When to Use a Business Plan

  • When you are starting a business
  • When you are changing your existing business model
  • When you are seeking funding from investors
  • When you are attracting potential partners

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Help Guide

A business plan is a document that helps many new businesses set up a roadmap for success during the formation process. It is a formal statement of the business’ goals and competitive strategies. It also contains relevant industry information and background information about the organization and managing team.

A strong business plan includes information about your products and services, analysis of the industry and your competitors, marketing strategies, financial information, and other pertinent information. It can also function as a fundraising tool for potential investors.

Although a business plan is useful for new businesses, it can also help you refine your mission or pivot to a new area after the company is already established.

LegalNature's form editor will help you to create a professional, in-depth business plan that gives potential investors and business partners an excellent overview of your business. While business plans are most commonly discussed in the context of startup ventures, they are also regularly used throughout the business life cycle to provide useful forecasts and an understanding of the business’ goals, strengths, and weaknesses.

Below you will find the most commonly included business plan topics. While you need not discuss all the topics we propose, being as detailed and comprehensive in your answers as possible will help give those who read this document confidence in your business. When completing the form, try to balance your writing tone between sounding professional, knowledgeable, detailed, and excited about your business.

Executive Summary

Your executive summary is the first thing that people will read when they look at your business plan and is therefore your first chance to make a good impression. Because of its importance, we recommend that you save this question until last so that you will have had a chance to think through all the important aspects of your business plan.

For the summary, identify the market needs that your company meets and provide an explanation of the major business operations, where you hope to take the business, and why you think the company will succeed.

Confidentiality

Since your business plan likely includes your proprietary business ideas, insights, and techniques, it is usually recommended that you include a confidentiality provision. This will prohibit those who sign it from disclosing, copying, reproducing, or distributing your confidential information.

Since this is not a legal contract, it is not necessary for you or those who read the plan to sign it. However, if you decide to require confidentiality, then those who you give the plan to should sign where indicated on the last page. If multiple people will read it, you can print out multiple copies of the last page or simply have them sign, print, and date under the signature space provided. Retain copies of the signed confidentiality provision for your records.

Mission Statement

Here you will briefly describe the company’s overarching values and aims. What problems will you solve for your buyers? Are you providing a product or service that is cheaper, faster, higher in quality, or that offers superior customer service?

Company History and Description

Describe why the company was formed and any major developments so far in the company's lifespan. Then identify your company's industry and types of operations.

Company Goals and Objectives

Explain the company’s goals over the short term (12 months) and long term (5+ years). Here, you usually have some freedom as to the types of goals, objectives, and forecasts you choose to include. These could include financial goals, forecasts for your industry position, and marketing benchmarks you plan to hit.

Ownership and Management

Next you will identify all major owners and managers as well as their qualifications and relevant experience. A common strategy here is to point out any exceptional characteristics displayed by your team individually or as a whole. For instance, you may wish to acknowledge the fact that your owners have previous or similar projects that have been successful and that your managers have over 100 years of combined experience in the industry.

Optionally include:

  • the hierarchy of management and key staff,
  • important changes in the management structure over the past year or planned in the future,
  • the strengths and weaknesses of the management team members individually and as a whole, and
  • the plan for obtaining additional managers as the company grows.

Products and Services

Provide a description of the company’s product and service offerings. You may be as broad or as detailed as you wish; however, it is often beneficial to include any relevant or impressive details you think your audience will be interested in.

Market and Industry Overview

Broadly identify the company’s target markets and industry and provide general facts and trends. Then show how your company will fit into the picture.

Optionally include:

  • the growth potential of the market,
  • the past growth of the market,
  • the current size of the market,
  • the total annual sales in the industry last year,
  • other relevant data about the industry as a whole, and
  • important changes currently going on in the industry.

Environmental and Seasonal Factors

Here you should describe key outside factors that affect the business, such as specific changes in the local or national economy, population, weather, employment levels, and interest rates.

