creating a business plan lesson 1

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1.1: Chapter 1 – Developing a Business Plan

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• Page ID 21274

• Lee A. Swanson
• University of Saskatchewan

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Learning Objectives

After completing this chapter, you will be able to

• Describe the purposes for business planning
• Describe common business planning principles
• Explain common business plan development guidelines and tools
• List and explain the elements of the business plan development process
• Explain the purposes of each element of the business plan development process
• Explain how applying the business plan development process can aid in developing a business plan that will meet entrepreneurs’ goals

This chapter describes the purposes, principles, and the general concepts and tools for business planning, and the process for developing a business plan.

Purposes for Developing Business Plans

Business plans are developed for both internal and external purposes. Internally, entrepreneurs develop business plans to help put the pieces of their business together. Externally, the most common purpose is to raise capital.

Internal Purposes

As the road map for a business’s development, the business plan

• Defines the vision for the company
• Establishes the company’s strategy
• Describes how the strategy will be implemented
• Provides a framework for analysis of key issues
• Provides a plan for the development of the business
• Helps the entrepreneur develop and measure critical success factors
• Helps the entrepreneur to be realistic and test theories

External Purposes

The business plan provides the most complete source of information for valuation of the business. Thus, it is often the main method of describing a company to external audiences such as potential sources for financing and key personnel being recruited. It should assist outside parties to understand the current status of the company, its opportunities, and its needs for resources such as capital and personnel.

Business Plan Development Principles

Hindle and Mainprize (2006) suggested that business plan writers must strive to effectively communicate their expectations about the nature of an uncertain future and to project credibility. The liabilities of newness make communicating the expected future of new ventures much more difficult than for existing businesses. Consequently, business plan writers should adhere to five specific communication principles .

First, business plans must be written to meet the expectations of targeted readers in terms of what they need to know to support the proposed business. They should also lay out the milestones that investors or other targeted readers need to know. Finally, writers must clearly outline the opportunity , the context within the proposed venture will operate (internal and external environment), and the business model (Hindle & Mainprize, 2006).

There are also five business plan credibility principles that writers should consider. Business plan writers should build and establish their credibility by highlighting important and relevant information about the venture team . Writers need to elaborate on the plans they outline in their document so that targeted readers have the information they need to assess the plan’s credibility. To build and establish credibility, they must integrate scenarios to show that the entrepreneur has made realistic assumptions and has effectively anticipated what the future holds for their proposed venture. Writers need to provide comprehensive and realistic financial links between all relevant components of the plan. Finally, they must outline the deal , or the value that targeted readers should expect to derive from their involvement with the venture (Hindle & Mainprize, 2006).

General Guidelines for Developing Business Plans

Many businesses must have a business plan to achieve their goals. Using a standard format helps the reader understand that the you have thought everything through, and that the returns justify the risk. The following are some basic guidelines for business plan development.

As You Write Your Business Plan

1. If appropriate, include nice, catchy, professional graphics on your title page to make it appealing to targeted readers, but don’t go overboard.

2. Bind your document so readers can go through it easily without it falling apart. You might use a three-ring binder, coil binding, or a similar method. Make sure the binding method you use does not obscure the information next to where it is bound.

3. Make certain all of your pages are ordered and numbered correctly.

4. The usual business plan convention is to number all major sections and subsections within your plan using the format as follows:

1. First main heading

1.1 First subheading under the first main heading

1.1.1. First sub-subheading under the first subheading

2. Second main heading

2.1 First subheading under the second main heading

Use the styles and references features in Word to automatically number and format your section titles and to generate your table of contents. Be sure that the last thing you do before printing your document is update your automatic numbering and automatically generated tables. If you fail to do this, your numbering may be incorrect.

5. Prior to submitting your plan, be 100% certain each of the following requirements are met:

• Everything must be completely integrated. The written part must say exactly the same thing as the financial part.
• All financial statements must be completely linked and valid. Make sure all of your balance sheets balance.
• Everything must be correct. There should be NO spelling, grammar, sentence structure, referencing, or calculation errors.
• Your document must be well organized and formatted. The layout you choose should make the document easy to read and comprehend. All of your diagrams, charts, statements, and other additions should be easy to find and be located in the parts of the plan best suited to them.
• In some cases it can strengthen your business plan to show some information in both text and table or figure formats. You should avoid unnecessary repetition , however, as it is usually unnecessary—and even damaging—to state the same thing more than once.
• You should include all the information necessary for readers to understand everything in your document.
• The terms you use in your plan should be clear and consistent. For example, the following statement in a business plan would leave a reader completely confused: “There is a shortage of 100,000 units with competitors currently producing 25,000. We can help fill this huge gap in demand with our capacity to produce 5,000 units.”

• Sources of Business Finance
• Small Business Loans
• Small Business Grants
• Crowdfunding Sites
• How to Get a Business Loan
• Small Business Insurance Providers
• Best Factoring Companies
• Types of Bank Accounts
• Best Banks for Small Business
• Best Business Bank Accounts
• Open a Business Bank Account
• Bank Accounts for Small Businesses
• Free Business Checking Accounts
• Best Business Credit Cards
• Get a Business Credit Card
• Business Credit Cards for Bad Credit
• Build Business Credit Fast
• Business Loan Eligibility Criteria
• Small-Business Bookkeeping Basics
• How to Set Financial Goals
• Business Loan Calculators
• How to Calculate ROI
• Calculate Net Income
• Calculate Working Capital
• Calculate Operating Income
• Calculate Net Present Value (NPV)
• Calculate Payroll Tax

How to Write a Business Plan in 9 Steps (+ Template and Examples)

Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.

If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.

Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.

You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.

Let’s get started.

What Do You Need A Business Plan For?

Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.

1. Secure Funds

One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.

For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.

A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.

Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.

2. Monitor Business Growth

A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:

• The business goals
• Methods to achieve the goals
• Time-frame for attaining those goals

A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.

You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.

3. Measure Business Success

A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.

Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.

You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.

4. Document Your Marketing Strategies

You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.

Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.

In your business plan, your marketing strategy must answer the questions:

• How do you want to reach your target audience?
• How do you plan to retain your customers?
• What is/are your pricing plans?
• What is your budget for marketing?

How to Write a Business Plan Step-by-Step

1. create your executive summary.

The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.

Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.

A good executive summary should do the following:

• A Snapshot of Growth Potential. Briefly inform the reader about your company and why it will be successful)
• Contain your Mission Statement which explains what the main objective or focus of your business is.
• Product Description and Differentiation. Brief description of your products or services and why it is different from other solutions in the market.
• The Team. Basic information about your company’s leadership team and employees
• Business Concept. A solid description of what your business does.
• Target Market. The customers you plan to sell to.
• Marketing Strategy. Your plans on reaching and selling to your customers
• Current Financial State. Brief information about what revenue your business currently generates.
• Projected Financial State. Brief information about what you foresee your business revenue to be in the future.

The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.

Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.

View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:

• Who is your target audience?
• What sector or industry are you in?
• What are your products and services?
• What is the future of your industry?
• Is your company scaleable?
• Who are the owners and leaders of your company? What are their backgrounds and experience levels?
• What is the motivation for starting your company?
• What are the next steps?

Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.

The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.

If you are writing your business plan for your planning purposes, you do not need to write the executive summary.

2. Add Your Company Overview

The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.

Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.

Your company overview should contain the following:

• What products and services you will provide
• Geographical markets and locations your company have a presence
• What you need to run your business
• Who your target audience or customers are
• Who will service your customers
• Your company’s purpose, mission, and vision
• Information about your company’s founders
• Who the founders are
• Notable achievements of your company so far

When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.

If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.

• Who are you targeting? (The answer is not everyone)
• What pain point does your product or service solve for your customers that they will be willing to spend money on resolving?
• How does your product or service overcome that pain point?
• Where is the location of your business?
• What products, equipment, and services do you need to run your business?
• How is your company’s product or service different from your competition in the eyes of your customers?
• How many employees do you need and what skills do you require them to have?

After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.

The company description or overview section contains three elements: mission statement, history, and objectives.

• Mission Statement

The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.

Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”

When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:

• Founding Date
• Major Milestones
• Location(s)
• Flagship Products or Services
• Number of Employees
• Executive Leadership Roles

When you fill in this information, you use it to write one or two paragraphs about your company’s history.

Business Objectives

Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.

3. Perform Market and Competitive Analyses to Proof a Big Enough Business Opportunity

The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.

Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.

This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.

Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?

You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.

Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?

Illustrate the competitive landscape as well. What are your competitors doing well and not so well?

Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.

Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.

Market Analysis

Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.

The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.

A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.

• Market Research

To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.

• Your target market’s needs or pain points
• The existing solutions for their pain points
• Geographic Location
• Demographics

The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.

Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.

You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.

How to Quantify Your Target Market

One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:

• Your Potential Customers: They are the people you plan to target. For example, if you sell accounting software for small businesses , then anyone who runs an enterprise or large business is unlikely to be your customers. Also, individuals who do not have a business will most likely not be interested in your product.
• Total Households: If you are selling household products such as heating and air conditioning systems, determining the number of total households is more important than finding out the total population in the area you want to sell to. The logic is simple, people buy the product but it is the household that uses it.
• Median Income: You need to know the median income of your target market. If you target a market that cannot afford to buy your products and services, your business will not last long.
• Income by Demographics: If your potential customers belong to a certain age group or gender, determining income levels by demographics is necessary. For example, if you sell men's clothes, your target audience is men.

What Does a Good Market Analysis Entail?

Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.

You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:

• Industry Description. You find out about the history of your industry, the current and future market size, and who the largest players/companies are in your industry.
• Overview of Target Market. You research your target market and its characteristics. Who are you targeting? Note, it cannot be everyone, it has to be a specific group. You also have to find out all information possible about your customers that can help you understand how and why they make buying decisions.
• Size of Target Market: You need to know the size of your target market, how frequently they buy, and the expected quantity they buy so you do not risk overproducing and having lots of bad inventory. Researching the size of your target market will help you determine if it is big enough for sustained business or not.
• Growth Potential: Before picking a target market, you want to be sure there are lots of potential for future growth. You want to avoid going for an industry that is declining slowly or rapidly with almost zero growth potential.
• Market Share Potential: Does your business stand a good chance of taking a good share of the market?
• Market Pricing and Promotional Strategies: Your market analysis should give you an idea of the price point you can expect to charge for your products and services. Researching your target market will also give you ideas of pricing strategies you can implement to break into the market or to enjoy maximum profits.
• Potential Barriers to Entry: One of the biggest benefits of conducting market analysis is that it shows you every potential barrier to entry your business will likely encounter. It is a good idea to discuss potential barriers to entry such as changing technology. It informs readers of your business plan that you understand the market.
• Research on Competitors: You need to know the strengths and weaknesses of your competitors and how you can exploit them for the benefit of your business. Find patterns and trends among your competitors that make them successful, discover what works and what doesn’t, and see what you can do better.

The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.

Here are some questions you can answer that can help you position your product or service in a positive light to your readers.

