100 Tips to Writing A Killer Business Plan That Gets Funded
Why should you write a business plan?
A killer business plan doesn’t simply explain who you are and what you do, it is actually a strategy to design your business. Below are 100 tips to make your business plan as compelling as it is informative.
The bottom line is: having this document separates the professionals from the amateurs. Take the experience of writing a business plan as a great learning experience. The business plan is not solely for investors. The business plan is for YOU!
The tips are categorized by 11 sections.
Click on a section below or scroll down to view the tips:
Understand Your Customer First
1. Successful business plans demonstrate deep insights into their customers. This is often the key difference between successful and unsuccessful business plans. The ones that fail, simply do not understand their customers. Before getting into the technical elements of your business plan, you should do a thorough job of understanding your customer.
2. Write out a list of interview questions. Your questions could be: why current products don’t meet their needs, what an ideal product would be to them, and how they decide what they are going to buy among competing products or services.
3. Don’t talk about your idea. The interview is about their ideas. All you have to do is listen and record. Don’t feel the need to pitch your product or service — just ask questions with a sincere interest to learn. Other people’s problems are interesting when you are in a position to solve them!
4. Interview at least 20 potential customers. Make sure your analysis of their answers is included in your business plan. Your business plan should include key quotes from these interviews, and will reinforce the conclusions you make about your product.
5. It should feel like a conversation. Your interviews should be casual and conversational. In order to get to gain the trust to ask deeper questions about your customers motivations, you will have to make them feel comfortable speaking with you first.
6. Interviewing customers will become one of your greatest strengths. If you listen well, you will gain insight into your product that will help you down the road, beyond writing your business plan. And this will help you with your competitors down the line.
General business plan tip from an expert
“First timers shouldn’t overthink things and try to reinvent the wheel. The first funding sources you’ll approach are friends & family, or for certain types of businesses, maybe a bank that offers SBA-backed loans. They won’t expect anything elaborate. Just use something like Business Plan Pro or LivePlan.com – they’ll help you organize your thoughts and produce a decent result if you carefully read and follow the instructions.”
–Akira Hirai, CEO of Cayenne Consulting (Business Plan Consulting service)
The Executive Summary (AKA Elevator Pitch)
7. Have your 2 minute elevator pitch. The Elevator Pitch is also a popular concept in Hollywood. If you had two minutes trapped in an elevator to explain your company to a potential investor, how would you describe it? What about in just 30 seconds? Time is always the essence — like pitching an exciting action movie to a studio executive, you should be able to pitch your business to an investor at the drop of a hat…or, an elevator.
8. Create a compelling “hook.” More Hollywood folklore here — a “hook” is the exciting start to a movie that the writer pitches, the thing that will keep the audience entertained and hooked from the very beginning. You are doing the same thing with your business. You have to keep the reader interested and entertained by your idea, right from the start. Bottom line is, if investors are not impressed or interested in your executive summary, they will stop reading. The hook is that important. Make it compelling.
9. What problem does your product or service solve? You should be able to answer this up front, or its unlikely the investor will want to keep reading.
10. Answer the “why” questions. Your executive summary should answer questions such as: What is your company’s mission? Why is it important to you? Why do you think you can make money? What is your own track record? How much money do you need? What kind of return can the investor expect if they give you the money?
11. Be clear about finances. How much money are you looking to raise? It’s important to be practical about your goals. Tell investors why you need the money. Nobody wants to lend you money if they don’t know exactly why you need it.
12. Keep it short and to the point. You want to give investors the confidence that your business will thrive, but keep it to the point — one page at most. You can elaborate on the details later in the document.
13. Be positive. Put your best foot forward, while not being completely unrealistic. You can be positive about your business without being misleading. You can ignore mentioning current and potential competitors here — you will detail that later.
14. Write it last. If you are having trouble summarizing your company, then write the rest of the business plan first, and do this part at the end. It might be easier once you have everything else on paper first. You can always go back later, making your Elevator Pitch last.