Next, discuss any important aspects of the business that could vary according to the time of year. For instance, if you operate in the tourism industry, you may experience an increase in demand during months when people tend to travel more. Some businesses do not have seasonal variables.

Regulatory Requirements

Explain how any laws or regulations will affect or are currently affecting the business.

Optionally include:

  • intellectual property issues;
  • licensing, permits, or bonding requirements;
  • special industry regulations;
  • health or environmental legislation;
  • relevant zoning or building codes; and
  • insurance requirements.

Intellectual Property Rights

If the company owns or has rights to any intellectual property, describe any rights the company has to patents, trademarks, or copyrights. How were these acquired, and why are they useful or valuable?

Target Markets

Describe the company’s target markets, target demographics (characteristics of your typical buyers), and how it will infiltrate each market that it operates in. Focus on narrowing down as much as possible each specific type of consumer of your product or service.

Marketing Strategy

In addition to your advertising strategy, this usually includes your market research, specific market goals, products and services branding, promotional tools, strategies for reaching target customers, and consumer data.

Optionally include:

  • planned marketing campaigns,
  • planned product mix,
  • strategies for beating out the competition, and
  • geographic marketing territory.

Main Competition

Provide a brief description of each competitor and its general market strategy. Identify their strengths and weaknesses. Remember that competitors may include businesses in other industries that take away your potential customers. Compare and contrast your business strategies.

Pricing Strategy

Explain how the company determines prices, any pricing policies the company will have, and any credit and collections policies it will have. Are you a low-cost/low-quality producer, a high-cost/high-quality producer, or some mix thereof?

Location

Describe the company's current and planned facilities or work locations, including any physical requirements and building costs. Are there any obstacles that need to be overcome for acquiring new locations? What strategic advantages do your locations provide? For instance, do they create cost savings for transportation and distribution or are there legal or tax advantages? How do your locations compare to those of your competitors?

Optionally include:

  • the necessary characteristics for well-functioning facilities,
  • the size and amount of space needed,
  • zoning restrictions and requirements, and
  • financial estimates.

Production Strategies

Explain any production or operational strategies, including how and where the company will produce its products, its production techniques, and its quality control plan.

Optionally include:

  • the customer service plan,
  • planned production levels, and
  • production costs.

If the company is in the high-tech industry, explain the status of any research and development as well as planned R&D projects.

Service Strategies

Explain any service strategies, including how and where the company will produce its services, its service techniques, and its quality control plan.

Optionally include:

  • the customer service plan,
  • service costs,
  • measures of productivity, and
  • customer retention strategy.

If the company is in the high-tech industry, explain the status of any research and development as well as planned R&D projects.

Inventory

What are the company’s inventory requirements, and what types of goods will it keep, if any? Explain how the company plans on meeting these requirements.

Optionally include:

  • turnover rate of inventory,
  • lead time ordering plan, and
  • storage strategy.

Suppliers and Vendors

Identify any of the company's suppliers and vendors, their relationship with the company, and the type and amount of products or services they will provide.

Optionally include:

  • supplier and vendor locations,
  • delivery methods,
  • credit policies,
  • reliability, and
  • payment terms.

Financial Projections

It is in your company's best interests to try to include as many detailed and realistic financial projections as possible. Potential investors and business partners will like to see as much hard data as you can provide to support your projections. You want to show them that you are well acquainted with the current state of your industry. Often, the best way to do this is to find similar companies operating in similar markets and then compare them with your planned operations.

Some common financial projections include the company's projected:

  • average monthly expenses for the first year of the business plan,
  • average monthly revenue for the first year of the business plan,
  • gross revenue for the first year of the business plan,
  • net profit for the first year of the business plan,
  • time taken to break even (recover its initial investment) after starting the business plan (for instance "three years" or "six months"), and
  • return on investment (ROI) during the financing period.