• Is your product or service of superior quality?
• What additional features do you offer that your competitors do not offer?
• Are you targeting a ‘new’ market?

Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.

Competitive Analysis

In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.

Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.

Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.

The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.

Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.

When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.

Find answers to the following questions after you have identified who your competitors are.

• What are your successful competitors doing?
• Why is what they are doing working?
• Can your business do it better?
• What are the weaknesses of your successful competitors?
• What are they not doing well?
• Can your business turn its weaknesses into strengths?
• How good is your competitors’ customer service?
• Where do your competitors invest in advertising?
• What sales and pricing strategies are they using?
• What marketing strategies are they using?
• What kind of press coverage do they get?
• What are their customers saying about your competitors (both the positive and negative)?

If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.

If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.

Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.

The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.

Direct vs Indirect Competition

You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.

There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.

If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.

In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.

For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.

There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.

Factors that Differentiate Your Business from the Competition

There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.

1. Cost Leadership

A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.

A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.

2. Product Differentiation

Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.

Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.

3. Market Segmentation

As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.

If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.

4. Define Your Business and Management Structure

The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.

Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.

If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.

Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.

The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.

Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.

Management Team

The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.

Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.

A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.

Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.

Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.

If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.

Key Questions to Answer When Structuring Your Management Team

• Who are the key leaders?
• What experiences, skills, and educational backgrounds do you expect your key leaders to have?
• Do your key leaders have industry experience?
• What positions will they fill and what duties will they perform in those positions?
• What level of authority do the key leaders have and what are their responsibilities?
• What is the salary for the various management positions that will attract the ideal candidates?

Additional Tips for Writing the Management Structure Section

1. Avoid Adding ‘Ghost’ Names to Your Management Team

There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.

Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.

2. Focus on Credentials But Pay Extra Attention to the Roles

Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.

While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.

Organizational Chart

Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.

If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.

An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.

You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.

5. Describe Your Product and Service Offering

In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.

Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.

The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.

If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”

Your product and service section in your business plan should include the following:

• A detailed explanation that clearly shows how your product or service works.
• The pricing model for your product or service.
• Your business’ sales and distribution strategy.
• The ideal customers that want your product or service.
• The benefits of your products and services.
• Reason(s) why your product or service is a better alternative to what your competitors are currently offering in the market.
• Plans for filling the orders you receive
• If you have current or pending patents, copyrights, and trademarks for your product or service, you can also discuss them in this section.

What to Focus On When Describing the Benefits, Lifecycle, and Production Process of Your Products or Services

In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.

When describing the benefits of your products or services, here are some key factors to focus on.

• Unique features
• Translating the unique features into benefits
• The emotional, psychological, and practical payoffs to attract customers
• Intellectual property rights or any patents

When describing the product life cycle of your products or services, here are some key factors to focus on.

• Upsells, cross-sells, and down-sells
• Time between purchases
• Plans for research and development.

When describing the production process for your products or services, you need to think about the following:

• The creation of new or existing products and services.
• The sources for the raw materials or components you need for production.
• Assembling the products
• Maintaining quality control
• Supply-chain logistics (receiving the raw materials and delivering the finished products)
• The day-to-day management of the production processes, bookkeeping, and inventory.

Tips for Writing the Products or Services Section of Your Business Plan

1. Avoid Technical Descriptions and Industry Buzzwords

The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.

A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.

2. Describe How Your Products or Services Differ from Your Competitors

When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.

If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.

For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.

3. Long or Short Products or Services Section

Should your products or services section be short? Does the long products or services section attract more investors?

There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.

If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.

Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.

The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.

If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.

A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.

4. Describe Your Relationships with Vendors or Suppliers

Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.

Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.

5. Your Primary Goal Is to Convince Your Readers

The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.

When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.

While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.

Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.

Key Questions to Answer When Writing your Products and Services Section

Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.

• Are your products existing on the market or are they still in the development stage?
• What is your timeline for adding new products and services to the market?
• What are the positives that make your products and services different from your competitors?
• Do your products and services have any competitive advantage that your competitors’ products and services do not currently have?
• Do your products or services have any competitive disadvantages that you need to overcome to compete with your competitors? If your answer is yes, state how you plan to overcome them,
• How much does it cost to produce your products or services? How much do you plan to sell it for?
• What is the price for your products and services compared to your competitors? Is pricing an issue?
• What are your operating costs and will it be low enough for you to compete with your competitors and still take home a reasonable profit margin?
• What is your plan for acquiring your products? Are you involved in the production of your products or services?
• Are you the manufacturer and produce all the components you need to create your products? Do you assemble your products by using components supplied by other manufacturers? Do you purchase your products directly from suppliers or wholesalers?
• Do you have a steady supply of products that you need to start your business? (If your business is yet to kick-off)
• How do you plan to distribute your products or services to the market?

You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.

6. Show and Explain Your Marketing and Sales Plan

Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.

The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.

There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.

In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.

Outline Your Business’ Unique Selling Proposition (USP)

The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).

Target Market and Target Audience

Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.

Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.

Creating a Smart Marketing and Sales Plan

Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.

Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.

Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.

Your Positioning Statement

Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.

Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?

Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market

• What are the unique features or benefits that you offer that your competitors lack?
• What are your customers’ primary needs and wants?
• Why should a customer choose you over your competition? How do you plan to differentiate yourself from the competition?
• How does your company’s solution compare with other solutions in the market?

After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.

All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.

Here is a simple template you can use to develop a positioning statement.

For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].

For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.

“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”

You can edit this positioning statement sample and fill it with your business details.

After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.

Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.

You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.

Basic Rules to Follow When Pricing Your Offering

Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.

• Covering Your Costs: The price you set for your products or service should be more than it costs you to produce and deliver them. Every business has the same goal, to make a profit. Depending on the strategy you want to use, there are exceptions to this rule. However, the vast majority of businesses follow this rule.
• Primary and Secondary Profit Center Pricing: When a company sets its price above the cost of production, it is making that product its primary profit center. A company can also decide not to make its initial price its primary profit center by selling below or at even with its production cost. It rather depends on the support product or even maintenance that is associated with the initial purchase to make its profit. The initial price thus became its secondary profit center.
• Matching the Market Rate: A good rule to follow when pricing your products or services is to match your pricing with consumer demand and expectations. If you price your products or services beyond the price your customer perceives as the ideal price range, you may end up with no customers. Pricing your products too low below what your customer perceives as the ideal price range may lead to them undervaluing your offering.

Pricing Strategy

Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.

• Cost-plus Pricing: This strategy is one of the simplest and oldest pricing strategies. Here you consider the cost of producing a unit of your product and then add a profit to it to arrive at your market price. It is an effective pricing strategy for manufacturers because it helps them cover their initial costs. Another name for the cost-plus pricing strategy is the markup pricing strategy.
• Market-based Pricing: This pricing strategy analyses the market including competitors’ pricing and then sets a price based on what the market is expecting. With this pricing strategy, you can either set your price at the low-end or high-end of the market.
• Value Pricing: This pricing strategy involves setting a price based on the value you are providing to your customer. When adopting a value-based pricing strategy, you have to set a price that your customers are willing to pay. Service-based businesses such as small business insurance providers , luxury goods sellers, and the fashion industry use this pricing strategy.

After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.

As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.

There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.

Advertising

Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.

Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.

Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.

A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.

Public Relations

A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.

Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.

Content Marketing

Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,

Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.

Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.

If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.

Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.

When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.

• Is your choice of packaging consistent with your positioning strategy?
• What key value proposition does your packaging communicate? (It should reflect the key value proposition of your business)
• How does your packaging compare to that of your competitors?

Social Media

Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.

You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.

Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.

Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.

You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.

Strategic Alliances

If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.

Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.

The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.

Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.

2. Evaluate Your Competition

One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.

You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.

These questions can help you know your competition.

• What makes your competition successful?
• What are their weaknesses?
• What are customers saying about your competition?

3. Consider Your Brand

Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.

4. Focus on Benefits

The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.

Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.

5. Focus on Differentiation

Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.

Key Questions to Answer When Writing Your Marketing and Sales Plan

• What is your company’s budget for sales and marketing campaigns?
• What key metrics will you use to determine if your marketing plans are successful?
• What are your alternatives if your initial marketing efforts do not succeed?
• Who are the sales representatives you need to promote your products or services?
• What are the marketing and sales channels you plan to use? How do you plan to get your products in front of your ideal customers?
• Where will you sell your products?

You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.

The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.

7. Clearly Show Your Funding Request

If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’

A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.

Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.

In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.

Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.

If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.

Funding Request: Debt or Equity?

When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.

Case for Equity

If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.

Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.

Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.

Case for Debt

You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.

When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.

Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.

Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.

You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.

Additional Tips for Writing the Funding Request Section of your Business Plan

The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.

If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.

You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.

If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .

Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.

8. Detail Your Financial Plan, Metrics, and Projections

If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.

The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.

If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.

Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.

If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.

When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.

The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.

Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.

Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.

Use Graphs and Charts

The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.

Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.

Address the Risk Factors and Show Realistic Financial Projections

Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.

You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.

What You Should In The Financial Plan, Metrics, and Projection Section of Your Business Plan

The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.

A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.

Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.

1. Sales Forecast

Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.

One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.

For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.

Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.

Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.

For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.

2. Personnel Plan

The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.

However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.

The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.

3. Income Statement

The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.

Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.

The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.

• Sales refer to the revenue your business generates from selling its products or services. Other names for sales are income or revenue.
• Cost of Goods Sold (COGS) refers to the total cost of selling your products. Other names for COGS are direct costs or cost of sales. Manufacturing businesses use the Costs of Goods Manufactured (COGM) .
• Gross Margin is the figure you get when you subtract your COGS from your sales. In your income statement, you can express it as a percentage of total sales (Gross margin / Sales = Gross Margin Percent).
• Operating Expenses refer to all the expenses you incur from running your business. It exempts the COGS because it stands alone as a core part of your income statement. You also have to exclude taxes, depreciation, and amortization. Your operating expenses include salaries, marketing expenses, research and development (R&D) expenses, and other expenses.
• Total Operating Expenses refers to the sum of all your operating expenses including those exemptions named above under operating expenses.
• Operating Income refers to earnings before interest, taxes, depreciation, and amortization. It is simply known as the acronym EBITDA (earnings before interest, taxes, depreciation, and amortization). Calculating your operating income is simple, all you need to do is to subtract your COGS and total operating expenses from your sales.
• Total Expenses refer to the sum of your operating expenses and your business’ interest, taxes, depreciation, and amortization.
• Net profit shows whether your business has made a profit or taken a loss during a given timeframe.

4. Cash Flow Statement

The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.

5. Balance Sheet

The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.

You can get the net worth of your company by subtracting your company’s liabilities from its assets.

6. Exit Strategy

The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.

You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.

Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.

Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.

Key Questions to Answer with Your Financial Plan, Metrics, and Projection

Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.

You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.

Here are some key questions to answer to help you develop this section.

• What is your sales forecast for the next year?
• When will your company achieve a positive cash flow?
• What are the core expenses you need to operate?
• How much money do you need upfront to operate or grow your company?
• How will you use the loans or investments?