The Company Description
15. Write it first. This could be the first section you tackle in the business plan, before your executive summary. It could be easier to write than the executive summary, because you don’t have to sum everything up yet.
16. Identify your type of business. Are you retail, wholesale, service? Manufacturing? Be clear about what type of business you are planning to operate, and include information about the present and future opportunities that make your business idea more viable.
17. Get into specifics. If you have more than 2 minutes with that investor in the elevator, they will want to know more details. You can do that here. This section is more than just the “why” of the company — think of it as the “who, what, where, why, and when” part.
18. Describe your product or services. This is straightforward — what are your selling, or what service are you providing? The description should elaborate on the product or service itself, and how that product or service will achieve your mission.
19. Show you know who your target market is. You can show off your knowledge of your customer here. Who are you selling to? Who are the the customers or other business that your company will serve?
20. Describe your company in the best light. Provide a clear company profile and history — when and where it was formed, and where you are located. This is also a great place to describe the success your company has already achieved. If your company is brand new, you can describe your previous accomplishments, or those of your business partner.
21. Show your advantage over competition. What separates you from your competitors, and why will people want to do business with you?
22. Include your legal structure. Are you an LLC? An S-corp? A sole proprietor? Who owns what percentage of your business? Investors will want this information clearly spelled out.
23. List your ownership/management team. Include names of the key people behind your company. Don’t elaborate this section yet — you will provide biographies of each team member later.
24. Explain where you will do business. Do you need to purchase a building for manufacturing? What about a store front? Do you own a lease? If you work out of a home office, include that here as well. Make it clear what your long-term plans are for any space that you already have, or will need in the future.
25. Include a vision statement. How would you distill the mission of your company into just one or two sentences? If you have a management team, you may want to create this statement with them, so it is a vision you all share.
The Target Market
26. Reflect the results of your customer interviews. Remember all those fabulous customer interviews you did before you got started? Great! All of those insights you gathered will shine here.
27. Back up what you claim. Remember to keep track of all your sources so you can back up what you claim with evidence and quotes from reputable sources. Properly cite your sources within the body of this section.
28. Your target market is not everyone. Every business caters to a specific demographic. What’s yours? Young hipsters in East L.A., soccer moms, workaholic coffee drinkers? You can gather market information through your chamber of commerce, the U.S. Census Bureau, and other businesses owners.
29. Describe your demographic. Here’s where your customer interviews come in handy again. What is the age range, gender, marital status, and income level most likely to be your customer?
30. Describe your psychographic. This goes deeper than income level or geographic location. Explain the motives in purchasing your product or service. Is it for necessity or luxury? What value does this product or service bring to their life? What personality traits might your customers have? Use your interviews and research to gather this data.
31. Focus on the benefits. If you are selling a tangible product, you are actually selling a solution to a problem. If you are providing a service through your business, you are also solving a problem. Your description should focus on the benefits. What’s in it for your customer?
32. Prepare for change. How will you meet the changing needs of your customers and the market? Base this on your research. You can make projections based on past buying habits, the average purchase amount, and if your business is service-based, your ability to make your services available.
33. You are always vulnerable to competition. You have to fully understand and be able to assess your competition. As a small business, you are still very susceptible to competition, especially when new companies enter your marketplace. For example, if you plan on opening a gelato store, you might have two competing gelato companies in the same market.
34. Profile current competitors. Develop a basic profile of your current competitors. Online retailers will also be competition, but analyzing those companies won’t be that valuable unless you decide to, for example, sell your gelato online. Stick with the companies you will directly compete with — those gelato stores down the street.
35. Do your own detective work. Check out your competitors websites, marketing materials, and visit their locations. Visit similar stores in your area. It’s easier to check out your current competition just by driving around or looking in the phonebook or online.
36. Be your competitor’s customer. Really! You can compare more than just price by buying that gelato from the other store — you might gather some information about their customer service that can improve your own. This is a great way to find out how your competitor treats their customers.
37. Ask your business colleagues for information. Next time you are networking or socializing with colleagues, ask them about individual competitors. Keep your ear to the ground — you might get some advance knowledge about a upcoming sale or change in personnel, or even if a company will go out of business soon.