If possible, also provide a summary of your financial projections for the first few years of operations. Include any major assumptions and predictions that your projections are based upon.

Capitalization

Briefly describe any capital the company previously received and how it acquired the funding. You may also address any capital the company still needs and plans on pursuing.

Startup Expenses

If the company is a startup, it may be helpful to include a short itemization of the expenses. This provides your audience with another means of assessing the viability of the proposed business operations.

Repayment Plan

Describe how and when the company plans on repaying its major debts, including any future funding received. Again, this is important for showing that your business can successfully compete and will not be plagued by too much debt.

Exit Strategy

Explain how the owners and potential investors will be able to cash out of the company; for instance, through a share buyback, company sale, public offering, strategic merger, and/or asset liquidation.

Attachments

There are many potential documents you can attach to your business plan to make it more insightful for those who read it. At a minimum, you should include the three basic financial statements every business should have before launching a plan: an Income Statement (also known as a Profit and Loss Statement), a Balance Sheet, and a Cash Flow Statement. If you do not have these already, or do not know exactly how to complete them, then there are many helpful online tutorials that will simplify the process for you.

The Income Statement is usually done as a forecast for the first 12 months of operation, but if your company is already operating, you could do it for the past 12 months. Likewise, the Cash Flow Statement is usually done as a future projection. The Balance Sheet is normally completed as a projection for the company's assets, liabilities, and equity as of opening day.

Some people also choose to include a Three-Year Profit Projection and a Break-Even Analysis. Lastly, it may be a good idea to include the personal financial statements of the owners. Banks and investors will often want to see these since owners have to invest or pledge their personal assets as equity or guarantees for the business.

Additionally, it is common for business people to include some or all of the following documents, if available: equipment and inventory lists, leases and other contracts, letters of support, resumes of management and key staff, an organizational hierarchy chart, industry studies, market research, advertising materials, maps, photos, and blueprints.

Ready To Get Started? Create a Business Plan

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Checklist

Step 1: Gather Information

As you complete your business plan, you will need to provide certain relevant information. Business plans commonly include the following company information:

  • Executive summary
  • History and mission statement
  • Goals and objectives
  • Owners and management and their qualifications
  • Products and services
  • Market and industry analysis
  • Regulatory requirements
  • Intellectual property rights
  • Competition analysis
  • Pricing strategy
  • Location planning
  • Inventory requirements
  • Suppliers and vendors
  • Financial projections
  • Capitalization
  • Startup expenses
  • Repayment plan
  • Exit strategy

While you may choose to leave out some of these sections or add others, it is recommended that you generally include most of this information in order to show that your company is well thought out and prepared.

Step 2: Answer Key Questions

After determining your business’ strategy on the items listed above, our form wizard will guide you through compiling this information into your business plan. We provide step-by-step guidance so that you can tailor your plan to highlight your business’ strengths while providing a balanced assessment of the challenges you will face.

Step 3: Review and Edit as Needed

After completing our form wizard, review your plan in detail in order to verify that it will meet your needs. Download your plan in .doc format if you need to make text edits in Microsoft Word or Google Documents. You can also download in PDF format if desired. Your downloads can be found in your LegalNature account dashboard.

Step 4: Present

Once you are well acquainted with your business plan, you will be ready to present it to potential investors, consultants, and other interested parties. Some or all of your plan may be incorporated into a slide presentation with additional graphs and visuals to help your audience follow along.

If you decide to require those receiving the plan to keep it confidential, then you should have them sign in the space provided at the end of the document.

Step 5: Periodically Revise and Update

Be sure to update your plan as your business evolves. We make this process simple by storing your completed business plan in your LegalNature account so that you can make edits as needed.

Step 6: Complete Related Documents

Completing a confidentiality agreement may help offer additional protection. For instance, this agreement will include more in-depth confidentiality requirements covering emails and other communications surrounding your business and any related intellectual property.

Ready To Get Started? Create a Business Plan