9. Add an Appendix to Your Business Plan

Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.

The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.

When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.

Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.

You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.

If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.

A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.

The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.

People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.

Common Items to Include in the Appendix Section of Your Business Plan

The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:

• Additional data about the process of manufacturing or creation
• Additional description of products or services such as product schematics
• Additional financial documents or projections
• Articles of incorporation and status
• Backup for market research or competitive analysis
• Bank statements
• Business registries
• Client testimonials (if your business is already running)
• Copies of insurances
• Credit histories (personal or/and business)
• Deeds and permits
• Equipment leases
• Examples of marketing and advertising collateral
• Industry associations and memberships
• Images of product
• Intellectual property
• Key customer contracts
• Legal documents and other contracts
• Letters of reference
• Links to references
• Market research data
• Organizational charts
• Photographs of potential facilities
• Professional licenses pertaining to your legal structure or type of business
• Purchase orders
• Resumes of the founder(s) and key managers
• State and federal identification numbers or codes
• Trademarks or patents’ registrations

Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.

Tips and Strategies for Writing a Convincing Business Plan

To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.

1. Know Your Audience

When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.

The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.

Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.

• A business plan used to address a company's board members will center on its employment schemes, internal affairs, projects, stakeholders, etc.
• A business plan for financial institutions will talk about the size of your market and the chances for you to pay back any loans you demand.
• A business plan for investors will show proof that you can return the investment capital within a specific time. In addition, it discusses your financial projections, tractions, and market size.

2. Get Inspiration from People

Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.

To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.

When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.

3. Avoid Being Over Optimistic

Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.

The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.

In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.

The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.

To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.

4. Keep it Simple and Short

When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.

One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.

Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.

You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.

To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.

5. Make an Outline and Follow Through

A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.

For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.

To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.

This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:

• Table of contents
• Introduction
• Product or service description
• Target audience
• Market size
• Competition analysis
• Financial projections

Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.

6. Ask a Professional to Proofread

When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.

You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.

In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.

Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.

Business Plan Examples and Templates That’ll Save You Tons of Time

1. hubspot's one-page business plan.

The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.

Hubspot’s one-page business plan template is divided into nine fields:

• Business opportunity
• Company description
• Industry analysis
• Target market
• Implementation timeline
• Marketing plan
• Financial summary
• Funding required

2. Bplan’s Free Business Plan Template

Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.

The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.

3. HubSpot's Downloadable Business Plan Template

HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.

The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.

There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.

4. Business Plan by My Own Business Institute

My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.

The comprehensive template consists of a whopping 15 sections.

• The Business Profile
• The Vision and the People
• Home-Based Business and Freelance Business Opportunities
• Organization
• Licenses and Permits
• Business Insurance
• Communication Tools
• Acquisitions
• Location and Leasing
• Accounting and Cash Flow
• Opening and Marketing
• Managing Employees
• Expanding and Handling Problems

There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.

5. Score's Business Plan Template for Startups

Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.

The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.

There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.

The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.

6. Minimalist Architecture Business Plan Template by Venngage

The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .

There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.

7. Small Business Administration Free Business Plan Template

The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.

There are five sections in the two SBA’s free business plan templates.

• Executive Summary
• Company Description
• Service Line
• Marketing and Sales

8. The $100 Startup's One-Page Business Plan

The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.

There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.

9. PandaDoc’s Free Business Plan Template

The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.

There are 11 sections in PandaDoc’s free business plan template.

• Executive summary
• Business description
• Products and services
• Operations plan
• Management organization
• Financial plan
• Conclusion / Call to action
• Confidentiality statement

You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)

PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.

10. Invoiceberry Templates for Word, Open Office, Excel, or PPT

InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.

Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.

Alternatives to the Traditional Business Plan

A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.

Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.

Business Model Canvas (BMC)

The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.

The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.

Segments of the Business Model Canvas

The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.

• Key Partners: Who will be occupying important executive positions in your business? What do they bring to the table? Will there be a third party involved with the company?
• Key Activities: What important activities will production entail? What activities will be carried out to ensure the smooth running of the company?
• The Product’s Value Propositions: What does your product do? How will it be different from other products?
• Customer Segments: What demography of consumers are you targeting? What are the habits of these consumers? Who are the MVPs of your target consumers?
• Customer Relationships: How will the team support and work with its customer base? How do you intend to build and maintain trust with the customer?
• Key Resources: What type of personnel and tools will be needed? What size of the budget will they need access to?
• Channels: How do you plan to create awareness of your products? How do you intend to transport your product to the customer?
• Cost Structure: What is the estimated cost of production? How much will distribution cost?
• Revenue Streams: For what value are customers willing to pay? How do they prefer to pay for the product? Are there any external revenues attached apart from the main source? How do the revenue streams contribute to the overall revenue?

Lean Canvas

The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.

Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:

• Problem: Simple and straightforward number of problems you have identified, ideally three.
• Solution: The solutions to each problem.
• Unfair Advantage: Something you possess that can't be easily bought or replicated.
• Key Metrics: Important numbers that will tell how your business is doing.

Startup Pitch Deck

While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.

Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.

Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.

Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.

Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.

• Cover/Introduction Slide: Here, you should include your company's name and mission statement. Your mission statement should be a very catchy tagline. Also, include personal information and contact details to provide an easy link for potential investors.
• Problem Slide: This slide requires you to create a connection with the audience or the investor that you are pitching. For example in their pitch, Airbnb summarized the most important problems it would solve in three brief points – pricing of hotels, disconnection from city culture, and connection problems for local bookings.
• Solution Slide: This slide includes your core value proposition. List simple and direct solutions to the problems you have mentioned
• Customer Analysis: Here you will provide information on the customers you will be offering your service to. The identity of your customers plays an important part in fundraising as well as the long-run viability of the business.
• Market Validation: Use competitive analysis to show numbers that prove the presence of a market for your product, industry behavior in the present and the long run, as well as the percentage of the market you aim to attract. It shows that you understand your competitors and customers and convinces investors of the opportunities presented in the market.
• Business Model: Your business model is the hook of your presentation. It may vary in complexity but it should generally include a pricing system informed by your market analysis. The goal of the slide is to confirm your business model is easy to implement.
• Marketing Strategy: This slide should summarize a few customer acquisition methods that you plan to use to grow the business.
• Competitive Advantage: What this slide will do is provide information on what will set you apart and make you a more attractive option to customers. It could be the possession of technology that is not widely known in the market.
• Team Slide: Here you will give a brief description of your team. Include your key management personnel here and their specific roles in the company. Include their educational background, job history, and skillsets. Also, talk about their accomplishments in their careers so far to build investors' confidence in members of your team.
• Traction Slide: This validates the company’s business model by showing growth through early sales and support. The slide aims to reduce any lingering fears in potential investors by showing realistic periodic milestones and profit margins. It can include current sales, growth, valuable customers, pre-orders, or data from surveys outlining current consumer interest.
• Funding Slide: This slide is popularly referred to as ‘the ask'. Here you will include important details like how much is needed to get your business off the ground and how the funding will be spent to help the company reach its goals.
• Appendix Slides: Your pitch deck appendix should always be included alongside a standard pitch presentation. It consists of additional slides you could not show in the pitch deck but you need to complement your presentation.

It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.

Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.

Advantages of the Business Model Canvas, Lean Canvas, and Startup Pitch Deck over the Traditional Business Plan

• Time-Saving: Writing a detailed traditional business plan could take weeks or months. On the other hand, all three alternatives can be done in a few days or even one night of brainstorming if you have a comprehensive understanding of your business.
• Easier to Understand: Since the information presented is almost entirely factual, it puts focus on what is most important in running the business. They cut away the excess pages of fillers in a traditional business plan and allow investors to see what is driving the business and what is getting in the way.
• Easy to Update: Businesses typically present their business plans to many potential investors before they secure funding. What this means is that you may regularly have to amend your presentation to update statistics or adjust to audience-specific needs. For a traditional business plan, this could mean rewriting a whole section of your plan. For the three alternatives, updating is much easier because they are not voluminous.
• Guide for a More In-depth Business Plan: All three alternatives have the added benefit of being able to double as a sketch of your business plan if the need to create one arises in the future.

Business Plan FAQ

Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time.  They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.

Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans.  A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.

A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs.  Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.

The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.

A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.

Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.

Exlore Further

• 12 Key Elements of a Business Plan (Top Components Explained)
• 13 Sources of Business Finance For Companies & Sole Traders
• 5 Common Types of Business Structures (+ Pros & Cons)
• How to Buy a Business in 8 Steps (+ Due Diligence Checklist)

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Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

Module: Entrepreneurship

Create your business plan.

The following written guide will help you create a business plan and map out how you will start and run your business successfully. The different parts are described in the order in which they appear in a business plan.

Executive Summary

The executive summary is often considered the most important section of a business plan. This section briefly tells your reader where your company is, where you want to take it, and why your business idea will be successful. If you are seeking financing, the executive summary is also your first opportunity to grab a potential investor’s interest.

The executive summary should highlight the strengths of your overall plan and therefore be the last section you write.

Below are several key points that your executive summary should include based on the stage of your business.

If You Are an Established Business

If you are an established business, be sure to include the following information:

• The mission statement : This explains what your business is all about. It should be between several sentences and a paragraph.
• Company information : Include a short statement that covers when your business was formed, the names of the founders and their roles, your number of employees, and your business location(s).
• Growth highlights : Include examples of company growth, such as financial or market highlights (for example, “XYZ Firm increased profit margins and market share year-over-year since its foundation). Graphs and charts can be helpful in this section.
• Your products/services : Briefly describe the products or services you provide.
• Financial information : If you are seeking financing, include any information about your current bank and investors.
• Summarize future plans : Explain where you would like to take your business.

With the exception of the mission statement, all of the information in the executive summary should be covered in a concise fashion and kept to one page. The executive summary is the first part of your business plan many people will see, so each word should count.

If You Are a Start-up or New Business

If you are just starting a business, you won’t have as much information as an established company. Instead, focus on your experience and background as well as the decisions that led you to start this particular enterprise.

Demonstrate that you have done thorough market analysis. Convince the reader that you can succeed in your target market; then address your future plans.

Company Description

This section of your business plan provides a high-level overview of the different elements of your business. The goal is to help readers and potential investors quickly understand the goal of your business and its unique proposition.

What to Include in Your Company Description

• Describe the nature of your business and list the marketplace needs that you are trying to satisfy.
• Explain how your products and services meet these needs.
• List the specific consumers, organizations, or businesses that your company serves or will serve.
• Explain the competitive advantages that you believe will make your business a success such as your location, expert personnel, efficient operations, or ability to bring value to your customers.

Market Analysis

The market analysis section of your business plan should illustrate your industry and market knowledge as well as any of your research findings and conclusions.