38. Profile future competitors. This one can be tough. How can you predict when and where competitors may pop up? Regularly search for news on your services or your product. If serving your market seems easy and profitable, you can assume that competitors will enter the same market. A killer business plan accounts for and anticipates new competitors.
39. Define how much market share you can gain. Once you’ve gathered all of your information, you should share the market share percentage and number of customers you expect to gain in a specific geographic area and income bracket. Explain the logic behind your calculations.
40. Set market share goals. Describe what your company will do to achieve your goals. How will your company be different from you competition? What competitor weaknesses can you exploit? What strengths will you need to overcome to be successful?
The Marketing Plan
41. Your whole life is marketing. I’m not exaggerating! We’re constantly being pitched to as consumers. And we are all marketing ourselves through our businesses, careers, and even advertising our personal lives on social media. Marketing your idea for your business gives you a shot at today’s extremely competitive market.
42. Be aggressive. You can build the greatest business on earth, but without aggressive marketing you will have no customers. Most successful businesses aren’t necessarily the best, but they do they have the most effective marketing.
43. Have a well-thought out marketing strategy. Include details such as how you will promote your business. Will you use snail mail, email, online ads? Will you do the marketing yourself, or hire a marketing firm?
44. Describe your pricing strategy. Your pricing should be very competitive but still allow you to make a reasonable profit. When you are calculating your price, consider the cost of labor and materials, and also freight costs, administrative costs, and selling costs.
45. Describe your sales/distribution plan. Potential customers must know where and how to get what you are selling. If you are selling a product, will you sell online, at a retail outlet, or use independent sales reps? What methods of payment will customers be able to use? What is your warranty and return policy?
46. Describe your advertising plan. What percentage of your annual advertising budget will you invest in the internet, television, radio, newspapers, magazines, billboards, direct mail, etc.? Also include your projections of how much business you think your advertising will bring in.
47. Determine if you need sales promotion. If it’s appropriate, you may want to include sales promotion into your advertising plan, such as: coupons, free samples, and product demonstrations.
48. Know your marketing materials. The most common marketing material is the business card. Brochures and pamphlets can also be used. No matter what your business is, you will include some of these in your promotion plans.
49. Publicity is also important. This is another kind of promotion you should incorporate. Press releases can generate publicity, but that’s only one way to spread the word. Consider: special events, writing articles, getting testimonials, and product launches.
50. You will need a website. If you don’t have one already, you will need one in the future. Describe how your current or future web site fits into your marketing plan.
51. Use your imagination. Your marketing strategy is only limited by your imagination. Think outside the box. Just remember to be focused and don’t make sporadic attempts at promotion. You want to really communicate with potential customers, not confuse them!
52. No business is too small to have a marketing plan. Small business often have very small or non-existent promotion budgets, but that doesn’t mean you can’t have an effective promotion plan. You can visit the Business Promotion Library for some inexpensive ideas on how to promote yours.
Your Management Team
53. Think of it as online dating. Ever made an online dating profile? Investors put money into people, not ideas. Don’t be afraid to toot your leadership team’s horn. You want investors to fall in love with your team at first sight. Yep, just like dating.
54. Present biographies. This is the place to provide more detailed bios of you and your team. If you don’t have prior experience as an entrepreneur, show other your fields of accomplishment. Do you have notable academic, athletic, or extra curricular accomplishments?
55. Identify the key leaders in your business. If you don’t have your full team yet, describe the type of leaders you will need. What are the experiences and backgrounds of your leaders? Describe what experience they have in the industry you are in.
56. Explain the duties of each position. You could create an organizational chart to illustrate this. What responsibilities are expected in each position? And what kind of authority does each position have?
57. Salary levels are important. What salary level will you need to attract qualified candidates for each position? What is the salary structure of your company, by position?
58. Think about external management. In your addition to your internal team, you may find that your company needs additional management such as Human Resources. You may not need external resources, but think of it as a possible backup for your internal management.
