sections of the plan.
1. Introduction (1)
Introduce the plan. Explain who wrote it, when and for what
purpose. Give contact details. See 1. Introduction within
the Business Plan Guide for more info.
2. Summary (1-3)
Write last. Present the highlights of the plan. See 2.
Summary within the Business Plan Guide for more info.
3. Strategic Overview (1-2)
Present the "big picture". What are the central purposes and
activities of the planned business? What are its SWOTs? What
are its major (long term) objectives, key strategies and prime
goals ? See 3. Strategic Overview within the Business Plan

Guide for more info.
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229.95)
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4. Present Status (1-5)
Summarize achievements and performance (financial, sales,
technical etc.) to date. Introduce the stakeholders in the
business. See 4. Present Status within the Business Plan
Guide for more info.
5. Product/Service Offerings (1-3)
Keep descriptions short and confine them to broad groups.
Explain briefly what makes them special. See 5. Product /
Service Offerings within the Business Plan Guide for more
info.
6. Profiles of Target Markets (3-6)
Size, segments, trends, competition and user/customer
profiles. See 6. Profiles of Targets Markets within
the Business Plan Guide for more info.
7. Marketing Strategies, Sales Plans &
Projections (3-6)
How will the business market its products/services and sell to
customers? What sales will be achieved in its main markets?
How will it deal with competitors ? Indicate costs. See 7.
Marketing Strategies, Sales Plans & Projections within
the Business Plan Guide for more info.
8. Technology and R&D (0-2)
If relevant, explain progress, plans, resources and highlight
any technological advances. See 8. Technology and
R&D within the Business Plan Guide for more info.
9. Operational/Manufacturing Plans (2-5)
Cover distribution & service activities and/or manufacturing.
Highlight major elements only. Indicate organization,
resources, costings etc. See 9. Operational / Manufacturing
Plans within the Business Plan Guide for more info.
10. Management & Administration (2-3)
Introduce the proposed management team, structure etc.
Indicate administrative arrangements and specify overhead
costs. See 10. Management & Administration within
the Business Plan Guide for more info.
11. Financial Projections (4-8)
Use simple tables to present key financial projections e.g.
summary P&L, cashflows, balance sheets and key ratios.
Place the detailed analyses in appendices. See 11. Financial
Projections within the Business Plan Guide for more info.
For more help, download a trial version of our financial
planners - Exl-Plan (for Excel) - and review its annual output
reports and Textual Summary Report.
12. Funding Requirements & Proposals (0-2)
If applicable, summarize funding requirements, possible
sources, likely terms, and, for investors, the projected return
on their investment. Be realistic!! See12. Funding
Requirements & Proposals within the Business Plan Guide for
more info.
13. Implementation (1-3)
Explain the major decision points, time scale and actions
required by management and others to progress the plan.
See 13. Implementation within theBusiness Plan Guide for
more info.
14. Conclusion (1)
Indicate why the business will succeed and why it should be
supported. See 14. Conclusion within the Business Plan
Guide for more info.
Appendices
Use appendices at the very back of the plan to present
important background data and detailed plans. This will avoid
disrupting the flow of the plan or cluttering it with excessive
detail. See Appendices within the Business Plan Guide for
more info.
For further information on business planning issues, refer to
other papers in this series which cover insights into business
planning, financial planning, cashflow forecasting, strategic
planning, devising business strategies and managing working
capital. Finally, you should review the contents of
the Business Plan Guide.
Need More Assistance?
Have a look at:
Exl-Plan Financial Projections
Plan Write Business Planner
Plan Write Expert Business Planner

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Business financial planner for
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details and downloadlinks for Exl-
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details and download links
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Business plan template &
guidelines (Word format) - details
& download link for Free-Plan.
Online strategic planner for
creating a 3-page strategic plan -
details and sample plan.
More free tools here.