What to Include in Your Market Analysis

• Industry description and outlook : Describe your industry, including its current size and historic growth rate as well as other trends and characteristics (e.g., life cycle stage, projected growth rate). Next, list the major customer groups within your industry.
• Information about your target market : One of the first steps in the process is determining your target market and why they would want to buy from you. Narrow your target market to a manageable size. Many businesses make the mistake of trying to appeal to too many target markets. Research and include the following information about your market:
• Distinguishing characteristics : What are the critical needs of your potential customers? Are those needs being met?  What are the demographics of the group and where are they located? Are there any seasonal or cyclical purchasing trends that may impact your business?
• Size of the primary target market : In addition to the size of your market, what data can you include about the annual purchases your market makes in your industry? What is the forecasted market growth for this group?
• How much market share can you gain? : What is the market share percentage and number of customers you expect to obtain in a defined geographic area? Explain the logic behind your calculation.
• Pricing and gross margin targets : Define your pricing structure, gross margin levels, and any discount that you plan to use.
• Competitive analysis : Ask which areas are being ignored by your competitors. Creating a niche for your business is essential. Your competitive analysis should identify your competition by product line or service and market segment. Assess the characteristics of the competitive landscape (e.g., market share, strengths and weaknesses, barriers to market entry, etc.). Don’t Become a jack-of-all-trades. Learn to strategize.
• Regulatory restrictions : Include any customer or governmental regulatory requirements affecting your business, and how you’ll comply.

Once you’ve completed this section, you can move on to the Organization and Management section of your business plan.

Organization and Management

This section should include your company’s organizational structure, details about the ownership of your company, profiles of your management team, and the qualifications of your board of directors.

Who does what in your business? What is their background and why are you bringing them into the business as board members or employees? What are they responsible for? The people reading your business plan want to know who’s in charge, so tell them. Give a detailed description of each division or department and its function.

Service or Product Line

Once you’ve completed the Organizational and Management section of your plan, the next part of your business plan is where you describe your service or product, emphasizing the benefits to potential and current customers. Focus on why your particular product will fill a need for your target customers.

What to Include in Your Service or Product Line Section

• A description of your product/service : Include information about the specific benefits of your product or service – from your customers’ perspective. You should also talk about your product or service’s ability to meet consumer needs, any advantages your product has over that of the competition, and the current development stage your product is in (e.g., idea, prototype).
• Details about your product’s life cycle : Be sure to include information about where your product or service is in its life cycle, as well as any factors that may influence its cycle in the future.
• Intellectual property : If you have any existing, pending, or any anticipated copyright or patent filings, list them here. Also disclose whether any key aspects of a product may be classified as trade secrets. Last, include any information pertaining to existing legal agreements, such as nondisclosure or non-compete agreements.
• Research and development (R&D) activities : Outline any R&D activities that you are involved in or are planning. What results of future R&D activities do you expect? Be sure to analyze the R&D efforts of not only your own business, but also of others in your industry.

Marketing and Sales

Once you’ve completed the Service or Product Line section of your plan, the next part of your business plan should focus on your marketing and sales management strategy for your business.

Marketing is the process of creating customers, and customers are the lifeblood of your business. In this section, the first thing you want to do is define your marketing strategy. You’ll learn more about this in the Marketing module of this course.

After you have developed a comprehensive marketing strategy, you can then define your sales strategy. This covers how you plan to actually sell your product. Sales is also covered later in the course.

Next, if you are seeking financing for your business, you’ll need to complete the next part of your plan—Funding Request.

Funding Request

If you are seeking funding for your business venture, use this section to outline your requirements, including the following:

• Your current funding requirement
• Any future funding requirements during the next five years
• How you intend to use the funds you receive: Is the funding request for capital expenditures? Working capital? Debt retirement? Acquisitions? Whatever it is, be sure to list it in this section.
• Any strategic financial situational plans for the future, such as: a buyout, being acquired, debt repayment plan, or selling your business.

When you are outlining your funding requirements, include the amount you want now and the amount you want in the future. Also include the time period that each request will cover, the type of funding you would like to have (e.g., equity, debt), and the terms that you would like to have applied.

Once you have completed your funding request, move on to the next part of your plan—Financial Projections.

Financial Projections

You should develop the Financial Projections section after you’ve analyzed the market and set clear objectives. That’s when you can allocate resources efficiently. The following is a list of the critical financial statements to include in your business plan packet.

Historical Financial Data

If you own an established business, you will be requested to supply historical data related to your company’s performance. Most creditors request data for the last three to five years, depending on the length of time you have been in business. Typical financial data to include are your company’s income statements, balance sheets, and cash flow statements for each year you have been in business. Often, creditors are also interested in any collateral that you may have that could be used to ensure your loan, regardless of the stage of your business.

Prospective Financial Data

All businesses, whether start-up or growing, will be required to supply prospective financial data. Most of the time, creditors will want to see what you expect your company to be able to do within the next five years. Each year’s documents should include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets.

Make sure that your projections match your funding requests; creditors will be on the lookout for inconsistencies.

Lastly, you may want to include an Appendix to your plan.

The Appendix should be provided to readers on an as-needed basis and should not be included with the main body of your business plan. Specific individuals (such as creditors) may want access to this information to make lending decisions. The appendix can include items such as your credit history, résumés, letters of reference, and any additional information that a lender may request.Therefore, it is important to have the appendix within easy reach.

Any copies of your business plan should be controlled; keep a distribution record. This will allow you to update and maintain your business plan on an as-needed basis.

Check Your Understanding

Answer the question(s) below to see how well you understand the topics covered above. This short quiz does not count toward your grade in the class, and you can retake it an unlimited number of times.

Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.

• Revision and adaptation. Authored by : Linda Williams and Lumen Learning. License : CC BY: Attribution
• Check Your Understanding. Authored by : Lumen Learning. License : CC BY: Attribution
• What I Do at Work. Authored by : The Scott. Located at : https://www.flickr.com/photos/thescott365/3183484673/ . License : CC BY-NC: Attribution-NonCommercial
• Create Your Business Plan. Provided by : U.S. Small Business Association. Located at : https://www.sba.gov/writing-business-plan . License : Public Domain: No Known Copyright

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Creating a Successful Business Plan

Turn your business ideas into a solid business plan to keep your venture strategically focused. With the support of your instructor and a network of like-minded students, you will work through all major components of writing a business plan to emerge with your first draft in hand. This critical first step is the most difficult one on the path to small business success. Lesson List:

• Lesson 1 - A Strategy for Success Meet several leading entrepreneurs and determine if you have similar passions and skill sets. You will discover that business plans are not just for funding your dream, but for guiding it along the path to success.  
• Lesson 2 - Defining Your Business Start to mold your business. Develop a vision and a mission for your enterprise. Define and refine your product or service, and you will uncover your niche. This is the fun part of the journey—your only limitation is your imagination.  
• Lesson 3 - The Role of the Customer Successful companies focus not on the products and services that they offer, but on the customers that they serve—on many levels. Learn to position your company to be customer-centric, and how to move that customer from satisfied to loyal (and perhaps even an advocate for your business).  
• Lesson 4 - Structuring Your Organization Structure your organization so it's in the best position to provide your product or service to your targeted customers. You will discover the role that change plays in your entrepreneurial evolution.   
• Lesson 5 - The Marketing Plan Explore the marketing section of your business plan. Discover the features and benefits of your product or service, and you will begin the ongoing task of market research. This is where you can differentiate your product or service from that of your competition.  
• Lesson 6 - The Competition This lesson will explore three separate areas of marketing. First, learn about your competitors so that you can better position yourself and discover just how solid your business ideas are. Then, address one of the most difficult issues of new business—pricing. Finally, you will become a SWOT agent—analyzing strengths, weaknesses, opportunities, and threats.  
• Lesson 7 - Marketing in Action Join a panel of outstanding marketing, public relations, and graphics experts who are also entrepreneurs and believe in the power of networking. Explore graphic design, logos, image, public relations, and guerrilla marketing, as well as marketing in action.  
• Lesson 8 - Operations and Manufacturing Tackle operations and manufacturing concerns.  
• Lesson 9 - Understanding the Finance Section (Part I) Takes a bird's eye view of the financial section of a business plan. Briefly explore the capital equipment list, the balance sheet, and break-even analysis.  
• Lesson 10 - Understanding the Finance Section (Part II) Discover three additional financial components of the plan: the projected income statement, cash flow, and historical financial records.   
• Lesson 11 - Financing Your Business Focus on funding and financing opportunities. Find out where to locate traditional, and not so traditional, sources of funding.  
• Lesson 12 - The Final Document Write an outstanding executive summary. You will receive a few important document formatting tips, and you will learn what supporting documents you should add to your final business plan. You now hold all the keys to the doors along your entrepreneurial path. 

Upon registering, you have six weeks to complete the program.

Course Dates and Times

 course hours: 24 hours.

This workshop is offered through our continuing education online partner.

Register for Creating a Successful Business Plan

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Steps to starting a business

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Steps to starting a business: Lesson plan

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Business start up planner

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Starting a business handbook

This lesson is designed to introduce students to the process of setting up a business and explore what it means to be enterprising. For students who are interested in becoming business owners, this lesson is a good introduction to important enterprise skills.

The first activity can be delivered as an introduction to setting up a business. The second activity can be covered in one session, or it can be delivered as a longer-term business project or series of sessions, allowing the concepts to be explored in more depth.

By the end of the lesson students will be able to:

• Understand the skills needed to be enterprising and their strengths in these areas
• Identify the seven key steps to setting up a business and how to apply these
• Demonstrate how to plan and pitch a business idea

The Starting a business handbook includes the student sheets for this lesson, with useful tips and relevant websites to refer to in future. It can also be used independently by students who are keen to plan their future business ideas in more depth.

Explore this topic further and visit BBC Teach where Radio 1 DJ Greg James brings the concept of different company types to life at a music festival in a series of short films.

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Why not try one of these next?

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Challenge your students to creatively solve issues set by real entrepreneurs with the Enterprise project challenge.

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Ziv Azmanov

Leadership. Innovation. Strategy.

Business Plan Lessons Learned – Part 1

In the course of my work with entrepreneurs and start-up teams, I’m often asked about business plans. Do we really need one? What are the main topics? Should we do a detailed 30-page version, or is a PowerPoint presentation good enough?

Even though many books, articles, and blogs have been written about business plans, I still sense that there is much confusion, especially among young entrepreneurs, regarding their purpose, use, and value.

Therefore, I would like to use this two-part post to offer my humble opinion and some useful suggestions. While business plans apply to all businesses, my primary focus in this article is on start-up companies.

The Purpose of a Business Plan

I’ve probably developed tens of business plans so far in my career. In large corporations and start-up companies; for established businesses and new ventures; for disruptive technologies and industry standards; targeting emerging markets and mature ones.

Consequently, this vast experience has given me a good perspective on the purpose and value of business plans; which elements in the plan are the most critical and which are less; and how to develop and communicate plans effectively.

The motivation behind a business plan is to “sell” a business idea/venture to a potential investor or an internal stakeholder (board of directors, CEO, etc.). However, I personally believe that a premier motivation is the planning process itself.