59. Determine if you need an Advisory Board. An Advisory Board is a management think tank. Choose your board members carefully — you want people with a genuine interest in seeing your business do well and those who have the expertise in your field. You don’t want to include anyone who may have a conflict of interest such as lawyers, accountants, or customers.
60. Don’t forget about professional services. You can describe external professional advisors that your business might use, such as accountants, bankers, IT professionals, and lawyers.
61. Put resumes in the appendix. You can include individual resumes of your team members, and yourself, in the appendix section, so the investor can get more detail of employment history, etc. This section is about selling your accomplishments in prose form.
62. Use the numbers to back you up. You need to include a sales forecast, expense budget, and cash flow statement. Your 3, 6, and 12 month financial projections should include revenue, expenses, margin, and net profit.
63. Start with your sales forecast. You can project your sales over the next 3 years in an easy- to-read spreadsheet. You should include the cost of sales in your forecast, and can use the cost of sales to calculate your gross margin. That will be a useful number to compare with your industry at large.
64. Make an expense budget. Differentiate between fixed costs such as rent, and variable costs like advertising. Lower fixed costs generally mean less risk. Don’t be afraid to estimate on things like taxes and ads.
65. Cash flow is king. The cash flow statement shows dollars moving in and out of your business. You can base your statement on your sales forecast and other assumptions.
66. Make an educated guess. Investors need to see if you put in enough effort to make a detailed estimate of how much cash will be needed to achieve your business goals. Make realistic assumptions.
67. It’s not the same as accounting. Accounting looks back in time, taking a historical view. Business planning is a forward-looking view into the future. You don’t do financials in the business plan the same way you do in your accounting — it’s an educated guess.
68. Have a great operation plan. The rundown of expenses you need on a daily basis to run your business should be described: location expenses, inventory, equipment, and vendors. Show the reader what actions you’ve taken to get your business ready. This shows them you understand exactly how to run your type of business.
69. Demonstrate some milestones in your income projections. Explain what milestones you expect to reach in the next 5 years, and how you are going to reach them. Each year’s documents should include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets.
70. Make a “use of funds” schedule. Explain exactly how you will be spending the investor’s money. (*Laurie — help! I’m not really sure what I am talking about here)
71. Catch mistakes before they do. Investors will be looking for inconsistencies. If you are making assumptions in your projections, then summarize and backup what you have assumed. Don’t make the reader guess for you.
72. Photos are powerful. You may want to add graphs of your trend analysis for your financial statements. Graphs can make your numbers easier to digest if they are represented visually.
73. Be conservative in your estimates. Make your financial projections more conservative than your wildest dreams. A 10 percent market share is much more credible than a 50 percent share. But, if you feel confident you can capture that 50 percent in the first year, then you can explain why you think so.
74. Give yourself a support system. Think of the appendix as the back up for the rest of your business plan. This is where you include anything that backs up what you have written in the plan.
75. Show your paperwork. You can include full financial projections such as income statements, balance sheets, and cash flow statements. Include resumes, customer lists, and supplier information.
76. It’s not required. You don’t have to include one, but keep in mind that a well structured appendix can go a long way in convincing an investor that you have thoroughly thought out your business idea.
77. If you include one, it can simplify your overall business plan. By putting all those charts and graphs in the appendix, you can make your overall business plan more streamlined, and simpler. And that in turn, will make it more effective and compelling to your reader.
78. Create a separate table of contents if it’s long. If you appendix is more than a few pages long, you should consider adding a separate table of contents to organize a variety of documents.
79. Be careful with your confidential information. If you are sharing confidential information in your appendix (such as your credit history), you will want to keep track of who sees it. A confidentiality statement is a good reminder to your reader.
80. Your business plan should stand on it’s own. Since this is the last section of the plan, it likely will be skipped. Make sure your business plan stands on its own, and the appendix is merely supporting information. If the reader skips this part of your business plan, will they still understand your business idea fully?
Some Writing Process “Do’s”
81. Try and write your business plan in under an hour. You might think this sounds crazy after all of my previous tips. But focusing on writing the broader points first, can help you get the heart of your business on paper. You can add the details later, don’t worry!