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7. Writing the Business Plan
The following suggestions may be of assistance when drafting
the plan:
1. Build the detailed business plan on a carefully
considered outline (table of contents) - see the
business plan outline above.
2. The most important and difficult sections to prepare
relate to marketing and sales as these can make or

break not only the business plan but also the business
itself !
3. Support market and sales projections by market
research. Ensure that there is a direct relationship
between market analysis, sales forecasts and financial
projections. Assess competitors' positions and possible
responses realistically.
4. Be realistic about sales expectations, profit margins
and funding requirements. Ensure that financial ratios
are in line with industry norms. Do not underestimate
the cost and time required for product development,
market entry, securing external support or raising
finance. Consider the possibility of the double-
double-half rule - double the cost or time required
or halve the sales projections.
5. Restrict the level of detail on product specifications
and technical issues.
6. The financial projections are likely to be
straightforward but decide on a sensible level of detail
as regards the time horizon etc. Consider using a
personal computer and a financial modeling package
for the projections.
See our range of financial planners -
Exl-Plan (for Excel) - which can be
downloaded from here.
For further specific information on
financial planning for businesses, refer
to the page entitled Preparing Financial
Projections accessible from the
PlanWare site.

7. If looking for external equity, be realistic about the
value of the business, risks involved and possible
returns, and be sure to indicate possible exit
mechanisms. Put yourself in the shoes of an investor
and remember the golden rule - he who has the gold
makes all the rules.
8. The management section of the plan is of crucial -
experience, balance, ability and commitment. If a new
venture is involved, then management is likely to be
its only real asset. Consider formation of a
management team or strengthening management as
part of the plan. Remember the five ingredients of a
successful business
are management, management, management, m
arket and product (in that order, and not in the
reverse order as some inventors and entrepreneurs
might like to think).
9. Be positive but realistic about the business's prospects
and explicitly recognize and respond honestly to
shortcomings and risks.
10. When writing the plan:
o avoid unnecessary jargon
o economize on words
o use short crisp sentences and bullet points
o check spellings
o concentrate on relevant and significant issues
o break the text into numbered paragraphs,
sections etc.
o relegate detail to appendices
o provide a contents page and number pages
o write the summary last.

11. Get a qualified outsider to review your plan in draft
form and be prepared to adjust the plan in the light of
comments secured and experiences gained.
12. External help and guidance in preparing a business
plan can be extremely valuable. If outside help is
used, make sure that the resultant plan remains your
own and not that of your advisers.
13. If presenting the plan to outsiders, attach appendices
and number pages. Add a contents page and bind it
within attractive covers.
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8. Introducing PlanWare
PlanWare develops and sells a range of financial planning
packages - Exl-Plan and Cashflow Plan - for businesses of all
sizes & types. Trial versions of all products can be
downloaded from our PlanWare site and many other sources
on the 'Net.


Strategic Plan
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Insights
Financial Projectio
ns
Cashflow Forecast
s
Working Capital
Raising Finance
Other Items: - Bad Advice
- Quotations
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We also offer an extensive range of commercial software for
writing business plans, market planning, assessing business
ideas and evaluating strategies.
PlanWare also features:
Papers
on cashflow, financial, strategic and business planning
topics.
Advice on getting new business ideas,
managing working capital, devising business
strategies and much more.
Free business plan template (Word format).
Pages devoted to famous business quotations and
examples of bad business advice and mistakes.
Basic & Free
Planners for
Financial
Projections and
more ...
Our Exl-Plan range of integrated
monthly/quarterly planners includes Exl-
Plan Basic which uses annual
assumptions to generate comprehensive
5-year projections. This simple, low-cost
version (US$29) will meet many
business planning needs. Get details,
download free trial copy or buy & use
now.
Also available is a
completely free version, Exl-Plan Free,
which is identical to Basic but projects
for just two years
ahead. Details and free download.
The Free and Basic versions of Exl-Plan
are complemented by other more
detailed, powerful versions of Exl-Plan.
Get details and download trial copies.
All versions of Exl-Plan include
a free 150-page Business Plan Guide &
Template (for Word).