You simply should not start any business activity, let alone raising funds to launch your company, before you have a clear and detailed plan.

In addition, strategic business planning provides an organization with several important benefits, including:

Learning . Learning about your target markets, competition, customers, and your own capabilities and competencies.

Goal setting . Discussing and defining the organization’s long-term goals and objectives.

Strategic thinking . Brainstorming, developing, and setting the company’s strategy, business model, and priorities.

Alignment . One of the important outcomes of a business plan is achieving an alignment throughout the entire organization, and in particular, among its leadership team.

These are essential activities and habits for any company. That is why I think business planning should not be a one-time event, but rather it should be revisited, reviewed (and modified if needed) on a regular periodic basis, at least once a quarter.

The Key Elements of a Business Plan

The primary purpose of a business plan is to describe and communicate a business venture and how it will be implemented. Therefore, the essence of a business plan is to answer the following key questions:

Who are you? What’s your company’s purpose (why are you doing this)?

What problem are you trying to solve, or what need are you trying to address?

– Who would want to buy your product/service?

– What is their jobs-to-be-done?

What’s your unique value proposition? Why would someone want to buy this product/service? Why would they prefer to buy it from you?

What is your business model? How do you intend to create, deliver, and capture your unique value? Can it scale fast to big business?

What are the main risks (market environment, competitive, technology)?

–  Also, list any limiting factors and obstacles

– Therefore, what are the critical success factors?

Your funding requirements.

In fact, I think these are the most important parts of the business plan itself. Also, notice that I didn’t mention any revenue projections or financial statements (income statement, cash flow statement, balance sheet, etc.).

More on that in part two of this post.

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11 Comments

"I like this …….. it's concise and right on the mark. Looking forward to Part 2"

Thank you, Ziv, for finding the time to post such important points for the important milestone in any business.

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Business Planning

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Create Your Course

10 steps to creating a wildly successful online course, share this article.

As you read this, you might have an online course idea already hanging out in your head.

If you’re passionate about a topic, you’re good at it, and it fulfills a need for someone – then you have all the makings of becoming a successful course creator. 

Creating an online course has never been easier thanks to a host of new tools and platforms that do most of the heavy lifting for you. All you need is your knowledge.

And if you’re building a business, learning how to create an online course is an ideal way to open up an additional revenue stream for your business while establishing you as an expert in your niche.

By creating online courses, you turn your tried and true industry expertise into a lead-generating, money-making, impact-creating online course that gets your valuable skills out into the world. 

To help you learn how to create online courses from scratch, we’ve broken the process into 10 easy stages – with plenty of tips from ultra-successful course creators who have the academies and the accounts to prove it. 

We’ve also included templates, guides and workbooks to support you every step of the way, so you can get your online course business up and running in no time. 

Here are our 10 steps to create an online course:

Pick the perfect online course topic

Check if there’s market demand for your course idea, create compelling learning outcomes, structure your online course, choose the most engaging and effective delivery method, produce your online course: filming, recording, and editing, choose your online course platform, establish your pricing structure, launch your online course and market for success.

• Build an online course community

How to create an online course from scratch

At the heart of learning how to create an online course is understanding what experience, expertise, and skills you have to offer the world.

We’ve tailored this guide to help you draw out your own unique perspective to solve your audience’s challenges, pain points, and problems. And build your personal brand in the process.

While it’s definitely not an exhaustive list of everything you’ll need to create and sell an online course – it’s a ‘birds-eye-view’’ of the major milestones on the journey to creating your first online course and tips to help you find your unique voice along the way from creators who have been exactly where you are.

Here’s our 10 steps to creating an online course that’s tailored to your audience – and feels authentically you. 

Choosing a topic for your online course is the first step to building a successful and buzzing course business.

Your ideal course topic should ideally be something you’re passionate about, you’re skilled at, have experience in, and have a target audience for.

In other words, here are the 4 things you need for your online course topic :

• Target audience

Let’s look at each of those in more detail…

Your passion

Your online course topic doesn’t have to be something you’re head over heels in love with – but it should be a topic you’re passionate about. That means something you don’t mind thinking about, talking about, and reading about for weeks, months, and even years on end.

If you’re passionate about your online course topic, then it will translate into your content. You’ll be better placed to inspire and engage your audience while making your course feel more authentic and relatable. And keep your customers coming back.

Warning: choose a topic you’re not passionate about and you risk getting tired of teaching it. (And your lack of passion will lead to a course that’s as enticing as a cardboard sandwich.)

Related: How To Turn Your Passion Into A Business

Your skills

As well as being a topic you’re passionate about, you also need to have the specific skills that will help you teach others about your topic.

That means your topic should be something you’ve learnt how to do – and you’re confident you can teach other people how to do too. It might be something related to your profession or career or to a hobby or skill you have.

By teaching your chosen topic on a public stage, you can help people learn from you and solve the challenges they’re facing – while setting you up as a thought leader in your field. 

“We all have a gift that someone needs… Don’t let technology, imposter syndrome, or any other limiting beliefs scare you. Just put yourself out there and get started because you can always perfect yourself as you go.” – AMANDA SCHONBERG, THINKIFIC COURSE CREATOR AND MEMBERSHIP SITE OWNER

Related: How To Monetize Your Expertise

Your experience

We’re all the sum of our experiences. And your unique experiences are what will ultimately help you create a winning and wildly successful online course business.

Your experiences can include:

• Work experience
• Educational experience
• Hobbies and interests
• Volunteering
• Personal experiences e.g. relationships, family, spiritual, cultural experiences

If you can draw out the experiences that shaped you both professionally and personally, you can find a unique perspective for your online course that will help you stand out from the crowd.

“If you’re an expert in something – either from schooling or personal experience – I believe that you already have everything you need inside of you… The world is just waiting for you to share your knowledge, expertise, and lived experience in a way that’s digestible for others.” – KIAUNDRA JACKSON, THINKIFIC COURSE CREATOR

Your target audience

To create online courses that people will actually want to buy, you need to make sure you have a target audience in mind from the very beginning. Who will your course help? 

Try answering these questions to find your target audience:

• What demographic groups are you most likely to help with your skills and experience? 
• How do your audience think? What are their values, interests, and attitudes?
• What needs, challenges, and frustrations do they have?
• What do they currently not know or need help with?
• How will your online course help them solve the challenges they’re facing?

People take online courses because they need help getting from where they are now to a place they want to be in their future – and your knowledge and expertise can help them get there quicker.

If you have a target audience in mind now, you can make sure that everything you do when you’re creating your online course is tailored to them – including your course content, delivery methods, marketing, and sales strategy.

Related: How To Define Your Target Audience (+Templates & Workbooks)

Activity: How to find an online course topic

To help you zero in on the perfect course topic, try this simple exercise:

Start by taking a sheet of paper and writing “Passions & Interests,” “Skills,” and “Experience & Achievements” across the top of the page. Draw a line between them so that each is in its own column.

Next, go column by column and write down as many things as possible that come to mind for each category. It doesn’t have to be perfect. Just write down what comes into your head.

Now review what you’ve written. Do you notice any similarities between the 3 columns? They could point you to your perfect course topic. If nothing comes up, keep brainstorming. Go step-by-step through your experiences, including your education, career, and how you like to spend time.

The truth is, you don’t need to have a degree or decades of experience in your chosen course topic to become a successful course creator. In fact, some of the best courses out there focus on things you might consider a hobby. 

Here’s a list of 10 online courses from some of our most successful course creators:

• Microsoft Excel  
• Content creation
• Mindfulness and meditation
• Photography
• Roller skating
• Dog training

There are so many online course ideas to choose from (the possibilities are literally endless…).

Remember: If you love your topic, you’re good at it, you have experience , and it fulfills a need for someone – then you have everything you need to create an online course.

Hands up, who wants to spend weeks of their life creating an online course only to have no one buy it? Nope. Didn’t think so.

Once you’ve picked your online course topic (or at least narrowed your choices down to 2 or 3 options), the next step is to do market research for your idea. The goal at this stage is to understand if there’s demand for your online course and who else is currently offering courses on that topic. 

If you’re just getting started, here are 4 questions to ask to help validate market demand for your online course:

• Are people asking questions about your topic? If yes, what questions are they asking?
• Who are your biggest competitors? Are there any topics, formats, or audiences they don’t cover or serve?
• Will someone pay money to solve the problem your course topic covers?

Let’s look at each question more closely and check out some tools that will help you complete your market research. 

What questions are people asking about your topic?

To understand what questions people are asking about your topic, you need to do some online research. Here are 4 places to look online:

• Try searching your topic on Reddit or Quora to see what questions come up and how often.
• Take a look at Answer The Public to see what people are asking, how, and how often.
• Scroll through any Facebook groups on your topic to gain some insight into the challenges your audience has.
• Follow relevant creators on LinkedIn to see what they’re saying about your topic and who is commenting on their posts.

If you know where your target audience spends most time online, start your research there. For example, if you’re targeting florists, consider doing your research on Instagram and Pinterest rather than LinkedIn.

After doing this research, you’ll probably have a few words, concepts and ideas that show up in posts, forums, and questions over and over. You can use these as keywords for your research in the next section. 

Are people searching for your topic and asking questions?

To understand whether or not there’s demand for your course topic, it helps to know how many people are searching for terms related to your idea online. 

Google Trends is the quickest way to check general search trends for your topic. These trends will give you a better idea of how popular a topic is and how it’s been performing over time. 

Use the keywords from your initial research to look up the popularity of your topic. For example, you can see below that “ Online Yoga Classes ” spiked in popularity at the start of the pandemic in March 2020. And it’s still popular today.

Search volume is also a great way to validate demand for an online course topic. Use a tool like Google keyword planner , Semrush, or Ahrefs to look at your topic’s search volume.  

Enter your keywords, and each tool will give you insights into how many people are searching for each keyword. 

The more people who are searching for each keyword – and the more competitive it is – the more sought- after your chosen topic is likely to be. As you can see, “Online yoga courses” is a popular keyword and has decent competition. 

Pro tip: Keep in mind that the search volume and competition you’ll see in keyword research tools only applies to the specific keywords you’re searching for. There can be hundreds of different keywords for any given topic. For example, running a search on “online yoga courses” will give you different results to searching for “online yoga courses for beginners” and  “yoga courses online”.

Related: 5 Steps To Test Your Online Course Ideas In The Real World

Who are your main competitors and what are they missing?

As well as researching what your audience is currently searching for, it’s a good idea to take a look at your competition too.

Do some research to figure out who your top competitors are and what their courses offer. While you’re unlikely to be the first person to think of your idea, there’s a good chance you can do it differently and offer your target audience something new and fresh.

Online course marketplaces are a good place to check what’s already out there. You can also do a simple Google search – such as “online courses on [ your topic or idea ]”.

Many creator educators make the mistake of thinking that lots of competition for their chosen topic means their online course idea won’t be successful. In fact, it shows there’s already a thriving market for your course idea and it’s well worth investigating further. If other people are making courses on that topic, there must be potential to generate revenue from it. 