82. K.I.S.S. “Keep it simple, stupid.” Writing your business plan should actually being an enjoyable experience. No, seriously! You’ve already spent all this time strategizing your business — now you are putting pen to paper. The simpler and clearer your vision, the more compelling it will be.
83. Make it no more than 20 pages long. This is why you need to keep it simple. Make your plan clear and concise, yet detailed. Comprehensive doesn’t necessarily mean long. Some successful business plans are only 10-15 pages.
84. Your business plan isn’t static. It should evolve over time. As your business grows and changes, so will your business plan. You will want to update your business plan as you hit or miss various goals. Update your plan every three months or so.
85. Your first draft will probably be too lengthy. It’s OK if your first draft is too wordy. You still got out all of your thoughts and research on paper, you should be feeling proud of yourself! When you edit, get rid of anything that doesn’t answer the question, “What makes this business special and how will it make money?”
86. You can make different versions. You might want to make a couple versions of your business plan for different audiences. One could be for venture capitalists, one for investors, and one for companies that may want to do a joint venture with you instead of funding you.
87. If you aren’t a good writer, hire a professional. If you struggle with words, hire a professional business writer who can make your ideas shine. It will go a long way.
88. Don’t be scared to get personal. Don’t forget that there’s a human being reading on the other end! Always remember what inspired you to make your business idea in the first place. The investor wants to know about you and what drives you. This separates dry factual plans from the compelling ones.
89. Involve your friends and family. Don’t be embarrassed to share your business plan with people close to you. Challenge your friends and family to improve it! They might ask you what you think are silly questions, but are actually big things you have to address in your business plan.
90. Ask for advice from complete strangers. I don’t quite mean a random dude on the street, but someone who has no prior knowledge of your business at all. A fresh pair of eyes on it can reveal if you are being clear enough, and will be able to point out things you might be numb to at this point.
91. Create an outline first. Don’t get overwhelmed with the enormity of this task. You can create a simple bullet list, using this article as a guide of the different sections, and then fill in those sections later. You can put all of your research points and ideas in first, and then write them out in a more reader-friendly way later.
92. Proofread a million times over. This cannot be emphasized enough. It is always best to have someone else proofread for you — you probably won’t be able to catch all the mistakes since you are probably pretty numb to your material at this point!
Some Writing Process “Don’ts”
93. Don’t make empty claims. If you can’t support it with facts or numbers, leave it out. You have to properly source your claims with actual statistics, facts, and quotes from reputable sources that support your claim.
94. Don’t indulge in rumors. Gossip with your dog instead — his lips are sealed. Even if you might think a competitor will be going out of business, don’t mention it in your business plan. Don’t list other companies’ weaknesses or rumors surrounding them. Stick to the facts.
95. Don’t use language that is too flowery. Save that language for your next great American Novel, not for your business plan. Avoid superlatives and strong adjectives like, “incredible,” “amazing,” “unbelievable,” and “tremendous.” We’re all sick of these adjectives anyway, right?
96. Your business isn’t unique. Avoid the adjective “unique” unless you can really prove your product or service is one of a kind. Chances are, it isn’t, and it’s similar to other businesses or products. That’s OK. Don’t oversell yourself.
97. Don’t overestimate your financial projections. You want to look good, but not so good you look unrealistic, or even amateur. It’s better to underestimate, than set your expectations too high.
98. Don’t overestimate your time frame. Do research on the internet and ask around. If it takes companies similar to yours 12 months to get up and running, that’s how long it will take yours. If you think it will take 6 months to develop your product, double it. Be conservative in your time predictions.
99. Don’t indulge in gimmicks. Please don’t send chocolates or a basket of bunnies along with your business plan. It’s not going to make anyone more interested in investing in your business. Let your work shine on its own accord.
100. Don’t make your readers look for more information. Make sure you business plan has enough detail and supporting evidence. You shouldn’t have to make the investor have to look for more information throughout the document. This is where an appendix can come in handy.