The trick is to find a gap in the market. 

Finding a gap in the market means finding an opportunity to offer something new that your competitors aren’t currently catering to – such as:

• An audience: Is there a demographic or group of people who aren’t currently being served by your competitors? Who can you appeal to that your competitors can’t?
• An idea: Are there any key concepts, methods, or ideas that your competitors aren’t covering? What’s missing from their course content?
• A format: Is there a course style or format that your competitors aren’t currently offering? What could you do differently? How could you make your course more engaging?

The online courses already on the market have the upper hand. The creators behind those courses have been learning about your audience, developing their course, and tailoring their marketing for longer than you have. 

The best way to find success? Make sure you’re offering your audience something different to what’s already out there.

Here are a few examples of how creators managed to create new, different, and better online courses compared to their competitors.

Miss Excel – Making a (kinda) boring subject fun

Despite the stiff competition for Microsoft Excel courses, Miss Excel – real name Kat Norton – carved out a niche for herself in a crowded marketplace by using TikTok to create bite-sized Excel courses and infusing creativity, fun, and enthusiasm into her content. Making an otherwise boring topic super approachable.  

Miss Excel began by posting a new video on TikTok once a day. Then one of her videos went viral and hit 100,000 views in just four days. After that, the rest was history.

After her first video hit it big, Miss Excel was able to massively increase her online course sales, quit her job, and focus on growing her online course business full-time. She now boasts an impressive lineup of courses on Thinkific , helping over 17,000 students learn how to improve their Excel skills and bringing in a whopping 6-figure income in the process. 

The Budgetnista – Catering to an underserved audience 

Thinkific creator Tiffany Aliche from The Budgetnista found there was no shortage of creators offering financial advice. But she quickly realized that few online courses were catering to women – specifically black women – and this was a niche where she could use her skills and expertise to make a meaningful difference. 

By creating online courses tailored to her target audience, Tiffany carved out a hugely successful niche in a competitive industry – and built a 7-figure business in the process. To date, she’s helped over 2 million women learn how to manage their money, get out of debt, and save money smarter.

“I want to help women, especially black women, live richer lives. Because we have been left out of the financial conversation for so long.” -TIFFANY ALICHE, THINKIFIC COURSE CREATOR AND MEMBERSHIP SITE OWNER

Will someone pay to solve the problem your course topic covers?

Of course, to validate your online course idea, you also need to make sure that people will be willing to pay money for the products and services you’re offering.

There are a few ways to figure out who will pay for your course and how much they’ll pay. Here are 3 popular methods to validate your course idea:

• Talk to your audience : If you’re not engaging your audience during your market research, you’re missing out on valuable insights. Ask your audience about their challenges, needs, and whether or not they’d pay for a course to overcome them. Use surveys, quizzes, and 1:1 interviews to conduct your audience research and hear what your audience have to say.
• Create a free mini course: To check demand for your online course topic, create a free mini course for people to download via your website and/or social media channels. Depending on the interest in your free course, you can get a feel for whether or not a paid course would sell – and gather feedback from your audience on what could be improved and what they want to see more of.
• Pre-sell your course : To avoid creating a full-length course that no one buys, try pre-selling your online course before you create it. Pre-selling is one of the best approaches to launching an online course to make sure that you have an audience ready-and-waiting for your release date – and it can pre-fund your course production too. 

Related: 4 Steps To Validating And Selling Your Online Course

Once you’ve finalized your course topic – including who you’re tailoring your course to – it’s time to get clear on what exactly you’re offering your learners.

A critical step in learning how to create an online course is identifying your learning outcomes. Think of learning outcomes like your big picture goals for the course. Your learning outcomes summarize what your learners will gain from taking your course – and they’ll also play a key part in marketing your course to potential students.

To your learners, your learning outcomes explain clearly and succinctly what they’ll be able to do after taking your course. This means they know exactly what they’re getting from your online course before they start, helping to make sure that the people who hit “buy” are the right fit for your product.

The result? Higher completion rates, better satisfaction scores , glowing testimonials, and fewer refund requests.

How to write learning outcomes for your online course

To help you write your learning outcomes for your online course, focus on these 3 key things:

• What your learners will be able to DO by the end of your course
• What your learners will KNOW by the end of your course
• How your learners will FEEL by the end of your course

In other words, your learning outcomes should cover the skills your learners will gain, the knowledge they’ll acquire, and the attitudes and emotions they’ll feel after completing it.

Here is a formula from our creators for creating winning learning outcomes. Use this structure to create your own:

VERB + What they will do (with a measurement where possible) + how they will do it.

For example:

By the end of this program, you will be able to formulate your 3 profitable packages and offerings for your wider online course business using our profitable education business model.

Complete this statement using the formula to write your own learning outcomes: 

By the end of this program, you will be able to…

•     __________________________

Try to repeat this exercise for the skills, knowledge, and emotions your learners will have. When you’re done, you should have 9+ learning outcomes for your course.

It’s up to you whether you choose to display your learning outcomes in sentence form like this, as bullet points, or in some other format on your sales page and website. For example, Mimi Goodwin’s Sew It! Academy has a range of learning outcomes listed under each of their course pricing plans. 

As you can see, the learning outcomes are clearly listed below the cost of each membership plan. Take the ‘Kids Only’ plan for example – learners will get to understand sewing machine basics, how to cut, pin, and iron, how to sew in a straight line, and the basic stitches and terms. 

With these basic learning outcomes, the Sew It! Academy’s customers know exactly what to expect from their purchase and can easily decide if it’s the right choice for them.

“If you start at the beginning, you just go down a rabbit hole… Instead, look at the end result that you want to achieve, and focus on how you’re helping your students to transform.” – GEORGE PITTS, THINKIFIC COURSE CREATOR

Related: How To Craft Magnetic & Compelling Learning Outcomes

Video embed: https://youtu.be/IauJLnNx8HI

Now you’re clear on the learning outcomes for your online course, you can begin to organize and structure your course content. 

If your course topic has a step-by-step linear progression – like learning a new yoga pose –  this stage should be easy.

If your course topic is more complex, you’ll need to break it down into smaller sub-topics. Try to group similar themes, tips, and ideas into different modules and structure the lessons within each module in the most progressive and logical manner. The idea here is to form a flowing sequence of lessons .

Need more help? Here are 4 tips from our creators:

Plan your online course with an instructional design storyboard

An instructional design storyboard will help save you a lot of time in the process of planning your online course content. It’s designed to keep your training focused and makes sure you hit all the most important points in the learning journey – before you sink time into fleshing out your online course.

Storyboards aren’t just a tool for planning videos. They can help you map high-level learning themes. For example, you could storyboard your student’s learning objectives using a Bloom’s Taxonomy storyboard , that covers all the levels of mastery your students need to master along the way.

Related: How to Plan an Online Course (Templates & Tips)

From here, you can start planning what courses you’ll need to create based on the themes you’ve come up with.

Related: 10 Instructional Design Models For Creating A Winning Online Course

Create a course outline

To give your course creation process more focus, create a course outline.

Think of your course outline as the roadmap for how your online course will bring your learners from point A to point B. A course outline will help you deliver content to your learners in a structured, ordered way, layering skill upon skill until they finish your course feeling like an expert.

To help you create yours, download a copy of our course outline template here.

“I’ll get a sense of how things [in the course] are flowing and then I work through it in order from the top down. I’m always adding in things, and sometimes I’ll take things out if they seem irrelevant or if I’ve covered it somewhere else.” – FIONA HUMBERSTONE, THINKIFIC COURSE CREATOR

Plan your individual lessons

As well as thinking about your high level course outline, you’ll also need to plan your individual lessons.

When it comes to creating a lesson plan , it’s helpful to start with a few questions to determine the goal of your lesson.

• What do your students already know?
• What do they need to learn?
• What tasks and activities will help to lock that knowledge into place?

Here’s an example of a lesson plan, including learning objectives and the key topics covered.

Lesson #1: How To Source Ingredients For Baking

Learning Objective: Learn how to source ingredients for baking to save time and money

Topics Covered:

• How to find fresh locally sourced ingredients
• What ingredients to buy in bulk for multiple recipes
• How to evaluate ingredients by nutritional value

Create a lesson plan for every lesson in your online course to help you structure your content – and make your life easier when it comes to recording and creating the lessons.

Related: The Ultimate List of Free Online Course Lesson Plan Templates

Consider how you’ll structure your course academy

Most creator educators rarely create just one online course. Chances are, you’ll probably end up with a whole academy made up of many different courses.

If you can think about how you’ll structure your academy at this stage, you can understand more clearly how each course fits into the wider framework of your business.

Here’s the simplest way to think about structuring your online courses – you can follow this method to create an entire academy:

For example, let’s say the goal of your academy is to teach people about sewing. You might have a bundle of courses on sewing projects and patterns, including:

• A course on fabrics and garment sewing; a chapter about how to draft a garment; and a video lesson on using basic shapes to create a clothing item.
• A course on pattern making; with a chapter on how to read basic patterns; and a video lesson demonstrating how to sew a pattern.

Sound familiar? We gave you a glimpse of this earlier with Sew it! Academy’s pricing plan. This example was lifted straight from their course catalog. The Sew it! Academy is an ideal example of how you can bundle separate courses into cohesive units and create an overarching academy with a clear goal. 

Check out this structure map for another basic example:

By thinking about your online courses as part of a wider academy, you can build a cohesive brand throughout all your course content – making it easier to sell your courses as bundles and become known as a thought leader in your industry or field. 

“You need to do two things: make it easy for somebody to tell a friend about what you do, and make it easy for your brand to have a professional, recognizable look. That brand recognition helps give people the ability to connect the dots.” – AMANDA ROBINSON, THINKIFIC COURSE CREATOR

You’re at the halfway point for how to create an online course that wows your audience.

To recap, you have:

• Picked the perfect course topic
• Validated demand for that topic
• Created clear and compelling learning outcomes
• Designed your course structure and plan

Now, it’s time to decide how you’ll deliver your content to create an engaging online course your learners will love.

When figuring out the best way to create an online course, you need to keep in mind your audience’s different learning needs and the ways you can deliver information to make your course as interesting as possible for your learners.

Here are a few questions to get the creative juices flowing:

• Will you have videos, reading content, activities, audio content?
• What type of visuals will you use?
• Will you have opportunities for social learning ?
• How will you make your course fun and engaging?
• How will you help students with different learning styles ?

To help you design effective learning content, follow these 3 tips.

Related: How To Design Your Online Course (Visually And Structurally)

Use a blend of different teaching techniques to make content more engaging

Traditional classroom experiences don’t always translate nicely into engaging online learning experiences. So it’s important to find ways to make your online course fun, easy, and interesting to complete. 

Here are 8 ways to make your online course more engaging :

• Bring storytelling into your teaching
• Create a learning community
• Use both synchronous and asynchronous learning
• Host live lessons or Q&As
• Use microlearning to break big topics into bite-sized chunks
• Include gamification to motivate your students
• Design your course to be accessible
• Make your courses interactive with quizzes

“I like to think of delivering your course like putting together a sitcom episode… Use lots of relevant and fun examples in your delivery and change slides and/or camera angles often. The former will keep the content interesting and the latter will re-engage the brain of your student.” – SAMANTHA KING, THINKIFIC COURSE CREATOR

Engagement strategies like live Q&As and quizzes can be fun and add another dimension to your course content, helping to create the best possible learning experience for your audience.

When you’re creating an online course, make sure you’re also using universal design learning principles to ensure your course is accessible for anyone and everyone.

“Ask questions that make them think. Throw in a surprise slide every now and then to alert their senses and above all incorporate an opportunity to connect with you either on Facebook Live, Zoom or Instagram Live.” – YETUNDE SHORTERS, THINKIFIC COURSE CREATOR

Related: 24 Expert Tips On How To Be A Better Teacher

Don’t make your online course too long

The ideal length of your online course is the shortest amount of time it takes to get your students from point A to point B. (The shorter, the better.)

There’s no one-size fits all approach to creating an online course. But in many cases, bite-sized learning can be just as impactful as a lengthy online course. 

A few factors may influence the length of your course – these include:

• The complexity of the topic: Your chosen course topic will determine how long your course content needs to be. For example, a course on rocket science will probably be longer than a course on how to change a tire.
• Requirements for continuing education credits: If you’re hoping to get your course certified for continuing education, your learners may need to complete a certain number of hours. These requirements will influence the length of your course and how complex your course may need to be.
• Your pricing structure: If you’re planning to create a range of online courses at different price points, this might influence how long your course is. For example, if you’re offering a deep-dive premium course offer , it may end up being longer and more in-depth than your lower ticket introductory course that just covers the basics.

Many first-time course creators fall into the trap of thinking they need to put everything they know into one course. But the secret to learning how to create an online course is knowing what to include – and what not to include.

In fact, you might be more successful if you break your course topic up into several smaller courses rather than one big course, giving your audience the chance to cherry pick the content they want to learn.

Add social elements like learning communities and cohort-based learning

We’re social animals. And one of the biggest challenges with self-paced online learning is finding ways to engage your learners and make the learning experience more social.

Consider building an online community to help facilitate meaningful connections between you and your customers. Learning communities complement online courses perfectly because they open up a space for social learning, peer-to-peer support, and learner-to-educator support. 

Online learning communities also help with accountability – learners can be paired up or placed in cohorts to collaborate on activities and hold each other accountable for hitting their learning goals.

“Online learning is definitely the thing that’s working… But along with that, I think a community or a way to touch base is important.” – EVELYN WOODS, THINKIFIC COURSE CREATOR

Cohort-based learning is also a popular format for online courses. This model differs from self-paced learning as it’s a synchronous learning method where people gather to learn in real-time, putting the emphasis on collaboration and teamwork rather than individual learning. Cohort-based classes are a little more work to manage and coordinate – but learners tend to love them. 

And as a bonus, online communities will also help you in marketing your online course, turning your learners into powerful brand advocates – and opening up more opportunities to upsell and cross-sell to your existing customers in the future. More on that below.

Related: How To Create A Cohort-Based Course

When you’re confident in your online course structure, plan, and delivery methods, you’re ready to start creating your online course for real – including filming, recording, and editing your content. 

While this process will look different for every creator, depending on your course delivery plan, it’s likely you’ll need to shoot some video content. And you know what that means… it’s time to get in front of the camera and hit record.

Some of the most popular recording styles for online course content include:

• Talking heads – One of the top recording formats for creating online courses, talking head videos feature your face and upper body in the frame as you talk to camera. You might have a greenscreen, projector or whiteboard behind you for helpful materials like presentation slides, visuals, diagrams, animations, and much more. Consider shooting other angles too to make your content more visually interesting.
• Screen recording – Record your device’s screen to create your online course content. This style of video is used most often to walk viewers through a process, explain a concept, or create a how-to guide. You might choose to feature your face or an avatar on-screen as well. 
• Voiceovers – A voiceover is similar to a screen recording but you’re narrating what’s happening on screen. This style is often used for presentations and usually the speaker isn’t shown on screen. 

Related: How To Set Up A Video Recording Studio

Pro-Tip: Even though you’re learning how to create an online course, try looking at resources for how to build a YouTube channel too as many of the same video recording and editing principles apply. Check out content like ‘ How to Edit YouTube Videos ’ or editing software roundups to learn everything you need to know.

Don’t worry about your course content being perfect at this stage. The important thing is to get your course out there and in front of your target audience so you can start collecting feedback – then you can go back and refine and even reshoot your content based on what your customers are saying.

“I think things are shifting to becoming less perfect… you don’t have to have a huge production company to produce a course. Everybody can become a course creator with just an iPhone Pro.” – LOLA MELANI, THINKIFIC COURSE CREATOR

If you need additional support or you want a professional touch to produce and edit your courses, consider outsourcing the work to skilled freelancers. Check out popular platforms like Upwork and Fiverr to find people ready and waiting to help you. 

Related: Best Equipment & Software for Creating Online Courses

Where you choose to host your online courses will shape the whole course experience – from creating your online course to onboarding learners to collecting feedback and issuing certificates.

When you’re building an online course business , it’s essential to choose a learning platform that fits all of your needs and can scale as you grow – including design, marketing, and community-building tools.

As you search for the perfect platform for your online courses, make sure you look at the marketing options on offer to help you promote your content. Here are some key questions to ask:

• What marketing integrations does this platform allow?
• Can I build a website and/or landing pages on this platform?
• What email marketing features do they offer?
• What metrics can I track?
• Can I create bundles and packages?

If in doubt, check out reviews, testimonials, and case studies from other creators who have used the platform to find out what it’s really like.

“Thinkific’s packages are simplistic and easy to follow. I love how user-friendly it is, and there is a ton of support. I like knowing that when I need something, I can get a response quickly.” – GEORGE PITTS, THINKIFIC COURSE CREATOR

Related: These are The Best Platforms for Online Course Hosting

A key part of figuring out how to create an online course is knowing how your course will fit into your business overall and the pricing structure you’ll use to sell them. 

Online courses pricing can range from zero to multiple thousands of dollars. To come up with a price tag for your course content, here are a few things to consider:

• What’s your pricing structure? How you choose to package your course as a product will influence the overall course design, the value you build into it, and how you market it. Are you selling a stand-alone course, a bundle, a membership, or a combination of these? Figure out your structure first to know how to price your online course.
• What are your income goals? Let’s be real – many creator educators choose to create courses to earn additional income. Look at what you’re hoping to earn from your online courses and price them accordingly. Remember the lower the price point, the more courses you’ll need to sell to hit your income goals.
• Where does your online course fit into your overall business? If you already have an established business, your plans for how you’ll use your online course content will likely impact how you choose to price your course. If you’re planning to use your online course as a free lead magnet , a passive income stream , or your primary product, this will influence your pricing.

There are no rules for setting a pricing structure for your online course. It’s up to you to decide what you want to charge.

For a starting point, look at what your competitors are charging. Take a look at the notes you took during your competitor research and compare the depth and complexity of their content to the course you’ve created. 

If you’re confident your course is significantly better than what’s currently on the market, then price yours higher than the competition. If your main priority is keeping your course accessible and selling to as many people as possible, then you may want to price it lower – but beware of underpricing.

Here are three reasons why you shouldn’t underprice your online course:

It will hurt your bottom line

If your course is a lot cheaper than your competition, people will assume it has less value and will be less likely to buy it. That means you could be driving customers away and into your competitors’ arms. 

If your strategy is to sell your course cheap to get as many learners as possible in the door, you also risk reducing the quality of the learning experience for your customers. Why? Because you’ll have less time to support your learners, answer questions, engage your audience, and offer a personalized experience.

For example, here are 5 different ways to make $50,000 selling an online course:

It’s a lot easier to manage 25 learners and provide a high-quality, tailored experience to your learners than to try and cater to 500. And the revenue result is the same.

Your marketing effort stays the same

The effort you need to put into marketing to get someone to buy your course at a lower price point is only marginally less than for a higher priced course – so don’t make the mistake of thinking you’ll instantly sell twice as many courses by low-balling.

This guide on how to price an online course gives you more details on why underpricing isn’t a good idea: 

(Assume each lead costs $5 and you have a 5% conversion rate.)

You can’t reinvest in growth if your margins are too low 

Putting a lower price point on your online course also results in a smaller marketing and advertising budget because you’ll have less money to reinvest. 

In the example below, the $50 course actually loses money compared to the $200 course: 

That $100 profit is money you can use to reinvest in filming equipment, a graphic designer, a better microphone, or even just a day off. 

Pricing your online course can be a tricky business – but don’t fall into the trap of undervaluing your expertise and pricing too low. It can end up damaging your reputation and losing you business in the long-run.

If you have no idea where to start with pricing your online course, try asking your audience. Set up a survey to find out how much they’d be willing to pay for your expertise. The results might surprise you.

“I saw what was included in other courses, how they were priced, the content, what I would change, and what I would add… that’s how I figured out the prices. It’s been five years and they haven’t changed.” – LOLA MELANI, THINKIFIC COURSE CREATOR

Now you’ve chosen and validated your topic, crafted your learning outcomes, created your course content, set up your school, and finalized your pricing, it’s time to launch! 

Give yourself a pat on the back, but don’t go anywhere…

If you think the work is over now you’ve completed your online course – think again. It takes a little more work to market and sell your course than just uploading it to your course platform and waiting. In reality, after launching your course you’ll need an ongoing marketing strategy to keep selling courses and converting followers into customers. In fact, your marketing plan can make the difference between zero sales and a seven-figure course business. 

To get started with your course marketing plan, try answering the following questions:

• How will you use social media to market your online courses?
• What types of content marketing will you use?
• What promotions and discounts can you offer?
• Will you run ads to market your courses?
• Do you have an existing email list you can sell to?
• Can you partner up with influencers?
• Will you run an affiliate program?

Each of these questions represent a possible pillar in your overall marketing strategy. Combine several of these strategies and you’re on the right path.

“The most important thing is not just to use marketing for the sake of it, but to actually get the right word out. I tend to prioritize quality and creativity over numbers. This has helped me build the right type of client relationships and gain traction.” – FIONA HUMBERSTONE, THINKIFIC COURSE CREATOR

Here’s a closer look at four of the most common marketing tools creator educators use to generate interest and drive sales for their online courses. 

Related: 58 Ways To Market Your Online Course & Increase Sales

Pre-sell your online course

Pre-selling your course means you start to sell it before you’ve even created it. 

This marketing method is one of the best ways to protect yourself from wasting time by creating a course that doesn’t sell – and drum up interest for your course.

To motivate customers to enroll early, consider an early bird special offer for anyone that buys your course during your pre-sell period. That might be a discount, bonus resources, or a sneak peek. 

Make sure your pre-sale is a limited time offer to create a sense of urgency and drive your audience to take action – you can include a countdown or stopwatch on your website, emails, and social media to drive home the message.

The main thing you’ll need to pre-sell your online course is a sales page – see more details on that below 👇

Create a sales page for your online course

Next, you’ll want to create a sales page for your course . A sales page (also known as a landing page) differs from other pages on your website. 

Your sales page only has one goal – to get people to enroll in your course. Everything on your course sales page should be tailored to converting casual visitors into customers. Here are a few key features of a high-converting online course sales page:

• A clear, compelling headline (to catch visitors’ attention)
• An opening story (to introduce the problem)
• Bullet points (to highlight the benefits of the solution, how it solves the problem, what you’re offering, and bonuses)
• Testimonials (for social proof )
• Credibility (instructor bio, your experience, and more relevant info)
• Pricing details (with a clear call-to-action)
• Risk Reversal (a satisfaction guarantee)

Make sure your content is clear and compelling with a concrete call-to-action (CTA) that directs your visitors on what to do next. 

The idea of a sales page is to make your offer irresistible, so you make your potential customers’ purchase decision as easy as possible – that means giving them all the information, social proof, and learning outcomes they need to know whether your course is right for them.

Related: Course Landing Pages: What You Need to Get Better Conversions

Use the webinar launch method

As well as creating a killer sales page for your online course, you can also use webinars as a strategy to sell your courses to potential customers. Webinars work because they create an environment where you can quickly earn your audience’s trust before you ask people to act.

“We need to be personable and connect with our target audience because they’ll probably never meet you in person.” – DIAMOND LEE, THINKIFIC COURSE CREATOR

Webinars are a proven marketing tool that can help you generate leads, generate interest, and sell your course. If you offer your webinar attendees a discount or early bird offer on your online course, you can also boost conversions.

This is a strategy Miss Excel – aka Kat Norton – has successfully used to sell her online courses. She hosts free Excel training and offers webinar attendees half-price on her courses at the end of the session, after demonstrating her expertise and showing the concrete value her target audience can expect to gain from purchasing her course. 

“This launch method is awesome. I did two webinars in April, granting me my first six-figure month… 99% of the revenue was from core sales on Thinkific.” – KAT NORTON, THINKIFIC COURSE CREATOR

Related: How to Promote a Webinar (Ultimate Guide)

Use lead magnets to grow your email list

As well as webinars, you can also use other lead magnets to grow your email list – and market and sell to your subscribers down the line. 

If you’re not already familiar with lead magnets , it might sound like a complex marketing term – but it’s actually exactly what it sounds like. Lead magnets act like a magnet to attract potential customers to your sales page, email campaign, or overall sales funnel. 

There are a huge range of lead magnets that can be ultra-effective for attracting and converting your ideal customers. You could offer a free mini-course, masterclass, or email course – and provide your audience with a shortened version of your paid course that delivers value, builds your authority, and encourages them to engage more with your content.

You can also create downloadable resources like guides, templates, workbooks, and ebooks to use as lead magnets.

Find out what your target audience are searching for, asking about, and eager to learn more about – then create lead magnets that are tailored to their needs.

“Don’t hold back what you know, be generous with the knowledge that you have. Once I said ‘screw it’ and just started teaching everything I knew without the intention to get paid, my audience found me.” – MILLIE ADRIAN, THINKIFIC COURSE CREATOR

It’s easy to create high-quality lead magnets for your business using graphic design tools like Canva and Adobe Express .

Related: Top Online Business Tools Used By Entrepreneurs

Build an online community

Last but certainly not least, the final stage of creating an online course is building your online community .

Why are we so obsessed with communities? Your online community is what turns one-time customers into loyal, repeat customers who act as brand advocates, mentors, and a readymade, committed focus group for your business. 

Building an online community lets you foster direct relationships with previous and current learners, allowing you to engage with your target audience in ways that a regular sales page or website won’t let you. 

By creating an online community , you give your students the space to ask you questions, share their learning experience, and give you feedback (directly or indirectly) about what your course does well and what it might be missing. You can also watch your learners grow.

“My first round of BAM graduated two years ago and they’re able to network and respond to newer members’ questions in the Slack community, as well as share their experiences, insights and stories of their journey.” – KAT LEE, THINKIFIC COURSE CREATOR

An online community can also function as an extension of your marketing strategy. When you ‘own’ a community, you have constant access to your target market that no algorithm can take away from you. You can use this access to build authority in your niche and generate more revenue. 

Just remember, as the community manager , it’s also your responsibility to keep the community machine oiled and the wheels turning. This might include:

• Sharing themed posts for each day of the week
• Asking questions to spark conversations
• Answering questions yourself or calling on others to share their tips
• Enforcing community rules and guidelines to ensure the safety of your members

And most importantly, it’s your responsibility to make sure you give more than you ask . Your students will quickly see through you if your community is nothing more than a marketing tool. So whatever you do, put people first . 

“For me, a membership is more effective than a one-off course because every single month I can check in with my students and watch them grow. Business has ups and downs and it’s never going to be perfect. I want to be there for all of it, and that’s what I love about the membership framework.” – AMANDA SCHONBERG, THINKIFIC COURSE CREATOR AND MEMBERSHIP SITE OWNER

Related: 13 Membership Site Examples That Will Inspire You

As well as improving the online course experience for your learners, an engaged, committed community can become the perfect space for generating new ideas, testing future products, and gathering valuable feedback to help you keep improving your offering and create the best possible experience for your customers.

Learn how to create an online course and start making money from your expertise today

The process of creating an online course can be hugely rewarding – especially if you’re able to create a resource that is genuinely helpful, valuable, and even life changing for your target audience.

If you have expertise and experience that you want to share with the world, now is the time to start. These 10 steps cover what to expect from the journey of creating, marketing, and selling online courses – all that’s left to do is for you to take the plunge. 

And if you need more inspiration, check out our Creator Stories from people who started where you are today.

“It’s never been easier to build your own course with all of the amazing tools that are offered nowadays to content creators… If I could do it in my living room on my laptop and make $1.3M in sales, you can do it too.” – LOLA MELANI, THINKIFIC COURSE CREATOR

Launch your online learning product for free 

Use Thinkific to create, market, and sell online courses, lead magnets, communities, and memberships — all from a single platform.

This blog was originally published in September 2021, it’s since been updated in May 2024 to include new information. 

Elizabeth Harris is a content marketer and copywriter with a passion for helping businesses get the most out of their content, helping to educate, inspire, and engage audiences.

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Try Thinkific for yourself!

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More From Forbes

Strategies For Managing Debt In A Growing Business

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Managing debt is a critical component of running a successful business, especially when that business is in a growth phase. As your business expands, it is natural to incur debt for purchasing new equipment, expanding your workforce, or entering new markets. However, managing this debt effectively is key to ensuring sustainable growth and financial health.

Here are some strategies to help you manage debt in your growing business:

1. understand your debt.

Before you can manage your debt, you need to have a clear understanding of it. This includes knowing the total amount owed, interest rates, repayment schedules, and any penalties for late payments. Create a detailed list or spreadsheet that tracks all your business debts, including:

• Loan Amounts: The principal amounts of each loan.
• Interest Rates: The interest rates and whether they are fixed or variable.
• Repayment Terms: The length of the loan and the repayment schedule.
• Collateral: Any assets pledged as security for the loans.
• Lenders: The names and contact details of your lenders.

Knowing this information will help you make informed decisions about how to manage your debt effectively.

2. Prioritize Your Debt Payments

Best high-yield savings accounts of 2024, best 5% interest savings accounts of 2024.

Not all debt is created equal. Prioritizing your debt payments can help you avoid unnecessary penalties and reduce your overall debt burden more quickly. Generally, you should focus on paying off high-interest debt first, as this is the costliest in the long run. Consider the following prioritization strategies:

• High-Interest Debt: Pay off credit cards and high-interest loans first.
• Secured Debt: Ensure you stay current on loans secured by collateral to avoid losing assets.
• Tax Obligations: Always prioritize any tax debts, as these can lead to severe penalties and legal issues.

3. Negotiate Better Terms

If your business has a good credit history and a solid relationship with your lenders, you may be able to negotiate better terms. This could include:

• Lower Interest Rates: Request a lower interest rate to reduce your monthly payments and overall debt burden.
• Extended Repayment Terms: Ask for an extended repayment period to lower your monthly payments.
• Consolidation: Consider consolidating multiple debts into a single loan with a lower interest rate and more manageable repayment terms.

Negotiating better terms can provide immediate relief and improve your business's cash flow.

4. Create a Debt Repayment Plan

A structured debt repayment plan is essential for managing debt effectively. This plan should outline how much you will pay each month, which debts you will prioritize, and your timeline for becoming debt-free. A well-thought-out plan can help you stay focused and disciplined in your debt repayment efforts. Here are some things to think about when creating your repayment plan:

• Set Realistic Goals: Determine a realistic timeline for paying off your debt based on your business's cash flow.
• Automate Payments: When you set up automatic payments you never miss a due date.
• Track Progress: Regularly review your debt repayment progress and adjust your plan as needed.

5. Improve Cash Flow

Improving your business's cash flow can make it easier to manage and pay off debt. Look for ways to increase revenue and reduce expenses, such as:

• Boost Sales: Implement marketing strategies to increase sales and attract new customers.
• Reduce Costs: Identify areas where you can cut costs without compromising quality or efficiency.
• Optimize Inventory: Manage inventory levels to avoid overstocking and reduce holding costs.
• Invoice Promptly: Ensure you send invoices promptly and follow up on overdue payments to maintain healthy cash flow.

6. Seek Professional Advice

Managing business debt can be complex, and seeking professional advice can provide valuable insights and guidance. Consider consulting with:

• Accountants: They can help you create a debt repayment plan and identify tax-saving opportunities.
• Financial Advisors: They can offer strategies for improving cash flow and managing debt more effectively.
• Debt Counselors: They can provide specialized advice and support for businesses struggling with debt.

7. Monitor and Adjust

You must monitor your debt management strategy regularly and make adjustments as needed. Business conditions can change rapidly, and your debt management plan should be flexible enough to adapt to these changes. Regularly review your financial statements, track your debt repayment progress, and adjust your strategy to stay on track.

The bottom line is that managing debt in a growing business is an ongoing process. By understanding your debt, prioritizing payments, negotiating better terms, creating a structured repayment plan, improving cash flow, seeking professional advice, and monitoring your progress, you can effectively manage your debt and ensure your business continues to thrive. Remember, the goal is not just to manage debt but to leverage it as a tool for growth and success.

Melissa Houston, CPA is the author of Cash Confident: An Entrepreneur’s Guide to Creating a Profitable Business and the founder of She Means Profit . As a Business Strategist for small business owners, Melissa helps women making mid-career shifts, to launch their dream businesses, and I also guide established business owners to grow their businesses to more profitably.

The opinions expressed in this article are not intended to replace any professional or expert accounting and/or tax advice whatsoever.

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